Byron Sharp: debunking the myths of marketing 3/3

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myth number six : the 80/20 rule always applies

This isn’t a myth per se, but the numbers don’t quite add up. Sharp, on the basis of numbered evidence once again, shows that Pareto’s Law does apply but real numbers based on observation are closer to 50% for most brands and never reach 80%. This reinforces the need to acquire more customers.

myth number seven: advertising doesn’t sell

Sharp shows on the contrary that advertising has a clear (but mostly long-term) impact on sales… Provided your product is distinctive enough and that your campaigns follow a few simple principles amongst which:

• reaching all by categories
• no lapses
• clear brand links
• easily noticed and remembered

myth number eight: price promotions increase sales in the long term

That one is far less counterintuitive I find. Price promotions are quite effective in boosting sales. Evidence produced by Byron Sharp shows that promotion have no or little effect on long-term sales. Sharp sees little rationale for maintaining price promotions over time apart from maintaining a relationship with retailers.

myth number nine: loyalty programs are effective

In fact, loyalty programs work a little, but their impact on loyalty is minimal and in some cases, brands won’t even feel the true effect at all for many external reasons. My friend and colleague Prof Christophe Benavent from the Paris University has been a long-time contender that loyalty programs don’t work. He’s actually quoted in Byron Sharp’s book as well. One may have the vague feeling that conclusions might be different whether one looks at airlines for instance, or a company like AMEX which has built its distinctiveness upon its loyalty program (I even chose to get an AMEX card a few years back which is coupled with my airline frequent flyer program and I have transferred the entirety of my purchases to AMEX) but evidence is required before one makes any rash conclusion.

Overall, I really enjoyed Sharp’s approach which is based on fact rather than fiction, even though some of the most counterintuitive conclusions would benefit from a serious data update. I definitely recommend you buy this book and place it on your bookshelf.

Byron Sharp’s blog is available at http://marketinglawsofgrowth.com/

… to be continued

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Byron Sharp: debunking the myths of marketing 2/3

[This report is being published in instalments, type bit.ly/sharpgrow to display  the piece in its entirety]

myth number two: heavy buyers matter, light buyers don’t

That is false too. A customer base is like a long tail , with few repeat buyers and a vast majorty of light or very light buyers; but the sheer mass of the latter makes their category very important in fact. These people are those which brands must convince over and over again if they want to succeed.

myth number three: targeting works

That one is really puzzling I must admit. Sharp points out that despite marketeers’ efforts in trying to “differentiate” through targeting, brands end up sharing “normal – looking” customer bases and those customer bases are supposed to be interchangeable. This is – once again – said to apply across all categories and countries. Yet, luxury products for instance, cannot be afforded by all. Sharp’s point is that segmentation within a subcategory doesn’t exist. It may exist between subcategories however. This item would however, in my mind, require further investigation.

myth number four: cannibalisation is a bad thing

According to Sharp’s findings, it’s not! What matters here, is not whether brands are differentiated, but whether they are “distinctive” (that is to say easy to recognise from others).

myth number five: consumers by preferred brands

Sharp contends that is just the other way round. One tends to favour one’s own choices; some sort of post justification of one’s own purchases in fact (I bought this, therefore I like it; or, I’m used to buying this etc.) That point he adds, also applies to iconic brands like Apple and Harley-Davidson. Basically, he means that Apple customers aren’t in any way, more loyal than PC clients for instance.

This chapter is probably the most difficult to sell. There is so much hype about Apple products that things do get very irrational. Sharp may well be right, but the evidence he uses to show that this is the case are rather outdated. Beside, Apple’s overwhelming success has, recently, put so many companies in such a bad position (Nokia, Sony Ericsson to name a few, not to name hp which withdrew from the Pocket PC (then Smartphone) market which it hugely dominated only a few years before). The evidence given here is a bit outdated on the one hand, and debatable on the other. This chapter requires therefore more investigation, even though mine Sharp may well be onto something (for other myth busting regarding Apple on this blog, click here).

Byron Sharp’s blog is available at http://marketinglawsofgrowth.com/

… to be continued

Byron Sharp: debunking the myths of marketing 1/3

Once in a while, a business book appears which changes your perception on things for ever. Such business books are inspirational (Crossing the chasm in 1992 for instance), some are critical (such as Scott Berkun’s myths of innovation) and some just take you back to basics. This is the case with Byron Sharp’s “how brands grow” (Oxford – 2010), an opus which unfortunately didn’t get enough attention and is even sometimes wrongfully dismissed as scientific claptrap. I must admit that I enjoyed the book thoroughly, even though some of its conclusions did puzzle me a bit. I suppose that these will lead to more investigations, since some of the evidence presented in the book and some of the conclusions based on such evidence (mostly in chapter 7) are very counterintuitive. Here is what I learned and would like to share with you regarding this book.

[This report is being published in instalments, type bit.ly/sharpgrow to display  the piece in its entirety]

Marketers are used to believing their own stories but often fail to check the facts. This is what Byron Sharp and his Ehrenberg Institute have done and their conclusions can be summarised as follows:

myth number one: loyalty matters, acquisition is less important

How often do we hear that it is more worthwhile to retain existing clients rather than acquire new ones? Well… as far as I am concerned, almost on a daily basis. Sharp shows that this is wrong, that churn depends – mostly – on the size of your customer base and that customer acquisition is of paramount importance. This is what is known as the double jeopardy law: “sales are lower because they have fewer buyers who buy the brand less often”. That law, besides, applies to all sectors, and all countries. As a consequence of the double jeopardy law, it is not cheaper to retain an existing customer than acquire new ones. Acquisition, CRM pundits must be eating their hats now, is not an option, it must even be a priority for brands.

… to be continued

Mendler: the workspace of the future is all about conversations #live11

reporting live from Orange Business Live in Munich

Workspaces of the future, an industry analyst perspective

In his introduction, Michael Burrell from Orange Business Services described  some of the main market trends include:

1. consumerization of IT, tuning the way that IT is working on its head.

2. The millenials are also changing things in the workplace

3. mobility is enabling people to work from anywhere

4. cloud technology is changing the ay that IT can be purchased and rolled out

Conversation isn’t just about Voice

Informa’s Camille Mendler (@cmendler on Twitter) introduced the subject by saying that what she wants to talk about is “conversations” before delving into workspaces of the future. Conversation isn’t about “exchange of thoughts; talk” as Merriam Webster defines it. Conversation isn’t about “voice” anymore Camille says. We have to rethink what we describe as “conversation”.

One has also to think about who is involved Camille added. One type of conversation doesn’t fit all. All regions have their preferred ways of conversing (re. conversation type slide above). The challenge is to have the flexibility to use whatever tool is best fitted.

BYOC will not be going away

BYOC/BYOT (Bring your own computer/telephone) she added is no longer a threat in a day and age when Nasa is controlling launches through iPad and iPhones. Camille says that this is not going away and the ability to take an order from a tablet, for instance, is improving business processes.

Conversations … between things

Conversation, is not only taking place between people, it includes things, and even thing to thing (like the Poken experiment which we have carried out at Orange Business Live this year in Munich).

Camille says that we are moving into “conversation as a service”, conversations is moving into mobility, cloud and “as a service”.

innovation in market research (with audio track)

Here is one of my latest presentations on the status and the future of online research including the audio track in order to make it easier to understand where I’m coming from. Duration: 40 minutes, sharp!

[En] Innovation in market research – Global Market research event

View more webinars from Yann Gourvennec

local vs. international social media platforms: a thorough study by Sofrecom

Carlos Jordan de Urries (left) and Chrystele Bazin (below), senior consultants at Sofrecom (a France Telecom Company) have updated us on the status of Social Media in emerging markets last Monday in Cairo. In this presentation, we’ll focus less on international Social media platforms and more on what the motivations are for people to follow – or not follow – brands like Coca Cola for instance.

aim of the study

The aim of this study was not to be comprehensive either. What Sofrecom have wanted to do is to highlight the main trends in social media in emerging countries. Chrystel started with a little sketch (right) defining a “social” network showing how (virtual) networks of people can be intertwined. With user generated content (UGC), content gets published online, and even though you are not a media, there are many chances that some people are going to see your content; your contacts will see it and then your contacts’ contacts etc.

She then replaced Social networks within the slightly larger framework of “social media” (which I had covered before in my presentation). There are different types of tools within Social Media, from blogs to microblogs and wikis and, eventually social networks proper. There are 2 types of social media platforms which make up a first axis: content centric such as youtube of Flickr, and communications centric such as Facebook, Orkut etc. The two are sort of joined at the hip though because they are both about content, but the approach is radically different. Then there are 3 more types on the second axis: collaborative such as wikipedia, community orientated or deal oriented (crowdsourcing, social e-commerce for the latter catregory). Eventually, Chrystel showed us that completed matrix showing how all these tools can be spread out across this two axes (above, click to enlarge).

Twitter is an issue because it can’t really be squeezed into the “social network” box as it is more of a tool than a social network. As to crowdsourcing, there are sites like e-Stockphoto which is reshaping the photo market, as a lot of media are using them now vs. traditional agencies (we could have added fotolia, here’s a link to my page as an example).

Main trends in local services

Different countries have been investigated, it is not meant to be comprehensive though. Commercial Services and Crowdfunding have been zoomed in in the rest of Christelle’s presentation.

• Watwet (note: the server was down when I tried it, so here is the cached version) is microblogging focused on Arab populations, it’s open, whatever country you are from. Zoopy is like youtube or Flickr. The service was launched in South Africa. Now we can see that some of the videos are coming from other English-speaking countries. They are both open solutions.
• Facebook is not providing any specific value to local countries in these regions. Veepiz for is just like that. They are using the Facebook platform but provide a local service based on top of Facebook and let users be on their own environment. They do that with Twitter as well so that users have the best of both worlds. It’s coopetition. Veepiz integrates other social networks but provides local value.
  • nov 20, 2010 adendum and clarification by the owners of Veepiz: “Just to clarify, veepiz is not built ontop of facebook platform. its all hand coded and has its own unique platform. for more goto http://www.veepiz.com or our bloghttp://veepiz.wordpress.com“
• FrontlineSMS: many services, blogs etc. in Africa are becoming social. FrontlineSMS is a Yammer-like two-way SMS platform which has developed its activity for NGOs. They have created a community. The platform helps NGO employees communicate amongst themselves. The platform is free for NGOs.
• Crowdsourcing: this is about making the user at the centre of the service. It’s up to the user to decide whether he wants to collaborate. The idea is not to just let people complain about the service but to let them be part of the improvement of that service. There are 4 domains to which crowdsourcing applies: knowledge sharing, task force, real time information and funding
  • Kiva is well known and is about micro funding. People go to the web and fund a project. You don’t win anything apart from the pride of being part of something.
  • txteagle is a task force example
  • iYammobi and Kerawa are examples of knowledge sharing. Kerawa is about small ads; say if you are looking for a flat in Cameroon. It’s working in most sub-saharian countries and enjoying good success in that region.
  • Ushahidi is a sample real time information example: it was used in Haiti after the quake to map needs for medicine and or in Atlanta to inform people about robberies being committed

For small ads, in emerging countries and namely in Sub Saharian regions, ebay cannot provide the right kind of service whereas Kerawa can.  There are still many opportunities in the Middle East and Africa for services like this to be provided for local people.

Facts and figures

there are sites on which one can find interesting data about Middle East social media usage:

• Google Ad planner is the first one
• Facebook advertising is another one (Facebook provides detailed numbers about users registered in the system)

Start-up of the month : Synthesio describes the 4 types of brands on the web (2/2)

note: this is the continuation of an interview of Synthesio’s Loic Moisand (see part one here). many thanks to Synthesio‘s Michelle Chmielewski for her help with the Englsh version of this post

Major trends in the monitoring market: consolidation and transversal moves

The market has greatly evolved since 2006 and showed signs of maturity in the consolidation actions among various actors. Scoutlabs was bought out by Lithium Technologies, Sysomos by Marketwire. The bought-out companies were easy prey “at the moment of the explosion of social media with the desire of creating true groupings”.

That doesn’t just mean more consolidations, but also more transversal actions with integrations:

• of social CRM (integration of client relations and social media, one of the most significant trends of 2010)
• of the press (with press and social media domains becoming more and more intertwined: on the one hand press relations officers are trying to reach information producers that are not connected to the mass media, bloggers in particular, and especially using different methods to transform their press releases into social media releases)

Other actors, including early days French pioneer KBCrawl “have stayed in ‘tool’ mode and haven’t switched to SaaS dashboards” and are being overtaken by swifter players.

brands online reputation: 4 main profiles

I’ve kept the best part for now. 4 years of experience in the field have allowed Synthesio to depict the landscape of online brands in a particularly striking manner; Loic Moisand highlights 4 main types of brands (pictures in the following diagram):

1. “Under-the-radar” brands

These are the brands that…we don’t talk about, or at least not a lot. A little bit like those friends that you invite to a party that don’t show up. There is either no or very little buzz for these brands that are consequently put into a “PR intravenous drip” that could only with hope to revive interest in the brand. In this category we find a jumble of mass-produced products like dishwashing soap and some B2B brands. Here are nonetheless 2 examples of companies that managed to “break the mold” (the best way to revive interest in your brand) :

• Blendtec with their famous WebTV series “Will it Blend?” that was present at the last MediaAces conference in Paris June 22, 2010 (http://france.media-aces.org)
• “compare the Market”’s URL was too long and getting too many searches for “compare the meerkat”. Comparethemarket, a sort of “progressive.com” decided to create an online character making fun of people that were typing it wrong in order to create their own buzz.

Not only are there numerous B2B brands fitting into this category that haven’t been able to break the mold, “3/4 of brands fit into this category,” adds Loic Moisand.

Important sidenote : certain brands, depending on the country, their media, and culture, may be “under the radar” here and not somewhere else. The French insurance-comparing site meilleurtaux.com generated high levels of buzz in France but Comparethemarket, the UK equivalent ended up being less successful (hence the need to do things differently)

2. Functional brands

This is another brand category that doesn’t necessarily inspire deep passion but that can generate a large number of comments. It has to do with brands that “we just want to work, and that’s it”. These are the brands that don’t leave you indifferent, but don’t necessarily cry out for your attention, either. In these types of cases the buzz level is  rather high, but focused around the product’s/service’s functions, price, the quality of customer service, etc with levels of dissatisfaction that are often quite elevated. This category includes : e-commerce sites, washing machines, household appliances, mass high-tech goods (except for Apple) and telecommunications operators. The response in this domain has been to have a community manager for their own sites (FAQ, tech support, answering questions) as well as on third-party forums to help web users with a proactive intervention (Orange has actually just taken this step).

3. Brands we love

This segment is – of course – brand nirvana. Unfortunately very few brands are able to be a part of this group, for sometimes irrational reasons. The brands that are able to attain this segment are brands from groups 1 and 2 that have “launched an emotional movement”. Apple, video games (Wii), Sony (only for certain products), Coke, and fashion brands are a few examples of “Brands we love”. They are brands that “take up all the space” and the ones that are always examples, which can almost become slightly irritating at times…They’re incredibly popular, and you can’t do anything about it. They are the brands that knew how to create “a relationship that is more imortant than the product” according to Bernard Cova.

Not everyone can get to this stage. It is full of clans of enthusiasts and brand advocates, where brands don’t need to “create communities” because they already exist, often on their own (Apple doesn’t have one blog and supposedly doesn’t intervene in social media other than to police what’s being said, which no one really seems to find surprising and hasn’t cut down on fan enthusiasm).

The best attitude to have for this group is to accompany communities : answer questions, inform fans, encourage them, occasionally give them gifts to thank them for their loyalty. Blogger clubs are also a phenomenon of this group, which can sometimes lead to large demands. Microsoft – in order to avoid always talking about Apple – organized the launche of Windows 7 at the end of 2009 in its Windows café. All interested bloggers were invited to get a very nice gift – their own complete version of Windows 7 on a DVD just for them. The brand decided not to get involved any further in blog discussions than that. It took a respectful approach of its community, which was the right attitude in this case.

4. Sensitive brands

These are brands that are “stressful” according to Loic Moisand’s terminology. The 3 sectors that are affected the most: health, safety, and children. People are scared in this segment, the brand can be scary, or becmoe a threat; the stress is real and “you have to reassure people”. It’s the only thing that can be done. Admitting you were wrong and showing that you are correcting the problem, even if, when opinion is against you, the attempt is bound to fail. Becoming a “sensitive brand” means risking becoming a disgraced brand. Certain brands will forever be in this category, like pharmaceuticals for example (without exception according to Loic Moisand); but there are other brands that switch from other segments to this danger zone :

1. banks, since the 2007 crisis, have become scapegoats for the economic problems in the West if you believe their detractors, to the point of having lost sight of their essential economic functions (see the example of Kerviel here)
2. BP, that has now become a symbol – according to their detractors – for the environmental problems like Total in France after Erika – justified or not
3. chronically : users with worries – based on facts or not (not up to us to decide) – about electromagnetic waves from WiFi connections, Wimax, telephones, etc (here’s a link towards a show with Etienne Cendrier from the site robin des toits)
4. food brands criticized for their choice of ingredients or their methods, like Nestlé, for example, that became a Greenpeace target in 2010 for their use of palm oil in chocolate products

A dynamic brand classification

A brand can pass from one segment to another at any moment. Apple did, for example, when a rumor about exploding iPhones spread in 2009, as did Renault with rumors of stuck Vel Saltis gas pedals (2005-2006), and Toyta in 2010 with with their own technical problems, even if the rumors usually disappeared along with the crisis.

I find this classification to be particularly useful as it presents us with a point of view that is different from the classic clichés heard on the web about brands. It also allows for web and PR directors to take a step back in order to decide which direction is the best for their brand.

sidenote: this is an empirical classification and is not a result of a scientific study. It may evolve over time depending on the country and brand’s history. The opinions expressed here about certain brands are the personal opinions of the author and do not reflect a proof of good or bad quality of these brands whatsoever.

Start-up of the month : Synthesio describes the 4 types of brands on the web (1/2)

note: many thanks to Synthesio‘s Michelle Chmielewski for her help with the Englsh version of this post

This past July I met up with Loic Moisand, co-founder of the start-up Synthesio with Thibault Hanin, specialised in web monitoring and analysis of social and online mainstream media. They are a great example of a French start-up that has succeeded, in France as well as abroad. I mentioned them previously in two videos filmed with Trey Pennington, who is in charge of Synthesio’s marketing in the US and the UK (video 1 – video 2). This time I wanted to take a moment with Loic in order to find out more about the creation of Synthesio, on one hand,  and about their measurement of influence on the Interneton the other. What I discovered during this interview is a real gem that goes above and beyond a simple market analysis : a very interesting and useful market segmentation that Loic Moisand has created based on his experience in the field that I found to be a fundamental and useful discovery for online marketing experts and branding experts that set their eyes on the web.

I met with Loic in the Cybervillage of Paris at Crimée, the same place where I had met him 1 1/2 years ago ; time enough for the young entrepreneur (28 years old, to be exact) to work hard on developing his start-up. His work has paid off as Synthesio has seen their revenues grow significantly, even if I can’t just yet reveal the exact numbers since the enterprise is private (you’ll just have to trust me when I say – they’re good).

The two Synthesio founders are both graduates of ESSEC (one of Europe’s top business schools), even if Thibault Hanin is the “geek” of the group, having earned his engineering degree beforehand. One worked on the software and the other on case studies, each in their “own little corners” of the school’s campus, according to Loic, before deciding to team up for a bit, just to see. “We worked on a business plan for a month and found that we complimented each other quite nicely”. They were able to raise enough funds rapidly, complete with a student loan, and were off and running. “Our first investors didn’t even look at the details of our businesses plan, they just evaluated who we were and trusted us”. A look at entrepreneurship that is very different from the usual Gaulic jeremiads. “I don’t at all agree with people that say that we can’t invest in France. There are good grants for those that are young innovative enterprise, thanks to the Research Minister,” adds Loic Moisand. Of course the two young entrepreneurs “ate nothing but pasta” for the first year while they developed their offer. But there were numerous surprises…

Business isn’t rational, it’s linked to the entrepreneur’s desires

The story behind Synthesio is interesting in and of itself. Well-positioned today for measuring social media buzz, the start-up began along a completely different route : “We started by creating a sort of Google Alerts,” explains Loic Moisand, but we quickly realized that there was something else going on in social media. Even if we didn’t begin that way”. Founded in 2006, the company took one year to prepare their offer. “I met 400 people, communications directors, research directors, agency directors, etc. during that year” adds Loic Moisand ; and that doesn’t even take into account incidental meetings. Forced to complete an internship abroad for his degree, the entrepreneur chose India for personal reasons, a choice that proved to be incredibly important for what followed in terms of their software operations, which makes the Synthesio co-founder say, “business is not rational and many things are tied to the founders’ desires”. A lesson in humilty and reailty to be taught in business schools, perhaps… “We wanted to visit, have fun, and not make something super French” continues Loic Moisand, and that’s exactly how Synthesio began “with everything in 5 languages from the very start” in order to win – little by little – international accounts that have made a very impressive list of clients: Accor, Orange, Sanofi, Eli Lilly, BNPP, etc. that use Synthesio to measure what is said about them online.

Finding a good brand name

Well-taught  marketers know it all too well : finding a good brand name is a fundamental step. The double-team took it upon themselves to create their own algorithm that spit out original names, and Synthesio came out. The domain name was free, so nothing more than to find a logo, which Loic created, partly Ying-Yang, partly a stylized “S” with “the red representing the human, and the gray, the technology” he clarifies.

25 employees in 3 countries and… 30 languages

Synthesio is comprised of 25 employees today working full-time, plus partners that bring that number up to 35, spread out in 3 countries : France, the UK and the US. “But we have people that work for Synthesio everywhere : Morocco, China, India, Russia, Portugal, Spain, etc because the company handles research in 30 languages (the dashboard is available in 6, including Chinese). The multilingual search engine is the cornerstone of their service along with the fact that the analyses are done by humans. The differentiating point is exactly that. The engine is a proprietary development that is partially protected, as only original features and innovations can be patented.

The buzz analysis market : a fusing of 3 stages (+1 or 2 for France that seems to do everything its own way)

The worldwide market is broken down into 3 segments : free, do-it-yourself and upscale, Synthesio belonging to this last group. France is a bit different as it has 2 different types of actors (ami and Digimind) that are editors as well but positioned on different price schemas. This category doesn’t fit – according to Loic Moisand – with Forrester’s and Gartner’s groupings, which would explain their difficulties in positioning themselves internationally, even if the two actors “perform well on French territory”. Digimind has opted, itself, for the third type of positioning in North America. The France, creative as always, also has another example that doesn’t fit with other models : Trendybuzz, a research company with publisher software.

coming next : Part 2 with a breakdown of Internet brands by Synthesio