When companies predict (and manipulate) habits

Chapter 7 in Duhigg’s book begins by talking about Target, and how they infamously used their analytics to identify pregnant women before they had told their families. The seemingly incongruous example paired this time is the Outkast song Hey Ya, which software had predicted would be a huge hit.

In both cases, the initial result was failure. The Outkast song was too different from what listeners were used to, and the Target targeting through coupons was too creepy.

Duhigg shares the secret recipe for creating habits from an old U.S. government study when they were trying to get Americans to eat more offal: people will try something new when it is surrounded by what is familiar.

So Hey Ya was played in between mega hits, and Target started putting the baby coupons next to unrelated common consumer items, and both succeeded.

Personal Branding

Michael Jordan seems to me to be one of the forerunners in terms of thinking of himself as a brand and then licensing that brand and actively managing it.  He went beyond the traditional endorsement, and even seemed to take an active role in brand management across various endorsements and companies owned (e.g. when his gambling became a potential PR issue, he worked with Nike to market the “I am not a role model, I’m a professional athlete” message).  I may be completely off base with the above, but the point is that personal branding is now rather common, and I found HBS professor John Deighton’s study of author James Patterson to be a fascinating case study:

While he doesn’t enjoy the same name recognition, Patterson regularly outsells other “brand-name authors” such as Stephen King and Tom Clancy by simply publishing more books, averaging three titles each year with the occasional assistance of a coauthor…Whatever the genre (he has also published romance novels, science fiction, and children’s books), readers expect a “good read” from the James Patterson brand.

The Internet and Social Networking (and their enemies)

I’ve spent lots more time learning about and playing with social networks for my job lately (plus a couple of weeks out of town and completely offline), meaning less time actually participating in the internet culture via this blog.  So here’s a great quote from Christian Lorentzen (a senior editor at Harper’s Magazine) from an article entitled “The Internet and its Enemies”, making use of a quote from my favorite author, followed by a few articles about social media that I have enjoyed recently.

“TV,” David Foster Wallace has said, “is not vulgar and prurient and dumb because the people who compose the audience are vulgar and dumb. Television is the way it is simply because people tend to be extremely similar in their vulgar and prurient and dumb interests and wildly different in their refined and aesthetic and noble interests.” The difference between the Television Mind and the Internet Mind is that the latter has access to the vulgar and prurient and dumb as well as the refined and aesthetic and noble elements of culture. And unlike TV, the internet fosters a culture of participation that, though it may lead the majority to public displays of vulgarity, banality, and idiocy, draws enough talented people to noble pursuits in what might be called the “online underground” to give credence to the claims of the cyber-Utopians. The Internet Mind then is a craven, stupid, obedient thing – except in the frequent instances when it is compassionate, subtle, and free.

The interesting social networking articles:

• “Tribe Called Us” by TJ Sondermann at Social Media for Social Change (includes shortlist of web companies offering free and/or specialized services to nonprofits)
• “Charity Cases” in the Wall Street Journal
• Evidence Facebook Causes works at Beth’s Blog
• Evidence Facebook Causes doesn’t work at Pro Bono Junkie’s Blog (or it only works for the big guys)
• “The Next Step in Open Innovation” from the McKinsey Quarterly (more about product/content co-creation with customers in a for-profit setting, rather than strictly social networking…entirely applicable and completely fascinating work and lessons learned) w/ free registration required

The tools that I’ve been playing with most have been google reader and friendfeed.  Both have been highly valuable and taken way more time than I expected.  The biggest surprise is not the amount of noise that I get, but the amount of signal.  I’ve got about 150 items in my google reader that I actually want to read right now, but don’t have the time to devote to reading.  Not a bad problem to have.

“Deep Metaphors” connect with people

Gerald and Lindsay Zaltman of HBS (yep, it’s HBS catchup day) wrote a book on marketing using deep metaphors: Marketing Metaphoria: What Deep Metaphors Reveal about the Minds of Consumers. You can read an interview with them here, to get a better idea of what the book covers, and what they mean by “deep metaphors”:

Deep metaphors are basic frames or orientations we have toward the world around us. They are “deep” because they are largely unconscious and universal. They are “metaphors” because they recast everything we think about, hear, say, and do.

One example that they discuss is Coke’s highly successful “I’d like to teach the world to sing” campaign, which didn’t say much about Coke, but tapped into the deep metaphors of connection and social balance. The book apparently details 7 of the most commonly used deep metaphors across a variety of products.

If consumer goods are able to tap into these deep metaphors to improve sales, this information ought to be extremely useful to social sector organizations actually working to improve things like social balance. Perhaps the trick is to keep the message metaphorical, since “most thinking occurs without awareness”? Are we hurting ourselves by talking about literal benefits to society rather than speaking in metaphors? Is speaking to the unconscious more powerful than trying to raise consciousness?

Going Negative with Green Messaging

Struggling for years with a decreasing market share and tumbling stock price, Nortel is going negative with a campaign against Cisco.  This Wall Street Journal article details their PR blitz utilizing bloggers, YouTube, anti-Cisco websites, and trade show demonstrations.  The message?  Use Nortel to avoid “the Cisco energy tax.”

Nortel is countering with the argument that Cisco’s technology, as successful as it has been in the marketplace, is an energy hog. In its ads, Nortel claims that Cisco’s data networks “are costing you 100% too much.” At trade shows, Nortel staff attach wattage meters to comparable Nortel and Cisco gear in an effort to show that Nortel’s gear is much more energy-efficient. The company posted a film of the demo on YouTube.

Energy prices are finally rising to a point where being energy-efficient is not just something to make a consumer feel good, but something that affects purchasing decisions by price-sensitive customers.  That Nortel is taking this message to large corporate customers is evidence that at least some people in corporate purchasing departments are concerned with cutting costs by conserving energy.

In a previous post, I talked about the strategy of going negative with marketing, and why it’s rarely done.  This is one of those cases where a very small company with much to gain and little to lose takes on the market leader with a campaign aimed at gaining some awareness and hoping to steal just a bit of the leader’s market share.  Or, as pointed out in the WSJ article, survive and keep their current customers as their competition makes persuasive presentations to switch.  It’s not unusual for a smaller company to paint the larger one as evil, and it’s not that unusual to use an environmental rationale to make that argument.  What might be unusual is that with the price of energy rising so quickly, customers might listen.

And frankly, Cisco’s response that “there are no industry standards to measure “green”; and Cisco’s gear meets the environmental requirements of the product-testing company Miercom” falls a bit flat with me.  Not a counter-argument about green manufacturing or building initiatives, but a lack of industry standards? No pledge for improved performance or details of why the additional energy usage creates a superior product?  This lack of rebuttal leaves me thinking Cisco either isn’t taking Nortel seriously or isn’t taking energy efficiency seriously –  either case may not be a big mistake now, but could be a huge mistake in the future.

night guy vs. morning guy

In college, my friend Jesse and I often discussed the “night guy vs. morning guy” phenomenon. Night guy would say, “I can totally get by on four hours of sleep – let’s stay up.” Morning guy would curse night guy as he rushed to class late and tired.

A HBS Working Knowledge article documents and codifies this type of behavior and provides a link to the PDF of a working paper by Todd Rogers and Max Bazerman. Here’s a brief overview from the executive summary:

Rogers and Bazerman show through four experiments that people are more likely to choose what they believe they should choose when the choice will be implemented in the future rather than in the present, a tendency they call “future lock-in.” They also discuss directions for future research and applications for public policy, an arena in which citizens are often asked to consider binding policies that trade short-term interests for long-term benefits. Key concepts include:

• Tension occurs between an individual’s immediate self-interest and the interests of all others, including his or her own “future self.” Individuals tend to think that their future selves will behave more virtuously than their present selves.
• Four studies demonstrated the future lock-in effect, which describes a person’s increased willingness to choose and support a binding “should-choice” when it is to be implemented in the future rather than in the present.
• Policymakers could leverage the benefits of future lock-in by advocating for reforms that would be decided upon in the present, but go into effect in the future. Future lock-in would encourage citizens to more heavily weight a policy’s abstract merits rather than its concrete costs.

The working paper presents several studies, including one on donation. They find that “the future lock-in effect… suggests changing the structure of the donation such that the prospective donor can commit now to donate in the future.”

This work obviously has implications for development professionals in nonprofits, and also brought to mind another HBS Working Knowledge article from July 2007 (thanks, Gmail, for making email archiving and search so simple!) which was, in fact, also co-authored by Rogers and Bazerman with Katy Milkman. It also chronicles the “want” vs. “should” cognitive dissonance, and study it in terms of grocery shopping and DVD rentals. You can read that article, an interview with Rogers and Milkman, here.

Authenticity over Exaggeration

Yeah, it took an HBS professor to figure this one out. Authenticity is important in new media marketing. This recent article from HBS Working Knowledge looks at the research of professor John Deighton. After a review of the Dove “real beauty” campaign, we get this meaty tidbit:

The new rules

But what does this all boil down to for companies that want to be successful in this relatively new environment? In the working paper, Deighton and Kornfeld discuss 5 aspects of digital interactivity, including

• Thought tracing. Firms infer states of mind from the content of a Web search and serve up relevant advertising; a market born of search terms develops.
• Ubiquitous connectivity. As people become increasingly “plugged in” through cell phones and other devices, marketing opportunities become more frequent as well—and technology develops to protect users from unwanted intrusions. A market in access and identity results.
• Property exchanges. As with Napster, Craigslist, and eBay, people participate in the anonymous exchange of goods and services. Firms compete with these exchanges, and a market in service, reputation, and reliability develops.
• Social exchanges. People build identities in virtual communities like Korea’s Cyworld (90 percent of Koreans in their 20s are members). Firms may then sponsor or co-opt communities. A market in community develops that competes on functionality and status.
• Cultural exchanges. While advertising has always been part of popular culture, technology has increased the rate of exchange and competition for buzz. In addition to Dove’s campaign, Deighton cites BMW’s initiative to hire Hollywood directors and actors to create short, Web-only films featuring BMWs. In the summer of 2001, the company recorded 9 million downloads.

These 5 aspects show increasing levels of effective engagement in creating social meaning and identity, Deighton suggests, noting that the first 2 (thought tracing and ubiquitous connectivity) change the rules of marketing but don’t alter the traditional paradigm of predator and prey. In the last 3 (property, social, and cultural exchanges), the marketer has to become someone who is invited into the exchange or is even pursued (as in the case of the BMW films) as an entity possessing cultural capital.

Marketing Metrics

Catching up on some of my HBS Working Knowledge newsletter reading, I found an interesting Q&A with Professor Gail McGovern. She discusses some of the major changes in marketing strategy in the past decade, particularly CRM. Particularly salient is this point:

“Indeed, popular metrics such as customer satisfaction, acquisition, and retention have turned out to be very poor indicators of customers’ true perceptions or the success of marketing activities. Often, they’re downright misleading. High overall customer satisfaction scores, for example, often mask narrow but important pain points—areas of major dissatisfaction—such as unhappiness with poor customer service or long wait times.”

She then goes on to promote the executive dashboard – a concept that seems to be all the rage lately. When our team evaluated software vendors at the Museum, the inclusion of a comprehensive yet user-friendly dashboard giving an overview of the Museum’s current business position was a key component. Of course, as with any data-driven tool, a dashboard is only as good as the data included (i.e. the old programming mantra, “garbage in, garbage out.”). Knowing which measures are important as actual business drivers and which measures are merely distractions is obviously the key. The best way to figure this out seems to be the key lesson that was hammered into my team as we defeated the competition in our Marketing Strategy simulation in business school: listen to your customers.