March 2, 2008
Content Comes to Marketing
Perhaps no complaint is more universal in the B2B marketing arena than the need for well-writen, relevant content. Yet, companies routinely short-shrift investment in content creation. That leads to a woeful lack of good information and a continual disconnect between marketers and prospects/customers.
That gap is why I found Steve Rubel's latest posting on his MicroPersuasion blog so interesting. Writing about event from the recent IAB Annual Meeting, he pointed out how digitally-savvy media companies had become. His angle was the threat that media companies now pose to traditional agencies. Some interesting stats he presented:
- By 2010, 53% of media companies surveyed expect to do more business directly with marketers. The majority of marketers (52%) feel the same about publishers
- Only 27% of marketers expect to be doing more business with agencies two years from now
- Today nearly every media company (91%) offers some kind of "agency-like" services. This includes former untouchables like idea generation (88%) and creative development (79%)
The implications for B2B marketers hungry for content? The answer may be in closer relationships with media companies hungry to leverage their content libraries and substantial content creation resources in new ways.
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July 23, 2007
The Power of NO.
Small business guru John Jantsch has a short, but important reminder posting about learning to say No when it comes to working with clients. Especially in many smaller independent dealer organizations, the temptation to accept all work is overwhelming. Learning to stay on focus can help you better manage your resources and keep the organization on a positive track.
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June 3, 2007
The Attack of the Killer Ad
This is not AdRants and it is not my normal posting to be critiqueing ads. But every so often, I see an ad that reminds of everything wrong a company can do with its B2B ad budget. This ad from Kyocera caught my attention in just that way.
(Click image to view larger size)
I assume, the concept was awareness, and BusinessWeek (where this ad was running)certainly has reach. But, is "color" really a value proposition for placing an ad that costs tens of thousands of dollars? I assume the point was to let people know that Kyocera is in the color game but the very soft copy does not make a bold statement -- and there are NO differentiators versus competition. The art direction is out-of-control. The Web site listing is for the Home Page -- there is no campaign-specific landing page to quickly get a reader to a payoff. Finally, the placement: BusinessWeek. Many ads in BusinessWeek are "investor-oriented. But for all that money, this is clearly not an investor ad, yet it has a weak call to action.
To be effective, B2B ads need to be clear, express a strong value proposition, explain the simple benefit for the customer, preferably have a strong call to action, and must run in media that are demographically correct. This ad misses the mark on many levels and is a great case study for any company working on ads for B2B media...a study in what not to do.
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April 26, 2007
You Don't Want To Buy A Drill, You Want To Buy A Hole....
Rabert Faletra is the Channel Group President at CMP, publishers of the tech industry's most august publications. (CRN, VARBusiness and others). Their ChannelWeb.com website is a very nice online resource for tech industry VARs (and obviously an ad destination for the industry's myriad suppliers...).
In his April 16 editorial in CRN (formerly Computer Reseller News if you are not familiar with the publication), he exhorted readers how important it is to take discussions away from technology...or "best of breed"... and to get them onto subjects that matter to customers. He had a great line: "Selling technology is a raffle." How true.
Unfortunately, it is amazing how badly many companies are at delivering on that simple-sounding strategy. It turns out, as salespeople, we are conditioned to want to sell "products" and not "solutions". It reminds me of the classic story about Ted Levitt's Harvard Business School exhortation to his students, "People don't want to buy a quarter-inch drill. They want a quarter-inch hole." Since we can't buy "holes", we buy "drills"...but that doesn't change what is important to the customer...it's the result, not the tool. So why is it that copier dealers want to sell "MFPs" or car dealers want to sell "SUVs"?
For one, it's easier. If you are trying to sell a prospect on the quality of your "upscale, aspirational transportation" it can be confusing versus talking about the Escalade's elegant interior or tricked-out ride. It's hard to talk about "optimized document production process" versus your "low-cost, 25 PPM multifunction printer with ADP, finishing and high-volume paper tray". And besides, most manufacturers love to talk about their "stuff". Just like a bunch of men talking about "who's bigger" they forget that "size doesn't matter." (Female readers...apologies for the reference...but I couldn't resist the analogy.... ;-)
However, the times they are a' changing. Customers are getting smarter and information transparency makes it easy to learn product specs and subsequently bargain on price like a buyer in a Marrakech souk. Failure to get a customer to talk about the issue they are trying to solve makes it hard to compete on other than easily commoditized features/benefits.
As Bob Faletra said, "Solve problems, but never sell technology." Good advice for people in lots of industries...tech and beyond.
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April 23, 2007
Dealer 2.0 -- The Web 2.0 Remake of Dealers As We Knew Them
It has been a little over two weeks since my last posting...an inexcusable lapse for any true "blogger." I have been on the road a tremendous amount -- visiting customers, making sales calls, spending time with suppliers and also executing projects. It was an exciting time that left me with many ideas for writing about.
Last week, I presented a customer a new concept for their channel partner programs: "Dealer 2.0". The idea behind this was the fact that Web 2.0 phenomena are requiring distribution channels to evolve and adapt. Here is my thinking.
Operating in the world of channel marketing, I see a dizzying amount of change happening...and and equally amazing amount of disorientation. Customers are spending more time online researching and planning their purchases. That means that the dynamic of what a dealer, retailer or distributor needs to do to be successful is different. Customers are not so easily "bamboozled." Real-world customers want different types of support today, not just help picking out whether they should buy the 28 PPM or 35 PPM multifunction printer model, or the Metallic Blue or Gunmetal Grey paint on their new SUV. Add to this the fear of sales disruption that is pervading many manufacturers. As manufacturers jockey for stability in sales, they are continually rejiggering their channel programs -- at the same time that market forces are also disrupting routine operations. Not a pleasant combination for the channel partners.
My Dealer 2.0 concept is built around the fact that distribution channels must think about the value they add. There is not room for "dumb" channel partners who simply add cost without commensurate value. Pricing transparency brought on by the Internet has made it increasingly difficult to integratre simple "markups." I encourage people to leverage Ted Levitt's venerable whole product concept when thinking this through. For example, the following diagram is a whole product mapping for an office products dealer:
The old standby of "a good product at a good price" (think Wal-Mart) is no longer enough...even for Wal-Mart. The Dealer 2.0 concept is a valuable one for both ends of the distribution chain. As a manufacturer, are your programs adapting to meet the needs of an evolving, increasinlgy electronic-tools savvy set of partners? As a dealer, are your programs and customer service initiatives evolving to meet the demands of an increasingly savvy customer base?
I have long believed that "where there is change, there is opportunity." But, seizing the opportunity can be a scary thing.
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April 6, 2007
A Lesson in Web 2.0 Marketing...From A Car Dealer! (Rated R ;-)
Regular readers know that I rail frequently about the need for dealers (in any industry) to get a message out that speaks of THEIR value and avoids copycat product-babble.
So alas, I present to you the video component of a promotional campaign for Clay Automotive, courtesy of our friends at AdRants.com and Catch Up Lady, that simply and humorously demonstrates the art of local promotion. This viral video, and the associated Website (www.dontgettaken.com) are humorous while also being informative and highly differentiating. This is dealer marketing at its best and a real lesson for channel marketing professionals.
Who wouldn't want to buy from these guys....
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March 29, 2007
VARs: Know Your Value; Vendors: Know Your Partners
Back in 2000, Michael Hammer created an editorial in Information Week in which he wrote:
“The notion of a distribution chain is becoming obsolete; in its place is arising the notion of a distribution community, a group of companies that collectively create value for the customer. There's room in this community for many companies besides the manufacturer, as long as they are ready to rethink their roles in customer value terms.”
Fast forward. On March 21, 2007, Jessica Davis penned an article titled "Changing Channel Influence" for ZiffDavis' Channel Insider Website in which she explored evolving programs for measuring not only absolute sales by channel partners, but also the influence value of smaller VARs. This subtle but very critical concept illustrates the changing dynamic between modern manufacturers and their channel distribution partners.
In the evolving, customer-driven world of marketing, mindshare for complex decisions is influenced by many factors, one of which is the tangible presence of a local reseller who will be there to support and service the product. Introducing Hammer's original concept, VARs and dealers increasingly need to think about what their real "value" in the market is. Consultative support value is a huge factor in many markets, and that value is typically overlooked by many channel support programs.
Good article to review.!
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March 13, 2007
On Good Vs. Great and Other Tips In Channel Sales Motivation
Several years ago, I entered a local Buick dealership to shop for a car. It was around 7:00 pm, and the slightly dingy dealership had only two salespeople on duty. The one assigned to me shuffled over and we walked back to his desk. He sat down, leaned back in his chair, and put his feet up on the desk! I talked to hom about 30 seconds, then got up and left (without tipping his chair over as I so badly wanted to do.) I thought things had changed since this happened to me...
Which leads me to a rant on sales and customer service in the form of a great posting on Seth Godin's Blog. Seth (for those readers not familiar with him) is a well-known author, speaker and consultant who is a passionate advocate for approaches to sales and marketing that are "customer-friendly" (like permission marketing) and that emphasize excellence. His latest blog is eerily like my story above, only all the more shocking because it involves Toyota.
Read: Good Is Not Almost As Good As Great
If you are a corporate reader with a large dealer network...this is scary reading. I have long advised clients on the importance of thinking about how dealers are trained, supported and treated...because behavior like this can undo all the value of great engineering and superior advertising when it comes to customer loyalty.
Do not say that "we have no control over dealer's sales beahvior..." Sending a link to a simple blog posting like this along with a sales tip and an acknowledgement/thank you for their commitment to excellence, can convey both a profound lesson and a boost of confidence that you care about their business.
When supporting sales channels...direct or indirect...it helps to continually remind people of the little things that make a big difference. Doing it creatively and supportively only makes the message more likely to be absorbed.
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March 10, 2007
The Importance Of Merchandising Your Channel Marketing Program
If you're title is "Channel Marketing Manager" or "Director, Channel Programs" or some similar version, I have some advice..."Get Your Consumer Hat On."
Many B2B channel marketing programs would benefit from a dose of "consumer-think." It takes real energy to gain adoption for new marketing programs among channel partners bombarded with messaging from multiple suppliers. That means programs need to, first and foremost, be relevant and valuable to the channel...not just be pumping up the volume on self-serving manufacturer-talk. But, even a well-conceived program requires serious merchandising to get the attention of over-burdened partners. Forgetting to "market" your valuable "marketing program" is one of the surest ways to doom the program to failure.
Here is an example. We have a client...a tools wholesaler located in Oklahoma. Now, Oklahoma, tools and wholesaling do not sound like they lead to creative marketing. But these folks are good...really good.
They contracted a set of interns to call thousands of channel partners to update their profiles and gather e-mail address to kick-off an electronic communications program. They observed channel partners abandoning orders for customized flyers and said: "Can we target these people with a special offer?" They looked at people who had ordered marketing programs and said: "Can we give them an incentive to order again?" If you are in consumer markets, you're thinking "what's the big deal?" But, if you are in B2B channels, this IS a big deal.
This client's team is thinking like marketers or merchandisers -- when they launch a program, they focus on ensuring its success instead of just setting it on its way! They're being analytical. They're being creative. That is very different from the "throw stuff at the walls and see what sticks" approach that so many manufacturers take with new marketing campaigns. Too often, companies fall prey to the desire to introduce "something new" instead of ensuring the sustained success of concepts they already lauanched. This leads to fragemented mindshare in the channel and even more confusion.
In the perfect world, all channel partners would be dedicated, single-supplier drones tethered to your messaging. GET REAL. Successful channel partners are high-performance sales organizations with little marketing skill, but lots of manufacturers vying for their loyalty. To get noticed, you need to get your consumer mindset turned on.
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February 28, 2007
Act Globally, Think Locally
One of my favorite annual issues of Harvard Business Review is out — the February issue with the annual "Breakthrough Ideas" column. This year, one concept caught my attention "Act Globally, Think Locally."
This reveral of the familiar adage, "think globally and act locally" reflects the author's perspective that "companies today need both global reach, in order to spot useful local ideas and incorporate them into strategy, and physical proximity, in order to effectively tap sources of tacit knowledge and thus sustain competitive advantage."
We have long held this view in our business, which is focused on supporting the localization of marketing messages being deployed by large enterprises through disparate distribution channels. The interesting observation, however, is that competitive financial pressures are continually driving companies to look for ways to unify messaging, manufacturing, etc in order to hold down costs. The resulting homoginization results in milquetoast marketing or equivalently bland product design.
The article is worth reading. As always, all the ideas are intriguing.
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February 18, 2007
Women of Innovation...It Starts In School
In our business, we have multiple customers who operate in the tech sector...a place where independent channel partners are the dominant form of distribution. I also sit on the Board of the CT Technology Council, a trade association comprised of large and small tech companies. So it is common that I hear concerns about the lack of qualified employees for tech jobs, worries about declining math and science educational achievement, and the dearth of girls pursuing technical careers.
Thus, I read with some happines a very nice article on CRN's The Buzz Blog by Heather Clancy about a network integrator in Warwick, RI -- Atrion Networking, that is doing something about shoring up the future workforce, and attacking the lack of women pursuing science and education careers. The GRRL Tech Expo is a cool idea and deserves more airplay.
Great stuff.
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January 9, 2007
An American Demographic: The Average American
My AdAge Annual January 1 issue has been buried in my bag for the past several days and I finally got to reading it. Stuck at the back of the issue was the American Demographics section that is periodically included. Very interesting reading.
As a Connecticut resident, I was absorbed by the first line..."the average American family has 3.1 people, makes $46,326 and saves nothing." The elitist New Englander in me can't help saying "WTF?" $46,326 with a spouse and a kid? In the NY metro region, that's poverty level...barely enough to cover the annual Starbuck's tab for over-caffeinated DINKs heading to their jobs.
Humorous comments aside, the income level should be a sobering wake-up for many marketers whose six-figure incomes may make it hard to acknowledge what an "average" American considers normal and affordable. It is also a sobering fact that in an era where guaranteed pensions are a distant memory and social security's longevity is an annual cause for concern, this average Ameican saves nothing.
There are lots of other interesting factoids in the numbers. If you have a moment and your job is marketing, it is worth a visit to the American Demographics section of the AdAge Website.
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December 16, 2006
DUH: With Increasing Product Parity Among Copier Brands, Sales and Service Become More Important to Customers
In its November 2006 report on customer satisfaction in the business copier industry, JD Power noted the growing importance of sales and service on the overall satisfaction with a brand. It is an interesting report because so many of the current leaders in the copier/multifunction systems category remain fixated on product-centric marketing and technology-focused development.
Factors like the sales experience, product reliability and service quality were major factors in differentiating major manufacturers. Once particularly interesting note was when asked to define the major reasons to consider switching copier brands, product reliability (not surprisingly) was mentioned by one-half the respondents. This shows how critical after-sales service and support are in determining repeat purchases. As I have noted before, management of the post-sale customer experience has never been more important in ensuring stable long-term business growth, since it is the primary lever to solidifying the existing customer base.
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A Case of Channel Obsolescence?
Interesting article in the December 4, 2006 issue of CRN titled "Printing Market Red Hot, Distributors Say." In it, the authors talk about the rapidly emerging interest of the traditional VAR channel for higher-end multifunction printers/copiers.
The copier/MFP market was once the domain of the BTA (Business Technology Association) dealers. That dominance is quickly fading as the 140,000+ tech industry VARs muscle into the increasingly technology-driven printing market. It is a fascinating transition to watch, as the old "box pusher" mentality that dominated the copier business is replaced by a solutions-oriented focus.
Just as with auto dealers, book sellers and travel agents, technology is reshaping the structure, purpose and focus of a channel. In the tech sector, a typical "solution" is comprised of 10 or more brands of product (e.g. IBM hardware, HP printers, Oracle databases, Cicso network gear, Hubbell wiring devices, etc...) The VARs are the dominant brand to the customer who turns to the VAR for single point-of-contact support for the final integrated solution.
Perhaps more critically, the majority of successful tech VARs create profit from services, knowledge and skills...and use product margins as a secondary source of revenue. For existing copier/MFP dealers, survival means rapidly growing a professional services skill set and a solution-sales strategy. The window of opportunity will not remain open long.
In an essay in InformationWeek Online written back in July of 2000, consultant and author Michael Hammer predicted, "The notion of a distribution chain is becoming obsolete; in its place is arising the notion of a distribution community, a group of companies that collectively create value for the customer. There's room in this community for many companies besides the manufacturer, as long as they are ready to rethink their roles in customer value terms." How right he was. Those are words of wisdom for dealers in the traditional copier industry. Rethink your role and rebuild your value proposition. Or, face the ignominious fate that many travel agents, bookstore owners, and auto dealers have already been dealt.
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November 14, 2006
I'd Like A Sandwich, Please...Not The Parts of One!
I was at a Dunkin' Deli today...a rebranded sandwich location (formerly Togo's) owned by Dunkin' Brands, parent of Dunkin' Donuts.
I ordered a tuna sandwich combo at the drive-thru, was quickly served and drove off. Some minutes later, I unwrapped my sandwich and what I founded reminded me of an order from a now-defunct Burger King that used to be in the town where I live in CT.
The tuna was squeezing out from all sides of the sandwich. The lettuce was "almost" on the sandwich. The tomato was half on, half off. The onions were scattered about. Our old Burger King used to be like that...all the parts of the Whopper there, just not quite assembled right. In fact, my Dunkin' sandwich wasn't really a sandwich as much as it was the components for one...a sort of do-it-yourself creation that was really hard to eat on the road.
Service makes such a difference. I really don't remember whether I enjoyed the sandwich or not...I simply remember being annoyed about how poorly assembled it was. There are a few chains that are obsessive about consistency from store to store. I thought Dunkin' Donuts was one of them. They threaten that image if they can't get the meat on the bread.....
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November 12, 2006
It's Radio Shack. What Do You Expect.....???
Seth Godin's blog has a great story of bad customer service at Radio Shack. My first comment is in the headline for this post...
Radio Shack has a 30-day, Money-Back Guarantee (although it is cleverly worded to potentially exclude situations like the woman's in Seth's post...). It has a published Return Policy (again, cleverly worded...). It also has a reputation, well-earned, of not having the sharpest knives in the drawer working the stores. Why have cool-sounding consumer-friendly policies if they are to be adjudicated by less-than-well-trained clerks like those described in the post? And why have cool-sounding services like a "30-Day Money Back Guarantee" come with caveats if you are really serious about customer service?
Now, there are many great Radio Shack employees. And, it is unfortunate how these good employees have to be shackled by the efforts of the ones who are not so swift. Every time I walk into my local Radio Shack, I get the same feeling I get when I walk into my local Wal-Mart...a creepy, cheap, low-budget feeling that I am anxious to extract from as quickly as possible. It may not be fair, but it is the result of my experiences with multiple Radio Shack stores that have now spawned a defense mechanism every time I enter one of their stores. It is a solid lesson for retailers, dealers and franchisees in how important consistency is.
Training store personnel on the keys to customer service is one of the most immediate ways to change the perception of the once-proud Radio Shack brand. In the meantime, as Seth Godin suggests...."Why Bother?"
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November 11, 2006
The Power of Channel Differentiation (And The Shifting of Power!)
If you have ever been in a Whole Foods Market, you know how hard the company has worked to create not just a unique experience, but a literal culture among its shoppers. The company's motto -- Whole Foods, Whole People, Whole Planet -- reflects a philosophy that goes beyond the selling of products to customers. They get above average prices for products from customers who are less likely to "sticker surf" than to simply "try something new."
The company has sheparded numerous organic brands to success by introducing them to the legions of Whole Foods loyalists. Simply by carrying a brand, Whole Foods delivers an implicit endorsement. Which is why a story in this week's Advertising Age about Pepsi's new Fuelosophy product -- a high-energy protein-rich beverage -- is so interesting. Aside from the fact that Fuelosophy doesn't seem very "natural" or "organic" (albeit all the ingredients are naturally occuring products), Pepsi was interested in introducing the product into the healthy lifestyle community without spending lots on advertising and marketing. Enter Whole Foods.
Whole Foods Market has such reach in the organic space that by sneaking onto the shelves at Whole Foods, Pepsi can see how the product performs in the marketplace without spending heavily on product advertising. Pepsi has worked hard to conceal its identity in the Fuelosophy line... there is no company mention on the packaging, the Web or any official company literature. The story is obviously big in the ad community where it is a case-study in new product launch strategies and brand management.
I find it equally educational from a channel differentiation perspective. It shows how a company in the mundane "retail grocery" segment, can identify and excel in a niche and then, in effect, become more powerful than the brands that want to sell through it. Compare that to Stop & Shop or Kroger's or other grocers. The brands doing the selling are more dominant than the retailer in the minds of most consumers. However, Whole Foods has developed its own local brand to the extent that it now is the powerful icon in the consumer's mind. They are not alone. For example, throughout Texas and sections of Mexico, H-E-B has learned that by obsessive attention to its customers, and careful management of its product offerings to reflect a Hispanic bias, it can differentiate from other grocers and dominate its markets. Again, H-E-B customers are part of the culture of the chain.
In my company, we often talk to dealers and emphasize the importance of knowing their strengths and building their brands. This story is a terrific lesson in why that is important.
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November 6, 2006
5 Bumper Stickers For Small Retailers
I was reading an article in Inc. Magazine titled "Price Isn't Everything" (online here). The author, Ted Hurlbut (a retail marketing consultant), did a great job of making the case for not competing on price alone in today's hugely competitive retailing environment. In this article, he offered five "bumper stickers" for small retailers -- tidbits to remember based on the experience of many larger retailers (Sears, Federated, etc.) who have seen their businesses ravaged in recent years. The five take-aways were:
- If you compete on price, there will always be somebody who will be able to beat your price, unless you decide to give it away. And nobody can do that for long.
- If you run an ad this year, you’ll likely have to run an ad next year to have any hope of running an increase. And your prices will have to be sharper.
- If you think you can cut costs by cutting customer service, plan on cutting customers as well.
- Customers may go to the internet for product information, but when they need true product knowledge they will come to you.
- Customers will always pay more for customer service than for products. Products they can get anywhere, whereas customer service, true service, is a rare commodity.
- Quality never goes out of style.
The testimonial at the the start of this posting is for a retail company in Chapel Hill, NC. — A Southern Season. My sisters were always raving about it, and so, when in the area a while ago, I stopped in. To call it a retail store doesn't do it justice. The restaurant on-site had a waiting list an hour long...luckily they gave you beepers so you could shop (and spend) while you were waiting. Their wine selection, tea selection and coffee selection were all the largest I'd seen in any single store. They had demos all over, fantastic prepared foods, spectacular displays and seasonal sections that are continuously rotated throughout the year. Shelves were impeccably maintained, associates were everywhere, and checkout lines were efficient, well-staffed and friendly. In short, it was a staged experience, not a "store." People went there as a social event as well as wanting to shop. Think about other places like that...locations like FAO Schwarz in NYC. The store and the products are part of a self-reinforcing ecosystem. People don't walk in thinking about price...they walk in thinking about the experience. Increasingly frustrated consumers and business buyers are showing renewed sensitivity to this service-oriented mindset. We have been through a period of deep cost-cutting as companies sought to improve the bottom-line by reducing the cost of doing business. In the last year, many companies have refocused themselves on differentiated top-line growth as the way to improve the bottom-line. While there remains a sensitivity to price, increasingly time-pressured buyers are much more likely to seek out suppliers or retailers who can deliver "value" which means not just products...but the service to go with it. Or, they want an "experience" — shopping that goes beyond procurement. A great lesson for both retailers -- and the manufacturers who supply them products. How is "value" being created throughout the process of design, manufacturing, distribution, retail sales and support??? OR how are you working together to make the retail location a destination in itself???
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October 24, 2006
Enemy At The Gates
In the Septermber/October 2006 issue of Office Dealer, a publication dedicated to sales in the office products industry, there is an article titled "Permission Marketing." (Unfortunately, it was not available at the time this posting was written...) In the article, the author profiles some dealers who rant and rave about manufacturers executing "permission marketing programs" (read...e-mail marketing).
It is a sad article, for two reasons.
One, it shows that even the biggest of the big (in this case HP) can strugggle executing direct marketing programs that don't alienate their independent distribution partners. In the case of e-mail, where exotic merge technologies make it straightforward to create programs that can drive the HP brand while still providing support for the channel, this really doesn't need to happen. But, there is a blend of hubris and business necessity at work. You cannot blame manufacturers who try to enhance brand loyalty at the expense of channel building. Thus, the hubris of simply ignoring the channel. The business necessity? That comes from the need to keep growing the company at all costs. Of course, therein lies the conundrum — how can you ask for channel loyalty while simultaneously undermining the channel's apparent value. Channel distrust remains a major hurdle in many industries.
At the same time, it is sad to see any dealer publically railing on this topic. Dealers need to spend less energy complaining about direct communications touches and more time figuring our how to build their value proposition or enhance their own communications programs. Getting e-mails delivered and read is increasingly complex. As a result, the organizations closest to the customer (those with facetime to back up their electronic touches) remain in the best position to be successful. Mr. Dealer, your customer intimacy is the key to defending your turf. Don't wait for HP or anyone else to erode your value...build it up so that HP's e-mails become irrelevant. I know that is easier said than done, but to be blunt --- there is no alternative.
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October 19, 2006
Value In The Channel. Have It or Die.
I was driving to the office this AM when I heard an ad for Progressive Direct. Shortly thereafter I heard an ad for Aetna. In frighteningly different ways, both made me think that insurance brokers were hurtling toward extinction faster than they realize.
Progressive Direct provides quotes online that do not always show them as the lowest cost option. They expose themselves and all the major carriers to the same scrutiny. Gutsy move, giving the customer that much information. Their ad explained their approach in very simple, plain English. Aetna's tack was a little different. It touted them as a font of information on healthy living and well-being. But in a way not unlike Progessive, it also spoke clearly to the customer.
Brokers often get angry at insurance companies seeking to "go direct." I say "get with the program." Many brokers conduct business the old-fashioned way -- assuming some schmoozing will keep the business. They need to recognize that just passing along information from carriers without adding unique value of their own is recipe for disaster (something I have written about before with regard to the auto industry). They can be easily disintermediated (remember that word???). A great broker guides, communicates and informs. They help me proactively avoid problems. They take the time to filter the maze of confusing data and provide objective input from which I can make an informed decision for my home, family or business. In short, a great broker works to create an objective buffer between themselves and the carriers desperate to sell some policies.
Which is why Progressive is so interesting. By presenting "neutral" data, they create their own "objectivity buffer." It may not be as good as a human broker, but think of it as a first-generation effort. All told, it adds up to one of the more unique approaches to crumbling the value of the channel.
By the way, I don't really fault the individual brokers -- in fact, I think many brokerage companies are managed by some of the most antiquated thinkers in the business community. Raised on a high-commission diet that allowed labor-intensive, personal touch approaches to business, they eschew the use of "depersonalizing" technology that could help them improve their ability to create and distribute value. I know many hard-working individuals slaving away in insurance brokerage businesses who are being suffocated by the lack of innvoative thinking and real-world support efforts.
It's no wonder that the gecko can get away with mocking the middleman.
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September 18, 2006
Zune Announced. Zune Already Obsolete.
Microsoft just announced its launch plans for Zune, its iPod competitor. Read about it at enGadget. And now the fun begins because market changes are already threatening the product's future. Welcome to the world of the "next big idea." If you are a B2B marketer stuck doing things as you have always done them, think about the pace of change in industries like music distribution.
What's eating Zune? The Wired Blog Listening Post noted that Rhapsody DNA was announced on the SanDisk Sansa e200. If the Rhapsody DNA reference doesn't mean anything to you, let me explain.
I have a Sonos music system at home. This past weekend, I updated the software to get the new tight integration with the Rhapsody music service. I can now control access to millions of songs and a vast library of artists from a wireless handheld device that let's me play jazz in the dining room, adult alternative in the living room, and rap on the deck...or whatever combination my mood dictates. I pay under $9 per month for access to the full library and only pay for individual songs if I want to copy then onto a portable music device outside the Rhapsody framework.
This tight Rhapsody integration with my Sonos system is in-part courtesy of Rhapsody DNA - a slick example of Web services that extends the firmware of a personal music device by introducing Rhapsody functionality onboard. All told, it's like having commercial-free satellite radio on my system, only I control the programming.
Over the past 2-3 years, music distribution has been irrevocably altered to account for entirely new processes that are permanently altering how we procure and manage music in our homes. We subscribe, rip, and mashup our music to suit our individual tastes and moods. Along the way, terrestrial radio, satellite radio and other structured media have been forced to continually evolve their business models to adapt.
Compare that with the processes you use to support your distribution netowrk or field sales teams. Are you continually assessing how changing customer expectations are modifying sales and support needs in the field? If not, think about the Zune team...celebrating with champagne in one hand and a case of Red Bull in the other for the all-nighter they'll be pulling to define next generation strategy.
Posted by jcioban at 7:07 PM | Comments (0) | TrackBack
Dell 2.0: What Does It Tell Us?
In his online editorial "Is Dell Ready for the Channel?" in eWeek's Channel Insider, Pedro Pereira stated "As Dell may have finally realized, a direct model only gets you so far." Well, on both sides of this argument, there is a lot of wailing and gnashing of teeth. However, the reality remains that instead of black-and-white answers, lots of industries are going through the grey zone of direct/indirect battles.
Hubris and past success set Dell up for an ignominious fall, but their situation is not about bloggers beating them down or batteries igniting. (BTW...check out this cool new flame retardant computer wrap...another sign of market ingenuity?!?!?!) Dell today is a product of a corporate culture where success was measured by bottom line growth created through process efficiency. Dell spent more energy cutting costs than building broad value in its customers' eyes. As competitors began to match its process efficiency, the company looked devoid of the innovation and support that rivals like HP could suddenly deliver at competitive prices.
This issue has long been a point of contention with manufacturers, financial institutions and other solutions providers desperately seeking more direct customer access, but needing local presence for both sales coverage and service support. Maybe even more critical in markets like IT, OEMs need the application specific expertise of diverse channel partners to cover the expanding array of business needs that customers express.
Despite this obvious symbiosis, we continually hear companies express "Oh, that's just not a priority now" when discussing channel support programs. It is painful to see channel partners continually dismissed as "not skilled enough" or "not strategic" when they could become a vital component in delivering true customer relationship management. It is tough line to walk, since failure to build the core brand and overcommitting to independently branded channel partners can lead to irrelevance in the marketplace. Nevertheless, the Dell freefall is a sobering lesson in customer service for many companies that believed that the direct model was the only sure way to get control of their market presence.
Posted by jcioban at 8:22 AM | Comments (0) | TrackBack
September 2, 2006
The Big Car Company That Couldn't
Memo To: Bob Lutz, Vice Chairman, General Motors
You buy your first car of a brand because of image, design or brand association. You buy additional cards of that brand because of your total ownership experience.
I read your posting on General Motor's FastLane Blog this morning. For years, I purchased cars from GM and Chrysler despite underwhelming design and moderate quality -- I really wanted to support the domestic auto industry. This past year, however, I purchased a Pre-Owned Mercedes (the smallest, cheapest model they make), and getting me back as a customer seems unlikely. I appreciate your commitment to style/design and quality, but until you and your dealers get the customer service part right as well, you are still at risk.
GM lost me as a customer 6 years ago when I went to the local Buick dealer and was treated with disdain by people who felt I was a tire-kicker. I spoke to a sales rep who had his feet up on his desk and was leaning back in his chair with a look of annoyance that I was wasting his time. (I ended up buying a Dodge.) Compare that to my Mercedes experience. A friendly greeting by a receptionist, a couple of questions, then connecting me with a sales associate. From the outset, the sales associate emphasized what it meant to be a Mercedes owner. At the time, I thought it was all shtick. Then, I purchased.
First came a Thank You/Welcome package from Mercedes. Next came multiple letters describing owner programs. Then, a large package arrived with a personal Thank You letter from the dealer owner along with a framed 8" x 10" photograph from a local artist. On my birthday, I receive birthday cards. On the purchase date, I get an anniversary card. I have had two surveys sent to me. I have had loaner cars, pick and drop off service, and I get follow-up inquiries after a service appointment to check that I am satisfied. In short, the owner experience has been stunning, helping me overlook the car's shortcomings and quality defects.
Over and over, I see companies like yours make the same mistake. You design and build an acceptable (or even better) product, then blow the customer experience because of ineffective coordination with the distribution channel. I know your dealers are independent businesses, but instead of treating them as inventory stops, you need to work together to help them understand their critical role in customer relationship management. They are the people closest to the customer, and your company cannot succeed without them doing a better job. In service intensive businesses like the automotive industry, your customer service experience lives on long after the car's design becomes outdated.
Sincerely,
James R. Cioban, President, Cierant Corporation (and former GM customer)
P.S. In meetings, how do you guys actually rationalize the Hummer??? ;-)
Posted by jcioban at 10:47 AM | Comments (1) | TrackBack
