Idea Deluge

Where to now for product endorsement?

2011-11-09T19:38:00.001+10:00

An interesting news article in recent media revolves around the validity of external consumer ratings for some organisations -

I would see this as part of an inevitable cause and effect cycle in the marketing environment.

Faced with an environment where consumers are becoming more informed by the abundance of information available online as well as more suspicious about the validity of claims made by marketers, the consumers respond to a stamp of approval from some independent third party.
Companies observe this trend and now we have a case where independent third parties are providing questionable impartial verification on customer satisfaction (a difficult thing to measure in the first place).
Consumers lose faith in the "independent" ratings and rely instead on public opinion.
Companies observe this trend and either pay reviewers to give good reviews or submit false reviews themselves (see this New York Times article)

The vicious cycle continues and companies need to draw an ethical line in the sand. Do they refuse to lie and possibly lose market share?

The question that intrigues me is "What is step 5?"

I believe it will still have a lot to do with recommendations, but not the kind of endorsement that a national cricketer gives to a mobile phone company. I am talking about the kind of support that your best friend gives to their favourite beer. Or the nod of approval that your son's best friend's mum gives to the headache tablets she is using. Positive reinforcement of products from people with whom you have a pre-existing relationship, nods of approval granted within small tribes.

The question now becomes, how are companies going to treat / amaze / enchant / awe these customers so that they are compelled to tell someone?

Young Professional Series : Office politics

2010-07-14T10:22:00.000+10:00

Office politics could cause you to shake your head in resignation – it stops you getting things done, new ideas implemented, customers signed….or does it?

Office politics can be counter-productive, but only if you don’t know the rules. Taking the time to understand the workings of the office learning to navigate the politics can make you extremely effective.

Get a reputation for being effective by understanding your office. Learn who makes the sales, who signs the cheques, who makes the hiring decisions, who can get you time in the CEO’s diary and so on.

There is an underbelly of office politics - the gossip, backstabbing, non-transparent decision making and so on. I am not suggesting you get off the bench to play this part of the game but rather learn the rules at your office and which playbook everyone is reading from.

Young professional series : Do you have a social media strategy?

2010-07-01T08:07:00.000+10:00

What is a personal social media strategy?

1. Which social media applications do you choose to use?

2. Of those applications, who do you choose to connect with?

3. How regularly do you interact with people through those applications?

4. How do you portray your brand in each of those applications?

I don’t think there is a one-size-fits-all to social media, but I do think that it is essential that you consider your strategy.

My strategy (which you are free to steal or give constructive feedback on) is as follows :

I choose to interact on Facebook, LinkedIn, Twitter and this blog. In my opinion, these are the leaders in the social media arena and best serve my objectives of staying connected and building a personal brand.

On Facebook, I connect with friends, family and colleagues with whom I have a personal relationship. On every connection I consider the risk of the information that these connections will have access to and manage my privacy settings. The updates are usually personal : My daughter is taking her first steps, my son has learnt the letters ‘R’, ‘Z’ and ‘C’ etc… I also use it to share photo’s with friends and family. I never post anything that would damage my personal brand.

On LinkedIn I connect with all colleagues I have had a conversation with, any prospective or current clients that I have met through work, networking functions or social interaction. On occasion I will connect with people I have not met personally – but that is the exception rather than the norm. I also connect with friends that are on LinkedIn as I believe that friends are an important part of my professional network. I am NOT a LinkedIn open networker (or LION). I don’t think this adds any value to my LinkedIn network and actually exposes my connections to 2nd and 3rd degree connections of the open networkers (which could be the same as introducing my competitors to my client base). I regularly post links and news articles that I think may be interesting to my network. This is extremely simple as I have linked Google Reader to LinkedIn – whenever I “share” an item in Google Reader, it updates my LinkedIn status.

I have not really decided how I am using Twitter, I simply decided it would be good to get on the bandwagon! All my LinkedIn status updates automatically post to Twitter, so my Twitter posts are more business related than anything else. I have branded my Twitter page to match the blog to differentiate it from a standard Twitter page. I accept all connections in Twitter and automatically follow back all connections. Hopefully my Twitter tribe will keep growing steadily until I actually determine the best way to interact with them and leverage this social media asset.

My blog was created to provide an outlet for random business related thoughts. It is intended to supplement my on-line presence and form part of my personal brand. My Twitter posts appear on a widget on the blog as well as any articles I find time to write.

All of these interactions with the Social Media universe are managed in such a way that they form a constant brand message. I have the same picture on each site and try to update them all regularly.

That’s me. Like I said, I can’t prescribe a strategy for you – but I do recommend that you get one.

If a gun has a safety, why not the stock exchange?

2010-05-07T17:07:00.000+10:00

News story

Apparently, a typo caused world stock exchanges to crash. In the space of 20 minutes, America’s top 30 firms lost billions in market value – more than they did after September 11. The pen (or PC) truly is mightier than the sword.

I find this scary, and quite frankly, unacceptable. Financial firms spend millions on virus security and firewalls, protecting against hackers and cyber terrorists.

How simple and cheap would it be to have a data validation assess each trade entry? You punch in 15 billion instead of 15 million and the system retorts “Warning : Your entered trade is 1,000 times greater than the maximum trade of this stock over the last five years. Please re-enter the amount to continue.” The warning and override should then be recorded in a log.

Please will the powers-that-be sort this out before it happens again by “accident” and someone makes a fortune out of the market reaction.

Get your base right

2010-04-22T09:56:00.000+10:00

Youtube Clip - The Axis of Awesome

Here is a brilliant segment by the comedy band, the “Axis of Awesome” (caution – a few swear words). These guys show us that a number of hit songs have the exact same chord progression. This isn’t a new discovery, anyone learning to play the guitar could probably have told you that quite a few songs have a similar chord sequence.

I think there is a very interesting learning to be extracted from this and it is not a lecture on the perils of plagiarism.

All of these songs have a distinctive melody and lyrics which is overlayed onto the foundation of the chord progression and “sits” well there. The melody and lyrics have added a subtle difference which makes the final song unique and enjoyable to a particular group of people.

In your business, do you have a clearly identifiable foundation that underpins everything you do for all customers? This is part of your business that you have to get right. This is your core value proposition.

On top of that foundation, you are able to differentiate your customer base to offer your customers targeted, tailor-made solutions which enhance the value provided by your foundation.

Get the foundation right first, then sort out your bells and whistles.

I think it would be more appropriate if the box bore a large red label : "Warning lark's vomit"

2010-04-08T21:39:00.002+10:00

If you don't recognise the line above, it comes from a Monty Python skit - a chocolate maker is being investigated for including peculiar ingredients in the chocolates. When asked why customers are not made more aware of these offensive ingredients, the answer is clear : "Our sales would plummet"

Have you ever looked at the ingredients list on the back of products you get from the supermarket? I think you should and I think you should know what you are looking for.

Most consumers are quite capable of discerning high fat, salt or sugar content. What I would like to draw your attention to is those innocuous looking numbers - E160b, E214 or E507 for example. This is where a little more education would go a long way to help consumers understand whether they are eating (or feeding their children) something which is regularly an allergen, causes hyperactivity in children or is something completely harmless.

Please do yourself and your family a favour :

Watch Jamie Oliver's TED Talk on Food Education
Read this article about how improved eating led to improved educational results
Do some research on E-Numbers, find out what you are eating
Download an application to your mobile phone so you can check in the shop before you buy (like this)
Don't eat things that are not food (like E-numbers and lark's vomit).

Be smart. Be healthy. Be smart.

Mild mannered reporter by day...

2010-03-29T10:47:00.001+10:00

We have all seen the standard superhero movie with the recycled plot line. A normal guy living a normal life suddenly discovers he has extraordinary abilities. Continuing his day job, in his spare time he does amazing things to help people he has never met – because he has the ability to act and he knows that it is the right thing to do.

But people like this exist outside of the Hollywood scripts, changing the world one life at a time. Superheroes like James Harrison, who at age 74 has saved an estimated 2 million lives – Batman would have to pull a lot of overtime to match that.

James learnt that he had very special blood, the plasma prevented babies dying from Rhesus disease. He has given blood every few weeks since he was 18 and will reach 1,000 donations in September this year.

So choose to give blood, volunteer, mentor, teach, inspire, sponsor a child, give to good causes, be selfless, spread joy. My challenge to you is to be a hero – you don’t even have to save a life, just try to change one.

Young professional series : Cleaning up your on-line image

2010-03-11T13:05:00.002+10:00

If I did a Google search on you, do you know what I would find?

As the world gets more connected, the chances of you being found online increases. Everything you post on Twitter, Facebook and other social media remains long after the controversial conversation concludes or compromising photo was taken. People may not have been watching at the time but the Internet never sleeps and has a long memory.

Take charge of your on-line presence by making sure your content on all these sites reflect a positive image of you. Check your sharing securities on Facebook, think before you post online on blogs, comment on news stories or pass comments on Twitter.

Once you have cleaned up, stay clean using Google Alerts. If you are a registered Google user, you can use the Google Alert function to trawl the internet for your full name or just your surname (mine is pretty unique so that works for me). When anything gets posted on the Internet and Google finds it using your search terms, you get an e-mail with a link to the site.

That way you can check whether the new information on the web that relates to you adds or detracts from your on-line image and you can try to change it.

People are getting fired and not being hired due to Facebook activity and what Google searches turn up. Don’t go making the same mistake.

Young professional series

2010-03-11T12:59:00.003+10:00

I am hardly still a young professional, but I am still learning an immense amount about being in the business of consulting every day. And it excites me and scares me all at the same time.

The cause for these mixed emotions is the same thing. No matter how much you know, there still is so much to learn. The learning curve is steep, especially if you have recently transitioned into advisory from a commercial background.

Intermittently, I will be writing down interesting things that I pick up from reading or from experience - as much for myself as for anyone else.

History always repeats itself, probably because mankind doesn't listen well

2010-03-01T09:51:00.003+10:00

I woke up early on Sunday morning and followed the usual morning routine of a bit of reading, catching up on the news and e-mails – to be confronted by a tsunami warning. A devastating earthquake in Chile was sending a wave across the Pacific towards Australia. I followed up on the story during the day and fortunately, no killer tidal wave made it to our shores.

What was shocking was the images on news.com.au of people in Australia, New Zealand and Hawaii swimming in the sea after the alarm had been raised but before the threat had been downgraded. Do humans suffer from long-term memory loss when it comes to tragedy?

The tsunami that hit Thailand around Christmas of 2004 killed over 200,000 people and left many more homeless. It was a crisis of epic proportion. And 5 years later, our response to a tsunami warning is either to sit on the beach to watch it come in or get in the sea because the waves should be awesome! I am not exempt from this idiocy, but a South African couple I know were on honeymoon in Thailand when the tsunami hit and were both nearly killed. The story they shared was a miracle. A mix of luck, perseverance and gut wrenching grief. As a result, the word tsunami brings up a very real image of destruction and disaster.

The same will occur in businesses. The lessons learnt from the corporate failures in early 2000 and the very recent global financial crisis will be forgotten – especially by those who escaped unscathed. Or they will simply not be learnt by those too young to be affected. This slow learning curve or the inability to remember tragedy is the reason why large scale financial catastrophes will always return.

Links

Pictures of people watching for the tsunami

Interesting Excel visual of the business cycle clock

Lessons from the pudding guy

2010-02-25T07:46:00.003+10:00

True story : In 1999, David Phillips was grocery shopping when he noticed that Healthy Choice Foods was offering frequent-flyer miles to customers who bought its products. A 25-cent pudding would bring 100 miles. Phillips bought 12,150 servings of pudding for $3,140 and then enlisted the Salvation Army to help him peel off the UPC codes, in exchange for donating the pudding.

He mailed his submission to Healthy Choice, and they honoured the terms of the promotion and awarded him 1.25 million frequent-flyer miles, enough for 31 return trips from California to Europe. Phillips also got Advantage Gold status for life with American Airlines, which brings a special reservations number, priority boarding, upgrades, and bonus miles and he got an $815 tax writeoff for donating the pudding!

He is currently earning new miles five times faster than he can spend them, so essentially he has free air travel for life for the net cost of $2,325.

Morals of the story :

Always do a full commercial review of any agreement / contract / business decision - check your modelling and assumptions.
Make sure that your selling price on a product is greater than the cost to make / buy it.
Honour your contractual commitments to increase the value of the trust in your brand.
Donate to charity!

Luckily, there are no losers in this story. Phillips bought all his future air travel for $2,325. The airlines sold the miles to Healthy Choice foods so it was a standard arms length transaction and Healthy Choice foods got more publicity from Phillips’ pudding plan than they could ever have hoped to achieve through the promotion alone.

Originally saw this on www.futilitycloset.com

How will the television content get to us tomorrow?

2010-02-24T09:00:00.002+10:00

In the previous post I outlined my reasons for thinking that the current television content distribution model is rapidly becoming obsolete.

Networks and studios should adapt to meet the changing market needs.

Here are two examples of how this could work :

Studio’s sell direct to the public via the internet. This model may not stop the piracy which is plaguing the industry because the gap between free and cheap is still a big one. The networks are bypassed entirely because they currently add little to no value to the user. The studio’s benefit because they know exactly what the viewer wants and waste very little money producing shows that no-one watches.

The other model which may have sustainability is for the networks to add value by becoming content aggregators. They continue to buy from studios and sell to viewers either on a “pay-per-view” arrangement or on an advertising subsidised basis, but more likely in a combination of the two.

The networks get to know their viewers through proper investment in customer relationship management. They use this information to supply advertisers the opportunity to air targeted marketing content to the viewer.

Content is still accessed via the internet, meaning you can watch what you want when want to and the interruption of advertising is limited to products you actually may have an interest in.

Advertisers only pay networks for the advertising sold, minimizing the shotgun approach they currently adopt.

If these ideas sound far-fetched, think again. iTunes is already selling music under this model, you can already pull down movies using your Foxtel remote and there is a new music site call Guvera which is looking to test a similar approach with music sales.

The studios don't want to do this, they may even fight it - but sooner or later something is going to give.

The way television content is distributed won’t last much longer

2010-02-23T08:36:00.002+10:00

That’s a pretty bold prediction, but stick with me on this – you may just agree with me. Let’s look at the old TV content value chain :

Studios produce TV shows. TV networks buy this content from studios. Networks air their content and generate revenue through a mix of subscriptions and advertising. The viewer watches the show when it is aired by the network.

This makes a great deal of sense in a situation where the only way to distribute media to a viewer is via broadcast (other than hard copies of course). It also makes sense in a situation where the viewer is disconnected from other viewers and could not collectively purchase the media content. Enter the network acting as the intermediary.

But now with high speed internet facilitating direct distribution and a hyper-connected viewing public as well as viewers who are increasingly protective about the precious resource of spare time – viewer wants and needs are changing :

They don’t want to pay for things they don’t want to watch
They want to watch what they want to watch when they want to watch it
They don’t want to wait for their local network to buy the content and then air it, they want it as soon as it is available
If they are getting content for free, they don’t want to be interrupted by marketing for things they don’t want
They don’t want to have to leave the house and go search through DVD’s at a store and select one to watch.

The current model does not meet the new demands of the TV viewer. Something is going to have to change soon…

In my next post, I have some ideas where this may be heading.

Should we benchmark schools on the 3 R's?

2010-02-22T07:50:00.003+10:00

The Australian government has launched the MySchool website. This allows anyone who is interested to investigate a school’s vital statistics (number of students, number of staff and some other key metrics). It also compares the school’s NAPLAN results against similar schools and all schools. (NAPLAN tests cover the fundamental skills of reading, writing, spelling, numeracy and grammar). This initiative has been received with mixed reaction.

My thoughts are mixed. I think the tool is extremely useful but it is the application that makes me nervous. In financial effectiveness, the mantra is “What is measured is what is managed” and as a school, producing adults who are capable of all the skills tested by NAPLAN must surely be high, if not number one on the agenda.

Having this focus on the results allows a school to determine their comparative success in achieving this objective. They can also seek out the schools that are outperforming them and collaborate to raise the scores. Everyone wins.

My concern is, what about numbers 2 through 10 on the school agenda. Where are the metrics that measure creativity, innovation, passion, discipline, creation of future leaders and so on. If you have a moment, you must watch Sir Ken Robinson’s TED Talk on how school’s could be killing creativity.

A targeted focus on “reading, ‘riting and ‘rithmetic” could see Australian schools losing that spark that creates musicians, dancers, leaders, inventors, paradigm breakers, game-changers....

Perhaps, to give a more well-rounded picture of the success of a school, the benchmarking should also include what past students of each school have gone on to achieve once leaving school - that would interest me as a parent and give me a sense of career accomplishment as a teacher.

Links

MySchool website

Sir Ken Robinson's TED Talk

The myth of self-regulation

2010-02-18T08:12:00.005+10:00

The concept of self regulation is a simple one. An industry polices itself to make sure that they comply to an agreed code of conduct. There is just a tiny problem to this plan – it’s rubbish. It reminds me of a line from the Pirates of the Caribbean when Barbossa was explaining the Pirate's Code : " The code is more what you'd call "guidelines" than actual rules."

Chances are, it would probably be in the best (short term) financial interests of the company to act against its own industry code and, because there is self-regulation, there is no need for management to weigh up the cost of contravening the code with the benefit to be obtained from ignoring it.

There is no leverage to ensure that the individual company adheres to its own code.

This was evident in the case of Hungry Jack’s in Australia contravening the industry code regarding marketing of children’s meals with too high a fat content. They weren’t supposed to, but they did it anyway.

They weighed up their commitment to self-regulation against another contractual obligation and the contractual obligation won. Why? If they didn’t, they would lose money. Unfortunately, impact to the bottom line is often the only language most corporates understand.

But consumers have the ability to influence customer behaviour. Unless we change the way we interact with companies, they will continue to heed the call for more shiny things that cost less as opposed to the call for sustainable business practices.

This is the kind of industry self-regulation that will work. If companies don’t behave in a responsible manner, stop buying from them. Immediately.

The leverage of money, spending it and withholding it, is an incredibly powerful leverage. As consumers we need to start using it.

Interesting reading and viewing :

Hannah’s rules : Rise of the ethical consumer

Building values into business

It's (still) good to be good

Change is inevitable

2010-02-12T09:21:00.002+10:00

It has been such a long time since the last post but I have been busy. A new baby in the house makes every day living quite a challenge and what was the norm never will be again. I am also involved in the transformation/creation of the finance function in a very large Australian company.

These two events have one very distinct commonality – change. Most people fear change, it represents the unknown. But change is inevitable, it is going to keep happening and eventually – it’s going to happen to you.

Being caught in change is a bit like swimming in a river (pardon the very extended metaphor). You have some options :

Resist the change or swim against the stream. Chances are you may be able to stay exactly where you are, but you are just as likely to tire and be swept away.
Let change happen or go with the flow. You won’t get tired but at the same time you will have little control over where the change takes you.
Influence the change or ride the wave. By being involved in influencing the change process you immediately herald your intention to be a leader in your organisation (or perhaps even industry). You also get the opportunity to shape the change in your organisation and how it impacts your business, you personally and your tribe (read up on Seth Godin if tribes at work is a foreign concept to you.)

Personally, I am all for option 3. If you swim with the current you tend to swim a lot faster than if you swim against or do nothing at all.

Maybe this comes from a smug sense that my opinion is worth adding to the change discussion, but I strongly believe that if you feel strongly enough about something, that regularly equates to an opinion that should be considered.

Bottom line : get off the sidelines and get in the game.

Anti-trust is now a bust

2009-08-19T08:57:00.003+10:00

Microsoft were dragged over hot coals for bundling Internet Explorer in their Windows suite of products. By doing this they supposedly stopped free competition for web browser companies like Netscape. Huge amount of bad publicity for Bill Gates and the team.

Google develop Google Chrome - a web browser which anyone can download for free! And they get high fives all round. Are they not stopping free competition by giving their product away?

There are a few business lessons to learn here :

Size and market presence may leave a sour taste in customer's mouths

People love an underdog! If you operate a small business, you are uniquely able to meet your customer's need in a very personal way. Provided your product is comparable quality and price, you should be able to target and pick off a big enough client base to keep your business profitable.

You may face your stiffest competition from someone who is not your competitor

The answering machine industry was rendered obsolete by mobile phones with answering services and fixed line operators now offering the same. Google are not in the web-browser business. Who is not in your market but may compete with you? Who could you compete with?

Perception is reality

Microsoft were perceived as being the "bad guy", so they got punished. What is the market perception of your company. How do you change that or preserve that.

Is the tail wagging the dog...

2009-04-15T11:15:00.005+10:00

There was a great movie in 1997 called "Wag the dog" with De Niro and Hoffman. The tagline was "Why does a dog wag its tail? Because a dog is smarter than its tail. If the tail was smarter, the tail would wag the dog."

I was reminded of this the other day when I phoned Telstra/Foxtel to reconnect my Foxtel service. A simple exercise really :

You move (obviously)
You phone Telstra to advise of the move
They thank you for the call and send a technician over to complete the reconnection.

Part 1 and 2 were completed with relative ease, I then phoned to find out what needs to be done. 2 weeks, 7 call centre agents and many wasted hours later I still do not have Foxtel. Why? The system will not process something that needs to be processed. When I try to find out what the problem is - the inevitable answer is "the system"

Now the lesson here is simple. Your processes, procedures or systems should never (ever) interrupt business, cause undue customer agitation or prevent sales. If someone comes into your shop and wants to buy something and your //insert offending item// is down, make a plan. Better yet, already have a plan that can be whipped out, dusted off and used without hesitation.

If you are in a competitive business, that customer may never walk back in again!

I'll let you know if the system at Foxtel stops wagging their customer service and I get to watch rugby again before the Super 14 ends.

Are you sure about your insurance?

2009-04-01T14:03:00.003+10:00

Walking home from the train station last week, I noticed a woman mowing the lawn. She was wearing very good gardening gloves - which is good, because she may be switching between gardening task and the gloves are good for protection. The problem is - she was wearing sandals on her feet.

She had more than adequate cover for her hands, they were not really at risk - but her feet were much closer to the business end of the mower and her protection there was extremely inadequate.

According to the Insurance Council of Australia (ICA), one in six small businesses in Australia – more than 270,000 businesses – are not insured. In South Africa - I would imagine the situation is similar or worse, because let's face it, insurance is at best a grudge purchase.

If you are over-insured, it's costing you. If you are under-insured...well you don't want to find that out at claim time. Money spent on a broker may well be worthwhile, just make sure you are speaking to someone who understands your business and you are not talking to a consultant who is simply reading through a checklist to assess your risk.

Small comapnies are different to big companies. Your risks are different, your needs are different. However, one thing that most big companies do - and you should also, is annually assess your cover and determine if it is correct and sufficient. Do you have business cover, not just household insurance? It seems like a simple question but a lot of small businesses do not have business interuption insurance, public liability or professional indemnity insurance. What happens if you become injured and can no longer generate revenue?

Do you have the correct insurance for your business? Or are you mowing the lawn in open-toe shoes?

Back on Real Estate Agents...

2009-03-24T23:48:00.002+10:00

I really enjoy reading Seth Godin's blog. His content is always thought provoking and he manages so many new thoughts a week - it's astounding. Read here for his thoughts on agents (interestingly after I posted my comments on real estate agents - but I doubt it was because he reads my posts).

I thought I would share a positive story on agents. We have finally found a place to move to, just around the corner from where we are now. Part of the reason I am so happy to move is due to the agent handling the transaction. The name of the agency - Plumb Property. I had reservations around their tag line of "Providing the ultimate in customer service" as you are never really sure if you actually qualify as customer...

The agent my wife dealt with was polite, interested and went out of her way for us. When we went in to sign the documents they had a box of toys to occupy our son. The receptionist even jumped at the chance to entertain him while the agent took us through the contract. I can't even compare this to our last experience. I have to admit, as jaded as I am - I felt like a customer.

I hope they continue to succeed in these difficult times for property related business.

Does your marketing message contradict itself?

2009-03-16T07:59:00.006+10:00

Here in Queensland, Australia - we are about to have a state election. As a South African, it is interesting to see how directly the campaigners attack each other.

I would like to highlight a particular advert that is currently airing on television. (I tried to find a video version but they are all not working...here is a link to a newspaper article about the advert). Basically a number of world leaders make very strong statements about the global financial crisis and then the opposition leader is shown supposedly disagreeing with all of them.

The advert then closes out with a homemaker in her kitchen making a plea to voters, the opposition does not really know what is going on. Trust me, you should vote for the other party....

My issue with the advert is that the message brought by the advert is : Don't vote for the opposition - they disagree with the global view. Don't vote for the opposition, there leader does not know what he is talking about. Don't vote for the opposition - they are not adequately qualified to be leading you..........brought to you by some lady in her kitchen!

If I cannot rely on an elected official because of some statements edited into a slick package why in the world would I rely on the opinion of some random person commenting on this?

What is your marketing message? Is it consistent? Does it contradict itself? Does it build your brand or compromise it?

*Disclaimer*

As a non-resident I cannot vote. I have no party affiliation. This article is purely a comment on marketing message.

Real Estate Agency Theory

2009-03-09T08:22:00.011+10:00

Agency theory looks at the conflicts of interest that exist between parties with different interest in the same asset. Usually this refers to the conflict between shareholders and managers of companies.

Real Estate Agency Theory (which is a term I made up over the weekend), refers to the conflict a real estate agent is in when looking after the interests of the seller or lessor, the buyer or lessee and themselves. The incentives at play in the agents mind are studied in Freakonomics (a great read, buy it here if you are Australian or here if you are South African)

As a buyer / lessee, you would do well to remember that your interest will probably always be last on the list. The problem with this sort of attitude from agents is that in any property transaction - you actually need a buyer / lessee. We are kind of a big deal in the transaction, it does not happen without us. In fact, if you thought about it, the only expendable party in the transaction is actually the real estate agent.

But in the property boom we have just been coming through, demand outstripped supply and the buyer / lessee group was huge. Agents and sellers had all the power, incompetent agents and agencies could make buckets of money without providing good service to all parties.

In order to be a successful agent in a downturn economy, you need to focus on all parties. This secures repeat business, this enhances your brand. All real estate agents sell exactly the same thing, surely the differentiation is who the are and how they sell.

Case in point (with thanks to my wife for coming up with this gem) : We submitted an application to a real estate agent for a rental property we are interested in. They get a whole bunch of applications, they process them and the owner picks a winner. The winning application gets a phone call, to say : "Your application is successful." Everyone else gets....nothing.

What? Not even a phone call. In a shrinking property market! In a fiercely competitive line of work! A real estate agent has :

A number of properties they are trying to let
A list of contacts that are actively looking (they even know what type of property these contacts are looking for)

A couple of calls and you could rip through your rental property inventory pretty quickly, with very little effort - they might not even have to advertise certain properties.

But I suppose this may not work - like I said at the very beginning - it's just a theory.

The proof is in the pudding...

2009-02-25T12:30:00.009+10:00

You know the scene. Someone nods knowingly, smiles and then says : "The proof is in the pudding."

Now unless that is yet another corny and macabre joke during the opening sequence of a CSI episode, it makes no sense. What proof is in the pudding? And why is it in the pudding?

The correct version of the expression is actually : "The proof of the pudding is in the eating." This makes a lot more sense. You are only really able to determine if the pudding is a masterpiece once you have tasted it. That is the test, that is the measurement of success.

The proverb can be traced back to the 1300's and was popularised by Cervantes' Don Quixote in 1605.

What does this have to do with your business?

Simply, when the proverb was coined - it made sense. It had a meaning, people understood it. Over time, the expression was still used but it had changed. Some people may have known that it was incorrect, some people may have applied the meaning of the original expression to this new one. If you look at the expression with no understanding though, it is meaningless.

This could be said for a lot of business processes. When the process was developed it made sense. Over time though the process has been altered, it reason for existing may have changed or people may simply not understand why the process is there.

It is very important to regularly review your business processes and the challenge the status quo. If you are fortunate to have your processes documented, review them and ask yourself these simple questions :

Why is this process performed?

Do I still need to perform this process?

Does this process actually achieve what it was desgined to?

If you answer "Yes" to all those questions, keep the process. If the answer is "No", then you might need to redesign the process or throw it out all together. If you have not documented your business processes, get started - it is part of your organization's value.

Customer communication is vital

2009-02-19T10:59:00.005+10:00

It was not that long ago that areas of Johannesburg, South Africa were regularly plunged into darkness. The reason, rolling blackouts instituted by the electricity supplier Eskom. The cause, not enough electricity production to meet the demand.

It was a number of events that led to this position, one being that generation capacity had been severely hampered by a number of generation failures. Another being that total demand had been steadily growing over time while the total generation capacity had not. Long story short - business and political disaster.

Eskom struggled to communicate to its customers when these blackouts would occur, how long they would last, if the blackout currently in an area was a scheduled one or an actual fault. It was ludicrous.

Then appeals to all - do your bit! Save electricity, don't leave the TV on, install ripple switches on your geyser, consumers of bulk electricity such as mines must curtail operations, no new houses may be built unless they have solar heaters for water and maybe even gas ovens and stove tops. Also, electricity tariffs will have to be increased to pay for more generation capacity.

Hooray! The problem seems to be rectified. No blackouts for some time.

Then today Eskom announce so more news. Due to the drop in electricity consumption (partly due to a downturn in the economy and probably partly due to everyone trying to save electricity) the electricity tariffs will have to be increased.

Excuse me?

This illustrates how important it is to make sure your customers are not in the dark (please pardon the pun, but I think you will agree it would have been irresponsible of me not to use it). It also shows how important long term strategy is - but that is another discussion for another day. By communicating properly with your customer and being transparent on the basis of decisions you create trust.

Why is it important to create trust? Simple. People pay for it.

Good packaging!

2009-02-10T07:48:00.004+10:00

Good packaging and good marketing can mean the difference between success and failure. And more expensive does not necessarily mean better.

There is a coffee shop in the building I work in. Instead of following the practice of other coffee shops in our area of having a happy hour where coffee is half price, they package their deal slightly differently. During happy hour when you order your coffee, you flip a coin and call it in the air. If you are right the coffee is FREE and if you are wrong then you pay the regular price.

Based on probability theory, over time all coffee sold in that hour will work out to half price. So the coffee shop is not losing any money over time. Patrons get a cheap thrill hoping to get their coffee for free. If they do, Hurray! If not, well you pay normal price - no big loss.

But on the plus side for the coffee shop, if I was buying coffee at that time of the day, I would try my luck. The outcome is that they could attract more customers by offering the exact option as their competition, just in different packaging.

So the question is, what are you doing to attract customers?

Recession or Natural Selection?

2009-02-04T09:13:00.001+10:00

Recession is not necessarily a dirty word. In fact, there is actually an upside in recession - you just have to look for it. For consumers, the upside is that businesses which offer poor service, have higher prices or incapable management tend to fade into obscurity.

The natural selection enforced by recession forces these businesses to fold and remaining are healthy businesses which should allow the economy to prosper when the tide turns.

There has been much debate around the bail out of the motor manufacturers. Based on the analogy above, I would liken the bail out to messing with the natural order of things. Yes, many jobs are at risk but long term you really are not doing the global economy a favour. Other motor manufacturers who run more efficient companies should have benefited by a massive boost in market share, they deserved it and it has been denied them.

If you run your own small to medium size business, bail outs are not your concern but the lesson is still there. Aim to be more efficient, offer better service and you could find yourself gaining market share and even being a more profitable enterprise. This does not always mean spending less, it really means spending wisely.

Hide and Seek on the WWW

2009-01-27T08:20:00.004+10:00

If you run a small business, hopefully you have realised the importance of having web presence. Internet connectivity continues to grow and at the same time, the use of the internet to search for products and services continues to grow as well.

Obviously, the importance of having a great website is paramount.

But what good is that amazing website if no-one finds it? About as useful as a great product or service that no-one buys.

If you are running a small business, you may have heard or read about Search Engine Optimization (SEO). If you do a Google search on SEO, you will probably come across any number of people who are trying to sell SEO services to you. Before you spend that money, please do some research on how it works and try it yourself.

By following a set of instructions, a mildly tech savvy business owner can climb the Google search ladder with relative ease - connecting your business to your clients.

I followed the steps listed on the link above and now this blog is found by Google Search! If I can do it, so can you.

Are you a pirate?

2009-01-20T09:46:00.000+10:00

Not the gun-toting, eye patch wearing variety. I am referring to "white-collar" pirates, the kind with illegal software on their computers. The Business Software Alliance (BSA) estimates a piracy rate of 60% in the Middle East/Africa region and 59% in the Asia Pacific region. (Source) I would guess that the rate in small businesses could be far higher.

What is the risk to you? In South Africa, conviction in a criminal case could lead to a penalty of R5,000 and/or 3 years in prison for EACH illegal item for your first offence and that jumps to R10,000 and/or 5 years in prison thereafter (Source). In Australia, the maximum penalty for individuals is extremely high at $93,500 and/or 5 years in prison and for companies that amount jumps to $467,500! (Source)

That's just criminal proceedings, there could also be civil suits filed and we have not even considered the cost of a damaged reputation. The BSA is very serious in tracking down offenders and rewards are offered for information on defaulters - as much as R100,000 in SA and $5,000 in Australia.

So what do you do? Well software is quite expensive. Prohibitively so for some small business owners, and everyone needs to have Office, right? Well no, not really. What a lot of small business owners do not realise is that Office probably has far more features than they really need and there is a great new concept that the Google revolution has brought to end users. Free stuff!

Office productivity software from Google and OpenOffice may just meet your need and your budget. These are just two examples of such software, search for more. The only requirement to run the applications is that you have a good internet connection as most of these services operate on thin-client type technology, where the processing and data are not actually held on your computer.

These solutions would probably be just fine for most micro-businesses and would probably stand up to some small business requirements as well. Keep checking back as I look out for other freebie or low cost software that will suit your business.

The Fourth Estate

2009-01-14T11:14:00.000+10:00

Some of the inspiration for this article comes from something I read by Graeme Codrington.

The responsibility of the press (in South Africa anyway) is laid out by the Press Code (I would imagine that a fairly similar set of standards prevails in most countries). The code requires journalism to present the news accurately and fairly, in context and in a balanced manner.

In any paper you pick up today, you will read that public confidence is extremely low due to the global financial crisis. Is this not a self-fulfilling prophecy? Follow my thinking :

Newspapers (for the most part) print only bad news about the current economic outlook.

People read this, public confidence dips.

They then interview their readership to discover *gasp* public confidence is low.

People read this, public confidence dips (even more).

I worry that a newspaper's first priority is to sell papers to make money and the second is to present fair and accurate news. While not mutually exclusive they can often be opposing forces.

Another non-business example of this in Australia was brought about by the sudden retirement of Matthew Hayden (a long serving member of the national cricket team). Last week every newspapers was a critic, saying he has lost form, he should not be selected etc. Then the day he retires, the same newspapers sing his praises, what a legend of the game, sad to see him go, who could possibly replace him?

Give me a break.

The truth is, it's not all bad news and you should not believe everything you read. Businesses are suceeding in these times, and so can yours.

Car sales are crashing! Now what? (Part 3)

2009-01-14T07:49:00.000+10:00

According to NAAMSA, December 2008 sales were down 27%. That is quite a serious number and it probably is similar to numbers around the world. That kind of drop, coupled with the already low dealer margins, stock holding building up, cost of financing the floor plan and suddenly car dealers are making losses on car sales.

What do you do? Well if you are a buyer, you bargain hunt. If you are a car owner wanting to sell, you don't. But if you are a car dealer, you need to change your business focus in a hurry.

Most car dealers have other revenue streams as well, and one they will have to focus on is the high margin service and parts departments. If you suddenly have less foot traffic on your floor and sales people are sitting idle, turn their attention to service lead generation. You already know who bought cars from you and when, give them a call and find out how they are enjoying the car, enquire about mileage and remind them when there next service is due. Offer to book them in and then call the day before and remind them.

If your salesmen are not that busy, make sure they are driving the high profile service customer to work - preferably in a demo model of the new version of that customer's car.

Selling cars does not have to be a once off transaction with a never-to-be-seen-again customer, it can be a service customer acquisition excercise. If you don't have this approach, and a dealer in your area does, your future service revenue might just be driving through their front door.

And when the economy turns. Don't stop doing any of the above!

The real estate market is flat! Now what (Part 2)

2009-01-13T09:47:00.000+10:00

A lot of the inspiration for this came from Seth Godin whose blog I follow...

The real estate market the world over has taken a bit of a dive. In South Africa in particular a perfect storm of low interest rates, strong economic performance, low inflation and a mass of first time buyers led to astronomical house price increases.

Demand exceeded supply as the developers could simply not keep up. The only possible effect - price increase. Good real estate agents made good money, average real estate agents were suddenly popping up everywhere due to all manner of people following the money.

But then the inevitable collapse. Due to the world financial crisis (ironically driven by the real estate subprime crisis in the US), the collapse was spectacular and rapid. Where to from here for real estate agents who actually want to sell houses and make money as opposed to just making money?

Start a local paper for your area...as mentioned in post linked above.

Why you may ask? Well the current market condition is temporary. What happens when the tide turns? You need to be poised to reap the benefits.

Your agency has a reputation in your area, maintained by dealing with integrity, having professional staff and selling houses. In a flat property market you aren't getting enough face time with that client base to maintain that profile.

So over time your agency no longer stands out but merges into the crowd. To stay at front of mind when buying and selling decisions get made a project such as this could keep the image of the agency bouyant.The content should be relevant to persons involved in property or thinking about property. It should be honest and professional, not a sales pitch. You make the money when you make the sale - this is just to get the customer in the front door.

The economy is flat, now what? (Part 1)

2009-01-12T11:51:00.000+10:00

If you are operating a business that is adversely affected by the current economic conditions, what are you doing differently right now?

If the answer is nothing then you are in trouble! You have two immediate decisions you have to make :

Can you buck the trend and improve sales during this time?

What are doing to make sure you are in a better position than your competitor when things pick up again?

If you aren't thinking about this, then you are sliding back with the economy and losing ground.

We will look at some practical, cost effective strategies that various businesses can implement right now to prepare them for success.

Stock take sales!

2009-01-07T12:22:00.001+10:00

In South Africa, the days before Christmas are a mad panic of shopping. The concept of going to the mall in those days scares me - fighting for parking, pushing through the throngs of shoppers like a homesick salmon and then trying to find the correct gift.

In Australia, I did some shopping at the Chermside Westfield in the lead up to Christmas. Free underground parking, practically no-one in the centre - it was great. If you missed out on an opportunity to hit the shops, there was 36 hours of shopping at the centre (starting on the 23rd thru the night to the 24th) which seemed like a very clever idea.

But apparently, the shopping centre stood empty. Was this a sign of the financial crisis? NO! In Australia, everything goes on sale on the 26th. The shopping centre bursts at the seams as the whole of Brisbane pours in to get the good deal on the stock take sales.

The lesson : If you are going to pay staff overtime to work round the clock before Christmas, start the sales at the same time and maybe you will be able to get some more units out the door.