“You get better at what you measure,” or so it goes. Metrics are an important part of business. It allows us to focus on key areas and ensure that progress is being made. The good thing about good measurement is that it takes the guesswork out of improvement, and makes a more equal environment. If you notice an employee who is not doing a good job and you tell them, they will more than likely get angry and think you don’t like them. If you have a solid measurement system in place then you just show the employee the data. They can understand it and see the need to improve without a lot of emotion.
All this is well and good, but it does seem to raise one problem. We know that people are motivated by WIIFM (What’s In It For Me). You can’t motivate someone to care about something they just don’t care about. To solve this problem it has become common practice to use a bonus or reward system tied to a set of metrics. “If you can bring up production levels 10% by the end of the quarter, you will get a $500 bonus.” On the surface this tactic sounds good. It allows us to help motivate our employees to do better because if they do, they get a reward. It’s the carrot and the stick at work. Do good, get a carrot, do bad, get the stick!!! There are two evident problems with the carrot and the stick as we know it.
1.) It doesn’t matter what you measure, the better you get at something, the harder it is to get better. Lets say that you are measuring production of a product. You find out that you are running at about 20% of what you could be running at. You set up a system of measurement, create a reward structure, train and educate your workforce about the system and then get to work. In the first quarter, you get an increase to 30%. Everyone gets bonuses and everyone is happy. The next quarter you get to 50%. More bonuses are handed out and life is good. Then you go on to get 60%, 65% and then 70%. Then all of sudden your increases are now lucky to grow at 1 or 2%, if they grow at all. What Happened???
There is a certain amount of energy that takes place maintaining a position. Its a lot more work to stay at 70% than it did at 20%. This is predictable and can be planned for, but more often that not when the numbers stop growing at a rapid pace, many people get complacent again as they don’t seem to be making as much of an impact. It hard to get the troops worked up over 1%. How much of a bonus can you get for that extra 1%? Is the work required to maintain your position PLUS the amount of work to get even better worth that 1% bonus? This brings us to point number 2.
2.) The carrot and the stick deal with very shallow motivational tactics. Don’t get me wrong. Money isn’t everything, but stop paying your employee’s and see how many show up to volunteer. The problem is that the prospect of more money is a superficial motivator. Many people want to do a great job. Given the choice between work that is mediocre (or working for a company that is) and working for an industry leader, or at least a strong competitor at the head of the market, almost everyone wants the latter. It is also apparent that most people understand that good work done smartly is the key to a great company. The carrot and the stick relies too much on such a shallow premise that it can actually work to lower motivation.
There is a part in most of us that wants to succeed, and have a part on the winning team. The sense of satisfaction that comes from knowing we did important work for a winning team feels better to us than the satisfaction we get from an extra $50. By focusing on the money (the carrot) we degrade the mission to one of greed, and most people do not want to be seen as greedy, or to be thought of as someone who can be bought. The metrics we use and the processes that surround them should be used and presented as tools given to a skilled and valuable worker. They should not be presented as a “program” or “an initiative”. Rewards should still be given, but they should be done as a thank you in the background, and not the focus of a project. Let the business purpose stand out and be the purpose, not the prospect of a bonus. Let your employees have a deeper since of purpose by completing identified key objectives instead of chasing a carrot.
Posted in Doin' it right, Management | September 11th, 2007 No Comments »
In the commercials that play before movies, at the theater, there is an All State Insurance commercial that asks “Do you know the name of your insurance agent?” I’m not sure how common it is for people to be able to answer that question. While sitting there with my family in the theater, when the All State guy asked the question, both my wife and I knew the answer. Not only the name of my agent, but we know the names of most of the people who work in that office. So do my Mom, Dad and Sister. Unfortunately for All State, I’m with State Farm.
It is no coincidence that my whole family uses the same agent. They know who we are. They know all about us and our policies. They know the name of my kids and how old they are. After my son totaled his car a few days ago, the local office called to make sure he was OK after getting word that it happened from the regional office. The bottom line is that they care about us.
I like a lot of the insurance company ads that are running right now. I love the Geiko gecko and the cave man. I also think the All State campaign is right on, but at the end of the day I won’t even consider getting a quote from anyone else. Even if I am paying more than I would from another company (which I don’t think I do) I wouldn’t switch. The bottom line is that if you want your customer to be loyal, be loyal to them first. It worked for State Farm, from my family alone they are insuring 2 trucks, 3 SUV’s, 2 cars, 3 motorcycles and 5 life insurance policies.
Posted in Doin' it right | August 30th, 2007 No Comments »
This post is in relation to Pop-music’s Lesson to marketing. If you haven’t read it, take some time to do so before continuing.
Again this point is relevant to a lot of music styles, not just rap, but let me be wildly stereotypical to make a point. While we project that pop music is predominantly about love and relationships, we also suggest that another popular content for song is all about selfishness. We will use Rap music as an example.
Many Rap songs are based on attitude and personal gratification. One of the most popular of them all is the subject of how much money, wealth, cars, toys and women a particular artist or group has. This, like our pop music example is an insight into human behavior.
While the two topics may seem contradictory, they are not so different. On one hand we have the pop music’s idea of love, and on the other hand we have raps view of collecting women. Could we find any two things more opposite? Actually, there not so far apart. How are they related? They are both in reference to relationships.
There is no point expressing an accumulation of things (money, cars, etc…) unless it’s used as a comparison to another. This is relation. “I have more women that want me than you” is a relational comparison. The argument doesn’t work unless there is another side to compare it with.
This suggests a few things. One is that differentiation is critical to a brand. If you don’t have a strong and meaningful way of comparing yourself or your brand to your competition, then how are your fans (customers) supposed to know that being on your side is the right side to be on? The second thing to consider is whether your differentiation and brand image is built using the right “metrics”. To be successful in rap music you have to have the most money, cars, houses, toys and women wishing to be with you. If you decided to become a rap artist and rap about how you have more life insurance and a better retirement package, you probably won’t get too far. You would be using the wrong metrics. What metrics do your customers use to rate brands? What metrics is your brand built on? Are they the same or related?
Posted in Mar Comm | August 22nd, 2007 No Comments »
I have been reading a lot of blog posts lately where the agency side is trying to convince clients to stop coming to them with solutions, and start to bring them problems. I don’t know why anyone would want more problems, but maybe that’s just me. 
All kidding aside, the premise of the argument is that agencies feel that if they are brought the problems the company has (I need more market share, I need higher positive brand recognition) that the agency can use their insights to help create the solution (the strategy).
There is a lot of merit in this argument. Because most agencies work with many different kinds of markets they are in a good position to help move things that work in one sector into another. Often times, the ideas and strategies they bring are new to a particular market and if works wonders. When you spend your days thinking about brands and markets, you get good at it. This is very different than taking an agency your solutions. This is often spec work, and a lot of agencies and independents don’t like it. As an example, lets say you need to increase your brand awareness. You have read a lot about the migration of markets to the web, so you decided you need to beef up your web presence in order to fulfill your need for brand awareness. You decide that you need a website that does a, b and c. So you shop around, get some referrals and call a digital agency. They get on board, do a great job and launch a site that has the best execution of a, b and c. Then 6 months later you measure you progress to find that the web initiative failed. As it turns out your focus on a, b and c made no difference to your brand awareness. You should have focused on d. If the agency we’re brought the problem (I need more brand awareness) they could have helped identify that d was what will make the difference, not a, b or c. That’s the way the story goes anyway, not all agencies would have identified that d is the best option anymore than their client-side counterparts.
The part where this all gets interesting is that, don’t we get taught in brand / business 101 that to be really successful, you need to identify the need and wants of your market and then fulfill those needs? I have heard a million agencies tell their clients exactly that. Try to go with the market instead of trying change the market to fit the business practices? If this is true (you decide if it is) then do agencies practice what they preach?
I received a twitter from David Armano from the Logic + Emotion blog, that pointed to a story on Marketing Vox about whether size matters (size of the agency) to clients. As it turns out, it doesn’t matter that much. But in the article was the list of top reasons marketers choose one agency over another. Here is the list:
1. Quality customer insights
2. Chemistry
3. Creative work
4. Service level / response to needs ongoing
5. Cost control
6. Innovative / strategic thinking
7. Case for ROI
8. Client list
9. Strict adherence to brief
10. Seniority of account team
11. Location
12. Size
It does indeed show that size doesn’t matter, but look at what else it implies. Innovative / strategic thinking didn’t even break the top 5, and neither did Case for ROI. Chemistry and Creative work are at the top of list. With these priorities, does it seem like many clients are searching for help with strategy as agencies think they should (the problem), or are clients searching for great execution (the solution)? It would seem the latter.
Posted in Doin' it right, Mar Comm | August 20th, 2007 No Comments »
This post started with some discussions I have been having lately with my business partners and colleagues. Here lately I (we) have been battling the same problem regardless of the scope of work, be it brand work, digital work or just good old fashion marketing strategy work. In an effort to reduce cost or speed along a project, the one thing that always seems to get sacrificed is the planning. It takes a lot of time and effort to try and convince people of the importance of planning. So here goes, in a nutshell and as short as possible, why planning is important, even if the plan will more than likely fail.
First off, I will agree that planning anything seems to be an exercise in either mind reading or some other form of extra-sensory intelligence. Most plans are built with the assumption that with enough hard work and diligence, everything can be outlined and mapped to ensure that success is obtained. We look at market research, consumer behavior and mountains of data to try and project what will happen if we do (insert your tactical changes here) or how the market will respond if we (insert your strategy for new product / brand extension / creative idea / making the logo bigger on your packaging).
The fact of the matter is that no matter how hard we all try, we cannot see into the future. We plan hard and thoroughly with the assumption that an educated guess is better than random actions. Then we launch the program / idea / whatever and quickly discover that what we thought would happen usually doesn’t, at least not exactly. As the adage goes, no battle plan survives contact with the enemy (or no marketing or business plan survives contact with your customers or employees). So while it would seem that these are good reasons to not plan or to cut back on the planning process, they are actually the entire reason we should plan to begin with.
Every plan is built on a set of assumptions. We assume our customers will like blue in the design. We assume the market is ready for innovation. We assume that our customer research is factual, even when chances are they are only another set of assumptions our customers make about what they want. So we go thought the best ideas we have, apply some type of logic to them and then craft our execution. In short, we make a stack of assumptions. It should then come to no surprise that, as assumptions often go, the assumptions are off. Sometimes a little off and sometimes a lot, but rarely ever are they right on. The real trick to all of this is to identify which one(s) of the assumptions are off, after all a plan is a stack of assumptions. If you can identify what was wrong in the planning, they you have a head start on figuring out what to do about it. (Pause for the Ah-hah moment.)
Can you imagine going thought the process of a new product launch that misses every projection and you realize that you won’t hit profitability when you need too. If you have no plan you have no place to start to adjust your processes or offerings to make your new product work. Its also common that without a solid plan, you can make some adjustments to your assumptions without fully understanding how they effect the other assumptions you have. You may launch your product and find that you are not moving enough pieces to meet your goals, so you react by offering lower prices or specials. You see the inventory start to turn and your product start to fly off the shelves so feel good about your “save”. Then, five months down the down the road, you discover that you are not going to be profitable in time, and you might run out of money. This is because as one assumption changes so do every other assumption in the stack that follows it. There are too many correlations to track without a road map, and that road map is a plan.
The true value of a plan is that it’s a map to your assumptions. DO not skip, or skimp on this step. Too many things change too fast for you not to be driving with a road map. Know in the planning process what assumptions you are making, even if they seem like facts, and know what assumptions are stacked on top of each. When you know that your plan in some way shape or form will fail to some degree, you will plan better and be ready to make changes as needed. Plan with planning in mind.
Posted in Doin' it right, Management | August 17th, 2007 3 Comments »
I received and email yesterday from a reporter at the Albuquerque Journal asking about marketing in Second Life. We set up a time to talk today (8/15) so I decided to log into SL and see what was going on. No sooner did I log in when my computer froze. SL didn’t crash, my whole system did. This happened about 3 times before I gave up. I tried again this morning and the same thing happened. I checked the SL blog just to find that some system maintanance was taking place. So I figured, Oh Well, I’ll just get twitter going again (its been a while since I’ve used it). So I download twitterific and low and behold, Twitter is having problems as well. It amazes me how far we can come, and how fast we can drop the ball. It becomes hard to let clients know about these great new media tools when they don’t work half the time. I wonder if its just me, or is this common with everyone else, and is isolated to just a few tools, or are they all having problems?
I know that the fast growth of these tools are very taxing on the technology. One day your running your small “Web 2.0″ service with your closest 200 friends, and then all of a sudden, 800,000 people decide you have a cool new toy to play with and BAM!!! You server dies!!! I guess its not that uncommon, many small businesses face the same issues with rapid growth. I have no doubt that these services will make it through the scaling phase, but I sure wish they would hurry.
Posted in New Marketing, TQM - Total Quality Mistake | August 15th, 2007 No Comments »
Imagine setting a goal to double the sales you get from your website. You look at your options and decide incremental changes to a few areas can make the difference. So you look at your sites log files or log into your analytics program to see how your site is doing now. You are shocked to find that your page view per visitor are really high, and so is your average time on site. How can this be? Don’t these metrics mean that the site users are engaged? If they are so engaged, why don’t they buy more?
The answer is because the users of the site are not engaged. They are confused. This example is a true story. Users of the site spent so much time on so many pages just trying to figure out how to use the site that the metrics were through the roof. I was hired to fix these issues, among others, and after working with them we (mindSpace, Inc) also made their total traffic number go down. That’s right, I said go down. Normally, you might think that that is a bad thing; however, in their case after just a few quick changes to their cpc (cost per click) campaigns, their traffic went down about 10% and their conversion rate went up 400%. What does that mean? It means they are spending less money on traffic that does them no good, and now only brings people to the site that actually might want what they are selling.
In this age of accountability, it’s important to remember that numbers don’t tell us anything. They are numbers. They can show us what is going on, but not always why. Develop a solid business strategy and figure out what is important to measure and WHY. Don’t just measure stuff you “think” you need to measure. The numbers are trying to tell you something, but they can’t say it out loud. They are more like signs that point to where to look.
Posted in Doin' it right, Mar Comm | August 14th, 2007 No Comments »
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