marketing chaos

20 million+ Google searches

every hour, 24/7

New technical information now doubles every two years. By 2015 it

will be doubling every 72 hours

80% of companies use Linked In to recruit

employees

Generation Y considers email

old-fashioned

1 out of every 8 US couples

married in 2008

met online

No matter how

innovative your

product is today...

…tomorrow it

will still be a

commodity.

…tomorrow it

will still be a

commodity.

And tomorrow

comes faster

now than it

used to

AccelerateNatural Dietary Supplement

ENERGY BOOST

Impact Guaranteed

Technological Progress is Accelerating

driving faster and faster economic growth

Around 1700, steady economic

growth started, at about 0.75% p.a.

By 1900, the rate of growth

had climbed to 1.5% p.a.

By 1960, growth increased

again, to about 2.3% p.a.

For 100,000 years, the average human being

lived on the equivalent of $400 to $600 p.a.

Question:

Of the 100 entities in the world generating

the most revenue, how many are nation-

states, and how many are businesses?

76 businesses

24 nations

Strategy. Execution. Results.

Competing now in a different dimension

Product Centricity

Market share

Customer

Satisfied

Customers Reached

Share of customer

Relationships are required

Customer ExperienceCustomer Insight

…customers as

unique addressable

individuals

…by value,

behavior and

…more cost -

efficiently and

effectively

…some aspect of

the company’s

behavior, offerings,

or communications

Identify Differentiate Interact Customize

Managing customer relationships

Competing now in a different dimension

Product Centricity

Market share

Customer

Satisfied

Customers Reached

Share of customer

Maximizing the value

created by each product

Maximizing the value

created by each customer

The Goldfish Principle

Wow! Look at that!

Hey! Look at that!

Optimizing by customer

Requirements

For Earning

Customer Trust

Intentionto act in the

customer’s interest

Competenceto carry out that

intention

Acting in the Customer’s Interest

The Need for More Trust Has Boosted Business

Lack of trust slows transactions

down and imposes frictional costs

When more trust is required, business

thrives, as obstacles are reduced

works because customers

are social animals

Bees and ants communicate new

discoveries to benefit the group

Now suppose you were a food

source for bees…

In the absence of communication

among your customers, advertising rules

But when customers talk to each other,

it’s the customer experience that counts

Why do groups make

better decisions?

Diverse Perspectives

“No clues” on the day of the event, and the actual investigation required

six months to complete

Rockwell

built the

Challenger

and its

engines

Lockheed

managed

ground

support

Martin

Marietta

built the

external fuel

Morton

Thiokol built

the solid fuel

boosters

Four key space shuttle contractors

But by 11:50 am, Thiokol’s stock was down the most and remained lowest

throughout the investigation

m Rockwell

Challenger

and its

engines

Lockheed

managed

ground

support

Martin

Marietta

built the

external fuel

Morton

Thiokol built

the solid fuel

boosters

Four key space shuttle contractors

How did the

market know?

Box office receipts down 40% the day after release!

Linda Kaplan Thaler, CEO, Kaplan Thaler Group

Screw up today, and the

“news” will be permanent

“You

can’t

un-GoogleYourself”

Grant Robertson, blog post, May 1, 2007

Screw up today, and the

“news” will be permanent

“You can't take something bad off the Internet. That's

like trying to take pee out of a swimming pool.”

What are brand advocates worth?

Source: “How Valuable is Word of Mouth?” Harvard Business Review, October 2007

One academic study of customers

compared “spending” to “referral” value

LTV = CLV + CRV (i.e., spending plus referrals)

Surprise: Highest spenders aren’t

always the best references!

A telecom company

$1,000

$1,500

$2,000

$2,500

1 2 3 4 5 6 7 8 9 10

Customer Decile

CLV vs. CRV - Telecom Company

Most valuable spenders

Most valuable referrers

Source: “How Valuable is Word of Mouth?” Harvard Business Review, October 2007

Networks evolve,

using “preferential

attachment”

Preferential attachment

can create a

“cascading” effect

Cascading is

Unpredictable

Cascading is

Unpredictable

Netscape has a

million collaborating

members

But 13% of Netscape’s

“most popular”

postings were done

by a single user

Cascading is

Unpredictable

Netscape has a

million collaborating

members

But 13% of Netscape’s

“most popular”

postings were done

by a single user

900,000 registered

users on Digg, but

one third of all

home-page

postings come from

just 30 users

Cascading is

Unpredictable

900,000 registered

users on Digg, but

one third of all

home-page

postings come from

just 30 users Reddit’s most

widely read user,

Adam Fuhrer, has

millions of page

views, including MS

Vista reviews

Cascading is

Unpredictable

Reddit’s most

widely read user,

Adam Fuhrer, has

millions of page

views, including MS

Vista reviews

Fuhrer is 12

years old!

Cascading is

Unpredictable

Fuhrer is 12

years old!

Path dependent local randomness

NETWORKS

Collectively predictable emergent behavior

In 2005, a blogger wrote about bad service with Dell

This “Dell Hell” story cascaded online, until BusinessWeek and The New York Times picked it up

Dell’s reputation suffered terribly, and its financial results declined, as well

One year later, a UK consulting firm analyzed the incident and

concluded it was not Dell’s fault at all

Most of the controversy was generated by misinformation that

cascaded through the online network of bloggers

and sometimes networks get it completely wrong

Evolution operates as a network also

A total of 35 completely new body plans emerged

during the Cambrian Explosion, 570 million years ago.

No new body plans have evolved since that time!

Complex

Interactions

Multi-cellularity

Discovered

Bacteria

Insects

Invertebrates

VertebratesCollectively predictable

emergent behavior

Path dependent

local randomness

Collectively predictable

emergent behavior

Path dependent

local randomness

Collectively predictable

emergent behaviorPath dependent

local randomness

Organizations compete to survive in

an “evolutionary” economic system

Over time, as in life, business models

evolve into more complex and

highly ordered “species”

Business innovation takes an evolutionary path

Because innovation proceeds by trial and error

…success

comes to

those who

“fail wisely”

Lisa computer failed

Apple Macintosh succeeded

First phone (with Motorola) failed

iPhone succeeded

Newton PDA failed

iPod succeeded

lyThe Wright brothers tested 200 wing

designs and crashed seven times

before their first successful flight

Why is WD-40 called “WD-40”?

James Dyson built 5,127 vacuum

cleaner prototypes

Because the first 39 “water displacement” formulas

designed by the Rocket Chemical Company in 1953 failedWhy is WD-40 called “WD-40”?

Collectively predictable,

locally random

“If we mapped 3M’s portfolio of business units

on a strategic planning matrix…the matrix

would utterly fail to capture how this portfolio came to be in the first place.”

Jim Collins and Jerry Porras Built to Last, 1994

World’s largest camera company?

Collectively predictable,

locally random

World’s largest music retailer?

Scary thought:

By 2010, Gen Y consumers will

outnumber Baby BoomersG

96% of Gen Y consumers

belong to a social network

Ask a Gen Y about privacy…

“The future is already

here. It’s just not evenly

distributed yet.”

William Gibson

SocialNetwork

Analysis

Leader: High number of

contacts in his/her

community and reciprocity

among them.

Follower: Person with a

similar profile to leader but in

less grade. He/She has

direct communication with

the leader.

Outlier: Person with a high number of

contacts both ways, but with low reciprocity.

1st Grade Marginal: Person with a profile similar to

the follower, but he/she is not near the leader.

2nd Grade Marginal: Profile not similar to the rest of the

roles. He/She has few or no bidirectional relationships.

Source: “SAS for Social Marketing,” 2009

DoubleClick

identified

network

influencers

1,000 influencers with certain traits

Quantitative

survey of 6,000 Web users

Use the Web more than twice as much

Pay more attention to online ads, and

want more relevance

But also more likely to clear their cookies

regularly, as well as fast forwarding

through video commercials

“People often ask my

advice about…”

“I am an expert in

certain areas…”

Build and

maintain a

reputation for

trustability

The only way to

succeed in a

networked world

influencers

connectors

are curious

inquisitive

people.

Computers will never do everything

The real secret to a great brand…

“Mechanical Turk”

There has to be a person in there

What you want:

Self-organization

Your employees need to be

Engaged in their work and

Enabled to accomplish their mission

Strategies for succeeding

in a random world

Identify emergent behavior early, and make plans for dealing with it

The direction of innovation is predictable, so

plan for the capability, not the technology

Word of mouth is random, but can be

maximized with transparency and straight talk

in a random world

Recognize that inputs are more

important than outputs

Measure performance not just by outcomes, but by effort, creativity, and preparation

Celebrate “wise failures,” and promote

experimentation

in a random world

Focus on your company’s culture,

and encourage self-organization

Do a network analysis of your own employees

to identify key influencers

Develop a philosophy of business

based on customer trust

Come face to face with a real

customer at least once a week…

Facilitate networked, moderated

product reviews, including your own

Some things you can do now

In B2B: Help advocates within prospects

by providing ready-to-use PPT decks

Provide location-based information to fit

personal mobile technologies

Let customers sign up “buddy lists” for

checking their friends’ opinions

Mix up your business groups – juniors,

seniors, male, female, trends and tattoos

Assign a 20-something to monitor your

brand mentions on social media sites

Above all, have fun! People like to

connect with other people. Help them!

Peppers & Rogers Group

Management consultants in

customer strategy issues

Magazines, newsletters,

research white papers

Offices and clients around the world

@DonPeppers

To subscribe to the “1to1 Weekly” email newsletter: dpeppers@1to1.com

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