The Marketing ARAB SPRING !

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10 hour flight to SFO from Shanghai and then a further 2 hours to Las Vegas. Hotel Check in 2pm. Off to the Zappos office at 2:30. At their reception at 3:01 just in time for the 3pm office tour. 15 other people from different parts of US were part of the tour.  We were the only ones from overseas. Round of applause for us when they hear we have come all the way from Shanghai.

Renea-the culture fireball (card shown above) welcomes the group and takes us through Zappos’s history via a breezy 4 min film before proceeding to walk us through the office ( if you can call it so). All I can say is this is one company which truly delivers on its promise. All the WOM they get is well deserved. It is a controlled happy mess.

The culture may not be for everyone espl for non-Americans but the happy vibe is unmistakable. They go our of their way to make sure their people ( and guests like us) are relaxed and happy. Nothing overbearing, just old fashioned authenticity, a fair bit of quirkiness and an infectious positive spirit ( sunny American optimism as some call it).

Even as tour guests we could pick whatever we want from the  free cafeteria and also from the Library ( I grabbed 3 books, Sina did the same). They offer to drop us off at our hotel ( we asked for the cab) in their van.

We get chatting with the driven-Ron and ask him what he likes most about working at Zappos. He says, ” The fact that it doesn’t feel like a job. But I still get a cheque every 2 weeks”.

That sums it up. Delighted employees delighting customers (and even casual visitors) creating massive positive buzz/WOM around the company’s culture and customer service which in turn generates new customers. It is a virtuous cycle. Amazon got them cheap for $1bn. Feels simple but not easy to pull off and sustain. Hats off to Tony Hsieh.

Culture eats strategy for breakfast. We have seen it in action.

UPDATE : Today morning ( within 10 hours of our tour)  we both have already received a personal mail from Renea thanking us for the visit and a 20% off coupon for shopping at Zappos.

Great Info-graphic on WOM from WOMMA- the global authority on WOM marketing

An hour back I was having drinks with a friend, who works in a leading strategy consultancy, at the JW Marriott in Shanghai . We were of course talking about the power of advocacy and word of mouth (WOM). The talk moved to how advocacy can benefit service industries like hotels and restaurants hugely if harnessed properly.

This gentleman is amongst the top 10 people globally in the Marriott Rewards loyalty card scheme. He told me he has stayed almost 500 nights in the Shanghai JW Marriott over the last 9-10 years. And yet he said he will not “advocate” this hotel. He stays there because he is used to it and it is kind of a habit now. He knows how things work and the staff also know him, by name in most cases. But (besides the minor fact that the breakfast has not changed in the last 10 years) what holds him back from advocating the hotel is that in these 10 years nobody has bothered to seriously seek his opinion on how things can be improved. One would think the Hotel GM can find 30 minutes one of these days to have a chat with him.

The point is this : Actively Involving consumers in developing your offer favorably biases them towards you. Even if you don’t implement everything they say, by listening to them you give the signal that you value them. This makes them feel good about themselves and about you as a brand. And when you do that with your loyal consumers, you turn them into advocates. This was proven by the Hawthorne experiments over 50 years back.

What happened : In the 1930′s some studies were held at the Western Electric production facility outside Chicago in a place called Hawthorne. The intent of the study was simple enough: invite a handful of employees to participate in various working condition tests to determine which conditions were most conducive to increased production. Those conditions that “tested” best were then to be rolled out to the general production floor. One of things they tested was brighter lights. Production went up. Then they tested dimmer lights. Production went up. In fact, no matter what they tested, production went up!

The explanation : By singling out a small group of employees to participate in an exclusive trial, participants felt valued, special and important. The special attention they received gratified their ego and created a positive emotional bond with what they were trialing. The practical upshot was that the research trials effectively transformed the research participants into advocates for whatever it was they were trialing.

Paul Mardsen has written an excellent paper on how consumer advisory panels can trigger WOM for your brand and can actually drive sales.

We at Advocacy are practicing what Paul has preached- Market WITH consumers, NOT @ consumers.

Case study on Dettol from our friends in Australia- Soup. Conclusive proof of sales growth and ROI due  to WOM marketing using consumer advocates.

This case also highlights the opportunity via WOM marketing to bypass the constraint high cost  mass-media imposes on the number of products that can be launched every year. Especially products which are already proven in developed markets can be more cost efficiently added to the portfolio in developing markets by using a community of consumers for research ( instead of long drawn traditional research)  as well as for launch activation.

Using a community of advocates is not just an addition  to your media mix. It can be THE MEDIA MIX plus lots more. Reach as well as impact of consumer advocates is proven. What more is left !

Hai Di Lao Hot Pot is hands down the most WOM-worthy restaurant in Shanghai (and maybe in China). The hot pot concept is simple enough – it’s known as the Chinese fondue where fresh thinly-sliced meat and vegetables are placed into a continuously simmering bowl of soup and then eaten with a dipping sauce. But Hai Di Lao takes the regular hot pot experience to a whole other level with its high attention to detail and in doing so has become more than a restaurant; it’s become a destination.

From the moment you walk in the door the staff is attentive to your every need. Don’t have a reservation? No worries, there’s a seating area with complimentary boardgames, snacks, and juices to keep you engaged while you wait. Alternatively you can drop your kid off at the playroom while you get a manicure, get your shoes shined, or get a back rub by their in-house masseuse. All free.

Once you get to your table the attentiveness shifts up a notch with melon, peanuts, and marinated tofu ready for you to nibble on while you order from the extensive menu. The selected hot pot is brought out by a professional-looking chef, the warm napkins supplied by a smiling grandmother, and the drinks kept full by your personal waiter. The staff here is attentive without being overbearing, they look after you without hovering… a refreshing change from most other restaurants in Shanghai.

If you have glasses they’ll give you a plastic bag with a microfiber cloth to keep them clean. If you happen to inquire about the longer-than-average chopsticks, they’ll give you a set of four to take home even though they’re – gasp – unbranded. If you order the kung fu noodles you’ll enjoy a mesmerizing display of hand-thrown noodles being pulled through the air by a specialist who can bust fluid moves like a breakdancer (see photo above). If you’re noticed as a regular (quite impressive given that the 1000+ occupancy is consistently full until around midnight, even on weekdays) then they’ll place a vase of roses on your table to distinguish you as a VIP. The roses are fake and kitschy but the gesture will make you feel like a million RMB.

10 years ago the founder of Hai Di Lao was selling hot pot in a small hole-in-the-wall in Beijing with seating for 6 people. Now there are dozens of locations, each one a thriving business that breeds more positive WOM and revenue than its competition. I don’t know the specifics of the founder’s rapid rise to fame but it’s easy to see on what he focused on the most: his team. From hiring (even old ladies are given a chance to shine, a rarity in Shanghai restaurants) to training (minimum 4 weeks of observation before ever facing a customer) to perks (including high-quality accommodation WITHOUT being crammed in like sardines as too many other restaurant workers are) to feedback (daily and weekly peer 360 reviews focused largely on level of authentic friendliness and attentiveness), its the only restaurant I know in China where every staff member is respected and celebrated.

To me it’s like a homegrown Zappos-style company culture, and the resulting customer experience is more than pleasurable; it’s an authentic happiness factory that consistently grows both WOM and the bottom line. Hai Di Lao is one of the fastest-growing restaurant chains in China, and for us at Advocacy it serves as an inspiration reminding us that attention to detail can be built into every process and interaction, while genuinely empowering all staff to keep the customer (i.e. our community members) smiling throughout their engagement with us. Every time.

Like any new media there are skeptics who ask us about the ROI of Word of Mouth marketing ( when was the last time this was asked about advertising). Thankfully this is NOT A NEW MEDIA. It has been around since 2001, even before the term “Social media” was invented. Tremor (from P&G) and Bzzagent have been 2 pioneering companies in this area and have done a sterling job in documenting how to  measure ROI. They also periodically publish case studies which clearly outline ROI of this media, based on rigorous analysis. I will be sharing these cases with readers of this blog to raise the bar for Authentic and Accountable marketing.

The first case is on Neutrogena Pure and Free- a sunscreen for babies. The key points to note are:

1. This was 3rd part modeling, not Bzzagent’s own claims

2. We are talking sales here, not impressions and $ value of WOM impressions which we see PR agencies tout.

Thank you Bzzagent.

PS: By the way Tesco, UK’s #1  retailer which has been trying to expand in US bought Bzzagent in May’2011. Think about it- Bzzagent got bought not by a traditional communication services group like WPP, Omnicom, but a business and sales focused retailer. Does that help connect the dots on how  Community led marketing and Advocacy actually drive sales efficiently?

One of the best strategic frameworks I have seen and used is the Mckinsey 7S framework. According to it ( and many other frameworks) an organization’s structure should follow its strategy. Fairly common sensical and logical.

It is fair to assume that most consumer good MNC companies look at big emerging markets like China and India to be the key engines of future growth. So why are organization structures in these countries mirroring the structures of developed markets, espl when some of the other “S’s- espl skills and systems are not at the same level. By trying to replicate the same structure, and investing massively in developing systems and skills to the same level as developed markets companies are perhaps mis-allocating precious resources which can be better used in driving growth, in the short to mid-term.

Specifically within brand management, a growth strategy demands a different structure from the usual 5 layered structure- ABM, BM, Sr BM/MM, Brand director, Category head. This structure is definitely not a recipe for quick and focused decision making. Add to this the complex regional structures and the zeal to localise at all levels and you have a perfect storm.

Too many people with too little experience to take  big calls, but still having the power to say NO to potentially  game changing ideas/approaches. When you don’t know, you play safe !! Playing safe is not a growth call.

Our friends often ask us why we launched Advocacy. Is this just an entrepreneurial bug? Is it a great commercial opportunity and will make us multi-millionaires when we get acquired?

The answer is simpler. The continued lack of authenticity and accountability in the marketing communications world is startling.  Things have not moved on despite the world having changed.  As passionate marketers this pained us and the opportunity excited us. We decided to show a different way !

What do we mean ?

1. The case for marketing WITH the consumer is well established, but we still keep marketing TO consumer.

Brand owners are looking for a different- more efficient and effective- model approach to consumer engagement but are still getting more of the same from traditional agencies, now under the garb of  ”digital”. Most agencies have added a digital unit which now pushes social media campaigns. Most of  these campaigns follow a very similar construct. A “content” led approach to marketing which looks to interrupt the consumer with “content” in the hope that it will be seen and remembered by enough to build a favorable association leading to purchase. This is the same model as advertising with ‘like” ‘share”, “comment” , “upload” buttons added. Only a few have truly embraced and leveraged the fundamental change in the consumer and brands dynamic brought about by the digital media, and that too has been on one off campaigns and not as a fundamental approach to communication. I don’t blame the agencies as one cannot teach an old dog new tricks and there are huge vested interests. Most people working there perhaps only know content led and interruption model of marketing

2. Companies are doing a poor job of measuring effectiveness, despite the tools existing.

I am not talking complex multiple regression or econometrics led approaches. They all suffer from the lack of quality /uncluttered input data. The simplest and the cleanest way (which I have used consistently many times in my career) is to do a test/experiment. A classic PRE vs POST in a test city vs a control city. This requires one time effort in setting it up properly but establishes the business case for a new activity/new approach conclusively.

At Advocacy, we are flying the flag for an Authentic and Accountable approach to marketing.

We are marketing WITH a community of consumers. It is marketing for the consumers by the consumers- Community led marketing !

We are giving them products they are interested in. We give them messages to share with friends which they have designed and developed with us, and we are course correcting in between campaigns based on what they tell us. And they are even telling us on their own how to improve the products and which new products should be launched. It is just so much more fun and fulfilling, and so much more than just “communication”.

We are NOT SELLING big campaigns, but PROVING ROI via pilots.

- We ask all our potential clients to first do a pilot with us ( even though we have now conclusively proven the business case on our pioneer client). All we ask is a commitment to set the pilot up rigorously to have no room for muddied data.

-We are putting our profit on the line by only covering fixed costs in pilot and taking the rest only if we hit the mutually agreed numbers.

We are on a mission which we are passionate about and it has been fun till now !