Atomic Ideas

In Business, The 80/20 Rule Is Not Always Golden.

We've all heard the 80/20 rule (Pareto's Principle). The basic reasoning behind it is that in most endeavors, 80% of the results come from 20% of the actions.

In business, it has become a rule of thumb that 80% of your business comes from 20% of your customers. I've said it, you've probably said... but guess what, it's not always true.

I ran across an interesting article on the Marketingprofs site written in 2005 that does a great job explaining the fact that the marketing interpretation of this rule is actually flawed in certain circumstances. Following is an excerpt to whet your appetite:

 "The 80/20 rule as conceived by Juran assumes an equal return on investment for each opportunity. This is not an assumption that typically works in marketing, where the margins on sales vary widely based upon the terms of those sales. Most importantly, the more a customer buys, the more bargaining power they tend to have to drive down the price they pay per item.

  "For instance, a bar of soap sold through Wal-Mart will tend to margin less for its manufacturer than the same bar of soap sold through a small grocery chain, since Wal-Mart's purchasing power enables it to drive a significantly better price per bar of soap than everyone else. This difference in margins means that the gains in volume catering to the golden 20% can come at the cost of a lower profit margin. When those differences are great, it is easy to have situations where the "trivial" 80% of customers are actually more profitable on only 20% of the volume."

It's a very interesting article and proof that you can't always take everything at face value - even an old adage!

You may have to register to read it, but it's quick, free and worth it. Better yet MarketingProfs is a great resource for this kind of eye opening info.

Pass the Popcorn

A friend recently told me he had a Twitter account but didn't tweet. He just read what others tweeted. Having sent out a couple thousand tweets I thought that a bit odd, sitting in the audience instead of getting onstage and messing it up. After all, it is social media. I do worry about him sometimes.

But businesses are getting on Twitter, opening up an account, and doing exactly that. They read the tweets. They set up Twitter alerts and other social media tracking tools and read what's being said specifically about their company and their industry.

Whether for legal issues, or resource issues, or for some other reason why they're not getting onstage, these companies are taking a step in the right direction, listening to what customers are saying.

It's an unvarnished, unleashed, free, customer focus group. Companies can take the information and, if it has merit, use it to improve what needs improving.

At Atomic Ideas we stress the selling actions of "Listen-Learn-Lead". And in the spirit of listening to what customers want, not what your company thinks they want, it's a digital step in the right direction.

If you want to sell more stuff, whose opinions ultimately matter? Yours? The people buying your stuff?

Right.

Selling Surrounds and Follows Selling

Reading Russ Tate's post, "Think INSIDE the Box", on how companies can use workplace optimism as a competitive advantage, reminded me of another post on another blog I read recently, where the blogger was lamenting the poor customer service he recently received, especially in light of the recent economy and how every customer should be highly valued.

The post was followed by 20+ people adding their customer service horror stories. Customer service reps reading off the script, regardless of your level of knowledge. Some of the posts named the companies doling out the rude service, which I'm sure Google will be happy to index.

As a 'marketing for sales' company, Atomic Ideas helps businesses sell more stuff through their marketing and sales efforts.

But truth be told, whatever part of your business comes in contact with a customer - whatever a customer touches, tastes, sees, hears - that's selling. And that translates to how the customer will feel.

Your level of customer service is selling after the sale. And it's one of the biggest determinants in a second sale. Volumes have been written about customer service. And yet...

The way you invoice is selling.

The way you ship your product in a box is selling. How the directions are written for the product is selling. Crappy directions raise blood pressures (Imagine if you're selling blood pressure monitors).

Your clean trucks are selling. So are your dirty trucks, with your logo prominently displayed under the dirt.

Your lobby is selling. Even your bathrooms are selling. There's an “America’s Best Restroom" Award, sponsored by Cintas, www.bestrestroom.com.  Any restroom in the United States that's open to the public is eligible. (Smart sponsorship, Cintas, you "facility services that includes keeping restrooms clean" company, you.). When's the last time you enjoyed a company's bathroom? Go to any restroom that made the top ten list and you will.

This liberates the idea that selling resides in the sales department. I've often used the sales quote, "The salesperson brings in the first sale, the company brings in the second".

Social media is all the rage, yet that's just one area of a person's life that comes in contact with your company. The key is to know all the times a customer bumps up to your brand.

Those bumps have been called 'touchpoints'. What kind of 'touchlist' would there be at your company based on those touchpoints? How long would it be? How many departments and employees would be on the touchlist? If an employee is on the touchlist, they're in sales.

Along with employee optimism, there's your other competitive advantage - knowing that any and all customer contact is a sales opportunity, to help you sell more stuff.

Think INSIDE The Box - Invest in Your Employees, Sell More Stuff.

Many companies spend an awful lot of time thinking "outside the box," and spend a lot of money doing it. In this case, outside the box means outside your business. In other words spending gobs of money in a quest to reach prospects and turn them into new customers. 

Obviously there is nothing inherently wrong with doing everything you can to sustain business and get more.

But with sales down, and in an effort to move the needle, many marketing budgets are being spread too thin with money being spent on "bandwagon" (mostly web) tactics (often without clear strategy, or clear metrics for ROI).

Taking the attitude, "Everybody's doing it, so let's try it and see what happens," is a bad tactic (it's certainly not a strategy). Especially in this economy when quantified return on investment is much more critical.

It's not that experimenting on the Internet is a bad thing. We're as dazzled by social media and other Internet opportunities as you are and consider them vital in the future of marketing.

It's just that, right now in a down economy, maybe there is a better way to use that "experimental" spend to get more measurable results by thinking "inside the box"... inside your company.

What if you spent it on your employees?

A recent article in Business Week shows how, "The link between a company's employee engagement and its bottom line is real: the more engaged the workers, the higher the sales and profit."

It presents case studies which describe how investing in employees to create "employee optimism" - an enthusiastic culture of belief and understanding of the mission and vision of your company - can lead to big payoffs.

One of the companies showcased is Campbell Soup. When their stock was in the toilet, employee pessimism was pervasive and takeover rumors were circulating everywhere, new Chief Executive Douglas R. Conant realized that winning in the marketplace meant first winning in the workplace. Read the article to see how it did it. Now Campbell employees are full of optimism and the company's earnings growth is far ahead of its competitors. Best Buy is another company discussed and there are others.

As the article nutshells it, "Put simply, workplace optimism, if nurtured properly, can be a competitive advantage:"

It's worth reading. It's worth thinking about.

One more thing. If you want to really be on the cutting edge,  you can indeed use social media to engage the troops. Read how here, and here, and here.

For more info on revolutionary workplace thinking:

Best buy changes everything! "Smashing The Clock."

Employees: The Direct Route To Customers' Hearts

Tata - How to Build a Culture of Innovation

How P&G Finds and Keeps a Prized Workforce

Changing Your Corporate Culture

Employee Engagement: What It Is and Why You Need It

Employee Engagement - It Takes Two to Tango

2008 Employee Engagement Report - Study

http://www.flickr.com/photos/fncll/ / CC BY 2.0

Is Social Media a Fad, Or a Revolution? Helpful Stats To Help You Make Up Your Mind.

The good folks over at the Socialnomics-Social Media Blog have put together a whole lot of stats documenting the amazing growth and effect of the Internet and Social Media, all wrapped up a cool little video.

Some amazing stuff!

Here's the info in text form courtesy of Socialnomics - you can check out the list of sources on their site.

You can also order the book, Socialnomics, here.

1. By 2010 Gen Y will outnumber Baby Boomers….96% of them have joined a social network 
2. Social Media has overtaken porn as the #1 activity on the Web
3. 1 out of 8 couples married in the U.S. last year met via social media
4. Years to Reach 50 millions Users:  Radio (38 Years), TV (13 Years), Internet (4 Years), iPod (3 Years)…Facebook added 100 million users in less than 9 months…iPhone applications hit 1 billion in 9 months.
5. If Facebook were a country it would be the world’s 4th largest between the United States and Indonesia
6. Yet, some sources say China’s QZone is larger with over 300 million using their services (Facebook’s ban in China plays into this)
7. comScore indicates that Russia has the most engage social media audience with visitors spending 6.6 hours and viewing 1,307 pages per visitor per month – Vkontakte.ru is the #1 social network
8. 2009 US Department of Education study revealed that on average, online students out performed those receiving face-to-face instruction
9. 1 in 6 higher education students are enrolled in online curriculum
10. % of companies using LinkedIn as a primary tool to find employees….80%
11. The fastest growing segment on Facebook is 55-65 year-old females
12. Ashton Kutcher and Ellen Degeneres have more Twitter followers than the entire populations of Ireland, Norway and Panama
13. 80% of Twitter usage is on mobile devices…people update anywhere, anytime…imagine what that means for bad customer experiences?
14. Generation Y and Z consider e-mail passé…In 2009 Boston College stopped distributing e-mail addresses to incoming freshmen
15. What happens in Vegas stays on YouTube, Flickr, Twitter, Facebook…
16. The #2 largest search engine in the world is YouTube
17. Wikipedia has over 13 million articles…some studies show it’s more accurate than Encyclopedia Britannica…78% of these articles are non-English
18. There are over 200,000,000 Blogs
19. 54% = Number of bloggers who post content or tweet daily
20. Because of the speed in which social media enables communication, word of mouth now becomes world of mouth
21. If you were paid a $1 for every time an article was posted on Wikipedia you would earn $156.23 per hour
22. Facebook USERS translated the site from English to Spanish via a Wiki in less than 4 weeks and cost Facebook $0
23. 25% of search results for the World’s Top 20 largest brands are links to user-generated content
24. 34% of bloggers post opinions about products & brands
25. People care more about how their social graph ranks products and services  than how Google ranks them
26. 78% of consumers trust peer recommendations 
27. Only 14% trust advertisements
28. Only 18% of traditional TV campaigns generate a positive ROI
29. 90% of people that can TiVo ads do
30. Hulu has grown from 63 million total streams in April 2008 to 373 million in April 2009
31. 25% of Americans in the past month said they watched a short video…on their phone
32. According to Jeff Bezos 35% of book sales on Amazon are for the Kindle when available
33. 24 of the 25 largest newspapers are experiencing record declines in circulation because we no longer search for the news, the news finds us.
34. In the near future we will no longer search for  products and services they will find us via social media
35. More than 1.5 million pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared on Facebook…daily.
36. Successful companies in social media act more like Dale Carnegie and less like David Ogilvy Listening first, selling second
37. Successful companies in social media act more like party planners, aggregators, and content providers than traditional advertiser

The #1 Thing Your Business Needs To Sell More Stuff Right Now? Knowledge!

It has been said that knowledge is everything. I have no idea who said it, but it does make sense. It has also been said that business is a lot like war. In fact, a guy named Sun Tzu wrote a manuscript sometime between 722-221 BC, according to scholars, which has become something of a 'art of winning in business" handbook for many.

The manuscript was called "The Art of War" and here's a quote from it that is very relevant to our business conversation here.

"It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle."

Too many businesses, big and small, don't know themselves very well, let alone their enemies (more politely referred to most often as "the competition)." And without that knowledge, it is impossible to be different.

As Sun Tzu points out, know your enemies and yourself and you'll win every battle. In business, it's the key to differentiation. And differentiation is key to real success.

Without in-depth knowledge of yourself AND your enemies, you cannot:

1. Own a unique position in your market.
2. Develop a unique culture inside your company that translates to fanatical customer loyalty outside your company - Word of Mouth/Buzz.
   
3. understand your customers and, more importantly how to win over your
   competition's customers.
4. Change what is wrong or not working - with your business, employees, products or services.

Of course, the one thing Sun Tzu leaves out that is important to us is knowledge of customers. That knowledge is more important than ever as customers become more in control of driving exactly what they want and expect from the businesses, products and services they form relationships with.

Without in-depth knowledge of your customer, you cannot:

1. Understand how to find, engage and convert prospects.
   
2. Innovate to meet to customer (and prospect) wants and needs.
3. Sell more stuff.

There is more to differentiation to be sure, but you get the idea. Knowledge is the only way you can make it happen.  Make it happen and it's a surefire way to break out from the crowd and sell more stuff. Remember, there is always a way to differentiate, and it may not be your products. Take a look at how Zappos did it simply by going above and beyond. 

The bottom line... it's not about your brand, it's not about "branding." It's about having the knowledge to know exactly what your customers really want. It's about knowing what your competitors are offering them. And then it's about executing what you have learned... doing whatever you have to do differently to give customers what they want, need and desire better than anyone else! Better products, better experience, better value.

Gain the knowledge to figure out your marketable differences, then blow away your enemies.

And listen to Sun Tzu. He also said, "Opportunities multiply as they are seized."

Society's Lost Art - Patience.

A recent article in USA Today told the story of a person who after ordering a pizza from Dominos immediately began tracking it on line – from the time it began being made right up through the time it was delivered.  About the same time a person I know ordered something online and that evening began tracking the product from the time it had left the warehouse, when it was on-route and when it had reached the local delivery service – then wondered every half hour when it was going to arrive.

By this time I started to ask myself whether real-time tracking was a cool tool or was it symptomatic of a societal malady.  Or both.

We live in a world that increasingly requires immediate gratification and feedback – from simple things such as IM on a cell phone (in constant communication mode) to the more complex world of business, not to mention tracking of pizzas. The technology of today has created a world that expects immediate responses and results.  Now we have to start determining whether or not this is a good thing.

Clearly this is impacting both our personal and professional lives.

The Stock Market wildly fluctuates on a given report – bad news and the bears are in control driving down the market value almost immediately.  However, an hour or a day later when there is a positive report the market will reverse itself nearly on the spot.  Is there no longer a thought process about the big, long-term picture?  What happened to long term planning and goals?  What happened to long-term profits?

A viral message appears in one form or another on the Internet and organizations go into a tizzy trying to solve it yesterday before they even understand the true implications. The results are often overblown and reactionary rather than strategic.  This is often driven by the ability for anyone to gain a bully pulpit and start to comment.  Remember the adage of the squeaky wheel.  Maybe if we took a breath, evaluated the situation and determined the proper and detailed response our marketing lives would be a little more manageable and successful.

A CMO today lasts an average of approximately 2 years.  There may be many reasons for this, but one that is frequently heard when a CMO is leaving is that it is time to move on or that the company is looking for new direction.  I find it hard to believe that after 2 years (and often less) that someone has accomplished all they could have.  Is this just wanderlust or lack of patience to commit to anything for the long haul?  We have come to expect the marketing solutions that work almost before they begin.

This, however, is not how it usually works.

We need to regain our sense of vision and commitment.  It is nice when we get an immediate reaction to our efforts, but we need to realize that our work is likely to last years (hopefully decades) and that we need to regain our focus and patience and not shift gears if things don’t work out the way we planned after a couple of weeks.  The ability to recognize when speed should be a priority versus when we need to step back and think long term (read an interesting article) should be more important that just reacting and then reacting again if we do not like the immediate results.

I have often been asked by a client when I took 3 or 4 hours to respond to an email – “where were you, I was waiting for a response?”  What is it about emails that people expect – demand? – an immediate response.  Yes, I know that with the phones of today we can get an email immediately after it has been sent.  But if I am with one client or in a meeting, isn’t it bad etiquette to stop what I am doing and respond.  Doesn’t the client I am with deserve my undivided attention?  If someone calls me and gets my voice mail and leaves a message they usually understand that I am not available and will get back to them as soon as I can.  Why not extend the same patience to electronic communication?

We have come to demand immediate results, immediate response and immediate satisfaction.  But the truth is life takes time, especially to get things right.  And the sooner we all realize that, and come to appreciate patience the better off and successful we become.

Is Bad Buzz Good Buzz? Ask The Buzzards Circling Modernista's New Palm Pre Ads.

One of my most favorite ad lines in recent memory ends a Cadillac spot created by Modernista. You know the one, "When you turn your car on, does it return the favor?"

Sadly, I have to agree with apparently thousands, maybe hundreds of thousands of others who think Modernista's new Palm Pre ads are a tad creepy. You can watch the video and judge for yourself... and read this post from Jim Edwards on BNET Advertising for validation if you also think it not so great. 

The spots are definitely creating buzz, but it appears the majority of it is bad. Is that a good thing? And that's the issue that got me going here.

Modernista's Gary Koepke, co-founder and executive creative director at Modernista apparently thinks bad buzz is good.

In an Ad Age article he states, "We weren't trying to creep people out, but one thing I have learned now in this digital age is people can be as rude as they want as long as they don't have to look you in the face," Mr. Koepke said. "The Pre is probably being talked about more than other phones right now because of the marketing and advertising, and that's a good thing. Could the ads work harder to show exactly how the phone works? Yes, but we knew it would be polarizing people to have a woman not shout at them and tell an interesting story."

Okay. Well, I for one didn't find the story in the ad interesting. And, they certainly didn't work hard enough to make me even think for a nanosecond about trading in my iPhone. But that's not the point.

I think Mr. Koepke is dead wrong. People talking about your product is only good if they like you and your product. People saying you're creepy and not understanding why they should buy your product or "how it works" is just plain bad.

Obviously, Gary must not follow what's going on in the world of marketing too closely. If he did, he would be familiar with the fact that Crispin's equally creepy Burger King ads have not been doing the job for the burger chain. Lot's of buzz? Yes. lots of awards for Crispin? Yes. A lot more BK burgers in bellies? No.

Fact is, BK is falling even further behind arch (sorry, couldn't resist) rival  McDonald's.

So apparently creepy is bad. And so is bad buzz. Before I became romantically involved with my iPhone, I was a dedicated Palm guy. I have to think there is something about the Pre that would be worth talking about.

What do you think? Is buzz good, even if it's bad? I think not.

Fantastic Resource - Social Media Case Studies List.

Stumbled across a phenomenal resource list today for those of us fascinated by and engaged in the social media space. You can find it here on the Interactive Insights Group site. Thanks to them for sharing.

A few highlights:

1. WOMMA's case study library
2. Peter Kim's list of social media marketing examples
3. 110 ways retailers are using social media
4. The corporate Twitter awards list
5. Forrester's Groundswell Awards
6. Twitter brand index
7. Ingnite Social Media's 26 Social Media Marketing Examples in Depth.

These are just a few. there are 23 entries on the list in all.

And while we're in the sharing mood, check out Chris Brogan's still extremely useful post from last year, "50 Ways Marketers Can Use Social Media."

read. learn. enjoy!

Somewhere In Time

Working on a social media project for one of our clients, and I'm taken down the online rabbit hole.

Searching through web sites and forums and blogs, and you realize the definition of infinity is the Internet. One web site leads you to seven, then to twenty more and then another forty. Valuable stuff that you learn along the way. But very seductive, luring you to link to just one... more... website...

Then you learn how quickly time passes when you lift your head up from the screen. 3 hours?! I thought I was surfing like, twenty minutes....

So I've had to invest in a low-tech reality gadget that snaps me out of my high-tech Internet infomania and back into real life.

It's my rubberized time travel device, worn on my wrist, covering up all the red teleportation marks.