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Customer sacrifice is now more important than pure “customer satisfaction”

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Choice is now something we all take for granted – from the type of product or service we desire, the features we look for that best suit our particular needs and requirements and even how much we’re prepared to pay for this.

Traditional marketing thinking went something like this: “Increase levels of customer satisfaction and give customers more of what they want is the key to commercial success.”

Well, the reality is somewhat different in 2014.

Much of the time, most of us don’t think too deeply about how happy we are about the product we’ve just bought at the supermarket or the service we’ve received at the local shoe repairer or whether it completely fulfils our needs.

But now and again a new product will arrive on the market or we’ll find a more convenient service and we’ll switch without giving it a second thought even though we may have been “satisfied” with the old product or service for a long time.

So why does this happen?

The short answer is that our needs are never perfectly met, which in quality terms means that products and services never fully meet our needs and expectations. And of course our expectations tend to change with increasing regularity, possibly as a result of more choice.

The issue is as consumers or as a business, we can be “satisfied” with what we get from a company or supplier in terms of whether it matches with what we expect to get.

But that could still be accompanied by a deep sense that we didn’t really get just what we wanted and if someone else can provide this then we’ll shift our custom there.

In the past, “customer satisfaction” was thought to be what we expect to get less what we perceived we got. In essence, if our experience met or exceeded what we expected, then we were deemed to be “satisfied”.

But that’s a long way from claiming we received the product or service we actually wanted, isn’t it?

Customer satisfaction surveys fall into the same trap. These are OK at identifying the general needs or perceptions of desired customer segments but they often tell us very little about individual customer behaviour. They also tend to be reductive and as a result tell us very little about the unique group of individual customers’ wants and requirements.

As a marketer, if you rely on “customer satisfaction” as a key metric for brand performance, you’re in for a shock as you’re missing the bigger picture.

Definition of “customer sacrifice”

It’s now more accurate and profitable to think in terms of “customer sacrifice” rather than just pure “customer satisfaction”.

“Customer sacrifice” is defined as the gap between what customers need and what they accept.

IMG_0930My favourite example is the following: you find yourself on a flight and ask for a Diet Coke but are told by the flight attendant they only have Diet Pepsi.

It’s not the brand you drink but you accept the alternative. Let’s say you want to order a ham and cheese panini from the in-flight menu. When the flight attendant eventually gets to your seat, they advise you that they’ve sold out and all that’s left is cheese and tomato on white.

Reluctantly, you purchase the sandwich as you realise by the time you get to your hotel it will be too late to eat a meal.

OLYMPUS DIGITAL CAMERAOver the weekend, I had my own “customer sacrifice” moment when I was out with friends at a trendy restaurant in London’s Covent Garden and we ordered a couple of glasses of South African Chablis from the wine list.

The waiter came back with the drinks for everyone else but said they’d run out of what we’d ordered and simply offered the wine list again and we re-ordered something else.

I did ask how could they run out of wine as a restaurant? No explanation was offered and I did wonder whether I would come again as I wasn’t expecting to have made a “customer sacrifice” so early into our meal!

Mind the “customer sacrifice” gap!

What happened on the flight and in the restaurant can be encapsulated in the following diagram:

Customer sacrifice gap

The wider the “customer sacrifice” gap, the less chance of delivering customer satisfaction.

In marketing terms, the “sacrifice gap” is an opportunity for competitors to better satisfy your customers and lure them away from you.

Of course it’s much more complex than this scenario as there may be a multitude of other variables that include quality, price and service attributes but the decision of the customer is likely to be a weighted aggregate of these “sacrifice gaps”.

Between the choices of two competing brands on offer, it could come down to that product which has the lowest sacrifice:

Customer sacrifice between competing productsThis diagram sums up the challenge for marketers as the customer is settling for the best product they can find rather than what they really want.

The dangerous thing about this is that traditional customer research fails to reveal this situation as it tends to ignore the level of “customer sacrifice” a customer may have experienced in the first place.

New approach to customer research

Instead, “customer satisfaction” surveys tend to focus on how customers rate the company on a pre-defined series of categories.

As a result, “customer satisfaction” measurements essentially focus on understanding and managing customer expectations of what marketers already do rather than trying to find out what customers actually want.

Marketers need to go beyond basic customer service metrics and develop a better sense of the perceptions of how much sacrifice your customers really feel with your product and supply chain services.

To some extent, Amazon is a great example of putting this into practice as it realises that timely delivery and fulfilment of orders is possibly even more important to the customer than the choice of products on offer on its website. The time between ordering and delivery is Amazon’s “customer sacrifice” moment and as reported in a previous blog it’s aggressively tackling this in order to compete with high street rivals.

But all is not lost.

Marketers should consider using online focus groups and surveys to detect “customer sacrifice” by exploring each element of the customer interaction that can provide clues about an otherwise unarticulated sacrifice dimension across which all customers settle for more or less what they want.

You need to seek answers to the following questions: What sacrifices – consciously or unconsciously – do your customers make when they accept your product or service? What assumptions do your customers make about what’s possible or not? What assumptions are you making about what’s possible and what’s not? What sacrifice does the market leader’s products and services require? How can you reduce “customer sacrifice”?

If you can see and cut “customer sacrifice” from your business you’ll be able to leap-frog your competitors and even enter new markets by becoming the challenger brand as this diagram illustrates:

Product C wins

 

 

 

 

 

 

 

 

 

 

Ardi Kolah is author of The Art of Influencing and Selling published by Kogan Page. Buy your copy today for a 30% discount.

 

Does culture matter?

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According to American anthropologists Clyde Kluckhohn and Alfred Kroeber, culture “is a shared social blueprint for life – the constellation of values, assumptions, beliefs and behavioural norms that define a group of people.”

Well that’s the academic perspective for you, but how does this work in practice? Let’s say you have a prospective major customer in Germany and arrange to meet in Berlin over lunch.

Knowing how to read and speak German will be an obvious advantage when it comes to ordering lunch or entering into discussions but how will this serve you in being able to recognise the communication patterns of your guests that goes beyond the difference in languages being spoken?

Richard Lewis, a British linguistic expert and author of a fascinating book, When Cultures Collide, says the key to business success in such a situation will turn on having an understanding of leadership styles and an insight into cultural identity – not something taught in many business schools and yet probably one of the most important skill sets required to be successful in global business.

“By focusing on the cultural roots of national behaviour, both in society and business, we can foresee and calculate with a surprising degree of accuracy how others will react to our plans for them and we can make certain assumptions as to how they’ll approach us.

“A working knowledge of the basic traits of the other person as well as our own culture will help to minimise ‘culture shock’ and provide insights in advance and enable us to interact successfully with nationalities with whom we previously may have had problems with,” explains Richard Lewis.

From a marketing and public relations perspective, there are two forces that have a profound impact on shaping communication – language and culture – and this is covered in my own book, High Impact Marketing That Gets Results.

I was drawn to the research by Lewis because he tried to provide a graphic presentation of what culture looks like, why culture matters, where the blockages to communication are likely to occur particularly within a business context and how to achieve the outcome you’re looking for.

For example, when preparing to meet that German prospective customer you should be prepared for a highly methodical discussion and it looks a bit like this:

German business culture

German business cultureGermans tend to rely on logic but “tend to amass more evidence and labour their points more than the British or the French,” says Richard Lewis.

Spanish and Italians regard their languages as instruments of eloquence and they’ll go up and down the scale at will, pulling out every stop if need be to achieve greater degree of expression. And when dealing with the Swiss, be prepared for a straight forward and unaggressive approach.

Although cultural generalizations can be overly reductive, Richard Lewis has shown it can be done fairly as he says “determining national characteristics is treading a minefield of inaccurate assessment and surprising exception but through our research we have identified national norms.”

Scandinavians tend to have entrenched opinions but are also good conversationalists. “Swedes have the most wide ranging discussions, Finns tend to value concision and most Norwegians fall somewhere in between” says Richard Lewis.

When it comes to the English, we’re famous for not mixing business with pleasure, being a bit aloof, have a tendency to make understatements and also possess a strong notion of ‘fair play’ so be prepared for negotiations with us to look a bit like this:

English business culture

English cultureWhat both the German and English business communication charts demonstrate is how the conversational range flows – in the case of the German business conversation it’s pretty much on the same level all the way through whereas in English business culture the conversation tends to widen out at the end.

These charts also identify what ‘road blocks’ you can expect to encounter in most type of negotiations and what the typical cultural traits look like.

French business culture

When negotiating with the French you should be prepared for a vigorous logical debate:

French culture

 

 

 

 

 

 

 

 

 

 

When negotiating with American clients or customers, be prepared for getting right down to business, managing an emotional response when an agreement looks like slipping through your fingers and expect to make concessions to get the deal done, like this:

American business culture

American culture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In comparison, Canadians tend to be more low-key and inclined to seek harmony, though they are similarly direct in their approach around the negotiation table.

When you survey these social norms you can see why international negotiations so often go badly wrong – either diplomatically or at a business level.

In the US, there’s a social norm of meritocracy with fluid hierarchies and very often some of the most successful US organisations often have matrix management structures. This contrasts sharply with social norms observed in countries such as China, India, Brazil, Russia and Japan which tend to be much more hierarchical.

Another major difference is that Americans don’t feel the need to particularly know or deeply trust the people they choose to do business with. They tend to rely on contracts to enforce business dealings.

In contrast, personal relationships in Russia, Mexico and India are far more important – something that was identified in the research I undertook for the British Government that examined the way in which incremental new business opportunities could be secured in the wake of London 2012 Olympic Games.

Understanding the basic traits of those whom we want to do business with has taken on a greater significance as traditionally strong economies of the developed world such as continental Europe and the US have been overtaken by the rate of growth experienced in developing countries like China, Brazil, Indonesia, South Korea, Argentina, Turkey, Taiwan, Nigeria and India.

Indian business culture

Indian culture

 

 

 

 

 

 

 

 

 

 

 

Given that Indian culture is organised into distinct social groups based on language, caste, religion and region, Indians learn that many, if not most, social interactions are embedded in networks and that network members will monitor and sanction anybody who deviates from the norms for that group. Indian culture tends to support numerous overlapping guarantees of behaviour and as a result, makes India a ‘tight culture’ whereas the US is a ‘loose culture’.

In loose cultures people routinely trust on faith and therefore negotiators will extend relatively high interpersonal trust to their counterparts. However in tight Indian culture, people depend on institutional guarantees of behaviour in compliance with accepted norms arising from the networks they are used to.

Where such guarantees are absent from negotiations, the negotiators will extend relatively low interpersonal trust to their counterparts and research shows that Indian negotiators tend to show lower trust than US negotiators.

In summary, what the evidence shows is that culture really matters.

Things can go wrong in negotiations with clients and customers from different countries where you don’t respect or appreciate the social norms that apply elsewhere. This can be on an individual but also organisational basis, for example, where a company is operating in a different market from its country of domicile.

Experience of successful marketing and PR practitioners shows that they not only understand social norms in other territories but they also customise the negotiation process to the particular individual they’re dealing with.

Research by about local customs, practices and behaviours in business negotiation is essential part of the preparation process.

But marketing and PR shouldn’t be driven by generalisations about inhabitants of a particular country in which you want to do business with as they may be unreliable when assessing the particular individual and the specific context for the negotiation.

Ultimately your success will be dependent on understanding culture as well as the attitude, values, beliefs, perceptions and behaviours of the person you are doing business with.

Ardi Kolah is author of High Impact Marketing That Gets Results. To order your copy at a special 30% discount, click here

 

Getting brands through the school gates can start a green revolution

Green Schools Revolution is one of the most innovative corporate social responsibility (CSR) programmes in the UK and could signal a new way for brand owners to engage with children and their families and turn traditional B2C sponsorship on its head.

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That was the message delivered at a special PRCA Breakfast Briefing where Hopscotch Consulting explained its role in helping The Co-operative develop a nationwide CSR programme that has bagged a ‘Special Award for Green Sponsorship’ at this year’s UK Sponsorship Awards 2014 to be announced later this month.

You could say Hopscotch Consulting has big plans for its Green Schools Revolution and has leap-frogged the competition with its three-dimensional approach to CSR.

“We set up the agency three years ago to help brands in connecting with primary and secondary schools and then once through the school gates we wanted to extend that influence with the families of those children in a relevant, meaningful and ethical way where the educational experience of this journey was of paramount importance,” explains Sam Mercer, co-founder of Hopscotch Consulting.

The challenge facing The Co-operative was to create an impactful CSR programme, bringing together disparate community and social programmes under one roof in order to deliver better outcomes.

welcome“We needed to capture the imagination of a highly distracted and demanding audience of 4-18 year olds that are increasingly media literate and also highly cynical of brands that are simply trying to ‘advertise’ to them,” explains co-founder Julie Noble.

Outside of lesson plans and teachers’ resources, delivered through a specially created microsite, the CSR programme differed from others in the UK because it was rooted in behaviour of children to grasp and put into action the concepts being taught at school.

So the ‘Walking Bus Kits’ is part of the Green Schools Revolution encouraging parents to leave their gas guzzlers at home and allow children to get to school by walking together. This may sound simple but is incredibly effective in getting the message of sustainability into the home.

And there’s funded school trips under the ‘From Farm to Fork’ part of the CSR programme in order for children to gain a deeper understanding about the food chain as well how fair trade can help support rural communities on a global basis.

This may all sound altruistic but it makes perfect business sense too.

Green-Rev-logoThe outcomes to date have been mind-blowing – by the end of last year, 7,000 teachers had registered to be part of Green Schools Revolution and the programme had engaged with over 1m primary and half a million secondary school children across the UK. Even Her Majesty Queen Elizabeth II paid a visit to a Green Schools Revolution programme in Manchester!

But it doesn’t stop there, explains Sam Mercer.

“This hasn’t just been about recruitment of schools, teachers, and children and their parents but part of a much broader picture that at its core is about adding value to the national curriculum in a flexible way and ultimately about influencing ethical behaviour and a conversation with The Co-operative at its centre.”

The agency is also the brains behind Barclays highly acclaimed LifeSkills programme that’s also up for the award for Best Education & Learning Sponsorship.

 

On-line “brand hijack” ruled unlawful by High Court

I feel dirtySales and marketing practices of online retailers selling similar products and services of well-known brands will need to change after the High Court ruled that online giant Amazon can’t use a Google Ad Word of soap and beauty brand Lush to lure customers to its own retail site for alternative products as this amounts to a breach of the Lush trademark.

Lush has built a brand platform based on its own code of ethics – something which it jealously defends and contends that Amazon doesn’t subscribe to. As a result, Lush decided it won’t sell its products on the retail giant’s website and probably never will.

But that lack of love didn’t deter Amazon from courting customers who want Lush products such as “sex bomb” bath salts and “Prince Charming” shower gel and directing them from its Google Ad Word to alternative products rather than lose the chance of a sale.

Lush founder Mark Constantine, who together with his wife Mo started the company with one shop in Poole, Dorset in 1995 and now have built it into a multi-million business, had tried to settle this clear case of ‘brand hijacking’ issue out-of-court.

“We asked them 17 times before we went to court and after a while you realise you’re being bullied,” he explained.

So Lush turned to trademark experts Lewis Silkin and by all accounts the firm can claim a major victory for all brand owners who feel they’re the victims of ‘cyber-bullying’ in much the same way as Lush felt it had been at the hands of Amazon.

Amazon and LushThe case addressed three specific online sales and marketing activities: where the consumer typed the word Lush or an expression containing it into a search engine such as Google, prompting an Amazon ad including the word Lush to appear; where a similar search prompting an Amazon ad displayed similar products but not the Lush mark; and where the consumer typed the word Lush (or begins to type Lush) into the search facility on amazon.co.uk web site that resulted in similar products being displayed.

Deputy Judge John Baldwin QC ruled that there was a clear case of trademark infringement where the consumer types the word Lush or an expression containing it into a search engine such as Google, prompting an Amazon ad including the word Lush to appear and where the consumer types the word Lush (or begins to type Lush) into the search facility on amazon.co.uk that results in similar products being displayed.

With respect to consumers being directed to other products on its website when they type in the word Lush, the judge said: “The use complained of by Lush clearly damages the origin function and the advertisement and investment function of the Lush trademark.” According to the judge, it wasn’t necessary to consider evidence of customer confusion.

In its defence, Amazon contended that advances in search engine technology benefited consumers and shouldn’t be constrained by IP rights.

But such arguments fell on deaf ears.

“In my judgment, however this right of the public to access technological development doesn’t go so far as to allow a trader such as Amazon to ride rough shod over intellectual property rights, to treat trademarks such as Lush as no more than a generic indication of a class of goods in which the consumer might have an interest.”

The judgment referred to the recent litigation over keywords between Interflora and Marks & Spencer as well as the case between L’Oreal and eBay which are all discussed in detail in Essential Law for Marketers.

The Lush case is a landmark ruling as it’s the first time the courts have ruled that the investment function of a trademark has been infringed by keyword advertising, which is good news for trademark owners.

In many respects it shows that if your brand is associated with characteristics above and beyond the goods and services themselves, there’s an added layer of protection for the trademark which means that look-a-like or ‘me too’ competitors can’t “brand hijack” the mark where to do so would damage the investment function.

The European Court of Justice had previously ruled in 2011 that trade mark owners could stop companies using their brands as triggers for ads for competing products if that use substantially interfered with the proprietor’s use of its trademark to “acquire or preserve a reputation capable of attracting a customer and retaining their loyalty” – something which the legal team for Lush strongly argued at the High Court and was accepted by the judge.

“Lush is a successful business which has built up an image of ethical trading. This is an image which it says it wishes to preserve and it has taken the decision not to allow its goods to be sold on Amazon because of the damage that it perceives there would be to that reputation.

“In my judgment, there’s no material which is sufficient to question the wisdom of Lush’s decision not to permit its goods to be sold on the amazon.co.uk website, particularly bearing in mind they’re rejecting an opportunity which Amazon would contend would lead to an increase in sales of its goods,” observed Judge Baldwin QC.

Mark ConstantineThe judgment clearly distinguishes the situation where the word Lush doesn’t appear in the sponsored ad. Consumers are used to seeing sponsored ads from competing suppliers and in this scenario Amazon is “just another supplier offering similar products” and as a result there’s no trade mark infringement.

The judge also recognised that the mere act of a consumer typing the word Lush into Amazon’s search box can’t be an infringement as Amazon has no control whatsoever over that activity. However all three specific online sales and marketing activities complained of did amount to trademark infringement.

It’s likely that Amazon will appeal against this ruling to the Court of Appeal. However, if the judgment of the High Court is upheld on appeal, then the ruling will restrict the scope for online retailers like Amazon to use others’ trademarks in situations where they don’t actually have any of those particular brands to sell. And as a result of this decision, the practice of using brand names in internet advertising to help advertise equivalent or similar products will have to change.

In the meantime, and in a bizarre twist of getting their own back on Amazon, Lush has registered the name of Amazon UK MD Christopher North as a trademark for a new range of toiletries, which could eventually extend to deodorants, hair removing cream and even a range of non-medicated toilet preparations.

Well, if you thought that was a bit bonkers, Lush sued Amazon under its new name “Cosmetic Warriors Ltd”.

It’ll be interesting to see whether in the war of words Lush manages to win the hearts and minds of a few more eco-friendly consumers. It should, however, remember to keep it clean!

Ardi Kolah is author of Essential Law for Marketers (published by Kogan Page). To get your copy at a 30% discount, click here

 

The Power of Crowds

The-Power-of-CrowdsEntrepreneur, lawyer and international deal-maker Clive Rich spotted a gap in the market for delivering high quality legal services to small-medium sized companies at the fraction of the fees that would normally be charged by a high street law firm.

The difference was that this legal advice would be delivered online and LawBite the brand was born.

But rather than go to a private equity provider or a bank in order to bankroll the new venture, Rich decided to use crowd sourcing to finance the enterprise.

In fact, seeking investment from the same small-medium sized companies that would want to use these legal services in the first place was a stroke of genius.

This deceptively simple approach, that tapped into the power of social media, has netted Rich a cool £550,000 in investment in a little less than six months and has made LawBite one of the ten most successful crowd-sourced businesses in the UK.

What’s interesting is that such business models didn’t exist even a couple of years ago and according to Rich the level of interest he’s been able to attract in this way has been staggering.

“In the first round we raised just over £210k in cash and kind and an additional £240k from Crowdcube in just 12 days! We’ve now gone back to Crowdcube for a top up of around £120k because they’re a number of partnership opportunities that have developed which weren’t available to us when the last round was taking place,” he says.

To watch the LawBite marketing pitch, click here.

By all accounts, the business has taken off faster than first anticipated. In particular, there’s been interest in franchising the LawBite model from investors in Ireland, Spain, Holland, Scandinavia and as far as the US and India.

“This suggests that the problem of affordable, understandable law for small-medium size companies is a scalable one, given that there are in excess of 25m SMEs in Europe and another 27m in the US alone, so we need extra resources to tap into these markets,” Rich explains.

LawBite has also entered into a joint venture with My Barrister, the leading UK supplier of direct access to these specialist lawyers and over 100 barristers are already on its books – and it’s only just started.

“We did this because we could see a mutually beneficial way of driving referrals between these two online businesses for the benefit of small-medium sized companies so it made strategic sense to find a way of working together,” says Rich.

This new economy model looks like taking off big time and now LawBite has bagged an exclusive contract to provide legal advice to those companies that have signed up to the UK Government’s initiative to pump £140m of start-up loans into small-medium sized businesses.

Rich says that the value of LawBite has gone up by one third since its launch in under a year and if his projections are right the company could be worth over £30m by the end of 2016 – a return of 20 times for those who invested in the first Crowdcube round.

Those interested to get involved can contact Clive directly by clicking here

Ardi Kolah is the author of Essential Law for Marketers (published by Kogan Page). To get a 30% discount, click here

 

Accenture uses RBS Six Nations as showcase for its technology

Accenture and Six NationsThis week I attended a fascinating insight given by the Accenture analytics team and former England rugby player and now BT Sports Rugby Expert Ben Kay on how the individual performance of a player is capable of being improved through the use of cutting-edge technology and sophisticated algorithms that give ‘real-time’ feedback whilst the game is in progress.

Accenture is the ‘Official Technology Partner’ for the RBS 6 Nations Rugby Championships (2014-17) and the sports sponsorship is something of a shop window for the world’s largest management and technology consultancy.

The tournament itself is one of the premier events in the sporting calendar with 15 individual matches played in Cardiff, Dublin, Edinburgh, London, Paris and Rome (February – March 2014). Accenture provides detailed statistics to its partners and a cut-down version for rugby fans in the form of a mobile app.

The underlying data is the same for both audiences and consists of hundreds of rows of information provided by OptaSports – one row for every action on the pitch – including x,y coordinates and the identities of players involved.

The way in which rugby fans interact with the sport is also changing and supporters increasingly use their mobiles and social media to follow the games and to get involved with the conversation 24/7 rather than spend hours drinking in front of widescreens in pubs although of course rugby fans are known to like a drink!

head to headFor 2014, Accenture has enhanced the official mobile app with the fans’ needs in mind by providing improved audience participation and interaction with the Championships that includes a Twitter feed.

The mobile app provides access to news updates, video highlights and up-to-the-minute scores and commentary throughout the Championships, giving fans a real second screen experience that compliments the TV coverage.

Early trials of the technology were highly successful and resulted in over 759,000 downloads in the 2013 Season, making it the number one sports app in the iTunes store for the UK and Ireland.

Today, rugby fans can download the mobile app on the iPhone, Android and Kindle Fire, and it’s also available across the 6 Nations in English, French and Italian.

It seems that technology is helping to re-write the way in which rugby is coached and played, according to Ben Kay.

“Rugby players now wear GPS units sewn into their rugby shirts that allow the bench to monitor their performance including their heart rate at crucial moments in the game, such as when they go to take a drop kick.

“And heart rate monitors attached to players now check to see how they perform under pressure as well as measure the G-force impact of collisions on the pitch that can be as much as 10 Gs,” he says.

Ouch!

Key performance indicators include “momentum scores” – an important factor in why one team beats another even when the players are evenly matched and “positional battle scores” that compare the relative performance of individual players in opposing teams.

Over the two month tournament a team of Accenture analysts will be buried deep in the basement of Accenture HQ at Plantation Place in the City pouring over algorithms based on observed statistical relationships to produce a score for every player that shows how well they are playing.

The algorithm combines weighted values for every action – positive scores for metres gained, passes and so on, negative for poor handling or a missed tackle – and calculates an overall score, with a few tweaks here and there. This analysis is then transmitted with a sixty-second lag behind what the fans are watching on the pitch so it’s as close to real-time as you can get.

The weightings are based on prior calculations of an action’s likelihood of leading to a point scoring opportunity, while the human side arises where a particular action – say, kicking a penalty – would give a player a disproportionate score advantage over his teammates who provided him with the opportunity.

leaderbOne observation to have come out of the analysis carried out by Accenture is that although the All Blacks tend to have less possession of the ball during a game, they tend to do much more with it because they choose their opportunities more carefully and execute well and as a result are much more strategic than some of their competitors, including England.

The boffins at Accenture accepted that there’s still more work required in order to be able to assess the performance of a whole team and to predict whether a particular team on the day is statistically more likely to win and what the score will be.

Then again, isn’t that what spread betting is all about?

Ardi Kolah was Chief Press Officer at Andersen Consulting (1992-94) and is author of High Impact Marketing That Gets Results, published by Kogan Page. To get your copy at a 30% discount, click here

marketing-book-front-cover

 

 

Predictions for growth of e-learning in sales and marketing

Guru e-learning

 

This year will mark a watershed in the way in which sales and marketing knowledge is shared across the world as technology continues to shape the way we work, play and learn.

The following predictions on how e-learning might trend over the next five years (2014-19) is based analysis of key business drivers across different territories; learning and development (L&D) challenges facing many sales and marketing professionals and the interest in new methods of learning such as ‘gamification’ as well as ‘byte-size’ learning.

 

 

 

 

Open access for workers who want to improve their sales and marketing expertise

Europe and USA

In mature markets such as Europe and US, e-learning and blended learning for sales and marketing professionals has been in existence for at least a decade.

Over the next five years the following factors will be the key drivers for future development of e-learning:

  • L&D content will need to be upgraded to ensure full mobile compatibility;
  • new IT systems will provide opportunities for more L&D innovation as organisations merge and morph requiring the sales and marketing workforce to acquire new skills and expertise; and
  • employees will be expected to take full ownership over their L&D by seeing this as a continuous rather than a one-off process.

India

L&D managers working within large organisations will increasingly seek more flexible ways for employees to maintain their sales and marketing skills whilst ‘on the job’. With the acceleration in the adoption of tablets, e-learning delivered across this platform is growing in importance, particularly as technology is reducing overhead costs.

Middle East

Many organisations are starting to experiment with e-learning environments. In addition, there’s Government interest and support for organisations to embrace e-learning as a cost-effective means of developing the skills and expertise of the workforce of tomorrow.

Africa

In countries such as Nigeria and Ghana where these economies are rapidly expanding ahead of the rate of growth of more developed nations, there’s a massive appetite for e-learning as education is seen as a key driver for business change in these emerging economies.

In each of these territories localisation of the content delivered is an important ingredient in the spread of e-learning within the sales and marketing sector.

Small content sizes, search, and performance support

Organisations that employ a younger sales and marketing workforce (18-24 years-old) already recognise that this generation of workers have much shorter attention spans and also have the challenge of retaining and applying what they’ve been taught. As a result, instructional designers are being challenged to re-wire their approach and think afresh – about how content can be made smaller yet more effective. This is leading to adoption of videos, animations, comics and other such interesting formats in learning delivery.

On the other hand, learning management system (LMS) providers are being pushed to add strong search capabilities, mobile compatibility, and enhance the user interfaces and usability of their systems in order to stay relevant in the forthcoming years.

There’s going to be a shift from Level 1/2/3 content to increasing the variety of content available. LMS providers will evolve and start making an impact with small-medium sized organisations in the first instance as larger enterprises will take time to adapt to new L&D environments over the next couple of years.

Localization

Sales and marketing employees are increasingly working across a diverse range of markets and customer segments. As a result, e-learning must take account of a wide variety of languages and cultures.

MOOC and The GuruMassive, open, online courses (MOOC)

In the past, MOOC have been an extremely popular ‘flavour’ of e-learning as most have been designed for the widest possible appeal. However, over the next five years organisations’ needs and requirements for a well-educated and trained sales and marketing workforce will be radically different. As a result, many existing MOOC will need to be re-wired to take account of specific needs and requirements, such as those faced by sales and marketing professionals in regulated as opposed to unregulated markets.

‘Gamification’

Typically, ‘gamification’ involves applying game design thinking to non-game applications to make them more fun and engaging and has been heralded as one of the most important trends in L&D in recent times. It’s highly likely that over the next five years sales and marketing professionals 18-24 years-old will engage with e-learning in a very different environment.

As a result, LMS content will need to be re-purposed in order to create and sustain user interest with some form of personal career development recognition such as Continuing Professional Development (CPD) credits that signal their total commitment to their own long-term learning and development.

Ardi Kolah is the creator of the Guru in a Bottle cartoon series of books published by Kogan Page.

Legal update on prize promotions, competitions and incentives

promoOne of the most engaging and powerful aspects of B2C and B2B customer marketing and communications is prize promotions, competitions, promotions and incentives.

And they are also some of the most difficult things to get right, requiring an understanding of a complex web of competition, data protection, and media laws and regulations as discussed in Essential Law for Marketers.

However, given the appetite of regulators to want to tighten data protection across a number of areas including sales and marketing practices, the use of prize promotions, competitions, promotions and incentives as a way of lead generation is the latest to fall victim of new controls.

As reported previously in Brand Republic, marketers must be ultra-careful when using any form of incentive as a condition to encourage customers to sign-up to receive information about products and services, which spooked quite a few marketers who wanted clarification on this point.

The Information Commissioner’s Office (ICO) Guidance note on this point is extremely relevant and it’s clear that brands can’t rely on implied consent from the customer as a way round of assuming actual consent.

The ICO Guidance clearly states:

“…. However, organisations cannot rely on “implied consent” as a euphemism for ignoring the need for consent, or assuming everyone consents unless they complain. Even implied consent must still be freely given, specific and informed, and must still involve a positive action indicating agreement (e.g. clicking on a button, or subscribing to a service). The person must have understood that they were consenting, and exactly what they were consenting to, and must have had a genuine choice – consent cannot be a condition of subscribing to a service.”

In practice, this means the brand owner can no longer state that “by entering this competition or prize draw you are agreeing to receive marketing messages from us”. They must also offer a chance to object at the same time.

In many respects, this defeats the object of the exercise of using prize promotions, competitions and incentives for developing a list for many marketers that want to keep a channel of communication open with customer segments and gain prospects in this way.

“We now have the situation where marketers really need to think long and hard about the investment made in these activities. An individual can of course participate in a prize promotion or competition and give their personal details but the brand owner can now only process this information to let them know if they’ve won and not for any further marketing unless consent for this purpose is also gathered at the same time.

“Using implied consent just won’t cut it,” explains Jenny Moseley, a leading direct marketing and law expert.

On top of this is the principle of proportionality even where it can be said that some form of incentive has been used to trigger informed consent from a customer or participant to continue to receive marketing messages in the future.

The ICO guidance is clear on this point too.

“The key points are that for consent to be valid it must be:

  1. freely given – the individual must have a genuine choice over whether or not to consent to marketing. Organisations should not coerce or unduly incentivise people to consent, or penalise anyone who refuses. Consent cannot be a condition of subscribing to a service or completion of a transaction.
  2. specific – in the context of direct marketing, consent must be specific to the type of marketing communication in question (e.g. automated call or text message).”

 

In practice, a judgment call will be required by the marketer as to what in the circumstances will be deemed to be proportionate, explains Moseley.

“Centre Court tickets to the Wimbledon Tennis Men’s Finals may be acceptable but a couple of First Class tickets and an all-expenses 2-week holiday with £1000 spending money to the Caribbean maybe seen as an undue influence in getting individuals to consent to receiving marketing messages in the future,” she says.

The recording of consent also appears to have become a big issue as an individual will need to be given a range of opportunities to give consent for marketing by post, phone, email and SMS and if these are all collected at the same time, then there needs to be an accompanying opportunity to select or reject consent via a selection of tick boxes.

Ardi Kolah is author of Essential Law for Marketers, published by Kogan Page. Order your copy today and get a 30% discount by clicking here

Legal update on changes affecting sales and marketing 2014

jail3

The following is a quick guide to some of these key legal and regulatory changes and more guidance is available in Essential Law for Marketers.

Direct marketing and e-commerce practices

A radical shake up in this area is already underway as the Information Commissioner’s Office (ICO) has signaled a number of important changes that effectively erode the reliance by marketers on an ‘opt-out’ as a strategy for driving direct marketing (DM) and e-commerce activities that may have been prevalent in 2013. 

In addition, renewals and win-back strategies – where a customer has cancelled a subscription to a service – will also need to be changed as a result of the EU Data Protection Directive expected to come into force post-May 2014 European Elections.

Defamation Act 2013

This comes into effect on 1 January and has been heralded as a piece of legislation that swings the pendulum in favour of freedom of expression with a number of changes that impact statements made online and provides more protection to website operators and other online intermediaries.

Under the 2013 Act, web site operators now have a new defence where they can show that they didn’t post a defamatory statement on the website.

However, as with most laws there are exceptions to this rule and this defence won’t succeed in certain circumstances:

(1) claimant can show it wasn’t possible to identify the individual who posted the defamatory statement that would enable an action to be brought; and

(2) notice was given to the web site operator of the complaint in question and the operator fails to respond to that notice in accordance with the provisions of the Defamation (Operators of Websites) Regulations 2013, that also come into force on 1 January.

In the latter situation, the website operator needs to act within 48 hours of receiving a complaint by notifying the poster of the statement or if this isn’t’ possible, to remove the statement within this 48-hour time-frame. Some commentators feel this places an onerous administrative burden on website operators and leave a legal question mark over the situation where the poster of the comment is anonymous.

From a practical perspective, the following steps should be taken in order to minimise the possibility of a successful legal action being taken against a website operator that could result in substantial damages being awarded: implement an efficient complaints system:

(1) review internal policies to provide guidance to employees when a debate or expression of opinion crosses the line and is deemed to be defamatory;

(2) add a ‘report abuse’ button to the website; introduce a ‘traffic light’ system for assessing the nature of a complaint that’s been received and corresponding scale of target reaction given the severity of the nature of the complaint;

(3) in the terms and conditions (T&Cs) to which every website user signs up to must contain a clear definition of an ‘offending post’ and an explanation that, if the Operator receives a legitimate complaint of an offending post and on the complainant’s request, the post may be removed;

(4) also in the T&Cs should be clear, ‘acceptable use’ policies, removing rights of user generated content (UGC) and adding a ‘disclaimer’ to the website stating that the website operator isn’t involved in the creation of the content posted; and

(5) have an ‘opt in’ check box that users need to use to accept the T&Cs of posting material onto the website.

Nuisance telemarketing calls

In January, the Department for Culture, Media and Sport (DCMS) is expected to publish its proposals on tackling nuisance telemarketing calls. These proposals are expected to give more statutory powers to the ICO and regulator Ofcom for taking action against rogue marketers who conduct such activities.

The Government has expressly recognised the call by the ICO for a change in the law to enable it to issue fines against companies that make 100s rather than 1000s of nuisance cold calls as such companies currently fall outside of fines regime.

The intention is to make it harder for the cowboys to continue to run such scams, penalise persistent offenders that flout measures such as the Telephone Preference Service (TPS) and at the same time improve the perception of telemarketing as a legitimate sales and marketing activity when it’s conducted on a consensual basis.

The Unsolicited Telephone Communications Bill 2014 has implications for companies that carry out any sales and marketing in the UK by telephone or text messaging irrespective of whether that company is UK-based or not.

Office of Fair Trading is scrapped and Financial Conduct Authority assumes responsibility for regulating sales and marketing of pay-day loans

From the 1 April, the Office of Fair Trading (OFT) will cease to exist and a new regime for the regulation of consumer credit products under the gaze of the Financial Conduct Authority (FCA) comes into force.

The new watchdog has been given sharper teeth as the Government has indicated it wants to get tougher on sales and marketing practices such as those for popular pay-day loans where there’s a high risk of consumer harm.

The FCA will have more of a focus on advertising and promotion of retail financial services than the OFT and the former Financial Services Authority (FSA) that tended to act more like a statutory back-up for the ASA.

For example, the FCA is expected to introduce new rules requiring payday lenders to carry ‘health warnings’ across all advertising.

Other measures are also expected to include stricter market entry criteria for those wanting to offer consumer credit products such as pay-day loans; appointment of suitably qualified individuals within such organisations to regulate sales and marketing activities and tougher legal redress for consumers when things go wrong.

The FCA will operate an interim regime for regulation of consumer credit 1 April 2014 – 1 April 2016 in order to give companies time to adjust to these and other changes in the regulation of the market.

Alcohol sponsorship

Drinks industry self-regulator The Portman Group will launch the first UK-wide Sponsorship Code that will come into effect on 31 January.

Although the Code is separate from the Code of Practice on Naming, Packaging and Promotions, it’s consistent with existing measures that prevent any type of promotion that may appeal to those under the age of 18 years-old as well as being in alignment with the BCAP and CAP Codes as set down by the Advertising Standards Authority (ASA).

A major difference will now be the requirement of brand owners to promote responsible drinking and/or support community activities as part of an overall sponsorship programme.

Sale of cigarettes and e-cigarettes at point of purchase

The Government is likely to introduce early 2014 new regulations forcing tobacco manufacturers and those of electronic e-cigarettes to provide plain packaging of these products, based on a study into the effect of plain packaging on smoking levels that’s due to be published end of March 2014.

Separately, the ASA is consulting on the advertising and promotion of e-cigarettes that have been exploiting a loophole by running radio commercials on independent radio stations like XFM in London to persuade consumers of the ’safer’ way to get a nicotine ‘hit’. Currently, the CAP and BCAP Codes don’t regulate e-cigarettes so clarification as to the position of the marketing of these products is expected early 2014.

These measures come in the wake of the Government’s move to regulate nicotine-containing products as medicines in line with proposed revisions to the EU Tobacco Products Directive (2001/37/EC) and as a result will bring e-cigarettes and other nicotine delivery systems within the scope of medical regulations and the pharmaceutical trademark regime.

New Consumer Bill of Rights 2014

As discussed in Essential Law for Marketers, the Government has signalled its intention to merge all existing UK consumer protection laws and regulations together with the requirements of the finalised EU Consumer Rights Directive into a single new Consumer Bill of Rights.

The Consumer Rights Bill sets out a framework that consolidates in one place consumer rights covering contracts for products and services, digital content and the law on unfair terms in consumer contracts.

In the UK, there are 12 existing laws and regulations relating to consumer protection which the Government has said are complex and confusing and not in the best interests of consumers and business.

The Consumer Bill of Rights is intended to repeal and replace a number of pieces of key consumer protection legislation including:

(1) Consumer Protection (Distance Selling) Regulations;

(2) Unfair Terms in Consumer Contracts Regulations 1999;

(3) Misrepresentation Act 1967;

(4) Sales of Goods Act 1979;

(5) Sale of Supply of Goods and Services Act 1994;

(6) Supply of Goods (Implied Terms) Act 1973; and

(7) Unfair Contract Terms Act 1977.

Changes to current legal protections available to consumers will represent “the biggest overhaul of consumer law for decades” according to the Government.

In practical terms, it could mean that Trading Standards can operate over local authority boundaries that they can’t do at present, and provide enforcement agencies sharper teeth to prosecute marketers that habitually flout the new law.

These changes will require a radical readjustment to the many ways that businesses operate at the point of sale. In particular, technology, media and telecoms businesses that provide software and entertainment products to consumers to be downloaded at the time of sale will need to be aware of that the changes that will be required.

Marketers operating in Europe should take the opportunity to review their sales and marketing practices, both online and offline to ensure that they will be compliant when the new legislation comes in to force.

Class actions brought by consumer groups could become more common

In 2013, the European Commission published its recommendations on common principles for collective actions in the EU that invited Member States to adopt collective redress mechanisms including injunctions and damages for breaches in EU laws.

This requires consumer groups to have been identified before a claim can be brought and each member of that group to have ‘opted-in’ to bring a class action to court.

The result is that UK courts could see a rise in class actions and this is likely to accelerate once the Consumer Bill of Rights also becomes law.

Counterfeit marketers face new EU-wide laws

On 1 January a new EU-wide Customs Enforcement Regulation comes into force in the UK that aims to increase cross-border protection against the traffic in counterfeit goods, including pharmaceuticals, between Member States or into the EU.

The Regulation implements a more simplified procedure for dealing with suspected counterfeit goods in the absence of a court order across all 28 Member States and in certain circumstances allows brand owners to apply for certain small consignments of fake products to be dealt with automatically by Customs Officers ex officio.

The responsibility of civil litigation claimants to pursue alternative dispute resolution (ADR)

The courts increasingly want parties to resolve their contractual disputes without resorting to the courts and instead use ADR.

In October 2013, the Court of Appeal delivered a judgment that strongly reiterated its support for the role of ADR in civil litigation and confirmed that a party’s silence in the face of a serious invitation to mediate will, as a general rule, be considered unreasonable and will warrant a costs sanction even if there are reasonable grounds to expressly refuse the proposal.

Ardi Kolah is author of Essential Law for Marketers (published by Kogan Page). Order your copy here and get a 30% discount.

Front cover for Essential Law for Marketers Second Edition

A ride to the dark side

lance-armstrong-doping-deniThere can be few ironies in life compared with the following story.

As a film maker in my spare time, I realise that the best laid plans can often go awry thanks to the tendency of real life events to play out in unpredictable and surprising ways.

This is exactly what happened to Oscar-winning film maker Alex Gibney when earlier this year it looked as if his world had fallen apart.

You see, Gibney was in the middle of making a documentary film, narrated by Hollywood ‘A-list’ Matt Damon, about the seven- times Tour de France winner Lance Armstrong and his triumphant battle against cancer to reach the pinnacle of his sport.

Except of course it was all a big lie as Armstrong shattered the illusion that he’d so carefully cultivated over a 20-year period when he gave his staged-managed ‘TV confession’ to Oprah Winfrey in January this year.

In an act of breath taking cynicism and cunning on a scale few had ever seen before or indeed since, Armstrong had bullied his team mates, collaborated with medical cheats and hoodwinked the world governing body and ultimately millions of fans around the world whilst banking millions in sponsorship fees.

Armstrong thought he’d ‘come clean’ by confessing to the use of banned performance-enhancing drugs throughout much of his cycling career. He admitted that he used erythropoietin and a human growth hormone and that he’d blood doped as well as falsified documents saying he passed drug tests. Doping helped him for each of his seven Tour de France wins, Armstrong told Winfrey. According to USADA, samples from Armstrong taken in 2009 and 2010 as well are “fully consistent with blood manipulation including EPO use and/or blood transfusions”.

Meanwhile, what had been planned as a documentary about Armstrong’s comeback following his retirement in 2005 looked like being left in ruins. Gibney and his crew had painstakingly followed Armstrong for the best part of a year, shooting Armstrong’s rides in the 2009 and 2010 tours with an array of cameras and ended up with 200 hours of material for their efforts.

The project was temporarily put ‘on hold’ in 2011 when doping allegations against Armstrong started to surface and the hope was that the documentary would be completed when these blew over and Armstrong was exonerated.

But when Armstrong finally came clean about his cheating, Gibney considered scraping the whole project altogether.

Then he had a rethink.

“I felt we had something in that 2009 material that was very powerful, for reasons we didn’t necessarily understand at that time. In making his comeback Armstrong allowed cameras along for the ride so you can see the myth-making machinery in action. Both what’s real about it and what’s fake about it. That footage allows you a front row seat for the Armstrong lie,” Gibney told Screen International.

This gave birth to a new documentary, The Armstrong Lie that has been just as successful as Gibney’s previous work that includes the 2007 Oscar-winning documentary Taxi to The Dark Side and We Steal Secrets: The Story of WikiLeaks that was released this year.

Using the old footage in the new version meant continuing a deal under which Armstrong got, in return for granting access, a cut in the film’s back end. Gibney said that deal didn’t become an issue because the arrangement was always that Armstrong had no editorial control.

“There was only one thing we had to do, which was to offer him the opportunity to respond to any allegations of drug use, which I would have done in any event,” says Gibney.

Creating the new context meant filming additional material – including interviews with Armstrong and others shot after the cyclist’s confession – and Gibney himself appears as a character in the film.

In the new version that had its premiere at the Venice Film Festival earlier this year, Gibney replaces Matt Damon as the film’s narrator “both to allow myself to explore things that I’d seen but hadn’t been able to photograph and also to reflect on my own role as part of this myth-making apparatus.”

Ardi Kolah is a former BBC TV producer, an elected member of BAFTA and creator of the Guru in a Bottle® cartoon series, published by Kogan Page.

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