As a member of an invitation only technology CEO community in Washington DC, I get together every month with like-minded individuals to network, listen to expert speakers, and potentially discover my next big co-founder or investor in our area. During last week’s summit, the predominant theme was marketing. We listened as two executives spoke about utilizing clever tactics to persuade potential buyers/partners and how startups can maximize their returns on thin marketing budgets. The speakers emphasized maintaining focus, executing with purpose, and getting your company’s message out to as many media outlets as possible. But how does one accomplish that? Traditional methods say to produce scores of press releases, top 10 lists, survey studies along with thought leadership packages. If you build it, will the media member cover it? The simple answer is no, they will not.
You see, as a publisher, I couldn’t help but think of my own inbox and the onslaught of e-mails I am bombarded with on a daily basis, most of which go unread. The number of press releases/survey results pushed to my inbox from companies seeking my attention is enough to make your head spin, and frankly, they all start to sound the same. “Look how smart this startup’s owner is,” or, “Look at the results from our most recent survey.” So, as I listened to these marketing executives share the fruits of their knowledge with us, I couldn’t help but feel like someone needed to add a few pearls of wisdom from the other side of the fence. So I decided to speak out.
“Please, for the love of god, stop spamming publishers and editors. They go straight to junk mail. How about we try working smarter, instead.”
Founders and CEOs of startups don’t need to spend a fortune on a public relations firm or marketing companies when they are perfectly capable of doing a great job on their own. There might come a time when the expertise of a larger corporate entity is required, but as a bootstrapped startup, they should allocate their funds to hiring talent and investing in sales and technology platforms. As the Publisher and Editor-in- Chief of three successful media platforms, the following list is a strategy that I try to implement in my own endeavors.
1 Research and find out as much as you can about the reporters who are writing about your industry. Make a list of their names, e-mails, Twitter handles, etc. Connect with them on every social media platform possible. Start with the reporter and work your way up from there. Don’t attempt to contact the publisher without an introduction or prior engagement.
2 Engage the writer. Read their material often and leave comments. Everyone who writes about anything does so to engage the readers. So you will always have their attention if you comment in a complimentary and intelligent way. Add to their discussion and validate their points with examples not just kudos.
3 Through your interactions, try to build rapport with writers by offering relevant information, links, and ties to other executives they might possibly want to know about. Make introductions. Nothing speaks louder about you then the people you know and the company you keep. So go ahead, don’t be stingy when it comes to intros.
4 Do their homework for them. Research your own industry. Then keep writers informed by offering them briefs about the latest developments in your industry.
5 When the time is right, arrange for a meeting, but be specific about your motives. Other than saying, “Let’s meet for coffee,” opt for something like, “There is a new study I want to share with you as a follow-up to the piece you wrote about last week. I think it could be useful in your ongoing coverage of company X or idea Y.”
6 Re-Tweet them. Share links to their articles on your Facebook and Twitter. We all have Google Alerts. Tag them in your own posts and you will see that they will start noticing you and giving value to what you have to offer.
7 Follow whomever they are following online. You want to connect with whomever they are connected to. It may sound like Internet stalking, but there’s a good chance your contacts might begin to feel like they know you already if you happen to share the same social media circles.
8 If the reporter writes about you, follow-up with gratitude. Find ways to thank them beyond a simple shoutout on Twitter. Regardless of how much you despise the picture they’ve posted of you or if their article included a typo, be grateful and show it. Be humble and grateful. There’s a good chance you might not ever engage with them again should you fail to followup on your article/feature.
9 Don’t use your connection to them to constantly sell your own genius. Remember, the relationship is about them, first and foremost. It takes time to establish trust. Be patient and your turn will eventually come.
10 To re-emphasize what is perhaps the most important point—don’t spam your media contacts with events, press releases, and surveys galore. Avoid forwarding, cc’ing, and bcc’ing your contacts. Construct individualized e-mails and invest your time in building real relationships. Your ultimate goal with the people in your network should be making them realize the value in knowing you. Your relationship should be a symbiotic one, where both parties mutually benefit.
Just because I publish a magazine, I do not assume to have solved the age–old problem of getting the most out of an investment when it comes to print and online advertising. Based upon my observations throughout the past five years, however, I have noticed a trend in what works for people in terms of getting the best returns on their investments and I’m able to detect the first signs of failure from those who take a loss. To become a successful advertiser, there are a few things to consider for your marketing strategy. Here is some advice if you are looking to take your business to the next level.
Find Your Niche
Know who your target market is and what they read. For example, you may think that your business is great for everyone. While that may be true, you are not necessarily looking to appeal to those consumers who might benefit from using your products or services. Rather, you are looking to appeal to the decision maker—the person responsible for purchasing your product. If you are a family business, you are most likely targeting the mom and it would be in your best interest to appeal directly to her. You need to find out exactly what kind of mom would benefit from your products. What are her hobbies? Where does she go to shop? Who is she? Profile her and find the outlets she uses to reach her.
Do Your Homework
Identify the outlets of media your target market uses. Are they online? Do they read the local paper? Are they an avid magazine reader? Do they belong to daily deal sites? Once you identify the outlets, request information from their publishers. How many readers do they have? How many magazines do they print or readers do they have online? How often do they print or update? What are the platforms available to you? Pricing? Discounts?
Invest in a Good Design
Invest in an eye catching design. No matter how good you think you are with Photoshop or InDesign, if you are not a designer, your best bet is to hire someone that is. It is important to have the right artwork that will catch the attention of your target market. Remember not to crowd your artwork, don’t overload consumers with too much information, don’t make lists, and don’t try to sound like everyone else. Be honest about your services and give reasons why consumers would benefit more from using your product more than they would your competitors. You are going to spend thousands of dollars getting your product out there, so spend a couple of hundred more on the product’s aesthetic. Most magazines will offer design services for free, but they will not necessarily provide the time you need. Hire someone. Have them make you the perfect ad. Evoke emotion. Use pictures and illustrations that would evoke emotion in the reader.
Keep it Simple
Do not use too many different fonts or sizes and always accept the power of what designers refer to as “negative space,” literally blank areas or white spaces in your ad that are not occupied by artwork or text.
Track and Analyze
Once you place your ad, follow its performance. Understand what sort of results you’re looking for. Is the purpose of the advertisment for branding, for coupon retrieval, or to establish new leads? Find out how your customers came across you by digging for details. Most consumers won’t recollect specifically where they noticed your ad and it’s okay to lead them. Was it in the paper or on the billboard? Help them help you. Analyze the ad’s performance once it hits the newstands or website. Ask your current customers what they think, then ask your competitors (hopefully you are close to them). If this is not a viable option, then ask your family. What does the advertisment do in the big scope of the entire magazine or website? Is it too small and does it convey your quality?
Don’t Expect Immediate Results
If an ad does not work, don’t blame the publisher unless he or she did not deliver on the quality product that he or she promised. Remember, the publisher cannot twist people’s arms to use your services. They are only responsible for producing what they promised you and distributing it in a timely fashion. If it is a website, do they update daily? If it is a magazine, does it look and read the same way it did when you decided to advertise in it? Other than that, if your ad didn’t work it is most likely not their fault. Look to see if the publication is being read and where. Find out the reader’s opinions about the media outlet. If you receive positive feedback, then the product is probably doing its job. Before you think about discontinuing the ad, consider redesigning or rethinking your offer and keep going.
Repetition, Repetition, Repetition
Advertising works with repetition. This sounds like the publisher’s schtick, but it really does carry weight. Research shows that consumers need to see or hear about you on an average of five times before they make a decision on your product or service. Advertising also works best if you are a part of your campaign. Be active about getting on the outlet’s site to blog, post, and comment and make yourself readily available to your potential customers. Remember, you only get back what you put in. Most consumers want to attach a face to a product and will be more inclined to use your product or service if they feel that they have established some sort of relationship with you.
Finally, you must remember to talk to the media outlet about your ad. If there is a flow of communication, they will do their best to help you. It is in the interest of the media companies for you to succeed. They want to keep you as a customer and have you refer more clients to them. If you expect them to extract information from you, you will ultimately be disappointed. Most publishers will assume that you are happy if you do not speak up. If a publisher doesn’t offer to help you after you reach out to them, then by all means, terminate your contract with them.
Like it or not (er, no pun intended), The social media giant is here to stay. So why not use Facebook to optimize your business?
It’s easy to see how social technology is transforming our personal lives. In many ways, we have less privacy, we know more about our neighbors and family than ever before, and we get all of our information in real time. In the context of our personal lives, these things are sometimes considered to be negative. Do we really want to know what our friends are thinking at every moment of the day? But when you take these transformations and apply them to the business world, you see a much different reaction: who wouldn’t want to know more about their business, their employees, or their CEO, and who wouldn’t want to get that information with enough time to use it to make better business decisions?
To illustrate the potential of social business optimization when I’m speaking to an audience of executives, I sometimes like to hold up an ordinary, everyday object, such as a glass of water, or the remote control I’m using to move from one slide to the next in the presentation, and ask the audience to identify it. Invariably, people will offer a handful of suggestions, including, “A white wireless controller,” “an Apple remote,” “a piece of plastic,” and sometimes someone will say, “A device which controls your Powerpoint slides by matching the frequency of your laptop.” Even on a simple question, people come up with very different answers, some of which are extremely insightful. This variety of perspectives, answers and insights is the heart of what a socially-connected enterprise thrives on: no matter how big your company grows, how many divisions you acquire, how many senior executives enter or exit leadership roles, or how many moving parts you need to coordinate, you should always be able to tap into the knowledge of employees at every level of your company. Th at is the essence of social business optimization, and it’s something that is empowering businesses to make better decisions for their companies right now.
The social consumer may be interested in sharing and commenting on family photos, but the social business is interested in sharing information that leads to better business alignment and fewer knowledge gaps.
To understand what a social enterprise should look like, it helps to understand the appeal of social networking applications like Facebook or Twitter. The core appeal of social apps is that they let people participate in a discussion, and they provide a structure that puts the conversation in relevant context.
This also applies to more specialized social utilities like Yelp, TripAdvisor, or even Wikipedia, which create immensely valuable content based on power users who take time out of their busy schedules to write articles that will be read by anonymous strangers – a phenomenon that plays on what Paul Ford calls the “Why wasn’t I consulted?” factor. It’s not unrealistic to say that if we consulted the people inside our business the way we consult with external consultants, and provided them a real forum to contribute and collaborate on issues that matter to their workplace, they’ll get glued to it in the same way they’re glued to Facebook – not only to make their contributions but to check up on everyone else’s. Social business optimization soft ware is able to channel this same creative, collaborative energy we see on social networks toward accomplishing business goals, and it’s able to render complex and potentially overwhelming business factors into comprehensible and actionable information. Here’s how it works, and here’s why the company I founded is called 9Lenses. To move toward social business optimization, you need at least three things:
(1) a social discovery application that lets you take the pulse of your employees; (2) an analytics layer that lets you understand the results of your findings; and (3) a platform that addresses the nine key aspects of your business.
In fact, before it was a software application, 9Lenses started as a framework that was adopted by the George Mason University School of Management to help business stakeholders to understand how their actions relate meaningfully to everyone else’s in a company. The lenses are nine functional areas that every business considers on a daily basis: its market, its people, its finances, its strategy, its operations, its execution, its expectations, its governance, and its legal entity.
In our personal lives, it’s easy to justify protecting our privacy and to resist the openness of social networks. But for businesses, it’s just as easy to see the benefits to be reaped by greater transparency, greater openness and more knowledge.
In Max Gladwell’s January 23, 2012, Huffington Post article titled, “The SoLoMo Manifesto: A New Era in Media and Marketing,” he writes, “Social. Local. Mobile [SoLoMo]. These are the sweeping trends in marketing today and for the foreseeable future. In terms of media consumption, they’ve come to dominate consumer attention.” This led me to the question: who exactly are the consumers?
Before we discuss the consumers, I would like to do a quick rundown of SoLoMo. In very simplistic terms, the place (local) is the physical place/location where we check in with our smart phone (mobile), and our smart phone then connects us to the social world of Facebook (as one leading example), which broadcasts to all of our friends where we are located through an app (social) like Foursquare (as one example). This is where we get those posts on our Facebook status updates like: “Beth just checked in at ____.”
Gladwell writes: “The brand that occupies the place is more fleeting, yet equally important to defining it. The brand is how we know a place. The lat/long or geocode is how computers know a place, and this is where the virtual world comes into play.” In marketing terms, the brand might be the most important aspect of the whole concept because how do we, as marketers, get consumers to “check in” at our space? We must build a brand identity that attracts consumers.
Missing The Mark
This leads back to the earlier question: who are the consumers? As a woman and as an editor at a small, start-up literary magazine where I wear many hats, and as one of them dabbling in the marketing sphere, I started to wonder, “Why did I have no idea what SoLoMo was?” It turns out that I am not just behind the tech revolution, but that many of the articles written about the SoLoMo concept are technical documents full of technical jargon written by men and for men. This last one is the “SoLoMo Manifesto,” written by Rob Reed and has the tagline: “Just About Everything Marketers Need to Know About the Convergence of Social, Local, and Mobile (SoLoMo)” and while it is very informative indeed from a technical standpoint, from a brand marketing standpoint, it is completely gender neutral.
I understand that these writers have a specific audience and tone, and I’m not giving them flack for this. However, there seems to be a key phrase that the creators of SoLoMo are missing: the female consumer.
This is odd if you consider the following data compiled by Aileen Lee in her March 20, 2011, TechCrunch post, “Why Women Rule the Internet.” In it, she states, “Comscore, Nielsen, MediaMetrix and Quantcast studies all show women are the driving force of the most important net trend of the decade − the social web. Comscore says women are the majority of users of social networking sites and spend 30% more time on these sites than men; mobile social network usage is 55% female according to Nielsen.” Women are not only outnumbering men in social media usage, but they are spending more time on the social sites that they visit.
This is important information for businesses, especially if you take into account the social nature of women and how they go about trying new products. According to a different Nielson study, “Women of Tomorrow,” posted June 28, 2011: “Across 22 forms of advertising ‘recommendations from people you know’ is by far the most trustworthy advertising source for women.” Also consider the following statistic about one of the most popular networking sites, Facebook: a Pew Research Study, titled “Social Networking Sites and our lives,” posted June 16, 2011, found the following, “The average adult Facebook user reports that they have 229 Facebook friends.”
Combine the knowledge of female influence on their social network with the 55% female mobile social network user statistic, add in the Pew data that the average Facebook user has 229 friends, and your end result is clear: women have the capacity to be social media behemoths.
The Female Consumer
If the SoLoMo concept relies on social networking, women should be aggressively targeted, especially considering Lee’s following facts about female spending power: “In e-commerce, female purchasing power is also pretty clear. Sites like Zappos (>$1 billion in revenue last year), Groupon ($760m last year), Gilt Groupe ($500m projected revenue this year), Etsy (over $300m in GMV last year), and Diapers ($300m estimated revenue last year) are all driven by a majority of female customers. According to Gilt Groupe, women are 70% of the customer base and they drive 74% of revenue. And 77% of Groupon’s customers are female according to their site.”
If females are consuming and socializing and using their mobile devices more than ever, shouldn’t they BE the target consumer group of this SoLoMo revolution? And females should not only be targeted as consumers, but should be integral in the creation of these SoLoMo marketing campaigns. Women know how other women think, what women want and how to target women.
Creating a marketing plan that will draw women to you (local) in order to generate that integral relationship called brand loyalty with women who will want to share their experience (social) by picking up their smart phones (mobile) to potentially generate a social media force behind your company makes sense. We have seen that women have money to spend and they oft en rely on friends for recommendations, so the next experience that they share with their 229 Facebook friends could be about your company. Being gender neutral is not an option.
Sure, everybody’s got something to say. And the internet is the perfect platform to express your opinion. But are social review sites turning every one of us into critics and ruining small business in the process?
If I were to rely on a popular social review site to characterize my favorite hangout in D.C., which I love to frequent both on Saturday nights and for Sunday brunch, I’d deduce, from the reviews on this site, the image of a place that serves soupy burritos, sometimes with rusty screws in them, and plays ZZ Top continuously.
It’s an image of a place that doesn’t seem at all congruent with a place I’ve patronized oft en, but could be presumed by an unsuspecting visitor to this site and social review sites like it—Yelp, Google Places, Citysearch, etc. Though these descriptions don’t in any way fi t my experience or the experience of anyone I know of the place, they’re taken from different reviews on a social review site and could easily be the sole basis for one’s perception of a business before they’ve had the chance to experience it for themselves. On these sites, anyone can contribute anything they like, regardless of accuracy or truth.
One major drawback of these sites is that anyone can submit a review. Obviously, the most discerning reviewers among us − those with the most discriminating palate, intuitive musical taste and eye for service − who could give us an accurate comprehensive review of a business’s strengths or weaknesses, are not always going to use or take the time to write reviews on these sites. In fact, they’re likely to avoid this activity for lack of commensurate compensation for their efforts, whereas reviewers with bias or vendetta can easily contribute despite their motivation or a possible agenda. It’s similar to the way ratemyprofessor.com has a strong possibility of reflecting a student reviewer’s undesirable or inflated grade rather than their actual potential learning experience in the classroom or the ability of a particular professor. How do you know what you can trust in these reviews? I’d like to think that, in general, reviewers will be honest, but how do I know that whoever wrote this review isn’t a disgruntled employee or a one-time patron with an anomalously displeasing experience (and how do I know that it isn’t entirely the fault of the patron)? The short answer is: I can’t know. And what better way to innocuously retaliate against a former employer or to feel vindication for an undesirable experience than to anonymously vilify the “off ending” business?
One problem is that there is no incentive to contribute to these sites. Patrons who give favorable reviews always do so as a courtesy or possibly because they had an exceptionally positive experience that motivated them to set aside time to write a review. Or maybe they like to review things for the sake of reviewing. But how many people do you know who have a passion for repeatedly reviewing with the sole intention of accurately informing others with no reward? In any case, the reasons to give favorable reviews are few, while the opportunity for criticism incidentally abounds. In a world where we’re increasingly relying on internet sources for guidance, credibility is a valuable commodity. And unfortunately, the credibility of these sites is flimsy at best.
It isn’t just that the reviewer may or may not be trustworthy; another deficiency in these sites is that there is no way to tell if the tastes and preferences of any reviewer on these sites is congruous with your own, despite how credible or competent their review may seem.
Another reason these sites can be disobliging is that they can provide inaccurate information. Julie Lizer from Atlanta, Georgia explains, “The number one result of a recent search on a social review site for a hair salon near my house was a tattoo parlor. Not what I was seeking. The only time I’ve found these sites to be beneficial was in locating phone numbers for restaurants that don’t have their own website.”
In the same way that Lizer has found a use for these sites peripheral to the intended service (access to a phone number rather than the actual review), Malkia Hutchinson, a former resident of D.C., found the same, “I found out my boyfriend at the time had gone to a strip joint and rated it…and sounded like a damned fool while doing so.” Though invaluable, the advantage in Hutchinson’s discovery was serendipitous − something too unreliable to depend on, but possibly the only way that these sites can be useful − by chance alone. Maybe the reviewer you read will happen to be reliable, and maybe they’ll be truthful, and maybe (the biggest gamble) they’ll be looking for the same things in a business that you are also seeking. Th en, and only then, if all the coordinates line up, it’ll be useful, but the chances are slim.
Ultimately, reviews that rely on one-time subjective personal experiences are largely unreliable. The best − and probably only − option to determine whether a business will suit your needs and preferences is just to experience it for yourself.
As a consumer, especially as one working several part-time jobs without benefits, I love a good deal. In this economy, I’m sure many (say, a particular 99 percent) would agree. Like many other young Americans in a similar financial position, I subscribe to Groupon and a few other popular daily deal sites. For the most part, I use these coupons primarily for places I already like and frequent. My rationale is that if I buy a coupon for something I wouldn’t have ordinarily purchased, like a hot stone massage or teeth whitening, even at a discounted price, I’m not really exercising strong financial management or budgeting skills. For many businesses on Groupon, though, this type of thinking defeats the point.
Offering a Groupon might seem like a good idea because it appeals to clientele who are perhaps hesitant about trying something at its full price, such as a yoga or zumba or ballroom dancing class, but who might be persuaded to try it at a discount. Hopefully, this becomes beneficial to the business when at least a few of the buyers develop a long-term interest that results in continuing the activity at the regular cost. In my experience (and let me be clear, I am certainly no economics or marketing trends expert), what happens instead is this: Someone who buys a yoga Groupon either attends a few sessions and then disappears, or they fall in love with yoga but, not being able to pay for it, they switch studios once their designated number of Groupon sessions ends for the next local studio offering a daily deal, and Groupon doesn’t seem to be in any short supply of those. In either case, the yoga studio offering the deal doesn’t generate many (if any) longterm clients. It’s also possible that in trying to accommodate a flood of temporary students, a few long-standing clients might even lose their space at a studio (for instance, by not signing up soon enough, or by not arriving early enough to class), which could lead to a potential loss of business − the opposite intended effect. In an article last March for the New York Times, Jay Goltz did an excellent job explaining this phenomenon: blogs.nytimes.com/2011/03/16/is-grouponruining- retailing/?src=twrhp” target=”_blank”>http://boss. blogs.nytimes.com/2011/03/16/is-grouponruining- retailing/?src=twrhp.
After buying a Groupon for a well-reputed yoga studio down the block from me last year, it took me exactly two classes to realize that I’m simply not motivated enough to wake up early on a Saturday morning in order to awkwardly contort my body in front of a group of sweaty strangers. It was well worth the $20 I spent to have that limited experience, and as a consumer, I’m grateful. But the truth is that if I had honestly been that interested in learning yoga in the first place, I probably would have carefully budgeted my small amount of disposable income and ponied up the $175 for 10 sessions. Because of the price, I also would have been more likely to push myself to attend all, or at least most, of those classes. Maybe after 10 weeks of yoga, it would have grown on me enough that I would have been inclined to sign up for another 10 after that. By getting 20 easy bucks off of me in the short term, that yoga studio missed out on potentially gaining hundreds of dollars from me a little later.
There are a select few businesses for which offering a Groupon seems to make the more sense − particularly for specialty services that people don’t often use on a regular basis, such as custom framing. I have a few nice pieces of art I’d really love to frame, but custom framing is super expensive, so a Groupon would get me in the door, willing to patronize a local frame shop and spend at least some of my money when otherwise all of it would have stayed in my wallet.
From a business perspective, getting some money instead of none feels like a win. In reality, though, like the yoga classes, if Groupon or sites like it never existed, I most likely would have eventually put aside the money for framing and paid full price, even if it took me a year or more to get around to doing it. I understand why custom framing costs so much money. It requires care and precision, specific materials, and knowledge in a certain craft. (I get that no one’s building a space ship here, but it also isn’t the same as buying a $15 frame from Target, either.) It also helps preserve art and provides an opportunity to display it, protected, for a significant period of time. But if I get a Groupon for $125 worth of custom framing for $65, I have to wonder just how expensive framing really has to be, and this is the biggest destructing factor for small businesses that choose to work with sites like Groupon.
FROM A BUSINESS PERSPECTIVE,
GETTING SOME MONEY INSTEAD
OF NONE FEELS LIKE A WIN.
Most people hopefully understand and agree with the very basic idea that for businesses to survive (and hopefully thrive), they have to make a profit. At small and local businesses, I’ll almost always gladly pay an extra dollar for something if it will help one of those stores prosper. What happens, though, when a profit margin for a business is exposed through Groupon, and it seems outrageous? When consumers have access to the knowledge of how low of a price a business can offer their goods or services, the mentality likely then becomes, Why would I ever pay full price? This means that offering a Groupon might drive away potential customers − even those who aren’t even purchasing or using the coupon.
Even for restaurants, a type of business on which people seem more likely to spend disposable income (CreditLoan.com reports that the average American spends a little less than 5.5% of each paycheck on eating away from home), Groupons may not be that helpful at generating profit. Though they frequent my inbox, I’ve bought only one Groupon for a restaurant in the last six months, and it was for a local sushi place that I already dine at regularly and would have eaten at again regardless of the sweet discount my Groupon provided. Some people might use Groupons as an opportunity to check out restaurants they’ve been wanting to try, and if the restaurant is good enough and falls in their price range, maybe this will lead to them returning to a place they otherwise never would have tried without the discount incentive. I know many people, though, who buy Groupons for restaurants they normally can’t afford or that are in parts of town they don’t often frequent, meaning they’ll visit just once to use their coupon and then not go again. How is this helping business, especially in the long run?
I feel grateful to businesses who participate in Groupon deals, allowing me to try new things on which I might not have spent the money or get discounts on the things I already love. This might, on occasion, make me feel more generous toward businesses whose names I see in my inbox, even when I choose not to buy the coupon. For the most part, though, I worry that working with Groupon is not always the best marketing choice for businesses, and I’m curious to see just how much Groupon impacts businesses, negatively or positively, in the years to come.
By Craig Durosko and Bob Gallagher | Photography by Michael Vonal
We Washingtonians love to brag that our region is more recession proof than any other part of the country. Certainly the steady flow of federal dollars into our economy helps, giving employees of local companies more dollars to spend on just about everything–food, clothing, entertainment, travel and, thank you very much, home remodeling.
Washington does have an advantage. We have the highest median household economy of any region in the country. According to a recent article in the Washington Post, five of the 10 richest jurisdictions in the U.S. are right here– Fairfax, Loudoun and Howard counties as well as Falls Church and Fairfax City. At the top of the list is Great Falls where half of households earn a quarter-million dollars or more. Localeconomy guru Stephen Fuller at George Mason University says that more than $80 billion in federal contracting dollars will flow into our region this year.
Prices can be high here, but if you consider the ratio of income to cost of housing and other essentials, it is affordable for millions of people. With low unemployment, people come here for jobs. And, many are here on their second careers – after government or military service. All good, right? Well, the only problem is that if you are a regional company like Sun Design, all of your competitors are right here in the Metro area enjoying the same relatively upbeat economy. But it’s a big enough market for just about everyone if you know how to navigate it.
We’ve been in business here for 23 years and we’ve learned a few things along the way about surviving and thriving in this great – but super-competitive – region. We’ve gone from a one-person shop in 1988 (when Craig was 18 years old) to a mid-sized business of about 45 employees with annual income of about $8 million. We’ve weathered three recessions. Last year was Sun Design’s third best year in revenue and 2011 is going to be even better. In late fall/ early winter, we’re opening up our second office, in McLean, to make ourselves more accessible to clients, especially in light of the region’s heavy traffic.
Riding the Wave
Recently we did a study of our customer base and found that, no surprise, many of our clients are government employees. Our experience has shown also that with good schools, cohesive neighborhoods and other perks, people tend to stay in their homes for a long time (except those on military rotation of course). We’ve also had clients who are executives at some of the largest private sector companies in the region: Raytheon, Lockheed Martin, CACI, SAIC, Exxon Mobil and many other companies, large and small. Among the many lessons we’ve learned along the way, these stand out: the importance of ready cash, the value of intensive marketing, building a great company culture, making our financials transparent to all employees, getting accurate customer feedback and educating ourselves and our clients.
The Importance of Ready Cash
The construction and remodeling businesses, like most other industries in the region, are very tough, and recent downturns in the economy have not made them any easier. But the single most important buffer is cash. We have always reinvested 90 percent of our net income back into the business. People often mistakenly overextend — like buying their own building too soon — and hope that future profits will carry them over. Revenue is not really cash, of course, until you put expenses against it. Since we started our business, we’ve watched a number of our competitors fall by the wayside because they grew too quickly. As a rule of thumb, we keep enough cash on hand to weather the ups and downs of a fickle local economy.
If your clients, prospects, vendors, investors, networking associates and other important influentials don’t hear from you on a regular basis, they will forget about you or, even worse, assume you are no longer in business. You must have a solid and diverse marketing program to reach out to all of your audiences. In addition to running a great website (that’s a given for any company) we do direct marketing, run a consistent public relations program to get major stories in the regional and local press, we employ social media where appropriate and, very important, we host over a dozen free events each year. They include home tours (to show off our remodeling work), and networking events and open houses at our offices. The open houses feature free courses on remodeling topics and great food. Attendance at events has been excellent (sometimes standing room only) and has resulted in significant new business. We send out e-blasts and e-newsletters (event invitations, how-to articles and news) to a relatively large list of people, targeted very specifically to the type of remodeling that interests them.
Building a Great Culture
Businesses brag that “people are our most important assets.” If it’s true, good. If not, there will be a stampede out of your door in the direction of your competitors. Sun Design is known for having a great corporate culture and a staff that clients love to work with. It starts with good hires. The hiring process is something we never delegate. While potential employees interview with numerous staff members, we two owners always have the last word. Many hiring managers end up hiring people just like themselves – that’s a mistake that just broadens your weaknesses. We have a hard-working but fun culture and we hire for attitude, values and organizational fit as much as for skills and experience. Clients can tell right away whether your employees are satisfied and engaged — employee work is of a higher quality and team members are a pleasure to deal with. One of the lessons we could have learned sooner was the value of intense and very focused training. While we have always trained our staff in making the customer experience great, it is only within the past few years that we have made it the foundation for everything we do. Every employee in our company is, in effect, a salesperson and a customer service representative whose primary role is to ensure that deadlines are met, promises kept and expectations exceeded. We even have a “Director of First Impressions” to help guide clients smoothly into the remodeling process.
Like many companies, we stage employee social events, sales contests and other morale building activities. Recently we held a competition in which the winners got to pelt the authors of this article with pies (oddly enough, the whole staff enjoyed the spectacle!). But morale and team-building at Sun Design is more than fun and games. We want our employees to understand how their work affects the whole company. As such, we open our financials to ALL of our employees in monthly meetings. It’s called “open-book management,” regularly providing employees with financial data (except salaries) and other information so they can understand their work in the context of the whole organization. We set sales and income targets and if the company meets those goals, employees share in the profits. Rewards range from a few hours pay to as much as two week’s worth. Since we opened our books many years ago, we have seen employees more engaged and motivated. It also has enabled us to be more accurate in “forward forecasting” revenue, anticipating possible hurdles and customer needs because we have input from the whole team. Many practitioners like Sun Design base their methods on the book The Great Game of Business, by Jack Stack, who says that only a small percentage of U.S. companies open their books to employees, but that 83 percent of companies that his organization identifies as Top Small Company Workplaces do. Opening the books may seem counterintuitive at first. Many executives worry about sharing numbers with employees and then having the employees leave the company. We have a different approach: Owners should be more concerned if they don’t share the numbers and the employees stay!
In any business that depends in large part on referrals (don’t they all?) knowing what your audiences think about you is critical. We know what our clients think of us because we ask them. In addition to us asking our clients to grade our performance throughout the project, we use a third-party service to take regular surveys of our clients to produce scores that we can track. One of the things we ask them is if they plan to refer us to others – of which nearly 100% do!
Educating ourselves and our clients
Customers also count on us to be experts on the ways in which people live in their homes. For example, an older couple planning to stay in their home might have very different requirements than a young family in their first house. We need to make sure we don’t underdesign or overdesign our remodel and we do that by working hard to know the customer before we make even the first design decision. Even a house where only two people live may have 25 or more people during holidays or other times. More people are working from home today making home offices more common. Tubs are giving way to spa-like showers. People prepare food while guests are with them in the kitchen. Formal living rooms are not as popular because people want open spaces in which to entertain. They want greener materials and smarter energy use. So what we do is listen closely to our clients and develop their specific and exciting plan for the way they and their family want to live their lifestyles. What we are moving toward in our business is bringing people together. Remodeling just happens to be the way we do it.
Our goal is to grow a company that will outlast the owners, a permanent place where the quality of work, integrity, job satisfaction and fun are second to none.
Van Morrison’s 1967 classic “Brown-Eyed Girl” might be the all-time champion of targeted marketing, as more than two-thirds of all female Americans thought: “He’s talking specifically to me! That is my song!” Today, country music writers are the masters of segmentation, composing hits targeted at specific demographics, such as stay-at-home Dads, children of great step-Dads, and of course their staple, wronged women, in order to lock up a specific segment of the population as their customers. I’m sure no one with a bad step-Dad bought Brad Paisley’s “The Dad He Didn’t Have to Be”, but I bet a lot of people with good step-Dads did. In country music, the writer chooses a market segment, consciously excludes (or even antagonizes) others – and rides that strategy to victory.
All of us opportunistically accept customers of all descriptions – understandably, and sometimes (but not always) rationally. However, too many companies maintain sales and marketing efforts which mirror that opportunistic philosophy, and which therefore are unfocused, inefficient, and unrewarding in terms of ROI. A sales and marketing program that tries to woo customers from too many different walks of life is a prescription for failure.
Succeeding in business is hard, especially in today’s macro environment. Sales and marketing is not only hard, it is expensive. To win, you need to identify the customers for whom you offer uniqueness or superiority relative to competitors – based on your company’s specific capabilities, limitations and culture. Then go spend ninety or even one hundred percent of your sales and marketing effort focused on those customers. If a customer from outside that target market wants to spend money on you, great, but don’t you spend time, effort and money trying to find and convince them.
Chances are that you knew this already. But chances also are that the way your company is spending money and running itself contradicts what you know.
It’s a huge world out there, and your company can win big while targeting only a small part of it. Be smart. The more intelligently you focus, the better your chances of winning.
Turkish Airlines was formed in 1933 with just four planes on its fleet. Today, the company is one of Europe’s biggest and as of 2011 its best airline. Plaudits abound as THY seeks to continue its growth and standing within the industry as being the leader in both its bottom line, its impeccable service and presence on the global stage.We spoke with Temel Kotil, a former aeronautics engineer and current CEO of Turkish Airlines and asked him about his future plans for Turkish Airlines.
The non-stop flights to Istanbul from Los Angeles, Washington D.C. and New York have been a big draw to THY, what took so long? First of all, I would like to specify that the demand of our customers defines our strategy of growth. The growth of fleet in number and size—the growth of our network—made it necessary to open new destinations, especially in the United States.
What was the attraction to D.C. as a major hub for THY? Who is the main target of THY’s new routes?
The major hub of Turkish Airlines is Istanbul. The main target of THY’s new routes will cover networks all around the world, besides dominating the market through this wide network and the youngest fleet of Europe. Considering the United States, if you focus on the ethnic structure of Washington−the Ethiopian community, Persian and Indian communities−their homelands are THY’s most effective destinations. D.C. is one of the top political centers in the world. This creates an attraction and a natural flow from all around the world, especially administrative and global organizations and institutions, i.e., the Federal government, IMF, World Bank, etc. They all have the potential for providing international passengers.
What are your plans for in-flight services? Wi-Fi on the horizon?
On B777 operated routes, we have full AVOD IFE systems available with individual screens that allow passengers to enjoy close to 350 films, short programs and up to 600 CDs, as well as interactive games. Additionally, we have in-flight connectivity which enables passengers to send and receive text messages and e-mail. The news channel offers passengers world news, including economic, financial and celebrity news, as well as the weather report in text form. Starting with B777 airplanes, we’re also working on providing Wi-Fi internet, Live TV and SMS/GPRS services, but those services have not been yet activated.
Tell us a bit more about the Flying Chefs.
Turkish Airlines is one of the first airlines to introduce the “Flying Chef” system. We bring the high quality of the Turkish DO&CO dishes from the start of the production to serving passengers with our own chefs. Our aim is to create the best possible service and the best possible kitchen in the air. It is essential that all our chefs are professional, that they have the right expertise and, above all, that they love to cook! It’s an incredible surprise for the guests on board when asked for the first time by a chef how they would enjoy their steak. The positive feedback we have already received shows that we are on the right track.
What is different on board?
We have limited galley space and equipment. We have a few hot air ovens on board. For safety reasons we are not allowed to use open heat. So there is no possibility to grill steaks or deep fry something. But with the right training with the on-board equipment, we can create the same experience a customer would expect from a restaurant. Our main goal is to create the same high food standards of a restaurant, and the passenger should not realize any differences in the food on board. What we want is to surprise our customers with new service standards, new food styles, new ways of serving and hospitality. At the moment, 108 flying chefs are serving on all long-haul flights for Turkish Airlines.
I understand that flight attendants are required to attend a full day training seminar once a month. Is customer service a central part of THY’s business culture?
We have to meet the expectations of our passengers that THY is a commercial airline. The cabin crew for Turkish Airlines gets professional assistance to provide passenger satisfaction in an effort to differentiate them from other airlines. Our cabin crews are expected to realize the importance of relations with all of the passengers. A friendly and professional approach, the correct use of body language and maximum sensitivity is our major priority.
THY fleet is young, with an average age of 6.2 years, how is that contributing to the success THY experiencing?
An average age of 6.2 years of fleet helps Turkish Airlines decrease the operational costs and improve fleet efficiency in terms of aircraft utilization and reliability. A young fleet gives the costumers a chance to enjoy the newest technology and product comfort.
Tell us about THY hiring practices. Do you hire from the local labor market? What are some of the benefits and drawbacks?
Turkish Airlines employs the candidates under the following four categories: cabin crew, cockpit crew, overseas office employees and administrative/technical department employees (general employment). We outsource our internal services (security, cleaning, etc.). This approach gives us the chance to focus on our main business, and contributes in terms of cost and speed.
What are Turkish Airline’s main priorities in the coming decade?
Our main priority is to become an air carrier with a continued growth trend above the industry average, have the most envied service levels worldwide with unit costs equal to those of low cost carriers, and to keep sales and distribution costs below industry averages.
Turkish Airlines is now the fourth largest carrier in Europe. Are you eyeing a speedy climb to the number one spot, or are you a proponent of organic growth?
This year, Turkish Airlines has been named “Best Airline Europe” and was also named winner of the categories, “Best Premium Economy Seats” and “Best Airline Southern Europe” by Skytrax. The most important source of Turkish Airlines’ growth and success is the development of new products and the service quality. Nonetheless, the flight safety that Turkish Airlines provides is the basic principal in all matters. Istanbul (Ataturk Airport) is the hub for Turkish Airlines. It is called the “Natural Hub of the World, Istanbul.” Transit passengers travelling through Istanbul have been important to increasing our company value in recent years.
The Bad News: Mark Twain once opined, “there are three kinds of lies: lies, damn lies, and statistics.” Today he would likely counsel, “there are three kinds of lies: lies, damn lies, and customer loyalty surveys.”
At their worst, customer loyalty surveys can mislead. For example, in December 2008, J.D. Power and Associates commended WellCare Health Plans Inc. for outstanding customer service. Just two months later, federal officials suspended Well- Care’s privilege to sign up new Medicare clients. Citing repetitive customer care problems, regulators claimed that WellCare’s “performance was substandard in numerous areas” and was “one of the overall worst performers among all plans.”
Even at their best, most customer loyalty surveys aren’t especially telling or capable of providing actionable results. They take the pulse of the customer and provide a score, but they’re all too often ineffectual in guiding the development of a better customer experience and moving the needle.
In short, many companies today are spending much and getting little in return for their investments in customer loyalty surveys.
The Good News: Ineffective customer loyalty surveys aren’t a fait accompli. Done right, they offer rich, meaningful insights about the customer experience, as well as a trustworthy barometer of corporate well being. Taken on with more than just good intentions, they facilitate the discernment and implementation of the “right” actions – those actions that lie at the intersection of a better customer experience and a more profitable company.
Habits For A Better ROI
Achieving a better ROI for your customer loyalty surveys is simple, but it’s not easy. It won’t cost more money, it’s not reliant on new technologies, and it’s not about the adoption of some novel business strategy. It does, however, require a discipline to practice six habits.
Embrace management by facts, not anecdotes.
Many companies rely on the individual, personal experiences of employees or other anecdotal data (e.g., focus groups, comment cards, complaint records, etc.) as a surrogate for customer loyalty surveys.
How often have you heard a colleague say, “I know a customer who…” or “I know about this one recent complaint where…” or “In this focus group we just completed…” and so on. Sometimes known as the “person who” fallacy, these rich, vivid, anecdotes can have a hypnotic effect on the organization and disproportionately influence decision making. As a senior executive of a large DC trade association recently lamented to me, “if one member expresses an opinion about his needs, it’s a trend; if two members share that view, it’s a mandate.” Worse yet, falling victim to the “person who” fallacy can lull a company into a sense of complacency about its need for a more intentional, empirical approach to listening to the voice of the customer.Would you manage your sales SURVEYSpipeline, marketing campaigns, product development efforts, or financial forecasts by anecdote? Of course not. And neither should customer loyalty outcomes be left to chance.
Companies that are “built to last” recognize that using intuitions, gut feelings, and anecdotal data about customer loyalty is a risky methodology for sustaining predictable, enduring, and profitable relationships with customers. Instead, they institutionalize some type of formal customer loyalty survey process that yields reliable, valid, and ongoing insights about the customer experience.
Set your sights on improving performance, not chasing scores.
Score chasing comes in a variety of forms. Sometimes, companies literally beg for better scores. For example, following a recent car repair, I received a “pre-survey” from the local dealership (“Will you rate your experience as “Very Satisfied”?) a few weeks before I got the “real survey” from the auto manufacturer. And during a recent hotel stay, the front desk receptionist wore a button that read, “How about a 10?” (“On the survey you’ll receive from our corporate office”). In both cases, the aim was to “coach” me to give a higher score (which, ironically, our research shows to have a negative impact on the score).
Other times, companies “correct” the scores. I once worked with a domestic auto manufacturer to end a practice whereby dealerships could request the removal of certain surveys from their overall score (i.e., those with lower ratings) because the customer was “unreasonable,” “crazy,” or otherwise “wrong.”
Companies getting the most from their customer loyalty surveys have transformed their culture from one that’s score-centric to one that’s performance-inspired. I like Andrew Carnegie’s vision of philanthropic effectiveness as an allegory here; the aim is to engineer “real and permanent good.” Analogously, companies devoted to improving performance value a better customer experience – not a score. Their objective isn’t solely to hit a target number tied to an “ultimate question” (i.e., Net Promoter) or some arcane industry-specific benchmark. Rather, the survey leads an effort to engineer a better customer experience – and the scores follow.
See the glass as half-empty.
An abundance of decision making research shows that people may be more influenced by a fear of “loss” than by a promise of “gain.” Yet, for fear of presenting bad news and/or using the results for promotional campaigns, many companies ignore this practical consideration when it comes to their customer loyalty surveys.
Using biased scales and questions (e.g., Are you Very Satisfied, Mostly Satisfied, Somewhat Satisfied, or Only A Bit Satisfied?), selecting “special” samples of customers (e.g., excluding those who are known to have had problems), and putting a positive “spin” on the results (e.g., combining Very Satisfied respondents with Somewhat Satisfied respondents to get a higher satisfaction score even when those who were Somewhat Satisfied are three times less likely to buy again), are but a few of the tactics used for viewing the world through rose colored glasses.
The most powerful customer loyalty results quantify the risk associated with not taking acting to improve the customer experience. Companies earning a better ROI for their customer loyalty surveys purposefully include survey questions to ferret out areas of customer dissatisfaction and potential causes of customer defection (e.g., providing participants with a list 50-60 problems they may have experienced, presenting respondents with a list of competitors and asking which company is the best, etc.). While such practices are counter to conventional wisdom, the resulting data go a long way toward compelling action.
Set credible targets.
Some years ago, a well known consumer transportation company sought our counsel during their customer satisfaction crisis. Bad press coupled with stagnant customer satisfaction index (CSI) made for a rather anxious Board Of Directors.
Hoping to send a message, the Board set a CSI target of 80. A goal which seemed completely defensible until you considered a current CSI of 66 and an average annual change that had not exceeded about 5 points over the prior few years.
Target setting isn’t about sending messages or emotional appeasement. Those companies realizing a better ROI for their customer loyalty surveys predicate their targets on a goal of encouraging continuous, long-term, incremental improvement. Thus, targets are rationally, carefully, and methodically calibrated on the basis of current and past performance (e.g., what’s the floor and ceiling, what’s the observed average change, etc.), statistical considerations (e.g., what is the level of statistical significance for the proposed target), and credibility (e.g., will the organization embrace the target?).
Concentrate on what matters most. Sometimes less is more. Better a small success than a colossal failure.
Of course, when applied to customer loyalty, these strategies work best when you focus on those elements of the customer experience having a significant impact on loyalty. All too often, customer loyalty surveys measure many things, without measuring the right things. We recently worked with a US professional services organization to explore the validity of their metrics. Their two-page questionnaire featured a few key outcome measures (e.g., overall satisfaction and loyalty) and 20 satisfaction questions that were designed to help them predict satisfaction and loyalty (covering various aspects of the customer experience). Together, these 20 measures only predicted about 30% of customer loyalty. In other words, they were measuring a lot of things they assumed were predictors of customer loyalty; very few were.
All else being equal, you’ll get a better ROI for your customer loyalty surveys if they help you target your limited resources so that you can improve where it truly counts. You don’t have to measure everything; but at least measure those few things that really make a difference.
Tell a good story.
When people look at the results of a customer loyalty survey, they tend toward one of three reactions. Some see nothing (the data resemble a television test pattern or the linkage between the results and their day-to-day job is muddled). Others, especially when the results are negative, express confusion or get defensive (since the data are complicated or inconsistent with their own experience, there must be something wrong with the data). And still others get it, but ask, “so what?” Storytelling breaks down these barriers to using the results and engages the organization in prescribing actions. The best stories help the company establish a shared narrative and business case for change. These stories create an economic imperative to act – by quantifying what’s at risk from not taking action – and connect the dots between the survey results, the right actions, and the benefits of effectively executing those actions. A long-time financial services client of ours demonstrated the value of good storytelling to me. Their corporate culture for sharing survey results was all too familiar. Directors from every department were shepherded into a conference room to endure an annual, two-hour perfunctory PowerPoint briefing which almost always ended in the edict, “things must change.” They didn’t; at least until this company reinvented the process for sharing results.
Although senior leadership continued to set the priorities for improvement, the broader organization was held accountable for driving change. Empowered cross-functional teams of mid-level managers were engaged in a day-long, structured and facilitated dialogue to formulate action plans for improving customer loyalty. Since launching this new protocol, this company has been ranked first in its syndicated customer satisfaction survey for five out the past six years.