Be Wary, The Dangers of Cost Cutting

By Karen Pelletier

Cutting product cost can kill the golden goose.

It’s the time of year to start executing plans for next year.  If you’ve planned to take cost out of your food product, BEWARE.  Public companies are under immense pressure to achieve a certain percentage of growth in profitability.  If you can’t achieve it through growth in volume, then the usual place to look is to cut costs, both in discretionary spending (like marketing) and through product cost reductions.

Don’t Take Your Cost Reductions Out of Your Food Product

I had a sad experience recently.  I’d made ribs for dinner, and took out a new bottle of Bull’s-Eye BBQ sauce.  OK, here’s the disclaimer, I’d worked on the introduction and rollout of Bull’s-Eye at Kraft back in the mid 1980’s.  When it was developed, it was intended to be a “super-premium” BBQ sauce, the Haagen-Dazs of BBQ sauces, with a clean ingredient line that read like a recipe.  No gums, starches, high fructose corn syrup or any ingredient that would jeopardize it’s positioning as “the” super-premium BBQ sauce.  We spent hundreds of thousands of dollars testing our recipe against the leading BBQ sauces in each region of the country, and it kicked-butt everywhere.  Everyone loved the sweet-spicy flavor.  Then we spent millions on marketing the brand.  It did well.

Even though I don’t use BBQ sauce often, for the last 27 years Bull’s-Eye was the only brand of BBQ sauce I would use.  Then, the other night, I took out a new bottle of Bull’s-Eye, tasted it, and was horrified.  This was NOT the Bull’s-Eye we had introduced.  It was thinner, more vinegary—not at all what I expected. Then I looked at the ingredient line.  What a shock!  High fructose corn syrup replaced tomato puree as the number 1 ingredient!  There was also modified food starch (the 6^th ingredient) and a preservative, potassium sorbate.  The high fructose corn syrup and the potassium sorbate changes were really new.  It happened between an April 19 code date and an Aug 1 code date.  I was crushed.  A brand I had loved and counted on for years was now gone…  Kraft may lose me as customer after I had been so brand loyal for so many years.

The Irony

The irony is that Kraft should know better.  They had seen this movie before.  Maybe there is no one there now who knows it, but when Kraft originally introduced their first BBQ sauce, Kraft brand BBQ sauce, it was the same formula we ended up using for Bull’s-Eye, full of tomato puree, molasses and cider vinegar. But over the years they cut cost and cut cost to the point that the Kraft BBQ sauce became a thin, watery, vinegary product that people primarily used as a base to create their own “doctored up” sauce.  Kraft BBQ also lost a substantial amount of market share, was usually sold on deal, and was not very profitable.

That’s the insidious thing about cost reductions.  Any one minor change may not be noticeable to the consumer, but after a while, all of a sudden, they notice.   You lose brand loyalty.  All the equity you built is put at risk.

Now it appears that the same thing is happening all over again with Bull’s-Eye.

Click to Tweet:  Restore the original formula of Bull’s-Eye BBQ sauce!

Don’t Let This Happen To Your Brands

Public companies have a very real, short-term focus.  They have to meet analysts’ expectations for profit growth.  If you work for a public company, fight against cost reductions to your product.  Take cost reductions out of packaging or other discretionary spending, but leave your formula alone.  Better yet, think about restoring your product’s formula to what it was when it was originally introduced.  It might even support a price increase!

Private companies can take a more long-term focus.  They don’t have to make product cost reductions that may hurt the viability of their brands in the long run.  Document and protect your brands from cost reductions.

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Use Social Media to Find the “Kernel of Truth”

Samsung used social media to discover insight that resonated with its target market.

By Karen Pelletier

Using social media to mine consumer issues is a phenomenal opportunity for marketers.  Finally, you can conduct market research in a cost-effective manner.  What used to cost marketers hundreds of thousands of dollars to mine consumer truths about a product or product category can now be done relative cheaply.  In the old days, we first had to do qualitative research (either focus groups or in-depth interviews) for around $25-50K.  Since this type of research is not statistically significant you would typically follow this research up by doing quantitative testing. That’s another $25-150K!  Quantitative research would enable you to say, with statistical confidence, that the conclusions you reached were meaningful. But now, there’s a much more cost effective way to go…

Find Meaningful Insights By Mining Social Media

Coinciding with the introduction of the iPhone 5 you may have seen Samsung Galaxy 3 advertising.  This advertising cleverly poked fun at the iPhone 5 and Apple loyalists.  In the process Samsung demonstrates the Galaxy 3’s superiority by highlighting features not available on the iPhone 5, and they were effectively able to position the Galaxy 3 as “the next big thing.”

A Wall Street Journal article from October 21, 2012 described the process that Samsung’s agency used to create their ads.  Samsung’s advertising agency used Network Insights, Inc. to review hundreds of thousands of tweets regarding the iPhone and the Samsung Galaxy 3.  They reviewed tweets that either complained about or poked fun at specific features of the iPhone 5.  This enabled them to create advertising which resonated with their target market.

What data mining enables you to do is sort through hundreds of thousands of real customer comments to find those “kernels of truth” that continually reappear and will strike a resounding chord when you build meaningful advertising around it.  And since you are combing through hundreds or thousands of bits of information you are starting off with a “statistically significant” base.

An example of a great advertising campaign that leveraged a “kernel of truth” is the MasterCard “Priceless” campaign.  It changed the nature of the credit card marketing game from “ubiquity” (“being everywhere you want to be”) to “empowerment,” enabling you to do what matters most to you (e.g. spending quality time with your family or engaging in an activity that you’re passionate about).  Using social media to mine data enables you to find these kernels of truth.

Click to Tweet:  How can a small company take advantage of social media data mining?

As a SMB, How Can You Take Advantage of Data Mining?

We can’t all spend mega-money on marketing research or big data analysis, but we can avail ourselves of the plethora of free tools that are out there that may provide insight into:

1) Product or service problems that need to be fixed.

2) Understanding consumer usage problems or opportunities.  Maybe there’s an opportunity for a line extension or extended usage campaign.

3) Competitive analysis.

In his very useful blog article, Priit Kallas lists 54 FREE Social Media Monitoring tools.  Play around with some of these tools.  Most of them have free or trial versions of their software that enable you to experiment with them.  Subscription prices are usually pretty reasonable if you decide you do want to subscribe.  Search for your brand name, your company name, your competitors’ brands and company names, and your product or service category (as a consumer would describe it).  You may be able to find some golden “kernels of truth” that will help you build or strengthen your business.

If you like this article, subscribe to my blog by clicking on “Entries RSS” under the Marketing Blog heading in the right hand column.  Thanks!

Visual Thinking – Redux

This Dog Meets Baby photo from FitPregnacy.com pulls at the heartstrings and elicits an emotional response.

By Karen Pelletier

I believe that information and messaging overload has led to the need for images, to cut through the clutter and take advantage of subconscious visual thinking. Images stand out when you are skimming or speed reading.  If it’s an attractive image the reader is more likely to stop and read the article or click on the image.  That’s one of the reasons why Pinterest is so appealing to me and millions of others.  It’s all pictures or images, and if I want to know more about a picture I can click through to the source.

Double the Engagement Level of Your Posts!

Since my original post, Use Visual Thinking to Increase Your CTR, there has been a lot of quantitative research that’s come out that substantiates that visual thinking is, in fact, more effective at generating engagement than posts without visual elements. Inbound Marketing software company, Hubspot, collected a number of interesting statistics:

• 90% of information transmitted to the brain is visual, and visuals are processed 60,000X faster in the brain than text. (Sources: 3M Corporation and Zabisco)
• 40% of people will respond better to visual information than plain text. (Source: Zabisco)

According to an info-graphic from global communications company M Booth and media measurement and analytics company Simply Measured, including a photo in Facebook posts will double the number of “likes” the post receives versus text plus link posts.  Including a video increases engagement on Facebook by 12 times!

Perhaps even more important is that including images next to your claims increases the believability of your claim!  According to psychological research reported on by Derek Halpern from Social Triggers, including an image, ANY image, next to claims increases the believability of that claim.  Some ways you can utilize this are to:

1. Show an image of the client next to your testimonials.

2. Put an image of your giveaway next to your text. It shows it’s real.

3. Include an image next to your main claim in blog postings.

Click to Tweet:  Double Your Engagement!

So How Can You Create Images to Increase Engagement?

Here are some ideas for how to create images.

• Use photos. Ideally select photos that stir an emotional response and are related to your subject matter.
• Take a visual screen shot of your blog post to include as an image. This image will be larger than a link image.
• Use PowerPoint or free or cheap graphics programs like Piktochart.com, Infogr.am or Easel.ly to create infographics.
• Use photos from Creative Commons along with attribution.
• Create memes with PowerPoint, MS Paint or meme generators.

I hope this post tells you why you should use images and gives you some ideas on how to generate those attention grabbing images.

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Using (Social) Media and Content Marketing to Gain Power

Paul Ryan used Networking with the Media & Content Marketing to rise to power.

By Karen Pelletier

I heard a very interesting article on NPR[1] the other day about how Paul Ryan developed power and influence within the Republican Party by using the techniques that we, in marketing, use to build trust and influence, and ultimately sales.

Using These Techniques Can Build Your Power and Influence

Whether you agree with Paul Ryan’s policies or not, his method raised him to prominence within Congress, and can raise your profile within your company and industry.  According to Jonathan Martin, a reporter for Politico, Paul Ryan rose to prominence by aggressively developing relationships with people outside of Congress.  Marketers call them “influencers,” people and organizations like the Wall Street Journal, Weekly Standard, National Review and FOX News.  The more outside organizations took Ryan seriously, the more Congress did.  Then when Ryan presented his budget plan he had a ready-made forum for discussing his “content.”

Click to Tweet “Paul Ryan used the techniques we know as Content Marketing and Networking to gain power and influence in Congress.”

How You Can Increase Your Influence

This Blog is called The Long View – A Marketing Perspective because I’ve been in marketing a long time.  I often see parallels in one world and see how they apply to Marketing.  When I heard this article on NPR I immediately thought of the parallels between what Paul Ryan did, and what we do these days to gain influence within our industry.  What Paul Ryan did was use the power of networking with key influencers combined with content marketing to become a respected expert within Congress.  It can work for you too.

1.  Network within your industry.  Use social media like LinkedIn, Facebook, and Twitter, to network and contribute meaningful or helpful information to your peers.  This will help you to become known and respected.

2.  Use Content Marketing to create useful or helpful pieces in as many different forms as is practical for you (blog articles, videos, infographics, e-books, etc.).  This will increase your perceived expertise in your field, engender trust, and improve your profile within your organization and beyond.

I hope this post helps you see that the principles of Networking, Content Marketing, and leveraging Social Media are not limited to Marketing, and that they can be applied to any field.

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[1] The Making of Paul Ryan, August 30, 2012, NPR.

Handy Call to Action (CTA) Tool

By:  Karen Pelletier

Use this free tool as a CTA to get people to share your blog content.

Derek Halpern encourages people to put 2 CTAs (Calls to Action) in “The Perfect Blog Post.”

One of the easiest CTAs to include is a “Click to Tweet” link.  After trying various WordPress and other tools to include an easy “Click to Tweet” button within my blog posts, I finally found this free ClicktoTweet tool.  I love it.  It’s so easy to use and doesn’t take up a lot of valuable real estate.

Make sure that you remember to check the box “open in a new window” so that when people click on the link they aren’t thrown off of your blog!

Tweet this:  Use this free tool to Click to Tweet!

Use Visual Thinking to Increase Your CTR

Information and messaging overload has led to the need for images, to cut through the clutter and take advantage of visual thinking.

By:  Karen Pelletier

Macala Wright in her great article, “5 Digital Trends Shaping the Consumer Experience,” argues that consumers are shifting to“experiential” forms of communication and sharing.  Visual thinking, the use and exploration of images as tools for communication, is one of the most important trends to capitalize on.

Cut Through the Clutter to Get Your Message Heard

The world is a complex, busy place.  And that complexity and competition for attention seems to increase exponentially over time.  Estimates show that the average American is bombarded with advertising and messages that compete for their attention.  Consumer Reports reported that the average American was exposed to 247 ads a day, The Business Journal Phoenix Website, 600 ads a day, and The Union of Concerned Scientists Website, 3,000 ads per day.  No matter whose estimate you believe, there is ton of messaging competing for the attention of your target customer.

When Trout and Ries came out with their seminal book, Positioning: The Battle for Your Mind, in 1981, dealing with an over-communicated society was already viewed as a major issue for advertising. Trout & Ries posited the art of positioning as a way to simplify, cut through the barrage of messaging, and claim a place in your customer’s brain.  Successful positioning touches base with the reality that is already in the customer’s mind. You have to focus on your prospect, not on your product, to find what is going to get through to them.  Thus when Mastercard created their “priceless” campaign, it resonated with the public because they were enabling their customers to focus on what’s important to them, like spending quality time with their family.

Using Images Simplifies Communication

Additional evidence for the rise of visual thinking can be found in the success of Pinterest as one of the fastest growing social networks.  According to Pinterest expert Melanie Duncan, Pinterest generates more traffic than YouTube, Google+, and LinkedIn combined.  Pinterest generates more traffic than Twitter, and interestingly, Pinterest is generating more revenue for businesses than Facebook!  Why? My hypothesis is that it’s faster and easier to quickly scan images.  Things that you might like, solve a problem you have, or are interested in tend to pop out.  It’s all about what’s appealing to the customer.  Those are the items that get repined, and go viral.

One of the reasons Pinterest has become such a huge success is that it leverages “visual thinking” to communicate.  Click to Tweet!

Once you’ve selected your image create simplified custom landing pages.  HubSpot reported on research done by the Corporate Executive Board that has shown that simplicity, and limiting or taking away choices, actually results in higher conversion rates.  Specifically, a 20% increase in decision simplicity results in a 96% increase in customer loyalty, 86% increase in likelihood to purchase, and 115% increase in likelihood to recommend.

When Selecting Images Start with Where Your Customer’s Head Is, Then Simplify, Simplify, Simplify

1. Select images that start with where your target customer’s head is now and shows a problem or opportunity that your product or service solves.  Remember—it should be from the customer’s point of view!

2. Create simplified landing pages that remove navigation, advertise the value of your offer—why it will be useful or beneficial to the customer, have a simple, actionable call-to-action (like “Download Now” instead of “submit”), and keep your forms short.

Remember, simpler is always better.  See if simple, powerful images increase your click through rates.

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Why Do Companies Still Get Customer Service So Wrong?

By: Karen Pelletier

Why can’t companies go out of their way to help solve a customer’s problem with their brand?  I can’t tell you how many times I email a company and get a response back from customer service essentially saying “thanks for contacting us, but we can’t help you—not my job.”  When my partners and I owned a dog food company, our policy was to go above and beyond to help solve a customer’s problem.  If a potential customer called in asking to buy our dog food direct, because they couldn’t get it where they lived, we figured out a way to sell it to them via mail order (now of course it would be online).  Happy customers share their experience with others.  Unhappy customers get even by badmouthing the company.

If all companies were privately held I can’t believe they wouldn’t place a huge emphasis on customer service and go above and beyond to turn potential customers into brand evangelists.  So why don’t more companies make a commitment to customer satisfaction?

1.  The company doesn’t give the customer service rep the authority to figure out how to solve the customer’s problem.

2. The customer service rep doesn’t care.  If it’s not in their limited repertoire of “canned” responses, then they are not going to extend themselves to help.

3. Customer service system metrics—if the rep is evaluated by how many calls they handle in an hour, and not by the degree of satisfaction of the customer, then the company has a problem.

Two Contrasting Case Stories

Playtex Bras

Any woman who has finally found a comfortable bra can tell you that when you find a bra you like, you stock up.  Well, I could only find 2 bras and wanted more but couldn’t find them anywhere.  I looked on the company’s website; the bra was not sold there. I looked on other retailers’ websites, again, no dice.  I finally resorted to emailing Playtex’s customer service.  Their response:
“We are sorry you are having a problem finding style number XXXX.  This style is sold at most Wal-Mart, K Mart and Target Stores.  We do not carry online at our catalog website.”

When I responded that I had checked all those stores and that the style was not in stock anywhere, and that I’d really like to be able to order it online, I got the following response:

“We will forward your comments to our appropriate department.”

Needless to say, this was a very unsatisfying response.  Contrast that experience with Oakley.

Oakley Sunglasses

I’ve owned a pair of Oakley sunglasses for 12 years.  The plastic nose-piece had finally worn out and I needed to replace it.  I looked at their website, found the nose-piece sold along with frame accessories that I didn’t need, so I called their customer service, and asked if I could just buy the nose-piece.  Lo and behold, the customer service rep offered to send me a replacement nose-piece for FREE!  Now that’s customer service!  I will be loyal to Oakley forever!

So What Should Companies Do?

1.  Empower their customer service reps to find solutions to the customer’s problems.  This means that the customer service rep may actually have to “talk” to someone in the company who can help solve the problem.

2.  Evaluate the customer service rep by how satisfied the customer is, not by how many calls he or she handles.

If your customer service reps treat your company like it’s their own, and feel like they have a vested interest in its success, they will do anything they can to preserve and further your reputation for customer care.