Waves and particles as consumer insight

Consumer waves and particles.

Just read something over at ConversationAgent.com about brand loyalty and incentive programs. This caused me to think about how we derive our notions about brand loyalty. First read their article here - 

http://www.conversationagent.com/2011/05/parity-brand-and-customer-programs.html#comment-6a00d8341c03bb53ef014e88c90699970d

An analogy of the consumer brand loyalty phenomenon can be drawn from quantum physics. The data we use to confirm our view of brand loyalty is all information from a distance. Purchase history, repeat business, loyalty card use etc. 

From this we derive, what could be called, the Wave Form of aggregate brand loyalty behavior. This Wave Form is self sustaining because of the distance between the consumer and the marketer. This distance may safely ignore the effects of indirect forces. The method of data collection tend to throw out or diminish variance.

The problem with the Wave Form in marketing is similar to the problem in physics - as soon as we observe the subject directly, the Wave collapses into a particle. In our case the particle is the individual consumer. The individual user distroys the coherent wave and becomes undefined. The trouble is, with today's tools we are able, with more accuracy, to observe the individual user.

The information that defines each user will always be a smaller set than the Wave because it is a subset of the Wave. Any large marketing organization that functions with a mass market approach will react to this subset in the same way - it will be ignored. The argument for this seems quite logical, the greater effort and resource must be put toward the largest average proportion of users.

However, the greater portion of users, The Wave, are composed from the individual customers. The Wave is a fiction, the individual users are the facts. As much as the phrase "multi-channel" is used in modern marketing, its meaning almost never takes into account the multiple channels of users.

The other fifty percent.

The other 50%

A trend in technology introductions to business is the focus on the enabled minority while ignoring the rest. this is true in so many fields - new is more fun than old. The thought is that start-up and innovation, may only make profit from new markets. 

A few years ago, in an attempt to get vendor produced product photography, I called a well known denim jeans manufacturer. The manufacturer had made a marketing decision to only shoot the new "low rise" products and not the "mommy jeans". There was no photography to be had for my core product offering, the "mommy jeans" shopper. This ignored that the mommy crowd is the majority of the market.

Attempting to appeal to the new market is perfectly understandable. This denim jean company felt that they were loosing the youth crowd, and the dreaded demographic numbers, supported this. The company wanted edgier, younger, sexier.  The trouble with this, only becomes apparent when we leave everyone else out.

Marketing has evolved a comfortable system of single focused strategies that have become a series of swapping elements devoid of creativity. We could as easily hand out a template:

Seasonal branding template.
Hook: super low rise jeans are sexy.
Supporting tag line: "how low will you go?"
Harmless top 40 music track from 10 years ago = fill in blank.
Two color swatch branding combo: denim, white
Photo style guide: midriff, midriff, midriff, oiled midriff.
Strategic seasonal direction: newness! Hipness!

This may be an easy prescription to fill for the team, but a bit tired in a multi-channel world. you have attempted to appeal to a new crowd with an old formula, while serving the base nothing. 

The result was the loss of market share with the base. The "mom jeans" crowd ran away from a product that they felt would be unflattering. The youth crowd could find hip (seriously? Ten year old top 40?) and sexy elsewhere and with more exclusivity.

The same phenomenon is seen in most new technology proposals. The developers, business people and analysts engage a tunnel vision for their product. A solution is designed for a subset, and the hope is that everyone will adopt because, in the developers opinion, the new way is better than the old.

Mobile people tell me that 50% cel phone owners will have the type of phone that is capable of running a given app that will make the customer experience better. Of course this assumes the customer knows about it. And that they download it. Then, use it properly. This is now a subset, of a subset, of a subset of half the users. At best.

In the same pitch, the potential technology partners, will be shocked if you ask about the other 50% customers. How will this mobile idea work for my customers who don't have or don't wish to use a mobile device. How will they access this content? How do we serve their needs?

Considering the other group is the obvious difference between a good idea and a great one. Yes, your new device can push to mobile - but now show me that it can push to fixtures, associate devices, customer loyalty devices etc. The idea that the have-nots will adopt because they are missing out, only works when the content is compelling or the use is advantageous. 

Pulling out my cel phone to pay is the same as pulling out my wallet. Receiving loyalty via the same method, coupons etc., would still go into my physical wallet as well as my virtual one. I would point out that the tangible one may even have a psychological advantage.

If we are going to claim a cross channel world and devise cross channel strategies, we can not ignore channels that are inconvenient to our perceptions. Your customers deserve your innovative thinking in every channel. 

Leveling the playing field

I do love Alvin Toffler’s notion of demassification even if the spell check on my Mac hates it. Oversimplifying it by quite a bit I could describe it as the post industrial revolution direction of the western world toward non-linear, intercommunicated individualism. This direction’s impact is far from fully realized and as with any time of serious change, it is we who are in the middle of it that have the hardest time seeing it.

 The industrial revolution, by the requirements of its nature, was a massing of assets. People, technology, transportation, money, government all had to physically come together to drive the engines of the revolution. Because of this massing of assets a culture that reflected the revolution’s form grew up around it and with that a mindset of doing things industrially. Every institution followed the factory model. The world revolved around the punch clock. All processes look like assembly lines.

The mindset of the industrial revolution is proving harder to break than the revolution itself. For this reason the biggest institutions of our time have been surprised at their sudden demise. The major television networks, music industry, marketing giants are the most high profile, but many into this shocked group. The consumer simply has more choices in every aspect of their world. With the growth of the web the ability to realize individual choice has been realized. Interestingly, the web in an enabler not the cause since real demassification started in the 1950’s – move to the suburbs anyone?

What does this have to do with Retail?

Department stores are a product of the industrial revolution. In order to have a department store, let alone a chain, several products of the industrial revolution must be in place. Massive, city sized infrastructure, transportation, monetary systems, workforce, etc. to support the business. You must also have a captive population. I say captive because the cornerstone of the massive institution is the captive client. Once open choice enters the equation the massive institution begins to erode if it cannot adapt. Consider the shopping mall as an adaptation of the demassing of the population. 

But competition, before the web, was a fight among giants for consumer dollars. Small or single store retailers posed no threat to organized retail. Even in boardrooms today you will only hear analysis of what Macy’s, Penney’s or Target is doing. What is not discussed is the real, up coming threat - The micro retailer.

What needs to be understood is that important difference between traditional retail and new retail is the off-line, physical tradition. The current core of consumers understand the mall and the department store, as destinations to acquire the mass produced goods they need. However, as the shift in comfort toward e-commerce continues younger shoppers will lose the ability to discern the difference between massive and small retailers.

I have mentioned in previous posts that the individual retailer is far better equipped to discuss and market a small product assortment in a better way than a big one does. What the big guys are missing is that 100 million dollar marketing programs, which rely on the massive marketing infrastructures that are fading, are now competing with nearly free marketing and that the real gap is not dollars but time.

The OPEN Small Business Monitor Survey results indicate that small businesses are increasingly relying on social media, with 4 in 10 business owners using social platforms. One year back, only 1 out of 10 business owners was practicing social media. As expected, Twitter, Facebook and LinkedIn are the most popular social media tools amongst the small business fraternity.

Douglas Idugboe, Read more here.

As the small retailers embrace the same social media that now nearly half of the US population already has, the intercommunication between these small businesses, customers and extended relationships will multiply. In the online world all media has an equal potential and all of it consumes time at the expense of its competition. The day is quickly coming when most of my non-food purchases arrive via post and all boxes in the mail look alike. When the future shopper comes along, the one who has no allegiances to brick and mortar traditions, those mass institution will need an answer to what makes them a better choice.

Small and personalized

I downloaded an app today featuring the work of Canadian designer Dace Moore. Available for iPad and iPhone it is a well-made but very simple presentation of the designers work. Romantic photography and video highlight the designer’s fashions and each style has easy links for social sharing, list making and buying. Retail is handled through the web site and the transition between web site and app is smooth.

So it’s a nice fashion website, what is the big deal. I feel this kind of retail gets at the notion of personalization in a very different form. To be sure, individual designers have proffered their work online for a few years now but the level of sophistication has improved dramatically. Dace does a better job of branding than a big retailer ever could because she is able to articulate a singular perspective. The design sense here may only appeal to a relatively narrow segment but that group has high loyalty.

Big retail looks at personalization as the data we have about narrow segments of our population to serve targeted information. If you only buy men’s clothing we will not send you marketing for our children’s sale. See, we know what you like. In the marketing group we all congratulate ourselves on the granularity of our targeting but is it really personal? I was standing at the copy machine recently, when a friend pointed out that both of our shirts were the same. This isn’t an issue for me but when I consider it in the context of the growing movement toward individualization… it feels wrong.
The obvious pushback has many reasonable arguments- big retail must serve millions of shoppers that transact billions of dollars. We must manage hundreds of thousands of pieces of merchandise with offers and messaging on an immense scale. Our reach is on a National scale and single designer’s little site cannot compare to what we do.

While all of that is true I have to ask who really needs it? Big retail hitting the broad target does not address the individual preference in product and that was fine when there were no other choices. Now there are more choices. The corduroy from the Big Box retailer is OK but the ones from Peterman.com are perfect. While you can argue that specialty shops have been around forever the real access to them has not, the difference in that access is indistinguishable in our new world.

The old model has been “from the few to the masses” but I think the masses maybe taking back that control. Can any large company adopt, even on a small scale, personal focus?

The changing acceptance.

We are in an age of high definition. Televisions, blu-ray discs even our telephones tout high resolution. Simultaneously, the proliferation of amateur created web photos and video have created a curious dichotomy –Less than perfect content on your high definition screen is perfectly acceptable depending on what it is. In fact certain kinds of content can lose genuineness when it is of too good a quality. This is what is meant by the realignment in expectations of content.

Professional content creators have a quality control knob for their work. This knob is designed on a scale from 1 to 10 with 10 being the only acceptable setting. If a video or photo cannot be perfect then it should not be done at all. From a retail point of view this means that if we cannot have the perfect video of our product than we should not have a video at all. There are two important problems with this. The first is that you are not serving the product, as it needs to be represented. The second is that while the higher the quality of any produced content is generally a good thing, there is a point of diminished return. In the information age, inadequate representation is unacceptable.

If you spend enough time on YouTube or if you search specifically for retail brands, you will find videos for just about any product. The majority of these videos are by amateur fans the brands. Many times these videos are created to fulfill the needs of the brand advocate for recognition but they also tend to be about brand information that is unobtainable by any other source. This underlines a lack of the product producers, sellers and marketers to address the basic needs of the customer. A great deal of the most important content about products cannot be found on the brands site or the retailers product page because of the perception of what that content should be like.

The customer shouts – “Make me video to show me how this thing works before I buy it!” We shout back “No! The lightings bad and we can’t afford a professional model!”
Let’s hope that since we as a business, cannot overcome our own restrictions that our customer will do it for us and post it on YouTube.

The open ideas market will respond to meet the needs of the modern content creators. As the big production habits of media creation outlets hold on tighter (and expensively) to digital rights, the market and individual content creators will respond with alternatives. Large organizations will be the slowest to realize this. The attitudes of traditional content creation and distribution by both corporate user and traditional content developer will only begin to erode once smaller, more nimble providers begin to undercut them.

This is happening now with companies like friendlymusic.com. In the battle of music content ownership the music industry set itself at odds with its own customer instead of finding a new way of doing business. Take for instance the use of music with home made video on YouTube. Copyright owners demanded the removal of their music from home made videos with threats of lawsuits. In step companies like Friendlymusic, where for as little as two dollars, licenses of any kind of music from musicians around the world, can be legally obtained.

This is almost a retelling of the ASCAP vs. BMI battle of the 1940’s and the results will be similar. ASCAP (American Society of Composers, Authors and Publishers) was the organization that controlled music publishing and distribution in the US. They began to use their monopolistic position to charge high rates to their Radio subscribers. Radio, in 1930, was a new way to distribute content and many legal battles arose about the ownership of that content. Sound familiar? When ASCAP, over the course of nine years, raised the rates nearly 500%, broadcasters rebelled. The broadcasters formed a new group called Broadcast Music, Inc. in 1939. BMI went to alternative content creators, created new performances of public domain music and offered cheaper services to broadcasters with far fewer restrictions. By responding to the new market BMI crushed ASCAP’s strangle hold of the media within two years – and ASCAP had the superior product!

Machine methods of content creation

For the sake of clarity, the use of the word “Machine” needs to be defined. Indeed, using some sort of machine – the digital video or still camera, the word processor etc, is the way in which we make most content today. When I use “Machine” here I refer to the process of content creation that removes a significant portion of human intervention in the process of production.

At the professional level, the use of electronic devices to produce content has not changed, fundamentally, in decades though many of the devices have. A digital camera, in the hands of a professional photographer, is used in much the same way as it was in 1970. The difference is cost, time and efficiency – the processing of film and the immediacy of preview has made the process more efficient but not really different. If our photographer from 1970 got his hands on a modern digital SLR, he would be right at home – interchangeable lenses, aperture and shutter control, light metering, TTL view etc. This is quite interesting when you consider how fundamentally different the two technologies are.

The reason for the similarity in the devices – the traditional SLR vs. The Digital SLR- has more to do with the users that it does the technology. If the Digital SLR were wildly different from film cameras professionals would have been slow to adopt. We see this in many introduced technologies where the early versions of the devices follow familiar antecedents.

Now that DSLR technology is in wide acceptance, we are beginning to see the evolution of digital capture devices. New cameras will record Geo locations of photos, META data will be more precise and expansive, in camera editing and color profiles will be more powerful, wireless transfer to cloud storage will make image handling seamless and the line between video capture and still will vanish. Eventually even multi lenses will disappear.

As we accept the differences that new technology brings to the devices we use, we must also acknowledge new industrial methods for producing content. To avoid the prohibitively high cost of content creation and the growing expectation users have of rich content experiences we must be prepared to experiment with Machine based methods like TalkMarket. The key here is to understand the realignment of expectations of certain kinds of content. This brings us back to the changing acceptance of the user.

Classical content creation systems are appropriate for the Class A presentation of products, but below that level this approach to production simply hinders the requirements we have today.

The traditional content acquisition model is not going away for the near future, but like so many other institutions it is, to a degree, diminished. Licensed, polished media will have to stand side by side with free, open source prosumer content and Machine produced content. Businesses who have to exploit massive amounts of content must adjust quickly to the new models.

Utility vs. Esthetic

The first, and possibly most difficult, task we must accomplish is to abandon our outdated notions of content and its purpose. All photos are not marketing. Marketing communication is not unidirectional, consumers do not just consume, videos are not television, content is a means to an end – not the end.

Photography in our business plays many roles and the most prominent of those roles has been to support our products and our brand. To that end we have engaged in the constant increase in the visual quality of our photography. This has resulted in helping Kohl’s achieve a higher place in brand prominence than discounters and other low-end stores. The parallel to this was a massive infrastructure investment to accommodate the growing demand of photography in the print explosion of the late 1980’s and 90’s.

When all visual content is viewed through a traditional marketing point of view, then the perfection of that content becomes paramount. If it cannot be perfect, then we will not do it. Unfortunately, that statement falls apart when visual content is viewed from an information transfer view.

Bluntly this: The customer will always favor the path of ease, clarity and efficiency. A short, medium quality video of a backpack being opened, exposed and a laptop slid inside with a voice telling us that it is water proof and padded is more powerful than a high resolution photo that tells me none of those.

Brand advocates exist for every successful brand. The voice of the individual user will be exploited more and more to support the brand. The quality and clarity of the voice (video tools, high speed internet, social publishing) is growing exponentially.

Obsolete marketers will continue to push glossy production over user-generated content as “non aspiration”, however, at the consumption level, socially shared advocacy is vastly more powerful.  The challenge will be how to support such advocacy without advocate becoming more glossy sell-outs.

To apply computing metaphors to this situation we would say that the world we lived in, up until 10 years ago, was a “Read Only” content world. We produced content, in this case photography, for the consumer to experience. The last decade has introduced the “Read/Write” content world. We still create content to disseminate to our customers but our customers also create content and publish it sometimes about us and the content our customers create can have equal reach in the online world. We have to become better readers of content and republish that which supports our goals.

The content creation model is dead; long live the new content creation model. We have, perhaps, become so engrossed in our methods of content acquisition and creation that we have forgotten the goal. We may have to let some of our precious ownership go if our goal is to spread our word. George Lucas realized that allowing his public to freely engage in his copyrighted material he could turn movies into an intergenerational phenomenon.

We must embrace that the prosumer has introduced a new spectrum content requirements, expectations and rules of engagement.  They understand it and own it. In retail we say that the customer is always right, it is time for us live up to that.

Gary P Hayes' Social Media Count

For those who have not come into contact with this, I am imbedding Gary Hayes' Social Media Counter.
This is a great visualization and I think it makes clear the rise of Social Media. I also think people like Hayes are always a wealth of information so checkout more here.