Alright. Maybe I was a little harsh in the last post. But I promise I’m not heartless. Even though I believe there were a lot of crucial missteps on behalf of Microsoft, I can also see their perspective. There is a need for competition in the closed-systems smartphone market. There is a need for better cohesion in closed systems. It’s just a matter of playing the game well – and smart – enough.

The bottom line: there is still hope. More specifically, I believe there is still hope for Microsoft.

Innovation is Not Dead

Remember AOL? Dial-up modems? Palm Pilots? Floppy disks?

To throw in the towel and declare that innovation in a certain market is over is a mistake, and every entrepreneur knows it. But the thing with innovation is that it’s exactly that – innovative. Good, strategic innovation has to at least change the rules ever-so-slightly – not too much that people fear the change, and yet dramatically enough for people to take notice. In order to change consumer habits, innovation – especially in the smartphone market – needs to cause people to stop and say, “Hey – this is clearly better.”

Innovation is not dead in the smartphone market – I’d say it’s just beginning – and Microsoft should be able to think through their smartphone product to create a somewhat different paradigm.

Closed-System Competition

Monopoly is only fun if you’re winning, and if you’re the consumer, you’re usually not winning when a company has the monopoly on a market. Apple has arguably earned their place as the king of closed systems, but there’s no reason it can’t be challenged. If Microsoft finds the right strategy, it could become a game-changer.

We need a little closed-system competition – for the sake of the consumer and at the very least, to ensure that Apple stays on their “A” game.

Surprise Attack

In the last post, I was very fond of the phrase, “too little, too late,” but Microsoft could use their late arrival to their advantage. It’s possible that Apple and Android feel invincible, and now could be Microsoft’s chance to come in from [way] behind and make a sneak attack. Microsoft should take bold chances – and I’d say, the bolder, the better.

You know what they say – “Never underestimate the element of surprise!”

The Secret Weapon

Microsoft could also gain an edge by jumping on the biggest chance they have: INTEGRATION. People are still looking for a cohesive way to jump between tablet and phone and computer without searching for their information, and neither Apple nor Google has successfully wielded this “secret weapon” (although they sure are trying).

Dan Lyons, technology editor at Newsweek, said in regards to this type of integration, “So far, no tech company can deliver this [type of integration]. But Microsoft has all the pieces. It just needs to bring them together.” And if anyone can speak with authority on this subject, it would be Lyons. He recently conducted an experiment in which he used only Microsoft products for a month. His conclusion? Well, I’d recommend reading the full article, but I especially liked his ending insight. He acknowledged that despite being impressed by Microsoft, he wasn’t about to switch his iPhone for a Windows phone; however…

“…later this year or early next, when Lenovo comes out with that slick Windows 8 tablet-slash-laptop, I might just buy one. That’s how change begins. That’s how Apple won people over, including me, over the past decade. It started with iTunes and an iPod. Then I got frustrated with Windows and tried out a low-end Mac Mini. That worked, so I made the leap to an iMac. Then an Apple TV box. Then a MacBook Pro. Then an iPhone. And on and on. So that’s what Microsoft needs to do. Find a product that gives it a toehold and build from there.”

So, Microsoft: hope is not lost. As harsh as the smartphone landscape may appear – and even as harsh as I may have been in the previous post – I firmly believe that you have a fighting chance.

And I can’t wait to see what you do with it.

• How do you think Microsoft can “come back swinging” with a fighting force?
• What is Microsoft’s best bet when it comes to strategy to win the market?
• Do you think there is still hope for Microsoft, or are you more apt to agree with the previous post?

How specific should you be when positioning your brand? And let’s just say you have chosen utmost specificity, then how do you reach your niche market effectively?
These questions hit me as I was driving the other day and happened to hear an ad on the radio. It was one of those ads that normally would have fallen into background noise, but there was something about it that stood out. Allow me to elaborate: It was an ad for a divorce firm (like I said, usually background noise to me), but they spun it a different way. The radio ad positioned the firm squarely as the divorce attorney for men on whom divorce was forced upon – men whose wives left them and put them in this position of divorce.

What was fascinating about the ad – from a positioning point of view – was the art of storytelling to a very specific, male-centric audience. Did you notice the italicized verbs? Forced. Left. Put. The firm’s ad painted a very vivid picture. They labeled themselves as a friend. They successfully characterized themselves in such a way that would cause a [soon-to-be-divorced] man listening to think, “Hey, these guys get me.”

Here was this divorce firm, with a (very specific) niche market, and they were incredibly successful at connecting with that audience.

How did they do it?

• They were specific: At first thought, this seems counter-intuitive. Companies sometimes shirk from the idea of narrowing their target audience, worried of losing countless other customers. But as anyone with at least one campaign in them will tell you: before you start selling, you must know your audience – down to most minute detail possible. See for yourself – a simple search of “niche marketing” on any of the major business websites (Inc.com, FastCompany, and BusinessWeek, to start) will tell you the same thing: niche marketing = success.
   
  It’s the difference between a car commercial showing an unidentified [professional] driver whipping fast around mountain cliffs, and a car commercial highlighting a family’s [hectic but fun] adventure to the Grand Canyon. Be honest: which one do you connect with more?
   
• They were storytellers: Sure, this is Marketing 101, but creating an authentic, meaningful story anywhere – let alone in an ad format – takes work. It takes time. It takes a team of people ready to put themselves in your customer’s shoes.
   
  The result must be a humanization of your brand – a humanization so powerful that the customer will stop and think, “Hey, these guys get me.” Like the divorce firm’s radio ad. Or the recent Huggies slip-on diaper commercial (seriously, anyone with kids can relate to this one).

The thing about these two components is that for successful marketing, you need both. They go hand-in-hand. How can you tell a good story if you don’t know the major characters (your niche audience) inside and out? You can’t. As Inc’s Michelle Miller writes, “You may have the greatest company in the world. But if you don’t know how to convey that to customers, you may as well not exist.”

• What other examples of great storytelling do you see in the marketplace?
• Have you ever had to narrow-down your target audience? How did it help your business and marketing strategy?

Who is your target audience?

No, really – who are they? What are they tweeting about? What are they searching for? Why are they using your services in the first place?

If you don’t know the answer to those questions, then you may want to pay close attention to the wisdom of Wil Reynolds, CEO of SEER Interactive, a leading SEO and search marketing firm in Philadelphia. If you haven’t done so yet, I highly recommend checking out the full interview with Wil. I already wrote about the Five Guidelines for Using Twitter for customer service, but since there is so much covered in this video (and since I realize you might not have the time to sit and watch it right now), I thought I’d highlight another great segment about the importance of social marketing and knowing (read: interacting with, solving problems for, hearing stories from, etc.) your target audience.

While supporting a small start-up company, Wil decided to get creative with his search strategies. His client had developed software that helped locate lost phones. So Wil typed something in Twitter’s search field – simply, “Lost my phone.” What he found was that every ten minutes, someone worldwide was tweeting the phrase, “Lost my phone.” So now that little start-up company can tweet back and forth with potential customers.

Here’s how:

Let’s say you’re part of that company – with software that wipes a customer’s phone clean if it does get lost. You can type in “Lost my phone,” or “Lost my contacts” (which actually gets typed in every 3-4 minutes on Twitter worldwide), and connect instantly with the (potential) customer. The conversation might go something like this:

   You:   “So, you lost your phone?”
Them:   “Yes, it really stinks.”
   You:   “You know, we have an app you can download to your phone remotely so that no one can use your contacts.”
Them:   “Really?? How can I get it?” (presumably, after they find their phone, this time)

The bottom line is that if your company is stuck on solely using search (i.e. Google) to get people to your site and product, you’re missing a real opportunity to connect. People are telling their friends about a need before they are searching for a product, so you’d better be on Twitter to see that search and find your customers.

How will you know it’s working? If you’re just trying it out, put someone (relatively inexpensive, such as an intern) on Twitter for one day, responding to every single tweet about [insert your company’s niche here]. If you see that more people have acquired your services from Twitter that one day, try it again on another day. And let the numbers speak for themselves. If you have more customers coming to you from Twitter, then you know you’ve reached your target-rich audience.

How have you connected with your target audience? What are your proven strategies?

Why is it that big companies tend to keep their customers at arm’s length? Instead of taking suggestions, a lot of times companies get cocky and decide what their customers want instead of asking what their customers want. This can create major problems, as we’ve seen before.

On the other hand, there are some companies making great strides to not only connect with their customers, but to involve their customers.

One perfect example of this is My Starbucks Idea, an online forum where Starbucks customers can suggest ways to improve their “Starbucks experience,” as the company likes to say. Starbucks then lists all the ideas that come from their customers. Even if you don’t submit an idea, you have the sense that Starbucks cares.

The same goes for Keurig. Here is another company that is catering to the customer, with great results. Last week, I talked about the I³ qualities apparent in Keurig’s single-cup brewer. Since this company is an intriguing case (and since not much has been written up about them yet on the blogosphere), I wanted to spend one more week looking at Keurig’s next innovation – or, I should say, innovations – keeping in mind that all of these innovations came from customer suggestions.

• Larger Brewer: One of Keurig’s weaknesses is size. Currently, you can only brew, at most, 12 oz. at a time. For someone who tends to order “Venti” sizes, or for someone who merely wants to fill their travel mug with one K-cup, this is a problem. Not to worry, says Keurig, who is rumored to be working on a brewer to accommodate.
• Strong Alliances: Keurig recently announced a partnership with Starbucks and Dunkin Donuts. This is a win/win for Keurig as well as for these companies – customers who only drink DD/Starbucks coffee can now enjoy it in K-cup form, thereby increasing business for both parties. In fact, Starbucks CEO Howard Schultz revealed that “more than 80 percent of current Starbucks customers in the U.S. do not yet own a single-cup brewer,” so this allegiance is bound to bring strong business to Keurig (as well as make Starbucks customers very happy).
• Environmentally-Friendly: In my last post, I brought up the troubling thought about the amount of waste generated, throwing out all those K-cups. What you may not know is that Keurig has already come up with a solution. They’ve introduced a product called My K-Cup – letting people reuse a single pod with the coffee of their choice – which especially makes their greener customers happy.
• Other Instant Beverage Ideas: Keurig has already branched out into the hot chocolate and hot apple cider realm, so what’s next on the docket? Here’s just a few for starters: lattes, cappuccinos, soup, Airborne, and yes, even infant formula. It’s as if the list keeps going. Soon the question will no longer be:
  “WHAT can I get in a K-cup?” — but — “What CAN’T I get in a K-cup?”

So what does Keurig – and all of their innovation – teach those of us who are not in the coffee business? Keurig teaches us that to truly be an I³ business, you must continue to go full-speed-ahead into your market, while never losing focus of your customer base. Keurig and Starbucks teach us that it’s not enough to acknowledge the customer, but to involve the customer.

This seems like a no-brainer, but I’m still amazed at how many companies take their customers’ suggestions for granted. Keurig (and Starbucks, for that matter) has made it their business to give their customers what they want, and it’s paid off. Big time.

• What else do you think we can learn from this ever-growing, ever-innovating world of coffee?
• Have you seen a payoff in your company by listening to your customers’ requests?
• Have you ever been on the other side – have you suggested something to a company, to see them follow through? How did this affect your relationship to the company?
• How are you involving your customers in the trajectory of your business?

It just dawned on me the other day: the Keurig coffee system is everywhere. In my home, in my office, in my clients’ offices, at the gas station, in the convenience store, at the mall – everywhere! It seems that wherever I am, I can look up and see a Keurig single-cup brewing station beckoning me to brew a cup.

Perhaps you’ve experienced this phenomenon. Maybe you could even look up from your computer right this second to glance at a Keurig coffee maker (it wouldn’t surprise me).

But what I want to know is: When did all this happen? When did a seemingly niche-market coffee maker become ubiquitous?

Sometimes in the business world, an idea is so well-anticipated that it’s an instant smash (most anything by Apple, for instance). Other times, you have a product that’s more of a “stealth hit.” The Keurig is just such a stealth hit – slowly creeping its way into our lives and suddenly ruling the coffee world. That’s not hyperbole, either. I truly believe that the Keurig is redefining how we consume coffee, and this is something to pay attention to (especially if you’re selling coffee).

Think about it. Surveys tells us that 73% of coffee in the US is made at home. That’s not news. And Starbucks has thrived in spite of this. However, consumers want what they want, the way they want it, inexpensively – and they want their coffee fast! In hard economic times, superfluous trips to Starbucks are the first to go. Keurig couldn’t have stealthily cornered the market at a better time.

Still not convinced? While in-home coffee maker sales have grown only 1% annually over the last 7-10 years, 2010 total revenue for Keurig brewers hit $330.8 million – a 67% gain over 2009. Developed in 1998, these single-cup coffee systems are now in 7% of households (and this doesn’t include all those offices with these coffee makers – 200,000 office installations in 2010 alone). This is incredible growth for a product introduced 15 years ago!

In fact, Keurig (which, it should be noted, was bought out by Green Mountain Coffee Company in 2006) is staking such a claim on the coffee industry that even Dunkin Donuts and Starbucks are producing K-cups for the brewers. That’s right – the coffee giants are teaming up with the little guy – who, by all accounts, doesn’t appear to be so little any more.

This type of success begs the obvious question:
What did Keurig do right?

That’s actually easier to answer than you might think. You see, Keurig is a near-perfect example of an I³ Value Proposition in action (see related post), and therein lies its success:

• The Keurig is Innovative: The Keurig entrepreneurs took a few simple ideas – that every cup of coffee should be fresh, and that everyone should choose what type of coffee they want, whenever they want – and made it happen in a clearly innovative way. The innovation was in the engineering to make these objectives easily attainable.
   
• The Keurig is Indispensable: With 2.5 million Keurig beverages made each day, I think we can safely conclude that the K-cup is indispensable to its owners – a part of their everyday lives.
   
• The Keurig is Inspirational: Keurig has come up with the type of product that consumers (and business professionals) are consistently interested in – even after using it day in and day out. I can easily marvel out loud at a Keurig in action, in any office – and have those around me join in. This is after we’ve all seen it do its thing hundreds of times. It’s still a “wow!”

So what’s next? We know they’ve made a great product, as well as countless great cups of coffee – but what will this niche coffee giant come up with next? Also – isn’t there an environmental concern with all those K-cups?

More thoughts on that next time…

Meanwhile:

• Is Keurig just dominating in-home coffee maker sales – or will it begin to impact Starbucks and other destination shops?
• How else do you think Keurig has changed the coffee business in the last ten years?
• Do you use a single-cup brewing system at home or at the office?
• What other “I³” ideas do you see cornering their markets?

We’re all familiar with this story.

A business is at the top of its game, makes a trajectory-decision based on an assumption, and subsequently misses the mark. In this case, the business is Netflix, the assumption was about its customer base, and – as we all witnessed (and were perhaps, as Netflix customers, privy to the news via e-mail) – Netflix missed the mark.

A year ago, if anyone had said that within the span of one month, Netflix would lose 800,000 customers and its stock would plummet, that person would have been laughed out of the “society of business punditry.” Netflix was the game-changer of how people consumed movies – arguably responsible for the closure of Blockbuster Videos around the country, as well as much of the Internet’s traffic. There was basically no current competition for Netflix; the business was at the top, gaining two-plus million new customers every quarter. Things were golden, until…

…until a haphazard blog post announced a price hike of 60%.
…until CEO Reed Hastings issued a disarmingly casual “I-messed-up” e-mail.
…until they decided to split the service into two different services
     (instant streaming staying as Netflix, and “Qwikster” for DVDs by mail).
…until they retracted that decision.

Netflix had a good business model. They had loyal customers. They had happy stockholders.

What went wrong?

First: Netflix made an assumption about their customer base, and this assumption was egregiously incorrect. They assumed that their customers were passionate enough about Netflix to stick by the business – that no matter what, these customers wanted their movies and would continue to use Netflix’s services. Although Netflix was right about their customers being passionate, they didn’t realize the passion would be railed against the company itself. In response to a price hike and change of services, Netflix’s customer base passionately informed the company of their disappointment and disapproval, and 800,000 of them jumped ship.

Second: Netflix employed poor communication and execution of the changes in service. Whether or not the new business model was good or necessary is one thing, but the way Netflix both announced and unveiled the changes fell short of their game. The announcement of changes first came through a seemingly slap-it-together blog post late at night, which sent the Internet ablaze in fury. Then Reed Hastings sent out an e-mail one might expect from a college buddy rather than the CEO of a company.

Finally, they retracted their decisions within a month of the first announcement. In the meantime, amidst all of these embarrassing communication flubs, the Qwikster website was not ready when the service launched, and the Twitter account was already in use by a drug-using teenager with foul language. All in all, the launch was sloppy. It seemed uncoordinated – like a last-minute decision gone awry.

We could spend all day disputing and defending the good and the bad and the ugly of Netflix’s recent business decisions, but I’m more interested in discussing the implications every business can take from this situation.

So what can we learn here?

What we can learn is that when you’re on top – when you’ve positioned yourself as a leader in your market, even if its just your local market – each decision must be well thought out (and hopefully the right one).

In the fast changing business world of today, it’s sometimes necessary to make drastic changes to a working business model. But before you are ready to go to the presses (or your customers) with these changes, make sure the model is carefully thought through in minute detail. Not analysis paralysis – but at least a thorough vetting with trusted voices. You have to at least try to do everything right or don’t do it at all.

If you are going to make business decisions based on assumptions, make sure they are the right assumptions. Validate them. Test them. Make sure you have the data to back it up before you go ahead and change your business model.

Once you have your facts in place, make sure you communicate well to all affected stakeholders. When you’ve amassed a loyal customer base, you need to keep them by respecting them, and respect comes through how you communicate. When all of these factors are set in place, ensure that your new business model is ready to launch from all sides of the company. You can’t cut corners – the market is too demanding and too connected for that.

The day where a single individual could sign off on a $100,000 purchase order is long gone in most organizations. The Martha Stewart and Enron cases were real and their repercussions have had a ripple effect in all aspects of the broader marketplace (hello Sarbanes-Oxely). These few but crucial instances in recent business history have drastically affected the climate of oversight, checks and balances in which buyers engage in big-ticket sales. Yet, this represents only a single, generalized example of how buyer behavior affects your firm’s market entry.

I had a client, Jack, whose company produces a retail product under exclusive license with an internationally known “household name”. Jack was going through some major struggles with some big volume deals that caused a major cash flow crunch. Over a period of 24 months – it seemed everything contracted and he was in trouble. The Internet had largely replaced mail order catalogs. Retail outlets for his product were shifting towards online sales relationships, and they were also cutting back on their staff corporate buyers. Where there used to be 20 buyers, there was often now only one.

The market changed around Jack in a way that he didn’t even realize until it was almost too late. He was in a tough spot. Revenues were declining and his business was scrambling. I told him to take out his order book and look at his historic client base. He actually had a huge Bible-like book of clients and phone numbers. Every week, I said to Jack, “Take out your book– pick up the phone. Who did you call this week?”

Jack did not initially understand why his market had changed, and that he needed to personally and proactively make calls. I nagged and nagged – Come on, Jack, just pick up the phone! He would not, so finally we hired someone to do it for him. This began his company’s turn-around – squeezing out orders and buying Jack time to reorganize his marketing focus to the new realities.

The lesson from Jack: you have to look at what is going on in your marketplace before it’s too late. And when you realize that shifts are taking place, you’ve got to have the gusto to do something about it – just pick up the phone!

I was recently on my way to deal with a family emergency, and I needed to pick up some cash at a local ATM.

There’s a bank in an office building on a nearby wooded street, and it’s a little bit unusual, in that this building  looks more like a medical office building or something like that. The branch was in the lobby area. I went in, took out the cash I needed and paid the extra $2 fee, because I needed to get on the highway near this location and I was under time pressure.

In that context, I also needed to find the restroom, so I step out into the office lobby that’s adjoining the bank – sponsored by the bank – and the doors on the bathroom say For Employees Only, and are locked!

What’s amazing about this– having grown up in New York, and being used to seeing banks in New York that clearly could not have a public restroom in that context, because of the vagrants and other security issues in a large metropolitan area– was that this bank was in an area that clearly only their customers, or people who would otherwise be in that office building (and therefore presumably would go to their offices), would ever even be here.

In other words, this locked door made no sense, either for security, hygiene, or aesthetics. It just made no sense. It was there for no good reason, except to inconvenience a customer.

Do you have mindless policies– things that you’ve put in place, or that you inherited in your business, or in the way you do things, maybe things you require of your customers– that are really stupid if you were to take a step back and take a look at them, and say, “Why am I even asking for this information?” or “Why do I make people do these things to deal with us as a company?”

Think about it. Take a step back, because if you fail to do so, customers won’t necessarily tell you– they’ll just take their business elsewhere.

Have you ever thought about which customers you shouldn’t deal with?

All sales aren’t equally beneficial to your company, so it’s worth taking a look at which customers are actually negatively aligned with you. Which customers don’t you want? Which ones are you selling to now, that you might actually be better off not selling to at all? The surprising thing is, you may be putting a lot of energy into selling to more of those customers than you know.

For example, if you are selling a commodity product with some value added services, but your messaging is still price oriented, you’re going to attract people who don’t value those value added services – they’re just negatively aligned to you.

They won’t appreciate the things that cost you more money to deliver, while continually hammering you to lower prices, thereby eroding your margins — even your ability to afford the value added services in the first place. These value-added services are the ones you’re offering to attract customers that are aligned to where you want to be.

Are some of your current customers negatively aligned to you? Could your historic customer be limiting your ability to reach better-aligned prospects –your ideal customer? Have you looked at your messaging to make sure that you’re not actually attracting the wrong kind of customer?

Free eBook: Know Thy Customer
Carefully crafted messages alone won’t sell your product or service. You must target your message for your best audience and through the most effective venues for that message.

If you have a solid grasp on your current customer base, the next major thing to look at is, who else could align with your offering?

Aligned prospects are those potential customers that you haven’t dealt with much – but who could become customers. If you’ve identified key attributes of your historic customers, you could actually start looking for other groups of prospects who share those attributes. For example, who else is in that geographic area, or in that industry, that you have access to, and think you might be able to connect to your story?

If you’ve been selling to CFOs in Industy X, you might be able to sell to CFOs in Industry Y. Or, if you’ve been selling to women through grocery stores and you want to have a direct-to-consumer offering via the web, then you focus on women. That would be a case of alignment.

You’re looking for those customers that naturally line up with your historic base – and more importantly – that line up to what you’re offering. If you’ve been selling accounting software to small businesses, and selling directly to their CEO, and you want to move upstream, you may not be able to get to the CEO of larger companies. Perhaps the best aligned prospect would be to market to the CFO at those larger companies because that level would be analogous to the smaller company CEOs. That is where you would start looking for opportunities for alignment.

Bottom line:
1. Identify the attributes of your current customer base.
2. Look for those attributes in other markets or other customer “pools”.
3. Align to the newer prospects – adjust your messaging and programs and…
4. Drive new revenue into your company.

Often, businesses don’t take the time to define who their ideal customer is.

Not simple stats on the status quo of current customers – but thinking through who their “ideal” – best – perfect –want more of these – customers are.

To define your ideal customer you first need to have a firm understanding of who your historic customer is – no time travel required. I simply mean the type of customer you’ve done business with until now. Really, that may encompass two phases of looking-back time. You’ve got the customer you’ve been dealing with most recently, and then there may also have been the “good old days” of a customer that used to buy from you in greater numbers, perhaps because of some trend in the economy or other circumstance that allowed you to tap a greater– or just different – customer base than you have now.

How far into history you want to go is up to you, but obviously, if you’re IBM, you don’t need to go back to when you made typewriters, but you might want to go back and start thinking about anywhere near the target market you’re looking to be in. Where have you had success before? Develop some characteristics around that market. For example, if it’s a retail service or product that you offer, what is the demographic that has typically purchased it? Have they been making this purchase directly from you online, through supermarkets, or at flea-markets?

Start putting down identifying markers such as age, gender, and other descriptors for the individuals who have bought from you historically. If you’re not sure who this historical customer is, maybe it’s time to create a survey or some other [obviously legal, inoffensive, non-intrusive] way. You could use low-key polls, such as through your Facebook page, or have a full-blown survey company take a statistically valid sampling of your customer base – but one way or another, understanding who they are is essential.

For B2B companies, it’s a little easier, but again, you need to slice and dice. Consider geography– where are the companies that are buying from you? What industry are they in? How big are they? Who, within those companies, is actually buying from you? (Is it the purchasing manager, the CEO, or the secretary?) Of course, it depends on what you sell – but really think this through.

All of this just gives you a framework of understanding your ideal customer. So, what you need to do is take a look at that, and start trying to draw out commonalities – those things that represent the success factors behind the sales you’ve been making.

If 70% of your sales, historically, are purchased by women, then you know that you have a product that skews towards women. That may be “duh” obvious, if it’s a product specifically designed to do that, but where it becomes an opportunity is when you discover things about your customer base you didn’t know before.

When was the last time you really looked at your customers and how they function?

In my last post, I included a video in which Barry Schwartz, author of The Paradox of Choice: Why More Is Less, suggests that while some choice is a good thing, a lot of choices might not be.

If you look at how Japanese automotive companies established their beachhead in terms of small car sales when they first came to the United States in the 1970s, there were some cultural and economic factors that were in their favor, such as the cost of gas and so on, but the other part of it was that they just had a simpler line-up.

They radically simplified the number of varieties you can have of a particular car model and that made it much simpler for a consumer to say, for example, “I think I want to buy a Honda.” Your head didn’t have to explode in making that decision.

General Motors, on the other hand, is the perfect example of what happens if you offering is too spread out. For years, GM had all these brands– Chevy, Buick, Pontiac, etc… –and none of them were particularly good or reliable (IMHO)! Now, they’ve finally gotten rid of a bunch of lines they previously could never bring themselves to shoot down (forced to do so by their recent bankruptcy and reorganization).

Once again, the lesson to be gleaned from this is to examine your desire to provide variety – and do what marketers like to do – which is to stratify a market to capture little pieces of everything along the continuum. Does that actually undermine your opportunity to create a distinct beachhead in a given market, with a superior offering for that market?

It’s counter-intuitive in a lot of cases. Naturally, you’d say, “Well, I want to offer a different color for everyone’s taste, so I can sell more stuff,” but go back to the example of the iPhone again. You can’t get an iPhone 4g other than with a black back. They don’t have the option of a white casing, like the previous incarnations did. Now, perhaps that could have been a manufacturing thing, whatever, it doesn’t matter. The point is, that’s it! It’s black. That’s what you’re going to get. Moreover, it’s cool. They sold you on it, and that’s how it is.

As much as we intuitively think variety and freedom of choice are good, we gravitate towards companies and products that FOCUS the variations offered and the choices we have to make. Does your company offer a lot of options? Too many? How could you simplify your offering, and streamline your customers’ decision-making process?

It’s a familiar scene– a guy walks into a Starbucks looking for a cup of coffee, looks up, and stares at the menu like a deer in headlights for five minutes, overwhelmed by all the choices he has to make before he can pay $4 for his delicious beverage. Cappuccino, frappuccino, macchiato, americano, mocha, latte or brewed coffee? What size? How many shots of espresso? Hot or cold? Regular, decaf, or half-caf? Skim, whole, 2%, or soy? Do you want a flavor in that? Whipped cream? For here or to go?

We’ve all turned on the TV, flipped through 500 channels and gave up and turned it off because “there’s nothing on.”

It may seem counterintuitive, but freedom of decision often leads to indecision. In this video clip, Barry Schwartz, author of The Paradox of Choice: Why More Is Less, talks about this puzzling phenomenon, and suggests that while some choice is a good thing, a lot of choices might not be. (It’s a little long, but worth watching!)

I couldn’t agree more with the central idea that one can offer too many choices. In fact, a great case in counter-point is Apple. Apple has refined the art of reducing options without making consumers feel constrained. Compare them to, lets say, a company who’s lunch they’re eating (IMHO): Research in Motion. RIM keeps coming out with a new model seemingly every day, and it makes it hard to make a Blackberry decision.

If you want to buy an iPhone, the only decision you really have to make is how much memory you want. There’s not a whole lot of other options. You can argue that the choice between a 3GS and a 4G is a choice, and it is, of a kind, but fundamentally, the way you’re going to interact with the device is identical. Whereas Blackberry offers phones that flip open, one that slides out, one that doesn’t even have a keyboard – and all these things are things that make you wonder if you’re making the right choice. On top of that, Blackberry (and Apple will soon follow) is offered on many networks, with phone varieties that are carrier specific.

In the case of the iPad, again, there’s really only two decisions: Do you need 3G, or WiFi? That’s the big decision (the other is 16GB, 32GB or 64GB – which is less complex) and I know all about that choice, because I went through that very decision when my wife surprised me with an iPad on my birthday. She said she wasn’t sure which I needed, so she got the WiFi model, but I could exchange it for the 3G version if I wanted.

I found myself paralyzed between desperately wanting to open up the box and tear off the cellophane wrap– but knowing that once I did that, because there’s a big restocking fee, there would be no turning back– or I had to get to the mall to get the other one.

I wrestled with that decision for nearly an hour, debating what I should do. That choice made it hard for me. I ended up, like most boys with toys, choosing to tear open the cellophane and enjoy my iPad immediately. Immediate gratification won out. I don’t regret that decision, for a variety of other reasons, but the point is, choices make it hard.

What do you think? Is it better to have more options, or to keep it simple?

[Stay tuned for part two]

What has really changed?

It’s a profound question that should  be asked when looking at all the new products, trends, ideas and things that are happening in the world of marketing, social media, and the web in general.

One can pause and look at it, and say it’s all different. Yet in some fundamental way, it’s all the same. People are still looking for things that are meaningful to them, through mediums they find trustworthy.

The message here is that trust is key.

I don’t believe an endorsement from an athlete who is being paid millions to say, “This soap is really good,” but I do believe it when Consumer Report tests a variety of soaps and then says, “This soap is really good,” because I believe they’re acting in my best interest. I believe it if my wife says, “This soap is better than other soaps”, because I trust her with my life. What has really changed is more about how to connect the dots.  And one more thing….

That one more thing (something that’s really changed) can be best be referred to as an emergent property of the new realities: the collective dynamic of the crowd – the group offering an opinion on a particular product has created a new recommender in the marketplace. It’s no longer an individual. It’s not the expert, and it’s not the testimonial. Although, as marketers will tell you, those things can still be effective.

Now, however, it also really does matter what the multitudes “out there” have to say.  Almost like a hive coming together in a sci-fi movie to form the alien protagonist, together they are actually bringing a new voice to the market – one that needs to be listened to. As covered in the excellent book, Marketing in the Groundswell by Bernoff and Li, listening has now become one of the most cherished skillsets of the modern marketer– more so than ever before, more so than just simply market research, but really having an open ear to what that crowd is saying, because how you influence that crowd can now give you a new voice to your prospect audience.

Are you listening – really listening – to what the multitudes have to say? How can you influence, and leverage the voice of the crowd to your advantage?

Quick Recap:

Two years ago I approached a national organization that rents office conference rooms and office space, and I arranged conference rooms for a series of meetings I was having around the country. One of the meetings had to be canceled. I contacted the organization to let them know,as per our contract and in fact received confirmation of cancellation. As per the contract, I would not be charged anything for that reservation.

Fast forward almost two years and I receive a letter from that organization –a collection letter. The amount referenced is almost a thousand dollars. Of course, I was very concerned and quickly called them to ask what the charge was for. If I did owe them money, I would pay it, but I was pretty sure I didn’t.
click for Part 1 of “Crazy Town”

It was clear that Mary had no authority or ability to do anything about the matter. In fact, her very wan answer was that although she accepted my story, apparently somebody in billing did not. I told her I’d like to speak to that person, or her supervisor, and she said she would give me her supervisor’s name and number, which I asked her to send to me in an email.

I arrive at my hotel that night and it’s waiting in my inbox. It was late, so the next morning I composed an email to that person, the manager, detailing in 8 points exactly what had taken place, including all the necessary attachments.

Before I pressed send, a voice in my mind (not a crazy voice) stopped me.

I paused and looked up the company (a pretty well known company) on the web, and I realized their email convention was “first-name.last-name@…” and so what I did is I found their entire executive suite – the CEO, CFO, SVP of Sales and Marketing – and I CC’d all of them on the email message. I wrote “Outrageous treatment of a customer” as the subject line, and I included this tale of woe.

It went out on Tuesday morning. By one o’clock Tuesday afternoon, the National Director of Customer Service called me up and said “Uh, Mr. Palomino, I’m calling to take care of this matter…” and sure enough, I received a letter of apology, a release letter from the collection agency, and I even got a credit worth about $500 of their services for some future use.

So now the lesson here is this: the person I spoke to originally was not a bad person. She wasn’t trying to hurt me. But she had not been empowered by her organization to keep a customer happy. This is a pure business services entity, so these could be big ticket items. It isn’t like somebody who says I’m not ever gonna buy a slice pizza there again – these are thousand-, even multi-thousand-dollar arrangements, and their representative was clearly not empowered to resolve it, or even to think through the logic of what she was telling me to do. Is your organization making your customers go through “crazy town” experiences without you even being aware of it?

Had I not escalated this matter, I have no doubt I would have been bouncing around lower level functionaries and a collection agency with no interest in hearing my side of the story. I wasn’t going to deal with this back and forth. I took it right to the top and it got their attention.

It’s an important story, and it was very frustrating, and only ended this well because I had the wherewithal to go about escalating this immediately. I don’t know if the CEO actually saw my email himself, but somebody in his staff did. Somebody saw it– somebody empowered enough to get it fixed.

These days you can find out who that is in most companies and find ways, whether email, Twitter or snail mail to contact them directly. That’s the other message, of course, from a consumer point of view– go to the top.

Crazy Town – don’t create it for your customers and don’t tolerate it from your providers.

[Part 1 of "Crazy Town"]