Branding matters. Because branding matters.
Published by 01.22#110
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Dear Friends A warm welcome to the New Year, the more things change, the more they remain the same. Probably what was said the same time last year. Hoping this year is better and more optimistic than the one gone by. Power packed issue this one- seeing people as possibilities is a new rallying cry that should go down well with top leaders.Layered leadership has been the secret sauce for Apple’s rise to the top- we take a look in this issue. B2B brand marketers seek brand salience most of the time. We talk about it here. The new era for organizations will need and seek intrapreneurs. We take a look at how that can be achieved. The jury has been out on Brand V Performance. We end the debate on that false dichotomy. Social media marketing and neuroscience- the twain can tango. Know more here. We have heard terms like trust deficit, attention deficit etc. Now get a new one on the block- creativity deficit. The customer is forever evolving, surprising. Understand him more through the article in this edition. If your brand were to be a dog, what kind of a canine would it be? Understand it in this issue. There is ample more in this issue to chew, soak in and use for brand owners and guardians. Till the next, my very best to you and yours.
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Managing Editor: Suresh Dinakaran Creative Head/Director Operations: Pravin Ahir Magazine Concept & Design/ New Media Specialist: Mufaddal Joher Chief Strategy Director: Rishi Mohan Business Performance Director: Sunil Vasudevan Brand Engagement and Outreach Specialist: Anuva Madan Chief Country Man, India: Rohit Unni Brand Trends and Research Architect: Meeta Pendse Revenue Growth Architect: Ritu Dey Country Head, Australia: Norbert D’Souza Country Head, UK: Sagar Patil Performance Marketing Architect: Suresh Babu Technology & Web Enabler: Vyanky Charakpalli Social Media Outreach: Pooja Chhabda SEO Advocate: Santhosh Rakonda Content & PR: Nitin Kumar
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CONTENTS Avoiding-the-pitfalls-of-reactive-marketing Seeing People As Possibilities How Agencies Can Retain Clients When A New Cmo Comes In Brand Experience Trends For 2022: Rethinking Retail And Events Brand Vs Performance: Let’s End This False Dichotomy The Creativity Deficit How D2c Brands Are Diversifying Consumer Experience To Disrupt The Retail Industry Put On A Show For Brands: Peter Field Reviews Orlando Wood’s ‘Look Out’ Understanding The Ever-Evolving, Always-Surprising Consumer Will Lush’s Decision To Deactivate Social Media Pay Off? Why Brand Salience Is The Ultimate B2b Marketing Objective Doing Capitalism Differently — One Backpack At A Time Layered Leadership And Apple’s Rise To The Top What Advertising Gets Wrong About Procurement Startups Share The 7 Things That Matter Most How Big Companies Can Cultivate Intrapreneurs The Great Attrition: The Power Of Adaptability How Consumers And Retailers Can Reduce Returns The Rebirth Of Cool: Lessons From B2c Marketing For B2b Brands What Neuroscience Tells Us About Social Media Marketing If Your Brand Was A Dog, What Type Of Canine Would It Be? Book, Line & Sinker
Now that digital is disrupting every industry and job function, it is no wonder marketing has become agile. Annual plans have given way to quarterly plans that usually end up getting scrapped for whatever is happening at the moment. Every marketing team is practicing some form of agile or reactive marketing. In fact, today, a marketing team that can turn on a dime is critical to an organization’s growth. However, how marketing team members react and what they react to is the difference between an extraordinary marketing team and one that is out of control. Even in this 24-hour-news-cycle world, marketing teams need to be grounded in strategy and purpose when determining direction and the way forward. Reactive Marketing: Getting It Wrong Can Be Damaging to Your Brand Typically, reactive marketing comes in two forms. The first comes from internal pressure driven by company politics or hierarchies, and it often leads to a chaotic marketing team that feels overwhelmed and underappreciated. Addressed in part two of this article, that situation is generally referred to as “shiny object syndrome.” The second type of reactive marketing is driven by external events. A company’s reaction, if done right, can help elevate the brand. If done wrong, it can be incredibly damaging. When Facebook recently changed its company name to
Meta, Wendy’s tweeted: Such an immediate—and clever—reaction to an event that affected so many people received a lot of positive attention. Conversely, here’s an older story you may have heard that still teaches a good lesson: A couple was traveling around the country blogging about all the Walmart stores they visited. Eventually, it was discovered that Walmart had paid the couple to blog about their experiences, and the company wasn’t being transparent about it. “In 2006, a blog appeared that followed ‘Jim and Laura’ across the country as they went from Walmart to Walmart, praising the cleanliness of the stores and the helpful employees. People knew something was up, and after they did some digging they discovered that the blog was actually created by Walmart’s PR firm. The stunt ended up costing the company 8% of its revenue. Ouch.” —The Worst Viral Marketing Campaigns by Jacob Shelton, ranker.com “Reacting” to a story you yourself have planted is bound to get you the wrong kind of attention. Staying Grounded in Reality Email, social, and Web marketing allow teams to communicate with their customers and prospects faster than ever before, which can be both a blessing and a curse. Company leaders love the idea of “going viral” because it is an inexpensive way to get publicity, but they always mean the good kind of viral, not the “Dell Hell” of the early days when people would show their laptops catching fire.
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Avoiding-thepitfalls-of-reactivemarketing By Jennifer Smith
To react well, marketing teams must know what to react to, which means having clarity on the following: •
Who is the audience?
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What does the audience like to hear, read, and see?
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Why it is important for this particular brand to react?
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How effective will reacting be? Is it worth dropping our other strategic priorities?
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How risky is this, and what is the company’s tolerance for risk?
An Agile Marketing Plan Aligned to Strategy When I was out on my own, as a consultant, I had a client who was an IT-hosting provider focused on growing its business in the healthcare sector. At the time, hospital IT systems were getting hit regularly by ransomware attacks. Stories were all over the news about the devastating effects the attacks had on patient privacy and brand reputation, and the cost to healthcare providers was astronomical. This particular IT company had a good solution ensuring that those viruses would become a mere nuisance to healthcare providers. The company’s response serves as an excellent example of reactive marketing. It quickly addressed the scenario by highlighting important points: •
The news affected its audience.
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The events were of enormous concern to its audience.
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It had a unique point of view to convey.
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It had something to sell as a solution.
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The brand was looking to be seen as a partner/thought leader in that space.
However, critical marketing tactics were in the works that also needed to be finished within a set time and budget. The team considered several important questions to make sure everything was completed: •
Is this a good use of our time?
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What makes our story different from everyone else’s commentary?
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How do we respond rapidly without derailing other initiatives?
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How are we going to measure whether our real-time responses are working?
Once the team agreed that it was important to react to the news stories and it had a strategy for how to do so, responding to the events became part of the overall marketing plan. A plan was also in place to create pieces of content valuable to the company’s audience that took a bit longer but were aligned to the overall story. That helped add value in the long term and positioned the company as forwardthinking—one that could help healthcare providers meet any challenge. The result? The company was acquired by a larger hosting provider that was interested in the company’s healthcare clients.
SEEING PEOPLE AS POSSIBILITIES By Dr. Srini Pillay
The future is ours to imagine. Strategies drawn from brain science show how to change people’s mindsets about who they are – and what they could become. Ask yourself this: have you ever hired a candidate without carefully assessing their experience and history? For most leaders in major businesses, the answer will be ‘no.’ Organizations traditionally hire people based on their past record. On the surface, this makes sense: prior experience implies that people have the know-how needed to perform in a new role. Yet research increasingly indicates that this approach is becoming outdated. When Jacob Morgan interviewed more than 140 top chief executives from around the world and surveyed more than 14,000 LinkedIn users, he found that the past is of decreasing relevance in a world that is constantly changing. Preparing leaders for the future is key. (See his book The Future Leader, and Dialogue, Q3 2020). Understanding, developing and amplifying a leader’s greatest possibility is a powerful way to ‘futurize’ the leader and the organization: that is, to develop a future-oriented perspective and help people develop into the best version of their future selves, relevant to emerging business realities. It replaces a view of people as static assets that never change. It is time for leaders to tap into the power of ‘possibility thinking’: a mindset and way of being that is future-oriented and uses the future as a goal and a guide to one’s current
choices. Possibilities, here and now ‘Possibility’ often gets a bad rap. Despite the obvious importance of living up to one’s greatest possible future, possibility is often seen as a ‘soft’ variable: unknown, uncertain and not in the here-and-now. People often feel lost when thinking about it. Yet our brains are wired to hypothesize about the future, through a network known as the default mode network (DMN). Called the “crystal ball” of the human brain by neuroscientist Stefano Sandrone (2012), the DMN helps leaders predict and act into the future. But it is also partly responsible for self-awareness: for who you think you are today. Your notion of ‘who you are’ strongly overlaps with, and influences, your idea of ‘what you could be.’ The relationship is neatly summed up by Warren Bennis in On Becoming a Leader (2009), who wrote: “Becoming a leader is synonymous with becoming yourself.” Leaders in particular can truly become themselves by contemplating the best possible version of their future self. When leaders develop a relationship with their greatest possible future selves, they give themselves, and their businesses, the greatest chances
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of success. Can you really change yourself? The brain has 100 billion neurons and 100 trillion connections. The DMN is part of this web of activity, and there is tremendous evidence to show that the connections to the DMN are not fixed. This network – and one’s sense of self – can be disrupted (including by psychedelics, by meditation and by creativity), and that disruption can make it possible to reconstitute our sense of who we are. Put simply, ‘who you are’ is not fixed at all. You can change. So why not change to be your greatest possibility? And why not help others do the same? An operating system for the future Another way of understanding possibility thinking is to consider it as an operating system for the mind. Specific inputs provide outputs that enhance possibility – and can help leaders harness their best possible future self. There are seven dimensions to possibility thinking that leaders can use as inputs for their own self-development, and to help others understand their own possibilities. 1. Change is possible Tell people that they can be different, because the brain can change. Change often starts in the imagination. 2. Imagine a desired future version of yourself As opposed to probability thinking, which is rooted in the
past, possibility thinking is anchored to a vision of the future. People can learn to ‘let the future use them’ – to model themselves and make choices based on their projected future. 3. Raise the bar Once the possibility is established as a clear vision, the next step is to raise the bar in believable ways. The aim is ‘self esteem optimization.’ Simply coping without changing, such that you feel the same every day, is self-esteem maintenance. But it is far more motivating to raise the bar on one’s goals and expectations of one’s self. Self-esteem optimization is a process of advancing who you can be. 4. Address obstacles When you hit a wall in imagining what you could be, address the obstacles to possibility. Burnout, feeling lost, being stuck in a difficult task, being caught up in old habits, being depressed or anxious, worrying, having already given up, and having trouble imagining – all are factors that limit possibility. At Duke Corporate Education, we use a ‘possibility index’ to measure a person’s sense of possibility and identify any blocks; programme managers can then address those blocks in a very targeted way. 5. Positively disintegrate If, after identifying and addressing any obstacles, there are still limits on the imagined goal, assistance may be needed with ‘positive disintegration.’ This requires us to consider being someone entirely different, based on the best and
most worthy version of ourselves. The 20th-century Polish psychiatrist Kazimierz Dabrowski noticed that gifted students naturally advance in this way. They activate an ‘overexcitability’ – an inborn intensity that keeps them together, despite being fragmented, so that they can reconstitute themselves to a higher level. We can all adopt that technique.
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Now that you’ve established a possible future, how can you raise the bar? If a person said that their greatest possibility was to make enough money to leave and become an entrepreneur, you might ask, “What about the social and physical aspects of your life?” It is important to consider the upper limits of one’s possibility thinking. Mark Bonchek, who specializes in catalysing innovation, emphasizes the need to avoid incremental thinking. What one strives for should be vastly different, rather than simply better (‘How to Create an Exponential Mindset,’ Harvard Business Review, 2016). If the possibility goal feels familiar, it’s a sign that you have not raised the bar far enough.
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What are the limiting factors to possibility? You could administer the possibility index to identify the blocks and help a person or team work on them. A good start is to find the greatest limit and work on that.
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What is the gap between who you currently are and who you want to be? How does this betray your basic values? These questions may help with positively disintegrating. If someone values the Olympics, for example, they might have stopped short of a winning mentality. Alternatively, if they wanted to be a better all-round person, husband, or father, they might think about working more efficiently to free up time to do other things.
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Are you doing what you are best at? What improvement would excite you most? Following self-determination theory, think about competence. Are you in a place that fits your competence, where you can excel? Move on to focus on autonomy: examine the levels of hierarchy shaping people’s control over their work, and how they might be flattened. And finally, consider social relationships: help people to connect authentically with their teams and build team spirit.
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Are you getting chances to express your greatest virtues? Huatian Wang from the Eindhoven University of Technology and her colleagues from Utrecht University describe job crafting as the action of changing the task, relation or cognitive boundaries of a job. It can help decrease the staleness that saps a sense of possibility. For example, a product engineer may want more of a say in design. As a leader, you can help them explore ways to do this.
6. Stay motivated To stay intrinsically motivated on this path, focus on competence, autonomy, and social relations. How much do you have of each and how can you increase them? In selfdetermination theory, these three areas are critical: they may influence how motivated you are to persevere in the journey you are on. 7. Never cap your achievement Plateaus in business are often a reflection of a syndrome described by management consultants George Parsons and Richard Pascale (2007) as “crisis at the summit.” They are a result of losing touch with a winning formula, or one’s core purpose. According to Aristotle, purpose is not necessarily about a goal, but about the opportunity to express one’s greatest virtues. By identifying plateaus, we can reconnect with our winning formula or core purpose. Implementing the possibility paradigm Possibility thinking can be applied in a wide variety of settings in organizations. To optimize the flourishing that it can allow, we use a technology called Reulay, an online platform that engages people in a sense of possibility and a self-authored journey, assisting them in achieving this frame-shift. It also helps to personalize interventions. The most obvious starting point for using possibility thinking is at onboarding. Asking people questions about their future selves will give you a sense of how far they are open to change, and whether they can be coached to reach that place. Possibility thinking should also feed into the identification of high potential leaders. High potentials are often identified as ‘Next Gen’ leaders based on their past performance and actions. But a different way to help talented individuals grow is to introduce them to possibility thinking. There are a number of key questions to consider. •
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Are you open to change? Do you believe you can change? Are you committed to change? People typically say they are open to change, but being committed requires us to track progress and ensure that change is happening. It is important to help people make the distinction between wishful thinking – a hopeful stance without much commitment – and possibility thinking, which is a commitment to manifesting what one is imagining. What is the greatest possibility you can imagine in your current role? What is your greatest possibility in this company? What is your greatest possibility in life? People often respond to these questions with very limited answers, as they want to sound reasonable. They may need help to think big. Counterfactual questions can help, such as, “What would you consider a breakthrough in your role right now?”
The cultural shift When all is said and done, possibility thinking is really a cultural shift. It will not work best if used only when onboarding or working with high potential leaders. Rather, when a culture engages with the best possible future, then the organization shifts from ‘knowing’ to ‘discovering’ the best path forward. In a world where knowing what will happen tomorrow is impossible, a culture rooted in possibility thinking encourages striving, openness and creative solutions. It’s why Jeff Bezos always aims to think two to three years ahead. And it’s why Steve Jobs said, “Have the courage to follow your heart and intuition. They know what you want to become.” Fulfil your possibilities by letting the future guide your decisions today.
How Agencies Can Retain Clients When a New CMO Comes In By Verity Burns
In a world where consumers are craving a deeper connection with the brands they buy from, advertisers are always seeking new and better ways to cut through the noise and engage with their audience on a deeper level. Augmented reality has been one of the breakthrough innovations in ad formats in recent years, with an increasing number of big brands adding AR to their marketing campaigns, from Ikea to Samsung and Coca Cola to Gucci. What draws advertisers to the format is how immersive it is in comparison to more traditional advertising formats, and how it makes brands a part of their audience’s conversations. While that’s clear to anyone who has ever used AR, traditional ad measurement techniques simply aren’t able to showcase that in a tangible way, to encourage those brands yet to jump on board. As leaders in the AR ad space, Snapchat wants to change that. In partnership with market research agency Alter Agents, it has looked into new ways of measuring this enhanced level of immersion, so that brands can better understand the possibilities of AR in their campaigns. “We’ve always felt that traditional research techniques just miss the true understanding of what AR does to an individual’s psyche, in terms of their warmness to a brand and the way that they pay attention to the creative,” says Andy Pang, Snap’s head of international market science.
“So that’s what we set out to do, to lead the understanding of how this medium truly works through passive measurement and neuroscience.” The international multicell study that Snap commissioned looked to understand what subconscious effects take place when people engage with AR content within the Snapchat app, in comparison with other content and platforms. It recruited participants to take part in virtual, individual research sessions, during which they were asked to use specific media platforms and watch online videos in a randomised order. During the session, their level of immersion was calculated by measuring their heart rate variation on a smart watch. This was paired with historical data from a neuroscience platform – fittingly named Immersion – which uses historical data to map how changes in heart rate correlate to the brain’s engagement with a stimulus. This is then translated into an “Immersion Index”, which rates a person’s level of immersion on a scale of 0 to 100. “When we talk about ‘immersion,’ we’re referring to a neurological state based on a person’s relative level of attention and emotional connection.” says Pang. “When people are highly immersed, they are paying attention, emotionally engaged, and actively committing information to memory. To put it differently, they are ‘in the zone,’ and the
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experience is resonating with them on a fundamental level — to the point it can predict future behaviour.” The study’s results show that, across the board, AR experiences are more likely to grab the attention of users when compared with more traditional formats. Up against more than 350 experiences across TV, film, music, gaming and sports, AR delivered a higher overall Immersion Index of 56 compared to 45. But that’s not all. When broken down further by platform, the results show that Snapchat was the most immersive of all platforms offering AR experiences in their camera, with an Immersion Index of 61 to 55. “Because we know that people who have a more immersive experience with a piece of content are more likely to recall and take action on it later, AR experiences are a prime opportunity for marketers and advertisers to target audiences, and this study proves they’re at their very best on Snapchat,” says Pang. As for how this compares to more traditional media, the study also found that, on average, branded AR experiences maintain higher attention throughout the time that users interact with them, compared with the peaks and troughs seen in traditional advertising spaces. “The fascinating thing is that [the] high engagement we’re
seeing in AR doesn’t falter like it does in other mediums and remains heightened throughout,” says Pang. “It means that every second is more impactful, and that’s certainly what advertisers want. They want their brands to be at a point where people are immersed and engaged, so they commit the brand to memory and have it at the front of their mind at point of purchase. And it’s not just about awareness, it’s about changing or reinforcing perception of a brand too, so what it stands for, and why you would consider it over something else.” There’s evidence of this in further research by Nielsen. When looking at the Consumer Packaged Goods (CPG) and Beauty industries in the US, Snapchat offered double the return on investment when compared to other channels. In addition, when evaluating the advertisers in the Personal Care and Beauty category specifically, Snapchat Lenses were found to be one of the most effective forms of advertising measured, offering six times greater effectiveness than TV. “For a long time, I think there has been a misconception that AR can’t deliver ROI, but this research shows that is absolutely not the case,” says Pang. “Not only is it engaging audiences better than other forms of advertising, it is driving results from a sales perspective too. “It proves that AR is the future of marketing. And if you haven’t considered it before, now is the time to pay attention.”
Brand experience trends for 2022: Rethinking retail and events By Warc Staff
Between COVID-19 and rapid digital acceleration, the opportunities and challenges facing marketers on brand experience will lead to new inspiration and strategies for 2022.
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2022 is the ‘first of the next’, says Christophe Castagnera, head of strategy for UK/Europe and Middle East at creative design company Imagination: we are moving from the pandemic pressures and associated shifting behaviours to a world that seeks to recapture what we missed, but in new ways and spaces – and always with an overarching drive for sustainability and reduced impact.
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Why it matters Events and experiences costs have been under the spotlight as physical options were curtailed. The knock-on effect is that there has been an increased focus on ensuring the right people are present, especially for brands targeting higher price points or trying to influence specific audiences, such as higher net worth individuals or B2B audiences. Takeaways
With more and more brands experimenting with ways to use the metaverse to meet their marketing goals, the conventions are still being defined, it’s a great time to explore the possibilities. A shift in attitude toward store space has started to emerge, and with it, the rise of brand home retail as flagship retail spaces meld commerce, communication and brand home strategy.
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A new landscape of B2B events is starting to take shape. Frequency will change – people will attend less often – and tentpole experiences stand out amid fragmentation.
Quote “Rethinking the store means ditching the idea that it’s about selling products and seeing it as a differentiated brand experience. It’s about retail changing and brands thinking about physical retail with a brand home lens rather than a store lens” – Christophe Castagnera, head of strategy for UK/Europe and Middle East at Imagination.
Brand vs performance: Let’s end this false dichotomy By Michael Lorenzos, Bleach London
The dichotomy between Brand vs Performance marketing is a false one and needs to be dissolved says Michael Lorenzos, Head of Ecommerce Growth at Bleach London. CMOs can help by aligning incentives and encouraging synergies between brand marketers and performance marketers and rewarding them for delivering on those synergies. Brand marketing vs performance marketing. One of the classic contests of our industry; a debate that causes heated exchanges and biased arguments. Recently, the prevailing sentiment has been antiperformance. Especially after iOS14, the Facebook outage, and reports that behemoths like Uber and Airbnb switched off a big chunk of performance spend with zero to little impact, performance marketing’s impact is being questioned. The great Rand Fishkin went as far as to wonder whether it’s an “analytics scam”. It wasn’t always like this. Performance used to be the darling of marketers, especially during the golden era of lower CPMs and less competition in Paid Search. Marketers would flood LinkedIn with posts mocking the “old way” of doing marketing without measurement and make lists of why performance/growth marketing is superior. This article isn’t about finding a middle ground between the two approaches. It’s making a case that the dichotomy
shouldn’t even exist in the first place. Why the dichotomy exists and the view from the two marketer perspectives Ultimately, the dichotomy between brand and performance exists because the day-to-day work and the mindset of a marketer that’s focused on each practice differs: The brand marketer will see performance activity as “cheap”, short-term, and compromising to the brand. They’ll be annoyed by the performance marketer’s testing mindset, and will look to impose constraints on what can be tested. They will care more about delivering a consistent message and developing the brand for the long-term than meeting short-term targets. The performance marketer will see brand marketing as fluff and not impactful enough. They’ll struggle with the priorities being set by them, and will also be annoyed by the fact that brand marketers impose constraints on what they can or cannot test. Why it’s a false dichotomy At its core, it’s a false dichotomy because it’s not supported by your audience. People buy from brands, and performance advertising is one of the marketing activities that enable a
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brand to reach and engage with their audience. The truth is, a brand drives performance and performance marketing informs brand perception. My advice to the brand marketer and the performance marketer Even though I come from a performance marketing background, my academic background is in marketing too – I first learned about marketing the “classic” way. For that reason, I’ve always seen performance marketing as part of the promotion mix for a marketing plan, and not a transformation to marketing itself. This notion has been supported by my experience so far. My advice to both parties starts from the same principle for both parties: understand that what you are doing is a means to an end, not an end itself. Your jobs are part of the same assembly line and ultimately deliver against the same target. To the brand marketer: 1. Your role is also a commercial role and must be tied to the business’ bottom line The fact that you’re not measured by immediate impact shouldn’t divert your focus from your end goal. You are not building a brand for the sake of building a brand, you are building a value-generating asset. Building a brand is a commercial outcome. There’s a reason why brand equity exists and is measured in dollars: a brand is a moat, an asset and it means that people are willing to pay a premium for your product or that they are likely to pick it among alternatives precisely because of the brand. While it’s not a short-term endeavour, the nature of branding is commercial. 2. When it comes to your relationship with performance advertising, shifting your mindset from an abstract “what’s good for the brand” to “how can I build a brand while enabling performance marketing to do their best work in a brand enhancing way” will only make you a stronger brand marketer. For example, when the performance marketer asks for more freedom to test things, place your constraints in a way that does allow for significant tests to take place. Especially with paid social, you want to avoid being “too polished” and rigid and understand that certain paid social formats work because they actually look native to the platform. You should 100% adjust those formats to how you think your brand should be communicated, but bear in mind that you are advertising fleeting content that’s going to be consumed on a mobile screen, and can be skipped with the flick of a finger. Not everything your brand puts out needs to be polished as if it’s a billboard in Times Square! Furthermore, what you have on your mind as “best for the brand” isn’t necessarily true – performance advertising can help uncover that. Also, looking at short-term effects of your activity, albeit not your guiding light, can provide solid indication on whether you delivered a message that connects with your target audience.
If you are running a bigger above the line campaign, you should be using learnings from your performance marketing campaigns to fail-proof your investment. If your budgets are smaller and don’t run any long-term Branding/Above The Line campaigns, that means that your branding is mostly going to be consumed through the performance channels. Adapt your tone of voice to the medium you serve while staying true to your tone of voice. To conclude: don’t delve into short-termism, but don’t discount short-term either. And nope, Performance Marketing isn’t a scam (sorry, Rand). To the performance marketer: 1. Nope, Brand Marketing is not fluff nor ineffectual just because you don’t see a large uptick in purchases after a brand activation. Keep in mind that the characteristics of the brand (or lack thereof) are impacting your performance metrics, whether you realise it by looking at your daily dashboards or not. 2. Let go of your ego! You are not more valuable than a brand marketer because you can report on sales after a successful performance marketing campaign. Your campaign is successful only because the brand enables it to be! 3. Nope, brand constraints on your performance advertising are not nonsensical – your performance marketing activity is a core component in brand building and you’ll have to connect the dots to the end goal. The end goal isn’t seeing beautiful numbers in Facebook Ads, it’s contributing to the company’s revenue. Yes, a creative test that goes off-brand might drive sales up for a period of time, but this will come at a cost to the long-term goal of building a successful brand. Heck, it will even make your performance marketing less effective over time! Like Babak Azad has said in his Ecommerce Playbook (a must read!), all marketing activity must be done in a brand-enhancing way, exactly to avoid this risk. To the CMO: 1. If you can only focus on one thing, focus on the alignment of incentives. It’s more frequent than I thought possible that the two teams sit in their own little silos, without communicating enough with each other or working towards the same overall goal. It’s even more frequent that the way the two teams are measured makes them compete with each other! Audit your team’s incentives and understand whether there are any conflicts of interest with the current setup. 2. Put your marketing plan on a single page and define priorities for every quarter to increase visibility across everyone’s activity. 3. Encourage synergies between the brand marketers and performance marketers and reward them for actually delivering on those synergies.
THE CREATIVITY DEFICIT ByDr. Vivienne Ming
Some things are simultaneously auspicious and ominous. Artificial intelligence (AI) is cast as everything from the key to a technological utopia, to the harbinger of a dystopian nightmare. Promise and threat. The promise is that AI will free humanity from routine work, allowing us all to engage in more rewarding pursuits. The threat is that AI makes most human labour redundant. Instead of complementing workers, AI substitutes for them. The risk of the negative future is higher than most perceive. Many would happily remove the need for routine, low autonomy, low-wage jobs. Having grown up in the farmland of Steinbeck’s novels, I am convinced that no one should
spend 16 hours a day picking vegetables for others just to feed their family. Yet that rudimentary perception of routine tasks is a fraction of the reality. In reality, ‘routine’ labour isn’t just picking lettuce. Routine includes reading medical imaging, reviewing contracts, and writing computer code. Incredibly sophisticated work can increasingly be done by cheaper, faster AIs. If the task is routine, traditionally requiring expert judgments by doctors, engineers, or accountants, it will be substituted, driving the deprofessionalization of those jobs. The common notion is that AI will make everyone more productive. That vision is false.
But that is just one future, one set of choices we might make. There is another future where AI stands not for artificial intelligence, but for augmented intelligence. The overwhelming beneficiaries of augmentation are people doing ‘creative’ labour (non-routine cognitive labour); I call this boost ‘creative complimentary,’ and it applies to engineering and science as much as art or business. Any time you explore the unknown, you engage in creative labour. For instance, basic analysis of medical X-rays will be automated. Machines can quickly compare the spot found on an X-ray with millions of previous X-rays and make a faster, less costly determination than a human. However, the creative task of exploring a patient’s unique medical history and planning sophisticated treatment may remain. AI will deprofessionalize the routine analysis but augment creative personalization of treatment. Educational failures The world’s schools and universities churn out an increasing number of graduates, yet they are failing to deliver a sufficient foundation in creativity and meta-learning (learning how to learn). Institutions are misinterpreting the demand for expertise on a grand scale. They see a huge increase in pay and demand for elite engineers, doctors, scientists and technologists. They perceive that trend as AI complementing the high-skill education traditionally delivered by universities and graduate schools. That is an incorrect interpretation. Within ten years, many high-skill tasks – even data science itself – will be performed more quickly and cheaply by robots than people. The correct interpretation is that we will need more creatives rich in meta-learning skills, like resilience, perspective taking, analogical reasoning, and uncertainty tolerance. This gives them the ability to explore unknown situations and act as creative, collaborative problem-solvers. Framing the problem in new ways, seeing around corners, interpreting the future, working with others to harness the collective intelligence of a diverse team: that is the work of creatives. But we will fail to produce the grandmaster creatives we require without a radical shakeup of the socioeconomic environment. The sobering reality pointed out by Harvard professor Raj Chetty in his work on ‘lost Einsteins’ is that the children of today’s top earners are ten times more likely to become innovators and entrepreneurs than their middleclass counterparts. Poor kids in the top quintile for maths are less likely to earn a patent than rich kids from the lowest quintile. If these children are our next generation of creatives, there will be too few of them. The war for talent will become a brutal conflict as we compete for the same tiny cohort. Some will earn extreme rewards while most of humanity becomes superfluous to the global economy. Other research suggests that super-bright children from lower socioeconomic brackets might have become futureproof creatives, had they been exposed to slightly different environments. Children from poorer families who grow up in wealthier neighbourhoods exhibit outcomes similar to their wealthy neighbours. The critical factor is environment and role models – both peers and parents – rather than
household income. Context is everything. Again, the education system has a case to answer. When Chetty examined the quality of teaching for children, he unearthed two bold truths. First, children’s educational experience was a strong predictor of socioeconomic outcomes. The lowest-performing teachers were a massive brake on social mobility. Replacing poor performers – even with merely average teachers – gave a massive uplift to both individual outcomes and the economy. Second, teachers that excelled at getting their students through exams performed less well when judged by actual socioeconomic outcomes. By contrast, the best teachers in terms of life outcomes failed to deliver the best scores in school. This is strong evidence that children are being tested for the wrong things – and yet we often look to those same measures for hiring and labour planning. Schools still glorify knowledge and learned skills over the premium meta-learning qualities that will secure the future. In academia, industry, and beyond, we lionize amazing, uniquely creative people, but both schools and labour markets still overwhelmingly focus on the routine skills and knowledge that machines can do. Conventional academic assessment is more about how well someone takes a test than how well they can explore the unknown. The very qualities that allow us to “learn to learn,” and motivate us to explore the unknown, aren’t being tested for. The growth mindset The key to actual life outcomes, not test scores, is being raised in an environment where adults treat kids with a growth mindset – a belief that your child, or your student or employee, can change and grow. An environment where kids aren’t encouraged to learn, grow, and think big and experiment, is a significant deterrent to reaching higher and having better life outcomes, even if they have good test scores. The same is true in business. My own research shows that leaders who carry a growth mindset about their employees are much more likely to develop successful individuals and teams than those whose perception of each employee is rigid, or fixed. Such leaders encourage their employees to explore, support their experimentation, and allow them to fail. An employee who struggled under a leader who saw them as a fixed asset can suddenly flourish under a growthmindset boss. Her résumé is the same, her skills are the same – but her outcomes are profoundly different. AI’s ability to outperform humans on routine tasks, even expert judgments, makes it a tremendous tool – perhaps one of the most powerful of the last 50 years. But it is still just a tool. Its true value is not substitution, but augmenting our intelligence and complementing our creativity. The biggest investment we can make in AI is to invest in people. As leaders of communities, schools and businesses, we need a paradigm shift in terms of the demand side. Don’t think in terms of skills, roles and expert credentials; none of those are robot-proof. Think about work in terms of the creative potential of individuals and the collective intelligence of teams. And on the supply side, if we want to produce enough creatives, we need leaders to disrupt current educational and business practices. Demand is already skyrocketing.
How D2C brands are diversifying consumer experience to disrupt the retail industry By Cathy Traugot
According to eMarketer’s forecast, US direct-to-consumer (D2C) ecommerce sales will reach $151.20 billion in 2022, an increase of 16.9% compared to this year. And while D2C purchasing will only account for 2.5% of total retail sales in the year ahead, these brands have challenged and successfully disrupted the retail industry by diversifying consumer experience. Originally, D2C referred to digitally native brands without a physical storefront that sold directly to consumers by website. Many founders of D2C companies say they went to market with the intent to solve a perceived pain point in the marketplace that they personally experienced. Over time, D2C has evolved into a business model with legacy brands, like Nike and The Clorox Company, having D2C components. Pure-play D2C companies like Peloton, Warby Parker, and HelloFresh, for example, curate every interaction—from marketing to delivery—with customers and share distinct commonalities that have enabled D2Cs to thrive: Attract consumers through intentional marketing. Customer acquisition can be expensive for D2Cs. However, the D2C model offers companies control over each product’s marketing. Shane Pittson, vice president of growth at Quip, told eMarketer that launching as a D2C allowed the oral hygiene provider better “data and perspectives” for conversations with retailers, setting the company up for success. Offer customers unique, quality products. Because of their direct offerings for customers, each D2C is challenged with
convincing customers that it offers something consumers can’t find anywhere else. For Ricky Joshi, co-founder and chief strategy officer at mattress company Saatva, this means avoiding the “glitz and glitter” that surrounds typical D2C brands and instead “sticking to the value proposition and the philosophy of the company as it started.” An ability to convert “add to cart” into “proceed to checkout.” Like every ecommerce company, D2Cs face the challenge of converting impressions into actual purchases. Strategies for pushing consumers to reach for their wallets look different for each D2C. Kate MacCabe, vice president of product at Brooklinen, shared with eMarketer that the bedding company has actually benefited from limiting consumers’ customizations, streamlining the path to purchase in the process. For other D2Cs, increasing conversions may involve adopting partnerships with companies like Shopify to streamline checkout. Evolve alongside customer needs. To stay competitive, D2Cs must diversify consumer experience beyond selling fixed products on a static website. For many D2Cs, this means evolving beyond the pure D2C model to partner with external resources in the spirit of growth. Footwear brand Allbirds and eyewear provider Warby Parker have brick-and-mortar stores to bring customers offline. Quip partners with existing brickand-mortars, like Target, to sell products. Many D2Cs have also expanded beyond their initial hero offerings: Allbirds now sells apparel and men’s razor company Harry’s has deodorant available. These offerings reflect an evolution of these brands’ original models while holding true to their original spirits.
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Put on a show for brands: Peter Field reviews Orlando Wood’s ‘Look Out’ By Peter Field
An anticipated follow-up to industry hit, ‘Lemon’, the chief innovation officer of System1 Group’s new book examines how society is ‘turning inwards’ and how this is reflected in creative arts – particularly advertising. You could view Orlando Wood’s new book Look Out simply as a look back at how advertising lost its way over the last decade. But to do so would miss the bigger point that he makes – one that is very much about the future, as the title suggests. The book is, of course, closely concerned with how the digital revolution affected the health of advertising. And in Orlando’s enlightened and enlightening style, he sets this in the context of how the digital transformation of life affected the mental health of people. True to the premise of the book, we are invited to view this revolution broadly, through the fascinating historical lens of how the visual arts responded to previous periods of disruption to society. What we should learn from this, is eloquently told and beautifully illustrated. Orlando argues that new technology has contributed to an imbalance in the way we view the world around us: to a turning inwards and a detachment from humanity. Solipsism is on the rise and inevitably happiness on the decline. This is paralleled in advertising, with targeting and creative styles focussed on the narrow and the immediate. Solemnity, intrusiveness and directness are the new tools, replacing humour, seduction and humanity. Effectiveness has fallen, along with the public’s liking for and trust in advertising. Like society, advertising is not in a healthy state. He shows how the predominant video advertising styles have been influenced by the scientifically-derived, rigid rules of the
performance marketing movement. And he reveals how this has impoverished our ability to build brands and secure the long-term growth they depend upon. So, at its heart Look Out is about the growing conflict between science and humanity; between measurement and intuition. The more that science directs the lives of people the more it leaves them feeling helpless; the more it leaves them out in the cold. And in marketing too, through rules and best practice supposedly guaranteeing success, science has devalued the creative contribution and constrained its genius. In fact, of course, all that marketing science can do is to improve the chances of success – there are no guarantees – and breaking the rules is no guarantee of failure. As Orlando reminds us, great effective creativity is often about popularity and fame, which cannot be reduced to a formula or an algorithm; it is sometimes about sensing which rules to break and how to break them. And there is huge potential value in this. The danger that the rule makers overlook, is that anyone can follow the rules – there is no enduring competitive advantage in that – only creativity can create the inimitable. The book is itself, a vivid illustration of this. So, the most important message of Look Out is that we would do well in future to rely less on following advertising rules and more on our ability to put on a great show for our brands. Let’s do it.
Science is resilient. It can overcome diseases, create cures, and, yes, even beat pandemics. It has the methodology and the rigor to withstand even the most arduous scrutiny. It keeps asking questions and, until there’s a breakthrough, it isn’t done. That’s why, when the world needs answers, we turn to science. Because in the end, Science will win.
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Understanding the ever-evolving, always-surprising consumer By Kari Alldredge and Anne Grimmelt
For many consumers around the world, a return to normalcy feels so close, yet so far away, in light of the alarming spread of COVID-19 variants. Although it’s unclear what the next 12 to 24 months will bring, what’s almost certain is that consumers won’t simply revert to doing exactly what they did in 2019. In this episode of the McKinsey on Consumer and Retail podcast, three consumer-behavior experts share their insights into how consumers’ spending patterns and purchasing behaviors are changing, and what companies should do given those changes. An edited transcript of the conversation with executive editor Monica Toriello follows. Subscribe to the podcast. Monica Toriello: Over the past several weeks, people in some parts of the world have resumed their prepandemic habits. Maybe you’ve recently seen a movie at a theater, or flown on an airplane, or even just stopped for a cup of coffee on your way to the office for the first time in over a year. But a return to “normal” won’t look the same for everyone. Today, we’ll hear from three people who intensively study consumer behavior. They’ll share fascinating insights into how consumers are changing and what companies should do about it. Kari Alldredge is a McKinsey partner based in Minneapolis. Kari has been advising consumer-goods companies for more than 20 years on a variety of topics, and she leads McKinsey’s work in consumer-goods growth transformation. She is an author of several articles, including a recent one on COVID-19’s impact on demand and costs in the consumer-packaged-goods [CPG] industry. Anne Grimmelt is a senior knowledge expert in McKinsey’s Consumer Packaged Goods Practice. She is based in Stamford, Connecticut. Anne has been one of the driving
forces behind McKinsey’s consumer-sentiment survey, which was launched in 2008 and during the pandemic has expanded to 45 countries. It provides a rich fact base for how consumers are feeling about their finances and how their buying behavior is changing. And our third guest is Anjali Lai, a senior analyst at Forrester. Anjali, who is based in New York, helps chief marketing officers [CMOs] and other business leaders to understand the shifts in consumer behavior and consumer decision making and then to figure out what these changes mean for the future of brands and industries. [To comply with Forrester’s Citation Policy, this transcript excludes Anjali Lai’s comments. Listen to the full episode on McKinsey.com or on Apple, Google, and other podcast platforms.] A ‘reversal of fortune’ for big brands Monica Toriello: Kari, Anne, Anjali, it’s great to have you here today. All three of you have been keeping your fingers on the pulse of consumers, both before and throughout the pandemic. Have there been any surprises? Are consumers doing things that you didn’t expect? Or is there anything that seemed to be going one way in, say, March or April 2020 but is going in a different direction today? Kari Alldredge: In 2019 or early 2020, the topic on the minds of large branded consumer-packaged-goods manufacturers was portfolio shaping: how to reimagine their portfolios, how to move away from center-of-store food products and big brands and instead engage with consumers in very different, more targeted, niche-oriented ways. The degree to which the pandemic pushed people back toward big brands in the center of the store, and
brandknewmag.com
31 toward cooking at home, has been a complete turnaround, a reversal of fortune, for large CPG companies. Some of those changes could have been anticipated, but others are quite shocking: the notion that bread baking would become a phenomenon among millennials, or that pet ownership would skyrocket to the extent that it has, and that those same millennials would be willing to spend more than they spend on their daily Starbucks to feed their new pets. So, many of those companies that were desperately searching for growth 18 months ago now have the opposite problem: their supply chains can’t keep up. The big question for all of them is which of those consumer behaviors are truly going to persist and be “sticky” coming out of this pandemic? Certainly, the dog that you adopted is likely to stay at your home. But when you go back to ordering your daily Starbucks and spending $7 a day on a coffee, are you going to spend the same amount to feed your pet? Those are the questions that are on many company leaders’ minds. Anne Grimmelt: As Kari said, we saw a complete shift. Prepandemic, the growth was in smaller, niche brands, but early in the pandemic, it was large CPG players that really gained scale because their products were available on the shelf. They were also brands that were trusted by consumers, so consumers felt good buying them. If you look at point-of-sale data from IRI or Nielsen, you see that large companies—those with more than $2.5 billion in retail sales in the US market—picked up most of the share growth early in the pandemic, whereas smaller and midsize companies, as well as private label, were really not picking up growth. In the second half of 2020 and in early 2021, small and midsize companies are regaining their sales growth. And we expect that private label is going to be powerful again, because if you dive into the why—why did consumers pick a new brand, and why did they pick the brands they chose?— it was about availability, it was about purpose, but it was also about value. It was about price points. Going forward, value is going to be even more important, and private label will gain strength in the future. Trust as a strategic imperative Monica Toriello: All three of you to some extent have written about customer loyalty: how to win it and how to retain it, particularly in an environment where people are willing to try new brands. Anne and Kari, you found that 39 percent of consumers tried new brands during the pandemic. And Anjali, in your research, you found that small brands are particularly good at earning consumers’ trust and consequently their loyalty. In a recent blog post, you wrote, “Now is the time for companies to embrace trust as a strategic imperative.” What does that mean? How should companies do that?
Even relatively mundane CPG companies are thinking about the end-to-end consumer journey,
including consumer experience preand postpurchase. Kari Alldredge Kari Alldredge: I’m seeing two interesting things in response to the trends you just talked about, Anjali. One is the degree to which even relatively mundane CPG companies are thinking about the end-to-end consumer journey, including consumer experience pre- and postpurchase, as they try to understand how to serve their existing consumers but also look for new ways to better meet consumer needs. The notion that there is a pre- and postpurchase experience related to a can of soda or a can of soup is a relatively novel idea, right? But, increasingly, the most forwardthinking companies are doing research across that entire journey to be able to understand the needs of consumers as they’re considering the range of options that are available to them—all the way through to satisfaction with usage and even disposal of the packaging of products. Another interesting thing I’m seeing is a recognition that marketing is a dialogue, and a recognition of the degree to which consumers now “own” or shape the narratives of many brands. This, too, was happening before the pandemic but was vastly accelerated during the pandemic. The notion that a marketer positions the brand and delivers a message and a promise to consumers is really becoming quite an antiquated one, I think, as consumers themselves—through reviews, ratings, blogs, videos, and social-media posts—shape the identity of many of these brands. Recommendations from friends and family become part of the brand’s identity and are critical to shaping both loyalty and consumer trust.
We found in our research that about 33 percent of millennial and Gen Z consumers say they choose to buy a brand from a company that has their values, versus about 12 percent of baby boomers. Anne Grimmelt Anne Grimmelt: Our research corroborates that. We found in our research that about 33 percent of millennial and Gen Z consumers say they choose to buy a brand from a company that has their values, versus about 12 percent of baby boomers. But every demographic group is leaning toward that. Another finding from our research is the reasons why consumers change to a new brand. It is definitely the younger generation that more often indicates that it’s because of purpose. It’s because of what the company stands for, how it treats its employees, et cetera. Purpose: More than just a buzzword Monica Toriello: We’ve been hearing a lot about purpose and values, but I also hear some skepticism in certain
pockets of the corporate world as to whether an emphasis on corporate purpose actually pays off. Because there is an attitude–behavior gap, right? What’s your response to a CEO who says, “Consumers like to say they care about purpose and values, but when they’re at the point of deciding to buy something, they truly only care about convenience or price or quality. Purpose is just a buzzword.” Kari Alldredge: It’s necessary but not sufficient. I think there’s an increasing recognition that alignment with a consumer’s values may put you in the consideration set but won’t drive you over the line to purchase. You still have to have product superiority, whether that’s taste superiority, functional superiority, or a price-to-value equation that works for that particular consumer. We talk a lot about the pandemic, which definitely shone a light on health in general, but there are other crises—like social justice and climate change—that have come to light over the past year and a half and that have really shaken the corporate community. These crises have helped companies understand that some of these factors are fundamental in how consumers perceive themselves and the world around them, to the point where we now actually see some change happening. One of the things that I was struck by was the speed and seriousness with which many of the household-cleaning companies responded to the pandemic and the heroic efforts to convert production capacity to manufacture things like wipes and sanitizer. Yes, some of that was for financial gain, but I think there really was an almost wartime mentality that I saw companies get new energy from. I think about center-of-store food manufacturers who, prepandemic, maybe viewed themselves as being a bit sleepy and not exciting in terms of attracting the best talent. Now when you hear them talk about what they do, there’s real pride in the fact that they fed America, or they kept America safe. It really changed the way they think about the importance of what they do. Sources of insight Monica Toriello: All three of you are experts in consumer behavior. But consumers are changing fast and they’re changing constantly. Anjali, in another recent blog post, you wrote, “Rather than expect consumers to settle into a defined postpandemic normal, CMOs should prepare for a constant evolution of consumer needs and expectations over the next 12 to 24 months.” So beyond reading the latest consumer research and analysis, what are the best ways for CMOs and CEOs to understand where consumers are and where they’re headed? Kari Alldredge: One of the best sources of insights is their online channel partners and their own D2C [direct to consumer] sites. Companies should mine online data to get a quick pulse on the way consumers are thinking or feeling. They should look at ratings and reviews using advanced analytics to understand and see trends and what’s selling on sites like Kroger.com, Walmart.com, or Amazon.com. They could even develop products that they can quickly test in an online environment and then change and adjust, as opposed to thinking about mass development of a product that gets pushed out to thousands and thousands of brickand-mortar retail stores. Consumers don’t always know what they want, and they
can’t predict how their behavior will change. So traditional consumer research—which asks consumers how likely they are to purchase something—is becoming less relevant or reliable than actual data in market. That’s why data from e-commerce sites can be so valuable. Anne Grimmelt: Another very powerful way to understand consumers is by looking at what your peer companies do. You can go to industry conferences like the CAGNY [Consumer Analyst Group of New York] conference and hear a company like L’Oréal talk about how they use their D2C and their online-sales platform to see what type of color lipstick people try—not buy, but try—on their online platform. That information is critical for them to know where to innovate. What are the colors that people want and what are the products that people like to try out on the digital platform? Similarly, I think it’s very important to keep an open mind beyond your own borders, to realize what’s happening elsewhere in the world. Going back to the topic of purpose, for instance, it is very much alive in the US but it’s also very much alive in Europe. Learning about the power of what consumers demand and how purpose is driving consumer decisions about CPG companies—and what companies in Europe are doing to meet consumer demand—can be valuable, wherever you are in the world. Kari Alldredge: I think we also shouldn’t underestimate the resilience of consumers and the gravitational pull of life as we knew it before the pandemic. One thing that surprised me even in the past several weeks is the degree to which behaviors have bounced back. If there’s anything I’ve learned over the past 18 months it’s that I don’t have a crystal ball, or if I did, it is certainly broken—because there is no part of this last 18 months that I ever could have in a million years predicted. At the beginning of the pandemic, one company I work with asked every board member, “When you look back, what’s the one thing that will be blazingly obvious that we either should always have done or never have been doing?” And one of the things that came up was shaking hands: “We’re never going to shake hands again.” But I attended a graduation ceremony in the beginning of June—so, early into the recovery—and what was striking to me is that the dean of that school shook the hand of, and physically embraced, every single one of the thousand students who crossed that stage. And this was at an institution that had been, like most educational institutions, incredibly thoughtful and conservative about their publichealth response. Literally days after restrictions were lifted, the urge to connect was so strong that it looked as if the pandemic had never happened. People are resilient. Hundreds of years of behavior certainly have been meaningfully changed by the past 18 months, but I think a lot of the old behaviors will bounce back pretty quickly. Monica Toriello: So if you could gather all the CEOs and CMOs of consumer companies in one room and leave them with one message, what would it be? What is the one thing they need to do to position themselves for success in 2021 and 2022? Anne Grimmelt: My one-liner would be, “Be open to change and be agile.” Kari Alldredge: I would say, “Listen; don’t tell.”
Will Lush’s Decision to Deactivate Social Media Pay Off? By Knowledge Wharton
Shutting down social media accounts is a risky move for any retailer, especially one that markets products to younger consumers glued to the endless scroll. But Lush cosmetics company CEO Mark Constantine doesn’t care about the cost. The chain best known for its colorful, cruelty-free bath bombs switched off Facebook, Instagram, Snapchat, and TikTok on Black Friday, saying the platforms are ignoring the mental health threat they pose to teenage users. With more than 10 million followers just on Facebook and Instagram, Lush stands to lose significant sales by going dark on those channels. Yet Constantine told The Guardian he’s “happy to lose £$10 million” if it draws attention to the need for stronger protections online. “We’re talking about suicide here, not spots or whether someone should dye their hair blonde. How could we possibly suggest we’re a caring business if we look at that and don’t care?” It’s a bold decision, but Wharton marketing lecturer Annie Wilson thinks it could pay off for Lush. She said retail is saturated with counterfeit claims of health and wellness, while Constantine’s approach seems sincere. In a statement, Lush compared social media to “a dark and dangerous alleyway” they wouldn’t ask their customers to enter. “This move signals a very apparent, genuine dedication to wellness, rather than just an interest in selling artificial or hollow images of wellness,” Wilson said. She said the announcement also aligns with Lush’s brand image as an ethical, charitable, sustainable company. Still, she added, Constantine is taking a big risk by turning off social. “There could be positive effects on short-term loyalty and brand engagement, but it will be interesting to see the long-term effect on acquiring new consumers in the future,” Wilson said on a segment of Wharton Business Daily on SiriusXM. That’s because it’s hard to observe and measure the absence of consumer behavior. It’s also hard to predict whether consumers will follow Lush’s lead away from social media accounts. Pressure is mounting for regulation of these platforms, particularly after whistleblower Frances Haugen revealed that Facebook’s internal research found Instagram worsens thoughts of suicide and eating disorders in teen girls. But Wilson said it will take a lot more than just Lush to push social media platforms into changing their policies. “I also think this depends a lot on whether this moves
consumer behavior at all,” she said. “If Lush does this and other companies follow suit [but] consumers stay on the platforms, then that’s still the best way to reach them and financially beneficial to companies.”
“There could be positive effects on short-term loyalty and brand engagement, but it will be interesting to see the long-term effect.”–Annie Wilson Lush likely won’t be the last business to deactivate its social media accounts. Wilson said there is a trend for companies to “take power back” from the platforms. She expects other companies will do the same or figure out alternate ways to wrest control away from social media algorithms. Breaking Up Is Hard to Do Lush has sworn off social media before, but this breakup may be for good. In 2019, the company said it would quit posting. Then the pandemic arrived, and it returned to social media as an effective tool to reach customers. Chief digital officer Jack Constantine, who is the son of Mark Constantine, told The Guardian that the failed effort is proof that social media is just as addictive for companies as it is for individuals. He said this time is for real, although Lush will continue using Twitter, Pinterest, LinkedIn, and YouTube. “What will be challenging for them is whether it smells a little bit like a PR stunt for a lot of consumers,” Wilson noted. “They’re very adamant that this is not a PR stunt. This is not entirely unprecedented for them, and they seem very committed to staying off these social media platforms this time.” Wilson also commended Constantine for a strong demonstration of brand purpose. His announcement captioned the company’s position, communicated the action it will take, and indicated sustained effort toward the goal. “Mark being on the forefront of this messaging is extremely important from the captioning perspective — that this is a top-down decision, and we are going to get everybody behind it in the organization,” Wilson said. “I think that adds a lot to the authenticity and the integration of the move into the brand values.”
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Why Brand Salience Is The Ultimate B2B Marketing Objective By Kathy Floam-Greenspan
In today’s crowded online ecosystem, highly effective, breakthrough B2B marketing is more difficult to achieve than ever before. There is so much noise — so much content — that it takes sustained effort to break through. Like trying to attract attention in a crowded room, gaining recognition, generating leads and increasing sales don’t happen by accident. As a result, effective B2B marketing campaigns take longer and are more involved than we often expect or believe. That’s not to say that B2B marketing is ineffective. According to one report, 60% of always-on, sustained marketing programs are successful. Instead, we need to reorient our thinking about B2B marketing. Embracing the right mindset and pursuing the right outcomes can make marketing campaigns a success. Breaking Through The Noise Especially amid a pandemic, people are overwhelmed and tired, and many may not have the emotional or intellectual space to accommodate even the most compelling content. Yet the expectations for B2B marketing are still incredibly intense. Many marketing managers have probably heard the same familiar refrain: “Let’s grow our visibility in a month, make us a top hit on Google and increase sales yesterday.” Unfortunately, there is no magic bullet to achieve marketing success. Effective marketing is the product of consistent, sustained effort from all angles. Before seeing results and patterns emerge from a marketing campaign, expect to spend at least four to six months on a persistent market strategy. To break through the noise, you’ll need to be patient and stay the course so you can assess, analyze and refine results as needed. When coupled with realistic expectations, you can expect your B2B marketing campaigns to pay excellent dividends. Today’s crowded and noisy online spaces also present an incredible opportunity for startups as they have the potential to reach an expansive audience. Startups can make the biggest impact when they have a compelling offer that speaks to their audience. This allows them to get their foot in the door. That’s why startups might need to deviate from their intrinsic desire for immediate and astounding resonance. Rather, they should reassess their objectives to ensure maximum impact. Brand Salience Is The Ultimate Objective
B2B marketing isn’t inherently about creating demand. It’s about creating brand salience that drives sales when the time is right. To achieve this critical outcome, marketing campaigns need to speak to the customer and provide interesting, insightful and usable content that’s memorable and worth their time and intellectual investment. In other words, marketing content needs to be significantly less self-focused (developed to satiate internal teams) and more consumer-focused (built to serve potential consumers’ needs). At the same time, marketing campaigns work best when aligned with sales team objectives and initiatives, making alignment a critical, if often overlooked, priority. Marketing doesn’t determine demand; customers do. That’s why, rather than trying to generate artificial interest, marketing campaigns should strive to achieve brand salience, the invaluable recognition that can create sales when the time is right. Simply put, the ultimate objective of a B2B marketing campaign should be brand salience — ensuring that your company is top of mind when a potential lead is ready to make a buying decision. And since such a decision may not be made right away, effective B2B marketing can’t be measured exclusively by clicks and short-term leads. Today’s Priorities Are Tomorrow’s Outcomes If your company has big year-end marketing plans, it’s time to reassess your priorities to ensure that outcomes and timelines are realistic and purposeful. B2B marketing should make brands authoritative, memorable and prepared to receive new customers — but only when those customers are ready. When it comes to highly effective marketing that pays real and long-lasting dividends, everything takes time, persistence and incessant follow-up. When you get this right, your marketing efforts can truly flourish.
Kathy Floam-Greenspan is the President of Pomerantz Marketing, a full-service B2B agency supporting regional, national and global SMBs.
Doing Capitalism Differently — One Backpack at a Time By Wharton Staff
Davis Smith, founder of sustainable outdoor gear brand Cotopaxi, thinks of protecting the environment as table stakes in his larger mission to alleviate extreme poverty and uplift communities across the globe. The company allocates a portion of its revenue to nonprofits, hires refugees, works only with ethical supply chain partners, and runs a foundation that leverages donations from customers with its own charitable giving. So, it’s only fitting that 94% of Cotopaxi’s products last year were made with recycled, remnant, or responsibly sourced materials. “Are we perfect? Of course not,” said Smith, a Wharton graduate. “But I think we’re doing things in a way that many have never done before, and we’re hoping that we can continue to lead the way in thinking about how we do capitalism differently. We have to do better because we are destroying our planet, and we’re leaving people behind in this rat race of trying to create more profit. And that shouldn’t be what business is about.” Smith spoke with Katherine Klein, vice dean for the Wharton Social Impact Initiative, during an episode of the Dollars and Change podcast. Klein asked Smith about his worldview, which was shaped by his childhood spent in the Dominic Republic and other parts of Latin America. He realized from an early age that
he wanted to help others, but he didn’t know what path that would take until he met an entrepreneur who persuaded him to launch a business with social impact.
“It’s not just about us doing things right, it’s about trying to move the entire industry forward in a better way.”–Davis Smith “It was really great advice,” Smith recalled. “I’d never really considered entrepreneurship as a career path, but I spent the next 10 years building a couple of different businesses.” The first was pooltables.com, which Smith started before attending Wharton. After graduation, he moved to Brazil and built Baby.com.br. An outdoorsman and adventurer, Smith got the idea for Cotopaxi while in Brazil. Although the outdoor gear market was saturated, he believed there was space for a brand that wanted to give back and help others. “It’s not just about protecting the environment. I think that’s very important, but I think these two things are very interlinked. There’s no way to save the planet if you’re not saving humanity at the same time,” he said. Cotopaxi’s commitment to social impact is literally woven
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into the very fabrics the company uses to create its products. When Smith realized the amount of wasted scraps left on their factory floor in the Philippines, he asked the sewers to gather the remnants and create one-of-a-kind bags of their own designs. The result is an iconic product with a unique backstory that customers love. Cotopaxi also uses a factory in China with a reputation for fair treatment of employees. The factory owner used to work at another facility that required employees to live on-site. The owner thought that was inhumane, so now his workers carpool every day in minivans provided by the factory. There’s also a community garden for employees to grow their own vegetables. “None of our factories works exclusively with us, but what we found is that we can have influence,” Smith said about choosing ethical suppliers. “I think everyone benefits from that. It’s not just about us doing things right, it’s about trying to move the entire industry forward in a better way.” Closer to home, Cotopaxi has partnered with the International Rescue Committee to employ 200 refugees who live near the company’s headquarters in Salt Lake City, Utah. The refugees, many of whom are women, write thank-you cards that are tucked into every order.
“I think what makes me most excited is proving that doing good and doing well are not mutually exclusive.”–Davis Smith Doing Things Differently Klein asked Smith to elaborate on how his company is different from others that espouse a commitment to social impact. He went back to Cotopaxi’s origin story. Before the
company ever sold a single product, the leadership team identified the mission and values. They also reserved 1% of revenue for the foundation, which in the early days meant all of their profits. They see the 1% as a minimum bar, though, so in 2020 they made the decision to allocate nearly 3% as they invested heavily in helping disadvantaged communities respond to the pandemic. “For us, it’s not about giving the minimum and making a commitment, and then kind of giving that,” Smith said. “It’s how do we give the most we can possibly give? How do we have the greatest impact possible?” Like most firms, Cotopaxi was impacted by the COVID-19 pandemic. With stores closed for months and consumers isolating, sales declined. Smith and his team pivoted quickly, making shirts to raise money for pandemic response and masks that were both sold and donated. Despite the challenges, the company managed to grow by 40% in 2020 and learned a few lessons along the way. For Smith, the biggest was about working from home — something he and his employees had never done. He found the teams became more efficient, more productive, and more creative about connecting with each other. He also discovered joy in spending more time with his wife and children. “This transformed the way that I thought things had to be,” he said. “I thought things had to be done in a certain way, and it turns out that wasn’t true.” Bain Capital Double Impact recently announced a $45 million investment into Cotopaxi, signaling its confidence in the company’s growth and mission. Smith said the investment is proof that the business world is thinking differently about capitalism. “I think what makes me most excited is proving that doing good and doing well are not mutually exclusive,” he said.
Layered Leadership and Apple’s Rise to the Top By Wharton Staff
Strategic leadership should emanate from multiple tiers in a company or a country, not just the top rung. While the enterprise’s strategic intent is conveyed by the most senior leader in the organ ization, it is then the responsibility of the managers populating the next tier to convey the same message downward and for their own subordinate managers to do the same in turn, with strategic leadership cascading down the company pyramid in what can be termed layered leadership. In formulating his principles for leading Apple Inc., founder and CEO Steve Jobs had put innovation at the center. One of his specific agendas was to create a “digital hub” for every private residence. He foresaw homes with linked music players, appliances, cameras, computers, telephones, security systems, and video recorders; Mac computers and their proprietary software would serve as connectors. All of
the devices would be multifunctional, easy to operate, and aesthetically appealing. A new operating system, OS X, developed at a reported cost of $1 billion, would furnish the required interoperability and adaptability to subsequent generations of Intel chips. Meanwhile, Jobs introduced devices for the digital hub one by one, each becoming a game changer in its own right. The iPod, for instance, displaced MP3 digital audio players with a smaller gadget that allowed for internet updating and a choice of songs. Serving as a first node in an ecosystem of related services, including iTunes, the iPod affirmed the potential of the digital hub strategy, knitting varied features seamlessly. Observers attributed Apple’s buildout of the iPod and the hub concept more broadly to the vision and creativity of the chief executive, but it also depended on the leadership of layers well below him.
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An ‘Act of Creativity’ Consider the role of Ken Kocienda, an Apple software developer whom the company had asked to create a virtual keyboard for the new iPhone. Given the mobile device’s modest dimensions, the keys on the iPhone’s virtual keyboard would have to be tiny, and for that, devising an autocorrect function would be essential so that users could type quickly and not have to backtrack to fix mistakes. Another challenge was how to cram letters, numbers, and symbols onto the phone’s slender keyboard. Here, Kocienda’s team came up with a toggling function, allowing users to easily switch the keyboard from letters to numbers to symbols, or even the Greek alphabet. Users readily embraced both innovations. Kocienda’s leadership of his engineering team’s decisions — along with Jobs’s leadership of his top team’s decisions — proved foundational for the iPhone’s launch. “The iPhone was an act of creativity,” Kocienda said, but “it wasn’t inevitable.” Rather, it was an “accumulation of many small choices by a group of people working together closely in a specific time and place.” When Jobs introduced Apple’s iPhone in 2007, he anticipated it would be transformative for the company and even the industry. “Every once in a while, a revolutionary product comes along that changes everything,” Jobs said. “Today, we are introducing three revolutionary products in this class. The first is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. The third is a breakthrough internet communication device. These are not separate devices, it is one device and we are calling it the iPhone.” The resulting product became one of the most successful technology combinations of all time, accounting for as much as half or more of Apple’s annual revenue for years to come. Having successfully created the keyboard and autocorrect function for the iPhone, Apple then assigned Kocienda the role of developing a keyboard for the next big thing, the iPad. Kocienda brought in Bas Ording, a software designer who had already invented inertial scrolling, where a finger swipe can make a screen slide quickly at first but then slow down, a function that users found appealing and one that has become a standard feature on virtual screens. Kocienda’s group sought to understand whether the new iPad keyboard should be a full replica of the Mac keyboard or just a subset of the Mac’s keys. Kocienda worked with Ording and the team on a range of design concepts, converging on two prototypes. The first, a virtual replica of the full keyboard, would be familiar to Mac users. The second, which allowed users to switch the virtual keyboard from lowercase letters to capital letters and back, would be less familiar. They tested a range of sizes for the virtual keys and a variety of ways for correcting typos. Layered Leadership at its Finest To determine which keyboard was better, Kocienda demonstrated his options to a room of top executives, including Jobs himself, in a conference room called Diplomacy at Apple’s headquarters in Cupertino, California. As Kocienda
entered the room, he saw Henri Lamiraux, vice president of engineering for iOS, the operating system created by Apple for its mobile hardware, including the iPhone, iPod, and iPad. Lamiraux reported directly to Jobs, coordinating engineering for the software and hardware interfaces for Apple products, and he served as a conduit between seniormost management and teams of engineers. Also present were Scott Forstall, senior vice president for iOS software engineering, and Greg Christie, head of the Human Interface Team. Here was the top layer, the big brass.
“Behind the launch of both the iPhone and the iPad were several layers of leadership, with the CEO resolving the final issues but engineers … reaching important decisions at their own levels.” Kocienda displayed the two main options to them: the full Maclike keyboard with smaller keys and the switchable keyboard with larger keys. In earlier demonstrations with other executives, Kocienda had found little agreement on the preferred option. As Jobs and the top team looked on now, Kocienda opened two screens on a prototype iPad. “There are two designs,” he explained. “One has more keys, like a laptop keyboard, and the other has bigger keys,” like “a scaled-up iPhone. We are thinking of offering both. Try the zoom key to switch between them.” Flipping from one to the other, Jobs tested each of the versions several times. Revealing no emotion or preference yet, he turned to Kocienda. “We only need one of these, right? Which one do you think we should see?” Kocienda was taken aback, having assumed that this was a choice for the upper layer, not his own. With time for only a moment’s reflection, he shot back, “I’ve started to like the layout with the bigger keys. I think I could learn how to type on it.” He added that the autocorrect feature already on the iPhone could easily be incorporated here. Jobs responded, simply but fatefully, “OK. We’ll go with the bigger keys.” Behind the launch of both the iPhone and the iPad were several layers of leadership, with the CEO resolving the final issues but engineers like Kocienda reaching important decisions at their own levels. The formula for the layered leadership included clearly defined goals for each, frequent communications among the layers, a shared tempo to keep all layers on track, and continual feedback up and down the layers. For navigating the several layers, Kocienda invented his own roadmap: “Remove distractions to focus attention where it needs to be. Start approximating your end goal as soon as possible. Maximize the impact of your most difficult effort. Combine inspiration, decisiveness, and craft to make demos.” Also, listen “to feedback from smart colleagues,” and then, “creative selection moves us step by step from the spark of an idea to a finished product.”
What advertising gets wrong about procurement By Jon Williams, The Liberty Guild
The profession likes to cast procurement as something of a bogeyman, but another way is possible, argues The Liberty Guild’s Jon Williams. I spent 20 years running creative departments, watching the slow inexorable rise of procurement (this is not a bad thing by the way). At that point, stereotypically, I was kept at arm’s length, and at a distance they were always cast as some sort of Mephistophelean figure with whom you had to cut a deal for your soul. They were the ones who, shrouded in anonymity, sucked the joy out of the creative process for a few dollars less. Every ‘no’ that an idea encountered in its journey from a marker pad to reality could be traced back to them. And every pitch that was won creatively then saw the commercial teams retire to some airless backroom and thrash out the real deal and break the winning ideas on a wheel of hourly rates, retainers and discounts.
They are just looking for value. And that’s very different. But here’s the thing. When I started The Liberty Guild, as part of the development of the MVP we did a lot of
research. A hell of a lot. We interviewed Creative, Strategy, Marketing, Production … and Procurement folks to find out what they really wanted from a new model ad agency. What they weren’t getting from their current partners. And the procurement crew, far from having us cut some Faustian pact, were charming, engaging, business savvy, and not looking to slash budget. They are just looking for value. And that’s very different. They know that great creativity drives great revenue. By and large, they’re trying to modernise the system. They’re the ones trying to move everything forward. In fact, it’s the agency systems that pine for the good old days. I guess this is where the Mephistophelean rep comes from. By and large we’ve found the procurement community to be massively collaborative and forward-thinking. With a purview wider than just marketing, they are champions of disruptive change. They understand that we are in a time of flux, systemic change to supplier relationships, business models, distribution, go-to-market strategy, media landscape, supply chain & logistics, and ultimately the consumer’s behaviour and mindset, without whose patronage we would all be out of a job. And yet. The agency model is still the same as it ever was,
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and it doesn’t drive value. Instead, it’s long and labour intensive and there are many, many people layered onto any given manhour. It’s actually better for revenue and margin for more people to take longer to do the work. In fact this means it ends up being the diametric opposite of ‘value’. And obviously, most agency people won’t or can’t rebuild the bus in the fast lane so they just scapegoat procurement and move on. I was recently at ProcureCon and the generalised opinion could be summed up as: ‘Yes, maybe every year we ask for more for less, but that is because our businesses are under massive pressure and the world is changing. It’s disappointing that agencies have not evolved their model to reflect this as we know all too well how much marketing is a crucial investment in the success of a brand.’ And because, in essence, everyone on both sides wholeheartedly believes that this investment in creativity is crucial, this isn’t a burned bridge. There are ways it can be rebuilt.
Funny how being jointly incentivised on something brings people together. On both sides there needs to be a move towards greater trust and a push towards treating each other as equals. But before trust has to come transparency. This can be done in a number of ways. Accelerate the move away from transactional KPIs and create joint ownership. Funny how being jointly incentivised on something brings people together. Funny how a shared agenda stops nasty surprises. Build a joint culture or team spirit around the brand.
If possible, work in the same office and meet IRL. If not, you’ve got a whole array of digital communications tools to use now. Bring everyone into the creative process. Think about a creative council including procurement, marketers and partner agencies. We spend a long time getting to know procurement as the MSA [Marketing Services Agreement] is designed, it always seems odd to me that they disappear once you start the work. Surely it makes more sense to keep it tight. Procurement can also look at how to be better for their agency. When in crisis mode, be open and transparent in the decision-making process, it’s no revelation that this builds trust. Transparency of budget is a double-edged sword, sharing it is so incredibly important, but agencies have to stop seeing it as a target. We gave £50k back to one client last month. We didn’t need it. Knowing that will happen is when things get much more transparent. This is a people business. It’s all about relationships. Bayer has a wonderful way of working where a specific person is there purely to build and drive relationships between the brand and the agencies it partners. This enhances those relationships and becomes proactive, not reactive. I wish it was more common. At The Liberty Guild we live this every day. We have great relationships with procurement. Yes, we don’t use the traditional agency model, we charge for ideas, not hours. We have a streamlined delivery system that is based in technology with research at the heart of it, which helps. But in general, our focus, quality and effectiveness means we share a more progressive way of thinking. And do you know what? We haven’t had to sell our soul, just our services … and that’s where the value lies.
Startups share the 7 things that matter most By Cathy Traugot
What do startups need to be successful? We asked IDC to survey startups in Oracle for Startups about partner preferences, funding challenges, obstacles, and relationships with cloud providers. The complete InfoBrief, “What Startups Need Most and Where They Find It,” can be found here. Oracle for Startups offers companies a 70% discount from Day 1, free cloud credits, and migration and technical support. For qualifying startups, there is also go-to-market, communications, and mentorship support. How we did the survey IDC gathered responses in July from 56 startups actively participating in our program. Most of these startups have belonged to or are currently participating in other startup programs, such as NVIDIA Inception. Respondents came from around the globe. In addition, IDC interviewed five companies in the program at length. One-half of surveyed companies have been in business three years or longer, 84% anticipate growing and scaling over
the coming year (vs. 16% that expect to be acquired or go public), and less than 9% report revenues below $10,000 for 2020. They are overwhelmingly clustered in high-tech fields, with AI leading the way (55% percent). Startups like one-stop shopping IDC found that corporate partnerships with technology vendors are highly valuable to the startup community. 70% of startups surveyed listed corporate partnerships as the 1st or 2nd most valuable option. It’s important to note that IDC listed other corporate programs, by name, for the question. “Not only do they provide technology support, but corporate partnerships also provide benefits in aligned business areas such as marketing, market access, business knowledge, and expertise,” IDC’s Simone de Bruin and Stuart Wilson write: “It is the extensive range of benefits and value-adds on offer that attracts startups to corporate programs of technology vendors.” Investors rank lower Business angels were the second most important partner at
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Instead of having to get funding from investors and selling them shares, I’m getting support from Oracle … Oracle is supporting my tech, and I can use the money that I would have spent on infrastructure for something else.” Startups live in a multi-cloud world Startups are savvy and wary. They don’t bet the business on one cloud vendor basket. 86% told us they considered other cloud providers, and 68% are using another cloud provider in addition to Oracle. Respondents said they do this for various reasons, including limiting risks, optimizing cloud credits, remaining independent, and listening to developers’ preferences. The multi-cloud world is a reality we embrace. You can read more about how startups in Oracle for Startups mix and match different clouds and why they do it. So what are the most essential features of a cloud? When it comes to what they want in a cloud, flexibility, scalability, and security lead the way. Here is the breakdown (combining valuable and very valuable): •
96% — flexibility
•
93% — security
•
90% — scaleability
•
84% — technology interoperability
innovation
and
openness/
As the IDC writers noted, “storing, managing, and processing data and apps in the cloud offers startups a robust, secure, and scalable IT infrastructure ready to grow with them. Pay as you go and scale as you grow is the mantra for startups, and cloud platforms can deliver this.” Reputation and business advantages matter •
96% of startups said the reputation of a vendor partner is of high to moderate importance.
•
87% say a proven record in cloud computing is of high to moderate importance.
•
86% say business and go-to-market are ranked important or very important.
The startup ecosystem is a unique and exciting space. It’s constantly adapting to emerging technologies, consumer behaviors, global business trends, unforeseen circumstances (pandemic), and so much more. Startups are vital to pushing innovation forward for the betterment of business, society, and humanity. We’re proud to play a part in this dynamic and thrilling space. We’ll keep sharing our insights and learnings so we can all grow together.
Her 6th-grade teacher’s love of technology piqued Cathy’s interest. Abysmal math skills led her to write about it. Her current gig is with Oracle for Startups.
How Big Companies Can Cultivate Intrapreneurs By Wharton Staff
The following article was written by Scott Snyder, a senior
taking” in their early life to “caretaking” as they scale and
fellow at Wharton’s Mack Institute for Innovation Management
mature, and then “undertaking” when it is too late to pivot to
and author of the book Goliath’s Revenge: How Established
a new model before becoming obsolete.
Companies Turn the Tables on Digital Disruptors, and Bill Seibel, author of Press Go — Lessons Earned by a Serial Entrepreneur, and former CEO and founder of Mobiquity. Snyder is also Chief Digital Officer at EVERSANA.
The speed of digital innovation, accelerated by the recent events of COVID-19, has only intensified the pressure to innovate in large corporations and is increasing the gap between the innovators and pretenders. And it’s not for
If history has taught us anything, it’s that big corporations
lack of effort. Over 75% of companies have some form of
struggle with disruptive innovation. Whether it’s missing
innovation accelerator or lab, yet over 90% of these labs fail
a new wave — like IBM underestimating the value of the
to achieve real financial impact (Cap Gemini, 2019). Some
operating system, Kodak underplaying the impact of digital
recent examples of high-profile corporate innovation efforts
photography, or JC Penney doubling down on brick-and-
like GE Digital and Nokia Labs failed to save either of these
mortar stores as the ‘Amazon effect’ was taking over retail —
companies from serious disruption. With the vast resources
big companies seem to lack the ability to innovate ahead of
that large enterprises have access to, why is such a small
the next disruption. Instead, most big corporations become
percentage successful at disruptive innovation? What do
addicted to their business models and move from “risk-
successful corporations do differently? And why are start-ups
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able to beat them to the next market opportunity so often? We believe that there are lessons earned from successful startups that can help large enterprises innovate, pivot, and turn their ideas into successful ventures that can move the needle on their long-term value. David vs. Goliath on the Digital Battlefield A recent Dell survey of 4,000 senior business leaders found that 78% of C-level decision-makers believe digital startups will pose a threat to their organization now or in the near future. The same survey also reveals that 62% have already seen new competitors enter the market as a result of the emergence of digital technology. Gartner adds that 125,000 large organizations are launching digital business initiatives now and that CEOs expect their digital revenue to increase by more than 80% by 2020. Business disruption is real and it’s accelerating. It seldom comes hard and fast like Uber. Instead, it targets segments of a company’s products and services, and manifests itself as death by a thousand cuts. CEOs can decide to be either a Disruptor or a Defender. Both strategies are viable. Both require unbundling an enterprise’s products and services and exploring how innovation can impact each. And both are hard work.
With the vast resources that large enterprises have access to, why is such a small percentage successful at disruptive innovation? But everyone knows that starting a new business venture is challenging. The odds are not great. Seventy percent don’t survive, 20% break even, and only 10% grow to achieve significant returns. And most startup leadership teams spend the bulk of their time raising very expensive capital from VCs (often expecting 25%-30% IRR) and acquiring customers, data assets, and brand equity — things that large corporations already have! Yet the odds for a new venture launched within an existing enterprise are even worse. Rubicon Intelligence reports that only 4% of them will ever reach $1 million in yearly sales. And only .4% ever reach $10 million. That doesn’t even begin to move the needle for a large corporation. With all the resources available within a large company (funding, expertise, market presence, global reach), why aren’t the odds better? Shouldn’t that make it easier? It’s just the opposite. Rubicon reports that the success of a new venture is inversely proportional to the amount of corporate help. What Makes Startups So Disruptive? Digital startups don’t waste time with consultants and flipcharts to find their top ideas or need to convince five layers of management to approve a new investment. They are typically born from the hypothesis of the founders to disrupt an existing market by creating a step-change in value compared to existing solutions. This requires a very different mindset compared with how successful corporate executives
running mature businesses might think. Some of the ways these startups — or “Davids” taking on Goliath — think differently are: 1. They Embrace Uncertainty Startups require the ability to deal with uncertainty through most of their early life. They have an intense sense of urgency and can pivot quickly. They are skilled at executing Plan B — because Plan A seldom occurs. They have no market share or existing revenue stream to defend. They don’t have to worry about upsetting existing customers, partners, or distribution channels. Successful startups have an experienced team with an unwavering commitment to make their idea a success. Failure has a direct impact on their career and personal life, unlike corporate ventures where teams may feel little to no financial stake in the outcome. 2. They Pick Their Team Not building the right team is one of the top reasons why startups fail. Successful startup teams are composed of experienced entrepreneurs that possess both broad digital and innovation skills and expertise in key areas needed to bring the new product to market. They also share a passion for creating something special with game-changing potential. The best teams share a common set of values but include diverse points of view. Startup CEOs get to pick their team versus getting handed one, as is the case in most corporate innovation efforts, where politics may dictate team composition more than raw skills and capabilities. 3. They Value Agility Business plans seldom survive their first contact with the customer. Successful startups pivot five times on average. Sometimes the founders need to tweak the technology, evolve their go-to-market strategy, or perhaps fundamentally rethink their business model or use cases. Every one of these scenarios is likely to occur at some point in a startup’s life. The best early indicator of a successful new venture team is their ability to execute Plan B. How good is the team at taking one step backward and turning it into two steps forward? Large organizations find it difficult to pivot. The more successful they have been, the harder it is and the more courage it takes. 4. They See Opportunity in Low-end Clients Large companies tend to overlook Tier 3 customers. They are the ones that are small, without a huge budget or a strong brand, and perhaps not as sophisticated as other clients. Tier 1 customers have the most attractive customer profiles and are the targets of most marketing and sales efforts. But, as a startup, if your business model is still evolving, so is your best-fit customer profile. Opportunities are hard to come by and you can’t afford to squander them. Being openminded to a Tier 3 customer that can move quickly and is willing to help you demonstrate outcomes for your product may be far more valuable to growing your business than
“whale-hunting” for a Fortune 500 client that may take a year or more to make a decision. Winning your first customer always makes it easier to win your second. How Can Goliaths Out-innovate the Davids? Given the unique advantages of startups to create new ventures, how can we harness the strength and scale of established companies — or Goliaths — to beat them at their own game? Below are three pathways for large enterprises to turn the tables on disruption. 1. Develop a Second Speed While the core business must continually improve through incremental innovation to drive near-term returns, or Speed One, companies must create a Speed Two capable of rapidly innovating the next generation opportunities that will disrupt the core business someday. And this second speed is highly unpredictable and needs air cover to allow the teams pursuing these disruptive ideas to experiment, pivot, and pursue seemingly unattractive markets without the daily scrutiny of the existing business units. Without this protection, radical innovations will be exposed to the chorus of reasons not to do something like: “This will cannibalize sales,” “We tried this before and it didn’t work,” “Our competition isn’t doing this,” or “This represents a huge security risk.” One structure that we have seen be successful that provides protection while also maintaining connection and sponsorship by the core business is a foundry model with several innovation teams capable of internal and external venture creation, and an investment committee composed of both insiders (business leaders and strategists) and outsiders (experts and VCs) that can balance the strategic needs of the company with what new markets and new customers will truly value. 2. Cultivate Intrapreneurs Intrapreneurs have entrepreneurial DNA but relish the opportunity to leverage the scale and resources of a big company to drive meaningful impact. Whether it’s building new AI-based models to identify patients at risk of disease or validating a new self-driving car feature, large enterprises have access to data, customers, and markets that startups can only dream of. Intrapreneurs can navigate both speeds of the organization to access these assets and apply them to new ventures, but they need protection and support. They also need the ability to build T-shaped teams that marry new digital talent and thinking with legacy talent that has the institutional knowledge and access to “crown jewels” from the legacy business to scale new innovations using the company’s resources.
[Disruption] seldom comes hard and fast like Uber. Instead, it targets segments of a company’s products and services, and manifests itself as death by a thousand cuts. Despite how critical these unique venture leaders and teams
are, most companies do not create an environment that attracts intrapreneurs or gives them a path to thrive inside their companies. A few ways to break through in building a strong pool of intrapreneurs are: 1) Make sure you balance both internal development and external hires. You need a healthy mix of external digital and venture talent with edge-thinkers that know the business. 2) Create a new rewards structure for internal ventures that includes longer-term asymmetric payoffs versus just short-term rewards, and 3) encourage and celebrate “risky” career moves in your best talent, even if it includes being part of a failed venture. Because even failed ventures create learning that benefits the company. 3. Help Startups to Scale Instead of trying to do everything inside, corporations have an opportunity to multiply their innovation capabilities by partnering with innovators outside their walls, especially in pursuing opportunities where the internal capabilities and speed are insufficient. Under A.G. Lafley, P&G was one of the first major companies to demonstrate the power of external innovations with its Connect and Develop program which increased new innovations coming from external sources from 15% to 45%. But most corporations are not set up to successfully partner with tech innovators or startups. Instead, they apply their traditional ways of doing business and suffocate the innovative potential in these startups with legal, financial, compliance, and security reviews before even demonstrating the potential value these innovations can deliver. External innovations need the same attention and protected pathways as internal ventures. Instead of tossing the opportunity over to your partnership group with little to no experience in new venture creation, you need to set up an innovation leader and team responsible for validating and scaling the new opportunity including navigating the corporate antibodies to ensure the new innovation partner does not get crushed or run out of capital before it even gets started. Intrapreneurs are best positioned to shepherd these opportunities through just as they would for an internally incubated venture. David’s Mindset in Goliath’s Body The biggest risk to future success and becoming a disruptor is a company’s existing business model, culture, and bureaucracy. Every company was a startup once in its history, but most of the startup DNA mutates into mature corporate thinking over time — which is why most entrepreneurial talent chooses to leave. Cisco’s ability to retain more than 150 former entrepreneurial CEOs of previously acquired companies under John Chambers is an exception, not the rule. Running at digital speed and shaping the disruption in your market will require a different approach to leadership, culture, and talent than what has worked in the past. You need the willingness to disrupt yourself on a continual basis, develop your own unique ambition to drive step-change outcomes for your customers and society, and create an environment where Intrapreneurs can grow and thrive. Then, you can harness the advantages of both the attacker and the incumbent to build your own unique advantage in the future digital battlefield.
The Great Attrition: The power of adaptability By Timothy Bromley
November 22, 2021If the pandemic has taught us anything, it’s that there is no “stop” button for change. Take the Great Attrition, for example. Employees are quitting at record rates and cite a lack of connection to the organization as a primary reason. Many feel increased burnout, grief, and exhaustion. Employees also report wanting to feel valued and treated as an individual, yet organizations are relying on transactional strategies to retain them. Organizations must address this employee need for connection and well-being. One approach is building adaptability, the ability to learn flexibly and efficiently and to apply that knowledge across situations. Being adaptable boosts well-being, turns adversity into a learning opportunity, and helps create an environment where relationships can thrive. Adaptability operates and drives results at four distinct levels: Individual. According to our research, the top two factors that became more important in the past six months to employees planning to leave their job were a need to restore work-life balance (65 percent) and being able to prioritize physical and emotional well-being again (63 percent). Adaptability can improve well-being and reduce burnout, primarily through the continuous adoption of adaptable mindsets and healthy habits under pressure. It fuels the consistent self-care necessary to deal with changing demands and cope with adversity. Interpersonal. Not feeling valued by one’s manager (52 percent) and not feeling a sense of belonging (51 percent) were two frequently cited reasons employees left a job in the past six months. Adaptability improves the ability to be vulnerable and empathetic with others, increasing the capacity to display compassionate leadership and turn difficult interpersonal situations into relationship-building opportunities. It helps us connect with others with greater authenticity—normalizing the importance of quality relationships at work and providing the skill set to strengthen them, especially in virtual settings. Team. One of the top five reasons that changed in importance over the past six months for individuals who chose to stay at a job was working with people who trust and care for one another (48 percent). Level of trust in and care for teammates contributes to the perception of psychological safety—reinforcing or weakening adaptability. The greater the psychological safety, the more quickly belonging, engagement, and ability to deal with stress can improve
because people feel supported. Adaptability’s renewing effect on relationships can drive the creation of attractive team environments. Organizational. Fifty-four percent of employees said that not feeling valued by their organization was the top reason for leaving their previous job. Organizational adaptability serves as the ultimate reinforcer for all levels because it provides an overarching sense of identity and a distinctive culture for employees. It creates a cultural core that helps individuals thrive in ambiguity and uncertainty, giving them a sense of autonomy, belonging, and competence. An adaptabilitybuilding program reflects a people-first message and empowers individuals to improve their well-being and relationships at work. Building adaptability begins with leaders dealing with change gracefully, despite the tendency to default to fear or familiar solutions. Leaders must bolster their own well-being and transform their relationship with change by building adaptability as an evergreen skill. Our Great Attrition research suggests that employees are prioritizing relational aspects while leadership is focused on transactional elements. One solution to this dissonance is having key influencers across the organization—with more direct team impact—model adaptability. During large-scale change initiatives, reach and consistency of the change story impact the speed at which employees adopt and sustain new adaptable behaviors. Additionally, personalizing a skill-building program to reflect employee developmental areas and broader skill gaps can boost effectiveness. Outside of capability building, other aspects—such as re-benchmarking compensation, reevaluating the operating model, and deploying formal employee-listening strategies—should happen simultaneously to reinforce new behaviors. Adaptability holds the key to equipping the workforce with skills to boost well-being and enrich relationships—turning the primary drivers of the Great Attrition into primary opportunities.
Guides organizational transformations with particular expertise in behavioral science, advanced analytics, and talent management
How Consumers and Retailers Can Reduce Returns By Knowledge Wharton
Americans return about 30% of their online purchases, costing retailers billions of dollars and creating mountains of environmental waste. Gad Allon, a Wharton professor of operations, information and decisions, wants to change that. He’s working with companies and researching ways to improve the reverse supply chain. He also believes that raising consumer awareness is key to reducing the massive rate of returns. “During your holiday shopping, do your part to stem return culture by choosing carefully and aiming to buy for keeps,” Allon wrote in a syndicated editorial. He joined Wharton Business Daily on SiriusXM to talk more about the issue. The reverse supply chain is clunky because it lacks the efficiency of scale that is achieved in the forward supply chain, Allon explained. From manufacturing to distribution to the last mile, an entire system of logistics is activated when products are sold in quantity. But returns are processed one at a time. A sweater that was purchased in November and returned in January, for example, doesn’t have much value for the retailer. The item is likely to be resold at a deep loss, liquidated, or sent to a landfill for disposal.
“While the forward supply chain has improved a lot over the last 20 years,
the backward supply chain…has not.”–Gad Allon “Everybody’s motivated by getting it as fast as you can to the customer to get paid. All of that is not true on the way back,” he said. “While the forward supply chain has improved a lot over the last 20 years, the backward supply chain, the reverse logistics, or what people call the circular supply chain, has not.” Online Boom, Return Bust The pandemic-related boom in online shopping corresponds with a surge in returns. The National Retail Federation cited online returns, which more than doubled from 2019 to 2020, as the main driver in the growth of returns. Each return erodes the profit margin of the item, especially if the retailer covers the cost of return shipping. Amazon, Walmart, and other big vendors can absorb those losses to some degree, Allon said, but small businesses simply cannot afford it. “We have to date it back to the early days of Zappos,” he said, referring to the popular online shoe and clothing retailer that offers free shipping both ways and 365-day returns. “Zappos came and changed the landscape of online shopping for an item most of us were reluctant to buy online: shoes. The moment they introduced that, everybody had to copy.”
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Now, he said, consumers are conditioned to get anything they want delivered right to their door with the ability to return it, no questions asked. However, few consider the consequences on profit. “Why do we see Amazon every place, but we don’t see small firms competing? This is the reason,” he said. “We are penalizing the small brands, we are penalizing the small firms without even realizing it.” Saving Money and the Planet Returns also create a hefty consequence for the environment. Allon said about 25% of returned items end up in landfills, so reducing returns will help shrink the carbon footprint created by so much waste. In addition to the toxic side effects of manufacturing, greenhouse gases are emitted from shipping back and forth.
“The point is to look at returns not so much as a transaction but rather as a holistic part of the relationship with the customer.”–Gad Allon Allon has been advising ReturnGo, a firm that tries to help retailers improve the returns process by building some economies of scale and looking for alternatives. Asking customers to donate returns to charity or keep the items in
exchange for a credit toward another purchase or a small discount are two ideas that can help the planet along with optimizing Customer Lifetime Value. “The point is to look at returns not so much as a transaction but rather as a holistic part of the relationship with the customer,” Allon said. He encouraged omnichannel retailers to think of omnichannel solutions for returns, pointing to Amazon as an example. An item purchased on Amazon can be returned unpackaged to Whole Foods, which is part of Amazon’s distribution system. Doing so helps Amazon generate scale in its reverse supply chain. “If you are Amazon or Walmart, you see massive returns, but you have the data to try to funnel things within the organization,” he said. “The ones that are really getting hurt with that are the small and medium businesses that cannot match the same return policy, but they have to remain competitive.” Allon expects to see a lot of innovation in the reverse supply chain in the coming years, with third-party firms developing viable solutions. He’s also optimistic that shoppers will realize their role in the process. “Consumers, hopefully, will become more aware of the impact, both financially and in terms of the carbon footprint of this behavior,” he said.
The Rebirth of Cool: Lessons from B2C Marketing for B2B Brands By Peter Weingard
Technology inspires wonder. It’s become the stuff of fantasy and delight. All too often, however, B2B tech brands somehow forget this and focus their messaging almost exclusively on business results. Not that you should disregard outcomes or solutions, but goodness, does content really need to be such a snooze? In fact, many lists publicizing the best marketing campaigns of the year will rarely if ever contain the name of a B2B brand — tech or otherwise. So much of the marketing material coming out of the B2B space tends to be cookie-cutter variations of what’s been done for years, even for the most cutting-edge of tech brands. But it isn’t just the marketing that’s long overdue for inspiration. Customer experience (CX) also feels a bit of an afterthought. Few B2B brands appear to consider CX much beyond a tradeshow booth, which is probably one of the reasons why they score below 50% on customer experience index ratings, according to research from McKinsey & Co. That same research also found that 77% of buyers felt their last purchase was too difficult or complex.
Just because interactions are business to business doesn’t mean customers expect any less in the experience with a brand. Truth be told, they may expect more. B2B tech purchases are generally much higher in costs than those in the B2C space — and that might just be where the problem resides. WHY SO SERIOUS? Traditionally, B2B marketing has always been more conservative due to the number of dollars involved in a single deal. Rock the boat too much and a decision maker (of which there are often many) may decide to go in a different direction, risking not only millions in business but your brand reputation in the process. With so many personalities involved, you then strike a serious tone in all interactions with a potential client. The issue, however, isn’t the seriousness of your marketing. The flatness of the campaign is. It’s almost as if enterprise businesses are afraid to entertain audiences. While maintaining some level of professionalism is always important,
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the time is now to move past such concerns. Audiences are changing — becoming more diverse, more global, and more sophisticated. The B2B customer no longer looks like the clients on Mad Men, and your messaging should reflect this. Consider the marketing of Apple over the years. That approach started when Steve Jobs decided to call the Mac an appliance. Like a refrigerator or washing machine, customers didn’t need to know much to use it. In a world where PC users had to memorize and type commands, Macs let people point and click — and that continues to this day throughout the tech space. Don’t let your marketing get too caught up in techno-jargon. It should be approachable. AN INFUSION OF INSPIRATION With that in mind, begin reviewing your marketing campaigns and look for where you could infuse the wonderment tech has to offer. Look for opportunities to move away from the standard messaging and add creativity in each exchange. The following are just a few ideas to get you started: 1. Keeping it simple. B2B and B2C audiences interact with content differently. Asking someone to watch an hour-long webinar or read a multipage whitepaper, even if it is informative, can be a tall order, especially in the middle of the workday. It’s better to keep content short, simple, and to the point. Get to your value proposition early, and bullet or number key points. It makes content much easier to consume for those prone to skimming, which will be most of your audience — 81% of people skim online content, in fact. A lesson, perhaps, from B2C Out of Home advertising. 2. Keeping it human. Remember that at the business end of your marketing are human beings, not just a business enterprise. With more than half of B2B customers having made up their minds before having the first meeting a company representative, the top of the funnel is looking more like the middle. The common denominator between both B2B and B2C marketing campaigns is people. Perhaps no enterprise B2B company has done a better job speaking in human terms as GE. The industrial giant has for many years now developed effective, human-centric stories. Their recent video, People Who See the World Differently, beautifully illustrates how GE’s technical innovations effect everyday human moments. At Wipro, a company with a long history of commitment to our communities, bringing the human element to the forefront is only natural. So, when we talk about our expertise in digital transformation it’s framed in the ways in which our work creates meaningful impact in the lives of others. 3. Making it fun. Though B2B audiences may not interact with content in the same way, they’re still B2C at the end of the day — and
sometimes want to be entertained. Instead of sticking to the traditional tone of B2B content, which can get stale and mundane, consider throwing in some humor for your next campaign. Wit can be just as professional as earnestness when done right, and it can help your business stand out from the others in the marketplace. Take SpaceX, for example. While the company may develop advanced rocket technology of industrial purposes, the brand itself feels much more geared to the general consumer. It has a sense of whimsy. You need only look to its 2018 commercial to capture the essence of the brand. The company launched a Tesla Roadster (including an onboard Hitchhiker’s Guide to the Galaxy reference) into space inside the Falcon Heavy, an operational rocket made by the company — and the commercial became a viral sensation. If you do go this route, still keep content authoritative, valuable and informational at the same time. It may also be wise to explore the human side of your operations by sharing stories about opportunities, challenges, conflicts, success and even failures. Tapping into the reader’s emotion or passion can more deeply engage the individual and help improve your conversion rates with time. 4. Focusing on the individual. You may be trying to secure the business of, well, a business, but this shouldn’t take away from the fact that there’s an actual person interacting with your messaging. As you develop your marketing materials, consider the individual. This, too, can help you stand out, as many B2B brands forget this. One survey found that executives are bored with the marketing they see. If you’re able to engage B2B consumers and establish an emotional connection, it can drive 306% more lifetime value than customer satisfaction. More importantly, B2B brands should be enhancing the overall customer experience for their audiences. Apple understood this, choosing to move the business side of operations closer to that of its consumer brand. Every interaction is simplified and intuitive for users. IKEA took a slightly different approach, leaning more so on the customer service aspect. B2B customers can chat with design professionals, access tools to find office solutions, and receive personalized recommendations from a support team. Marketing is all about understanding your audience. Just because someone sits behind a desk for the majority of the day doesn’t mean their story ends there. Get to know the individuals making the decisions, tell them why your brand would be of value in their lives, and never forget to add joy to your messaging. Selling is only part of the equation. Making a connection — and a real one, at that — can provide returns for years to come. Peter Weingard is the Head of Brand at Wipro, a global technology services and consulting business with over 220,000 experts in emerging technologies. Before joining Wipro he served as CMO of New York Public Radio, transforming it into one of the most important innovators in the audio space as leaders of the podcast revolution.
What Neuroscience Tells Us About Social Media Marketing By Aaron Templer, Nicole Gravagna, PhD
A canvasser knocking on your door during game night. A sales pitch at church. The guy at the BBQ telling you about an investment opportunity. The hawker on the beach breaking into your group lunch peddling necklaces and flowers. If those kinds of activities trip off alarms in your head, send you into a near rage, or cause you to feel physically sick, there’s a reason. People are unable to receive marketing messages when they are directly engaged in purposeful social interaction, neuroscience suggests, because they’re hard-wired to fiercely protect against anything that will
break their social connections. Social vs. Transactional Relationships When our social constructs—gatherings of opted-in groups brought together for activities unconcerned with financial transactions—are interrupted by sales and marketing, we
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all react instinctively and strongly in defense of our social bubble. With the exception of a rude driver getting in the way of our Car Culture feel-good, nothing matches it. We set aside normal empathetic responses and break all kinds of conduct codes with words and phrases not typically used in such settings. Red faces, embarrassed friends and families, money deposited into the curse jar. In other settings, when we know there’s an exchange for value—say, commercials that pay the bills on a TV channel, or popup forms gathering our email address to pay for an industry whitepaper—things are different. We’re quite literally in a better headspace to receive marketing messages. When we feel we’re a part of the arrangement, when it’s what we’ve signed up for, we’re at least more tolerant. That’s the nature of transactional relationships. It seems intuitive: Not many of us need convincing that interrupting meaningful social gatherings with random peddling from sales and marketing people run contrary to our internal sense of right and wrong. Social media marketers, on the other hand, aren’t getting the signals. Still, they insist on practicing expensive and persistent marketing campaigns that barge in on our social media feeds as we share pictures of our lives, exchange knitting tips and tricks, offer advice for hidden hiking trails, or discover a new chord progression. Despite the piles of data that demonstrate suspect results at best and brand-damaging results at worst, most marketers approach social media as a transactional channel to find customers to convert. That is in part because the neuro-network responsible for social thinking is distinct from the abstract reasoning section of the brain associated with general intelligence (the part of the brain where, for instance, marketers evaluate what kinds of marketing tactics will work for selling their goods). In his book Social: Why Our Brains Are Wired to Connect, social neuroscientist Dr. Matthew Lieberman describes the relationship as at odds with each other, as an “antagonism between social and nonsocial intelligence…like two ends of a seesaw; as either side increases (goes up) in activity, the other side decreases.” That contributes to strong biases. Marketers are engaged in social media with their work hats on and their nonsocial network activated. Marketers see potential, creativity, and possibilities in social media—which is different from the way people in social circles are actually engaged. Loss Aversion Bias Dr. Lieberman’s research intersects with many other areas of social media marketing. For example, the previously explained seesaw effect also means people engaged in social activity need to completely switch their networks when being asked to consider a transaction. The bias of “loss aversion”—psychologically we’re more predisposed to avoid losses than we are to take advantage of gains—works to help us avoid social loss. In a social setting, we’re deeply biased toward avoiding
losing that social connection much more strongly than we are to gain a new product, a discount, or even a nugget of value by way of branded content. We’re also wired to find harmony within our social groups, so accepting a transaction is an act of dissent. In our view, the most important finding from the research in Socialand many other studies is this: We are creatures with deep, physical needs for belonging. We experience pain from social separation and rewards from social acceptance in the same way we feel physical pain and rewards. And so, we see and protect ourselves against threats to our social connections fiercely, doing so “whether the instance of social rejection matters or not,” according to Dr. Lieberman. Let that sink in: We experience social pain and protect ourselves against it the same way we do physical pain. It explains a broken heart after a breakup, or a kick to the gut after a rebuke. We use physically derived words such as broken, ill, shattered, empty, and sick when describing a lost relationship. That’s the result of millions of years of evolutionary development to ensure our survival—something social media marketing managers try to overcome with cat videos and Star Wars memes. And you thought your job was hard. Persuasion in Social Settings Because social media marketing is such a huge industry, and because so many have been convinced by the behemoth ad platforms telling us that it’s worth the cost, let’s take things out of the social media context to illustrate how the mind is wired to receive transactional messages in social settings. Persuasion is an art, meaning that there’s no one way to do it well. To persuade people, you have to get their attention, gain their trust, and provide them with an action they can take. Imagine trying to convince your family to do Christmas in Hawaii this year, and you have an idea about how hard that act of persuasion might be. It doesn’t matter how awesome the product is (island holiday, yeah!), it’s still hard to persuade people to do something that they weren’t already planning to do. Sales and marketing strategies need to accomplish two things: Meet their customers where they are. Coordinate sales and marketing interactions to correspond with the moments when the customer is primed and ready to take in such information. Now, to get your whole family to Hawaii, you need a strong sales strategy. Wait until the whole family comes together for a family reunion. Makes sense, right? You get to tell everyone about your Hawaii Christmas plan at the same time. Intuitively, unveiling your proposal one time for everyone at once seems efficient. Persuading everyone to make the long flight to Hawaii seems like it would be easier to do
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when everyone is already socializing and having a good time together. Unfortunately, that strategy is flawed in a specific way. If you try to change people’s minds while they are engaged in a purposeful social interaction—such as a family reunion— they will not be primed to receive the message. In fact, they will be primed to avoid that message because, as we learned from Dr. Lieberman, their social network is activated, and the nonsocial network is deactivated. They’re literally in a different headspace. Instead of a welcomed landing space, your Hawaii proposal will land on people who are focused intently on the subtle facial expressions and signals of approval or disapproval within their social group. Any grimace, tsk, or sigh from a member of the family will be amplified in that environment. You might argue that Christmas in Hawaii is so awesome that the excitement will outweigh your aunt’s negativity (you know the one). Unfortunately, your news about Hawaii is just that: news. New information creates a natural conflict— one that, as we discussed earlier, is working against strong biases. In one moment, your family knows nothing about Christmas in Hawaii and instead has a standard construct of the tradition in mind. In the next moment, family members are faced with a decision: Join in or resist. Some members of your family will resist, at least at first. When they do so in a social context, the resistance is amplified. Such a scenario plays out in sales and marketing campaign strategies on social media. Facebook, TikTok, Twitter, Reddit, Imgur, Snapchat, Instagram, and YouTube are basically family reunions among strangers who are paying close attention to each other’s social cues.
Some of the most powerful examples we found in our research didn’t even staff their social media teams with marketers. The managers of those communities know, even if only intuitively, that a marketing mindset is a virus inside social groups. Organizations are realizing that social media activities can return much more value when used outside a marketing context, specifically in customer care settings. That’s because the construct of customer care is much more social: Democratized relationships built on reciprocity. For example, McKenzie Eakin built Xbox’s groundbreaking customer service team called The Elite Tweet Fleet and a 1000+ member Ambassador Chat program composed of Xbox users who provide peer-to-peer support. She told us she didn’t even have a Twitter account when she started the project, and she didn’t hire social media experts. Instead, she looked for people with a passion for Xbox, so they’d have a deeper understanding of the problems their users were experiencing. That resulted in more authenticity online, as well as acting passionately in solving problems. Nichole Kelly built a a million-strong online community for debt consolidation nonprofit CareOne. She told us she staffed her team with customer-oriented talent so she “wouldn’t have to train them to unlearn marketing.” She says she’s been dealing with that dynamic her entire career as her community-building professional practice has developed. “Recognizing opportunities for human connection is very different from opportunities for conversion,” she told us.
That is why, in part, social media communities tend to generate negative biases, contrary to the stubborn beliefs of social media marketers.
The rewards for such investments can be handsome. British Telecom lowered the cost of its customer service operations by £2M a year (approximately $2.6 million). About 600,000 contacts are now handled via social media every year instead of through expensive traditional methods. And the company’s live chat and social media channels have both registered a 44% increase in preference scores while traditional methods decline.
Brands on Social Media
Social Media Is Not for Marketing
Across 170 million unique users of 3,000 brands on Facebook, the word-of-mouth that occurs is typically negative—and when it affects brand performance, it tends to damage it, a University of Maryland study found. What’s more, the larger a brand’s following, the more likely wordof-mouth is to be negative, whereas that of brands with smaller followings leans in a more positive direction, the study found.
It’s time to view social media marketing for what it is: a telemarketing call during game night.
Think about that the next time you report social media follower growth to your boss—or demand it from your marketing agency. Organizations that have built thriving online social communities understand the difference between a community longing for belonging and market segments ripe for conversion. They usually build those communities outside of the marketing department.
That isn’t to say that there aren’t outliers, of course, or some general contexts in which social media marketing can work. But we believe it’s long overdue for organizations to stop marketing to their online social groups. Avinash Kaushik, one of the Internet’s most respected analytics practitioners and thought leaders, goes all the way, appealing to “the intelligent rational assessor of reality” in all of us: “Kill all the organic social media [marketing] activity by your company. All of it.” I’m a first-time author and 20+ year marketing leader with a music problem. I’m the Founder + CXO of a fullservice brand and marketing firm, Three Over Four, and am involved with the American Marketing Association as a past chapter president, professional instructor, and Past President of its Professional Chapters Council.
If your brand was a dog, what type of canine would it be? By John Furgurson
Dog breeds have well-known personality traits. Or at least, behavioral tendencies.
gives them a very specific task. Fetch! They’re very good at that. They always deliver.
Brands are harder to pin down. Very few are pure bred.
Yorkies are on high alert, at all times.
Most brands operate more like mutts, with an unknown pedigree and a wide variety of traits, tendencies and influences.
They’re small, but agile. They’ll dart every which way and chase every little varmit of an opportunity that comes along. They’re sharp and energetic, but easily distracted. Squirrel!
That’s a good thing. That implies a balanced brand personality.
Australian Shepards are constantly herding things.
The question is, does that dog hunt in your particular niche? A submissive little Shih Tzu brand isn’t going to work well in an industry like waste management or criminal law.
They want to work! To them, work is play as long as they can boss something around. Aussies lead well, as long as others stay in line. They don’t work well in isolation. Pit bulls are aggressive and unpredictable.
On the other hand, a pit bull brand doesn’t really match up with a day care business or a pediatric practice.
Tenacious and territorial, Pit Bulls never quit. Pity the competitors that try to steal market share from them.
(Keep that in mind when you’re thinking about the brand personality and corporate culture you’d like to build.)
Poodles are social animals.
Problems arise when a big dog CEO hires a bunch of other Dobermans. Pretty soon the culture can get a bit snarly. If the CEO’s a submissive little Lassie, it’s best to bring in some more dominant blood for balance and support.
Pretty to look at and not to be ignored. They’re smart, aloof and somehow superior. #1 in the market. Of course, we’re all completely biased about our dogs. Every dog owner believes her breed is the best. The same can be said about our brands. It’s impossible to be impartial.
Labrador Retrievers are loyal and a little lackadaisical.
So the next time you’re out walking your best friend, consider what outsiders may think about your brand personality. Is it well defined, purposeful and easily identified, like a St. Bernard? Is it aligned with your operation and authentic?
Vacation is their specialty. They’ll lay around until the master
Or is it just a dog.
What about your brand? Does your brand personality resemble any of these popular breeds?
Book,
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Build Your Brand Mania: How to Transform Yourself Into an Authoritative Brand That Will Attract Your Ideal Customers By Matt Bertram he missing piece of internet marketing that almost all business owners miss is transforming themselves into an authoritative brand that attracts their ideal customers.
Sticky Branding: 12.5 Principles to Stand Out, Attract Customers, and Grow an Incredible Brand By Jeremy Miller Companies like Apple, Nike, and Starbucks have made themselves as recognizable as they are successful. But large companies are not the only ones who can stand out. Any business willing to challenge industry norms and find innovative ways to serve its customers can grow into a Sticky Brand.
Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions By Dr. Dan Ariely n this newly revised and expanded edition of the groundbreaking New York Times bestseller, Dan Ariely refutes the common assumption that we behave in fundamentally rational ways.
Brand Society: How Brands Transform Management and Lifestyle By Martin Kornberger Brands are a fait accompli: they represent a mountain range of evidence in search of a theory. They are much exploited, but little explored. In this book, Martin Kornberger sets out to rectify the ratio between exploiting and exploring through sketching out a theory of the Brand Society.
Sinker How to Launch a Brand (2nd Edition): Your Step-by-Step Guide to Crafting a Brand: From Positioning to Naming And Brand Identity By Fabian Geyrhalter Most entrepreneurs, even seasoned brand managers, launch first and then work on slowly transforming the new offering into a brand. A logical progression, I would agree.
Identity Designed: The Definitive Guide to Visual Branding By David Airey
Ideal for students of design, independent designers, and entrepreneurs who want to expand their understanding of effective design in business, Identity Designed is the definitive guide to visual branding.
Marketing Myopia (Harvard Business Review Classics) By Theordore Levitt What business is your company really in? That’s a question all executives should all ask before demand for their firm’s products or services dwindles.
Persuasive Signs: The Semiotics of Advertising (Approaches to Applied Semiotics, 4) By Ron Beasley Using both verbal and nonverbal techniques to make its messages as persuasive as possible, advertising has become an integral component of modern-day social discourse designed to influence attitudes and lifestyle behaviours by covertly suggesting how we can best satisfy our innermost urges and aspirations through consumption.
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The War of Art: Break Through the Blocks and Win Your Inner Creative Battles By Steven Pressfield A succinct, engaging, and practical guide for succeeding in any creative sphere, The War of Art is nothing less than Sun-Tzu for the soul. What keeps so many of us from doing what we long to do? Why is there a naysayer within? How can we avoid the roadblocks of any creative endeavor— be it starting up a dream business venture, writing a novel, or painting a masterpiece?
Unfu*k Yourself: Get Out of Your Head and into Your Life By Gary John Bisho
Joining the ranks of The Life-Changing Magic of Not Giving a F*ck, The Subtle Art of Not Giving a F*ck, You Are a Badass, and F*ck Feelings is this refreshing, BS-free self-empowerment guide that offers an honest, no-nonsense, tough-love approach to help you move past self-imposed limitations.
Hook Point: How to Stand Out in a 3-Second World By Wang Shaoqiang A lot of people know who they are, what they do, and a few even know why they do it—but even when brands or individuals have clarity in these areas, they often struggle to grab a potential audience’s attention for long enough to get them to learn about their attributes. Others have amazing products or services that fail to achieve great success because they don’t know how to talk about what they do effectively.
What to Post: How to Create Engaging Social Media Content that Builds Your Brand and Gets Results (for Real Estate) By Chelsea Peitz This isn’t another one of those real estate marketing books that you read once and stick back in the bookcase, never to be read again.
Do the Work: Overcome Resistance and Get Out of Your Own Way By Steven Pressfield It saved my life, and it will save yours.” -- Steven Pressfield Could you be getting in your way of producing great work? Have you started a project but never finished? Would you like to do work that matters, but don’t know where to start?The answer is Do the Work, a manifesto by bestselling author Steven Pressfield, that will show you that it’s not about better ideas, it’s about actually doing the work.
Hello, My Name Is Awesome: How to Create Brand Names That Stick By Alexandra Watkins Every year, 6 million companies and more than 100,000 products are launched. They all need an awesome name, but many (such as Xobni, Svbtle, and Doostang) look like the results of a drunken Scrabble game. In this entertaining and engaging book, ace naming consultant Alexandra Watkins explains can create memorable and buzz-worthy brand names.
Influencer By Brittany Hennessy Every one of your favorite influencers started with zero followers and had to make a lot of mistakes to get where they are today—earning more money each year than their parents made in the last decade. But to become a top creator, you need to understand the strategies behind the Insta-ready lifestyle . . .
This Is Marketing: You Can’t Be Seen Until You Learn to See By Jake Knapp Seth Godin has taught and inspired millions of entrepreneurs, marketers, leaders, and fans from all walks of life, via his blog, online courses, lectures, and bestselling books. He is the inventor of countless ideas that have made their way into mainstream business language, from Permission Marketing to Purple Cow to Tribes to The Dip.