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Thursday, October 15, 2009
Friday, September 25, 2009
The personal conference
As the economy is trying to get back on its feet, the conference market faces rough times. Reductions in training and travel budgets mean fewer delegates, in the worst case canceled conferences. Though it need not be all doom and gloom. These developments could actually be a win-win situation for speakers and delegates.
Let’s face it. Not all conferences, and certainly not all speakers, are a great experience. For many delegates, it is a matter of wanting to hear one or two great speakers on subjects of high interest and the rest are of secondary interest. Some conferences also tend to be vendor dominated – if a large portion of the delegates and speakers are vendors, no one is particularly enthusiastic – neither vendors nor remaining delegates. This is not to say all conferences fall into this category, but we have all experienced those that do.
Sending delegates to conferences can also be quite expensive. There is usually a conference fee, transportation costs and hotel costs, not to mention work hours that could be spent on other tasks. Sending multiple delegates can thus be very costly for companies. For speakers, unless they are gurus that draw in lots of delegates, many only get the costs of transportation and stay covered, and if lucky a modest fee.
So, what if a company rather than sending a number of delegates to a conferenc, hired the speakers of highest interest to come to them and present their material? Call it personal conferencing. It is arguably not a new concept, but one that is very relevant in today’s business climate. The companies would only have to cover the transportation costs and potential costs of staying for the one or two speakers, rather than for all their delegates. The conference fees, partially or in full, could be paid to the speakers – and the company would gain a competitive advantage from having access to the speaker without everyone else in the industry hearing the same speech. The presentation could also be custom-tailored to the specific priorities of the organization, thus increasing its overall value.
It is evident there are win-win opportunities for speakers and delegates to get together in personal conferences – especially while the conference market remains rough.
At MACAW research we are happy to send speakers to both regular conferences AND personal conferences, whichever you prefer. If you want to hire one of our consultants as a speaker, please contact us via www.macawresearch.com
Let’s face it. Not all conferences, and certainly not all speakers, are a great experience. For many delegates, it is a matter of wanting to hear one or two great speakers on subjects of high interest and the rest are of secondary interest. Some conferences also tend to be vendor dominated – if a large portion of the delegates and speakers are vendors, no one is particularly enthusiastic – neither vendors nor remaining delegates. This is not to say all conferences fall into this category, but we have all experienced those that do.
Sending delegates to conferences can also be quite expensive. There is usually a conference fee, transportation costs and hotel costs, not to mention work hours that could be spent on other tasks. Sending multiple delegates can thus be very costly for companies. For speakers, unless they are gurus that draw in lots of delegates, many only get the costs of transportation and stay covered, and if lucky a modest fee.
So, what if a company rather than sending a number of delegates to a conferenc, hired the speakers of highest interest to come to them and present their material? Call it personal conferencing. It is arguably not a new concept, but one that is very relevant in today’s business climate. The companies would only have to cover the transportation costs and potential costs of staying for the one or two speakers, rather than for all their delegates. The conference fees, partially or in full, could be paid to the speakers – and the company would gain a competitive advantage from having access to the speaker without everyone else in the industry hearing the same speech. The presentation could also be custom-tailored to the specific priorities of the organization, thus increasing its overall value.
It is evident there are win-win opportunities for speakers and delegates to get together in personal conferences – especially while the conference market remains rough.
At MACAW research we are happy to send speakers to both regular conferences AND personal conferences, whichever you prefer. If you want to hire one of our consultants as a speaker, please contact us via www.macawresearch.com
Sunday, August 2, 2009
Testing Bing
MACAW research gave Wolfram Alpha a test drive earlier this year. This time we take a look at Bing, Microsoft’s latest search engine, which was launched worldwide in the beginning of June. Bing is promoted as a Decision Engine, which implies it is more than just a search engine.
To quote Microsoft, “Bing takes a new approach to helping customers use search to make better decisions, focusing initially on four key user tasks and related areas: making a purchase, planning a trip, researching a health condition or finding a local business.”
In addition to these specialized task-oriented features, Bing is also a general purpose search engine. As international business consultants, we do travel a bit, however we are more often performing searches as part of research projects. Thus we will limit our testing of Bing to general purpose searches where Google to this day reigns supreme.
If we’re going to be using Bing, it needs to perform as well as – or better – than Google. Our first test query “macaw research” run on both engines gave us slightly different results. Our website, www.macawresearch.com, is the top pick on both engines, and they both return the Wikipedia entry on Macaw, as well as the Tambopata Macaw Research project on the first search result page. Google returns links both to the MACAW Card Bulletin, published by us, and to our Twitter profile. Bing doesn’t bring back anything else related to our company on the first search result page, so it is a better option if your primary interest is bird research links. Our second query, “EU population”, also returns some shared results, including Wikipedia entries and links to optimumpopulation.org, but then there are some differences. Google returns what we would say is the most relevant for a market researcher – a link to Eurostat, the EU central statistics agency. After a bit more testing, in general, it seems like you get a different mix of results with Google and Bing, and the relevancy is fairly high for both engines, with a slightly higher utility in favor of Google for our test queries.
However, Bing has some nice features. For instance you can hover over a link and Bing will retrieve some basic information from the site the link leads to, allowing you a preview. Using this feature can be faster than clicking and then going back if the page doesn’t give you what you were looking for, according to Microsoft something that occurs in 24% of cases with clicks on search result links.
Bing also uses what Microsoft terms an Explore Panel, which contains Related Searches and Quick Tabs. The former is suggested other search strings related to your current search, whereas tabs are somewhat more sophisticated with dynamic categories that depend on the search. Searches for a certain city name yield Quick Tabs for tours, travel and images; searches for a car model generate categories on reviews, accessories and videos.
So, what’s the verdict? We’ll have to use Bing a bit more before we can conclude on anything, but it definitely looks promising. Search results tend to overlap with Google, but there are some differences, which suggest it can be worthwhile to do a search on both engines in some cases. With regards to features, Microsoft is on to something, particularly with preview, however it will probably not be long before Google or someone else copies it. All in all, we are pleasantly surprised.
To quote Microsoft, “Bing takes a new approach to helping customers use search to make better decisions, focusing initially on four key user tasks and related areas: making a purchase, planning a trip, researching a health condition or finding a local business.”
In addition to these specialized task-oriented features, Bing is also a general purpose search engine. As international business consultants, we do travel a bit, however we are more often performing searches as part of research projects. Thus we will limit our testing of Bing to general purpose searches where Google to this day reigns supreme.
If we’re going to be using Bing, it needs to perform as well as – or better – than Google. Our first test query “macaw research” run on both engines gave us slightly different results. Our website, www.macawresearch.com, is the top pick on both engines, and they both return the Wikipedia entry on Macaw, as well as the Tambopata Macaw Research project on the first search result page. Google returns links both to the MACAW Card Bulletin, published by us, and to our Twitter profile. Bing doesn’t bring back anything else related to our company on the first search result page, so it is a better option if your primary interest is bird research links. Our second query, “EU population”, also returns some shared results, including Wikipedia entries and links to optimumpopulation.org, but then there are some differences. Google returns what we would say is the most relevant for a market researcher – a link to Eurostat, the EU central statistics agency. After a bit more testing, in general, it seems like you get a different mix of results with Google and Bing, and the relevancy is fairly high for both engines, with a slightly higher utility in favor of Google for our test queries.
However, Bing has some nice features. For instance you can hover over a link and Bing will retrieve some basic information from the site the link leads to, allowing you a preview. Using this feature can be faster than clicking and then going back if the page doesn’t give you what you were looking for, according to Microsoft something that occurs in 24% of cases with clicks on search result links.
Bing also uses what Microsoft terms an Explore Panel, which contains Related Searches and Quick Tabs. The former is suggested other search strings related to your current search, whereas tabs are somewhat more sophisticated with dynamic categories that depend on the search. Searches for a certain city name yield Quick Tabs for tours, travel and images; searches for a car model generate categories on reviews, accessories and videos.
So, what’s the verdict? We’ll have to use Bing a bit more before we can conclude on anything, but it definitely looks promising. Search results tend to overlap with Google, but there are some differences, which suggest it can be worthwhile to do a search on both engines in some cases. With regards to features, Microsoft is on to something, particularly with preview, however it will probably not be long before Google or someone else copies it. All in all, we are pleasantly surprised.
Wednesday, July 15, 2009
Introduction to Market Intelligence
When people make decisions they rely on gathering and analyzing information. If you plan on buying a new stereo, you want to make sure you make a good purchase. You want to compare product features on different models, prices in different stores, available support and warranty, what other customers have experienced using the product, and a host of other information. In short, the more information you can base your decision on, the less likely that your purchase will be a bad one.
For small decisions people can get by with less information. The bigger the decision, the more informed you want to be. Big decisions typically involve a higher level of risk, and you want to minimize that risk. So you gather relevant data and analyze it to improve the odds of a successful decision. For businesses, whose decisions have much larger impact than individual consumers’, this is even more important. Companies need not only information, but information put together in a manner that makes sense in the context of their decisions. They need Market Intelligence.
Market Intelligence is a collective term for information about a company’s environment, which is gathered, structured, analyzed and presented to decision-makers. In this environment we find competitors and their products, customers and their experiences, strategies, websites, regulations, innovation, and a host of other factors that influence the market- and ultimately business decisions.
Companies need to be aware of their surroundings to reduce risks and improve their likelihood of success. They need to know when competitors launch new products or change their strategies, when and how government regulations will affect the industry, how customers and other groups experience interacting with the company, how the company’s new website compares to the old one and to competitors’ websites, and the list goes on.
Why do companies need to know these things? Because if they don’t they are running their businesses based on random decision-making. That doesn’t sound good at all, but the truth is that many decisions are made on gut-feeling or very limited information. This might come as a surprise in an era when information is more available than ever before.
In fact some managers would argue that they don’t use Market Intelligence because they are too busy (too busy to make good decisions?). Or they say they don’t know where to start looking, and they could waste days without finding what they are looking for. And even if they do find something, they don’t have the proper systems and the continuity required to optimize the value of the information. In short, their Market Intelligence efforts are performed ad hoc, require a lot of resources, and the results can vary.
At the same time, these managers all realize the value of good information. They need to be able to provide the necessary data and analysis to back their decisions. This is especially important when businesses are facing reduced sales revenue and they can’t afford to make mistakes. That is when the value of Market Intelligence is truly appreciated.
So, if Market Intelligence is a requirement for good decisions, and it’s difficult to get it right for companies on their own… then what should they do? Here’s an idea. Maybe someone else can do it for them. Specifically, maybe we at MACAW research can do it. We work with Market Intelligence all the time and we know how to get it right. Go ahead, check out our website and drop us a line. We won’t bite.
http://www.macawresearch.com
For small decisions people can get by with less information. The bigger the decision, the more informed you want to be. Big decisions typically involve a higher level of risk, and you want to minimize that risk. So you gather relevant data and analyze it to improve the odds of a successful decision. For businesses, whose decisions have much larger impact than individual consumers’, this is even more important. Companies need not only information, but information put together in a manner that makes sense in the context of their decisions. They need Market Intelligence.
Market Intelligence is a collective term for information about a company’s environment, which is gathered, structured, analyzed and presented to decision-makers. In this environment we find competitors and their products, customers and their experiences, strategies, websites, regulations, innovation, and a host of other factors that influence the market- and ultimately business decisions.
Companies need to be aware of their surroundings to reduce risks and improve their likelihood of success. They need to know when competitors launch new products or change their strategies, when and how government regulations will affect the industry, how customers and other groups experience interacting with the company, how the company’s new website compares to the old one and to competitors’ websites, and the list goes on.
Why do companies need to know these things? Because if they don’t they are running their businesses based on random decision-making. That doesn’t sound good at all, but the truth is that many decisions are made on gut-feeling or very limited information. This might come as a surprise in an era when information is more available than ever before.
In fact some managers would argue that they don’t use Market Intelligence because they are too busy (too busy to make good decisions?). Or they say they don’t know where to start looking, and they could waste days without finding what they are looking for. And even if they do find something, they don’t have the proper systems and the continuity required to optimize the value of the information. In short, their Market Intelligence efforts are performed ad hoc, require a lot of resources, and the results can vary.
At the same time, these managers all realize the value of good information. They need to be able to provide the necessary data and analysis to back their decisions. This is especially important when businesses are facing reduced sales revenue and they can’t afford to make mistakes. That is when the value of Market Intelligence is truly appreciated.
So, if Market Intelligence is a requirement for good decisions, and it’s difficult to get it right for companies on their own… then what should they do? Here’s an idea. Maybe someone else can do it for them. Specifically, maybe we at MACAW research can do it. We work with Market Intelligence all the time and we know how to get it right. Go ahead, check out our website and drop us a line. We won’t bite.
http://www.macawresearch.com
Wednesday, June 24, 2009
Journalism quality
There is an ongoing global debate concerning the quality of journalism, or rather its decline. The reduction in printed media, online advertising models, reduced government funding, increased demands for speedy delivery, an increase in tabloidization, and even Google and Wikipedia have been mentioned as reasons for the perceived decline in journalism quality.
This certainly isn’t a new debate. It goes all the way back to the advent of online newspapers and probably all new media. However, an interesting development is that it’s not just journalists who are waving the red flag. An increasing number of non-journalist bloggers vent their frustrations. It would appear journalism quality might have reached an all-time low in the recession, with the crisis eating into advertising income and more cost cuts finding their way to the editorial boards.
Market researchers who turn to news articles as a source of information continually face the challenges of journalism quality. While the average news consumer might be annoyed by spelling mistakes, casual stories being treated like “the latest scoop” in terms of headlining (which can even be directly misleading to attract clicks), and celebrity gossip and sports news finding their way into other content categories, market researchers face other challenges.
For example, the widespread use of cut+paste journalism, which eventually leads to articles becoming less than a stub – in some instances an article was only a stub to begin with. Unfortunately, this not only removes what can be important contextual or additional information, but it also can lead to extensive hunting in search of the original source due to a lack of or incomplete quoting practices. As a policy, market researchers should always go to the original source, which can involve following a surprisingly long trail of bread crumbs which might abruptly result in a dead-end.
Another concern for market researchers is the use of Wikipedia and Google as sources by journalists. Wikipedia is not an objective, quality-assured source, despite how intriguing it is and practical for instant look-up for less professional occasions, such as when discussing at a party whether the CD or LaserDisc came first, or who won the 2004 Eurovision song contest. Google uses a number of algorithms for determining search engine results, some of which are based on external references. Thus sites that fulfill certain criteria will get a higher rating, and thus come up early in journalist’s search results. This can create biased results, which are transferred to media sites and magnified by journalists who reference the found pages in their articles, thus creating further bias towards their sources. Popularity does not by itself determine truth. Google doesn’t separate right from wrong, that’s the time-pressed journalist’s job.
This leads to the question “who is the author of a given article?” In a number of countries, journalist is not a protected title. Even if it is, news articles can be written by “unlicensed” news desk workers, who aren’t specifically trained in critical journalism. Some newspapers only list an article sponsor, for instance “This article was sponsored by Company X”. All this makes it difficult to trust a growing number of online media sites in a professional research context. Market researchers need to choose their sources carefully in today’s online media jungle.
We await the day when new incentives surface which will encourage the rise of journalism quality again. And, as the critical reader will have determined, this post can easily be picked apart with regards to elements required to qualify as high quality journalism. That is because it is not meant to be such, rather an informal blog post on a topic of interest to us – and hopefully to other market research professionals as well.
This certainly isn’t a new debate. It goes all the way back to the advent of online newspapers and probably all new media. However, an interesting development is that it’s not just journalists who are waving the red flag. An increasing number of non-journalist bloggers vent their frustrations. It would appear journalism quality might have reached an all-time low in the recession, with the crisis eating into advertising income and more cost cuts finding their way to the editorial boards.
Market researchers who turn to news articles as a source of information continually face the challenges of journalism quality. While the average news consumer might be annoyed by spelling mistakes, casual stories being treated like “the latest scoop” in terms of headlining (which can even be directly misleading to attract clicks), and celebrity gossip and sports news finding their way into other content categories, market researchers face other challenges.
For example, the widespread use of cut+paste journalism, which eventually leads to articles becoming less than a stub – in some instances an article was only a stub to begin with. Unfortunately, this not only removes what can be important contextual or additional information, but it also can lead to extensive hunting in search of the original source due to a lack of or incomplete quoting practices. As a policy, market researchers should always go to the original source, which can involve following a surprisingly long trail of bread crumbs which might abruptly result in a dead-end.
Another concern for market researchers is the use of Wikipedia and Google as sources by journalists. Wikipedia is not an objective, quality-assured source, despite how intriguing it is and practical for instant look-up for less professional occasions, such as when discussing at a party whether the CD or LaserDisc came first, or who won the 2004 Eurovision song contest. Google uses a number of algorithms for determining search engine results, some of which are based on external references. Thus sites that fulfill certain criteria will get a higher rating, and thus come up early in journalist’s search results. This can create biased results, which are transferred to media sites and magnified by journalists who reference the found pages in their articles, thus creating further bias towards their sources. Popularity does not by itself determine truth. Google doesn’t separate right from wrong, that’s the time-pressed journalist’s job.
This leads to the question “who is the author of a given article?” In a number of countries, journalist is not a protected title. Even if it is, news articles can be written by “unlicensed” news desk workers, who aren’t specifically trained in critical journalism. Some newspapers only list an article sponsor, for instance “This article was sponsored by Company X”. All this makes it difficult to trust a growing number of online media sites in a professional research context. Market researchers need to choose their sources carefully in today’s online media jungle.
We await the day when new incentives surface which will encourage the rise of journalism quality again. And, as the critical reader will have determined, this post can easily be picked apart with regards to elements required to qualify as high quality journalism. That is because it is not meant to be such, rather an informal blog post on a topic of interest to us – and hopefully to other market research professionals as well.
Sunday, May 31, 2009
Testing Wolfram Alpha
Wolfram Alpha is Stephen Wolfram’s much hyped search engine project. We decided to give it a little test run to see how it can be of use in market research, and wanted to share our experiences with you. We are probably not the only ones in the market intelligence community that are curious about Alpha: http://www.wolframalpha.com
It is important to distinguish Wolfram Alpha from Google and other text-based search engines. From the hype one might almost be led to believe Alpha has artificial intelligence (AI) and can compute an answer to almost anything. It’s definitely not an AI, but uses a series of engineered scripts to provide some interesting results in select areas. The scripting is based on Wolfram’s Mathematica software, and numbers is what Alpha is good at.
Alpha is not a universal search engine. It does not return information on for example “EU regulations” or “Adam Smith’s invisible hand”, giving you the quickly annoying null result message “Wolfram Alpha isn't sure what to do with your input”. Alpha excels at numeric data and performing calculations, though, and it can conjure up useful tables and charts in instants, but only based on facts it has stored in its databases. In some instances, Alpha utilizes external sources too, typically for frequently updated data such as stocks.
For instance, we entered “DnB NOR”, which is the largest financial institution in Norway, and Alpha returned latest trade data and returns, a chart with price history, performance comparisons and correlations with various indices in table and various chart formats, projections for future pricing and alpha, beta and R Square values for daily returns for DnB NOR compared to S&P 500. Wow. Impressive, assuming the information is correct. To verify some of the data, we went to the Oslo Stock Exchange website and checked the latest trade value and weekly, monthly and year-to-date returns. The latest trade value was identical, but the return values were a bit off, as in Alpha reported an additional +5% on 30 day-return and -10% on year-to-date return. Hmm. That’s a lot.
This led us to check out the Source data link provided on Alpha’s search result page. It gave a long list of finance-related sources ranging from academic books to sites such as Morning Star, with a disclaimer that not necessarily all sources were used in the results. This can make quoting a source for particular data difficult, as the source list seems to apply for the search result page as a whole rather than for individual elements on the page. The Oslo Stock Exchange was not on the list, by the way, but several sources for aggregated financial data were.
We decided to try one of the recommended searches Alpha provides on its front page, and thus entered “EU populations.” Alpha returned a summary with the total EU population, the country with the highest population and the lowest, a chart with historical developments for the total EU population (does not say whether it includes ascension member states), a list of top 5 and bottom 5 countries ranked by population size – which can be expanded to a full list with a few clicks, a distribution plot with unspecified data (what does it show?), along with some demographic data measures for the countries that have the highest, lowest and median values for the population, population density, population growth, life expectancy and median age. This part didn’t strike us as intuitively very practically organized. A few clicks at a More option for yielded some additional demographic variables, such as annual deaths and birthrate fractions.
Of high importance, we were unable to find references to which years the various population data stem from – in fact there seems to be hardly any meta data available. We could be comparing years-old figures for some parameters and countries with very recent data for others without knowing. The source list doesn’t provide us much help in this case either. This is a major issue that needs to be addressed if Alpha is to be used by market intelligence professionals.
Summarizing briefly, Wolfram Alpha currently can produce substantial amounts of data on select subject matters of quantitative nature. For market researchers looking for quick access to on-the-fly generated charts and tables on data otherwise obtained and structured via other sources, Alpha could be a low-cost solution. However, seeing the source references are vague and Alpha seems to lack very important meta data, it seems more like a tool for a) the general public with simple data requirements, b) students and specialists in certain fields with a need to perform mathematical and statistical computations without using desktop applications.
We’ll definitely keep tabs on Alpha and play around with it some more, but currently it doesn’t strike us as something that will revolutionize the market intelligence industry. If anything, it is a supplement to other search engines and tools. As far as search engines go, Wolfram Alpha is certainly not a replacement for Google, but then again, it doesn’t intend to be either. We look forward to seeing Alpha evolve.
It is important to distinguish Wolfram Alpha from Google and other text-based search engines. From the hype one might almost be led to believe Alpha has artificial intelligence (AI) and can compute an answer to almost anything. It’s definitely not an AI, but uses a series of engineered scripts to provide some interesting results in select areas. The scripting is based on Wolfram’s Mathematica software, and numbers is what Alpha is good at.
Alpha is not a universal search engine. It does not return information on for example “EU regulations” or “Adam Smith’s invisible hand”, giving you the quickly annoying null result message “Wolfram Alpha isn't sure what to do with your input”. Alpha excels at numeric data and performing calculations, though, and it can conjure up useful tables and charts in instants, but only based on facts it has stored in its databases. In some instances, Alpha utilizes external sources too, typically for frequently updated data such as stocks.
For instance, we entered “DnB NOR”, which is the largest financial institution in Norway, and Alpha returned latest trade data and returns, a chart with price history, performance comparisons and correlations with various indices in table and various chart formats, projections for future pricing and alpha, beta and R Square values for daily returns for DnB NOR compared to S&P 500. Wow. Impressive, assuming the information is correct. To verify some of the data, we went to the Oslo Stock Exchange website and checked the latest trade value and weekly, monthly and year-to-date returns. The latest trade value was identical, but the return values were a bit off, as in Alpha reported an additional +5% on 30 day-return and -10% on year-to-date return. Hmm. That’s a lot.
This led us to check out the Source data link provided on Alpha’s search result page. It gave a long list of finance-related sources ranging from academic books to sites such as Morning Star, with a disclaimer that not necessarily all sources were used in the results. This can make quoting a source for particular data difficult, as the source list seems to apply for the search result page as a whole rather than for individual elements on the page. The Oslo Stock Exchange was not on the list, by the way, but several sources for aggregated financial data were.
We decided to try one of the recommended searches Alpha provides on its front page, and thus entered “EU populations.” Alpha returned a summary with the total EU population, the country with the highest population and the lowest, a chart with historical developments for the total EU population (does not say whether it includes ascension member states), a list of top 5 and bottom 5 countries ranked by population size – which can be expanded to a full list with a few clicks, a distribution plot with unspecified data (what does it show?), along with some demographic data measures for the countries that have the highest, lowest and median values for the population, population density, population growth, life expectancy and median age. This part didn’t strike us as intuitively very practically organized. A few clicks at a More option for yielded some additional demographic variables, such as annual deaths and birthrate fractions.
Of high importance, we were unable to find references to which years the various population data stem from – in fact there seems to be hardly any meta data available. We could be comparing years-old figures for some parameters and countries with very recent data for others without knowing. The source list doesn’t provide us much help in this case either. This is a major issue that needs to be addressed if Alpha is to be used by market intelligence professionals.
Summarizing briefly, Wolfram Alpha currently can produce substantial amounts of data on select subject matters of quantitative nature. For market researchers looking for quick access to on-the-fly generated charts and tables on data otherwise obtained and structured via other sources, Alpha could be a low-cost solution. However, seeing the source references are vague and Alpha seems to lack very important meta data, it seems more like a tool for a) the general public with simple data requirements, b) students and specialists in certain fields with a need to perform mathematical and statistical computations without using desktop applications.
We’ll definitely keep tabs on Alpha and play around with it some more, but currently it doesn’t strike us as something that will revolutionize the market intelligence industry. If anything, it is a supplement to other search engines and tools. As far as search engines go, Wolfram Alpha is certainly not a replacement for Google, but then again, it doesn’t intend to be either. We look forward to seeing Alpha evolve.
Monday, April 27, 2009
Recession business mentality
In our last post, we wrote about innovation in the economic quagmire. This time we will focus on how the financial crisis and economic downturn impact the way we think about doing business.
It is safe to say that optimism has been replaced with caution. Costs are cut, investments cancelled, and innovation is viewed with skepticism by many managers. Product, sales and marketing departments face new challenges with what we call “the recession business mentality:”
• Risk aversion – everyone is afraid of making wrong decisions, both personally and for the business as a whole. When people are advised to wear white shirts to avoid sticking out in the next round of downsizing, finding someone willing to take large risks can be difficult.
• Demand for visible results – investments require visible return in the form of reduced risk, increased revenue and/or lower costs. Results need to be perceivable and quantifiable. Projects, services and products that fail to deliver visible results face tough times.
• Demand for quick results – cost cuts can quickly impact the bottom line. Now investments require quick results, often within a year or even within a quarter. Managers face strict requirements to cut costs and improve results within short time frames.
• Long decision-making processes - decisions that were up until recently made by empowered employees and single managers now drag on as more people become involved in decision-making processes. The larger the investment, the longer it takes.
• Budgets are slim – in many companies it is currently not room for large investments, or there is an investment freeze altogether. Expensive products and services are categorically refused, and price negotiations can be tough.
So, how can struggling companies adapt to the recession business mentality? To begin with, businesses should evaluate their product and service range to determine whether they fulfill the criteria almost required to do business during the recession. We have compiled a list of requirements, and the more criteria a product or service meets, the more likely we predict it is to succeed during the economic downturn.
The optimal product is one that:
• Entails low risk to the business and buyer
• Provides tangible value
• Provides quick return
• Can increase revenue and reduce costs
• Can circumvent inefficient decision-making processes
• And finally, it should be low cost
A low-cost product can entail low risk for the buyer and can circumvent long decision-making rounds and investment restrictions. If it is easy to provide tangible results, lower costs and increased revenue, it is easy to measure return on investment. Of course, many products or services don’t meet all these criteria, but the ones that do – or that can be adapted to do – have an edge when facing the recession business mentality.
It is safe to say that optimism has been replaced with caution. Costs are cut, investments cancelled, and innovation is viewed with skepticism by many managers. Product, sales and marketing departments face new challenges with what we call “the recession business mentality:”
• Risk aversion – everyone is afraid of making wrong decisions, both personally and for the business as a whole. When people are advised to wear white shirts to avoid sticking out in the next round of downsizing, finding someone willing to take large risks can be difficult.
• Demand for visible results – investments require visible return in the form of reduced risk, increased revenue and/or lower costs. Results need to be perceivable and quantifiable. Projects, services and products that fail to deliver visible results face tough times.
• Demand for quick results – cost cuts can quickly impact the bottom line. Now investments require quick results, often within a year or even within a quarter. Managers face strict requirements to cut costs and improve results within short time frames.
• Long decision-making processes - decisions that were up until recently made by empowered employees and single managers now drag on as more people become involved in decision-making processes. The larger the investment, the longer it takes.
• Budgets are slim – in many companies it is currently not room for large investments, or there is an investment freeze altogether. Expensive products and services are categorically refused, and price negotiations can be tough.
So, how can struggling companies adapt to the recession business mentality? To begin with, businesses should evaluate their product and service range to determine whether they fulfill the criteria almost required to do business during the recession. We have compiled a list of requirements, and the more criteria a product or service meets, the more likely we predict it is to succeed during the economic downturn.
The optimal product is one that:
• Entails low risk to the business and buyer
• Provides tangible value
• Provides quick return
• Can increase revenue and reduce costs
• Can circumvent inefficient decision-making processes
• And finally, it should be low cost
A low-cost product can entail low risk for the buyer and can circumvent long decision-making rounds and investment restrictions. If it is easy to provide tangible results, lower costs and increased revenue, it is easy to measure return on investment. Of course, many products or services don’t meet all these criteria, but the ones that do – or that can be adapted to do – have an edge when facing the recession business mentality.
Monday, April 13, 2009
Innovation in the economic quagmire
The global economy is a quagmire and we are all sinking.
Daily we hear stories about companies downsizing, dramatically cutting costs and slashing their revenue projections. Aggressive growth strategies are replaced by more defensive strategies and many promising projects are cancelled.
But what will these companies do after the reorganizations are completed and daily business is all that remains? Essentially they are holding on to a branch to avoid sinking deeper into the economic quagmire, but it won’t help them to get out. And if they don’t do something, companies will see competitors climbing out of the pits while they remain stuck.
We say the time has come to focus on innovation. By now companies should have corporate cultures that are cost-focused and stricter requirements for return on investment should be in place. Building on this fundament, innovation needs to be quick, low-cost and potential return on investment should be identified early. It is also important to remember that not all innovations will be successes. Scott D. Anthony, author of The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work, reminds us that companies should also focus on decreasing the cost of failures.
Based on the above criteria, we have come up with a few simple rules to improve innovation performance - which frankly should apply regardless of economic cycles, but are particularly in the spirit of the now. We think it is just what companies need to get out of the quagmire.
1. Prioritize ideas by costs and potential return on investment. Already at an early stage ideas should be evaluated for potential. Many times, low cost ideas are just as good as high cost ones – and they entail lower risks.
2. Accept that 80% is good enough. Those last 20% can be very costly and you can achieve more and reduce risks by spreading your resources on multiple innovation initiatives.
3. Use agile development techniques. You gain flexibility to make changes along the way without having to discard or make substantial changes to detailed product specifications.
4. Test your ideas on a user group. Testing need not be expensive. Especially for qualitative feedback, a small group tends to come up with many of the same comments a larger group would do. If customers are too expensive to get hold of, use internal user tests.
5. Increase pace of decisions. This does not mean making uninformed decisions, but advocates avoiding long decision-making rounds. Cancelling flawed projects early reduces costs and allows you to focus on the best ideas (Thanks to Scott for this one).
In the eyes of Joseph Schumpeter (1883-1950), the entrepreneur spirit is that which drives progress, and the actors that drive innovation and the economy are big companies which have the resources and capital to invest in research and development. If Schumpeter was still around, he too would likely have advocated that the way out of the economic crisis is through innovation. Food for thought, big companies.
Daily we hear stories about companies downsizing, dramatically cutting costs and slashing their revenue projections. Aggressive growth strategies are replaced by more defensive strategies and many promising projects are cancelled.
But what will these companies do after the reorganizations are completed and daily business is all that remains? Essentially they are holding on to a branch to avoid sinking deeper into the economic quagmire, but it won’t help them to get out. And if they don’t do something, companies will see competitors climbing out of the pits while they remain stuck.
We say the time has come to focus on innovation. By now companies should have corporate cultures that are cost-focused and stricter requirements for return on investment should be in place. Building on this fundament, innovation needs to be quick, low-cost and potential return on investment should be identified early. It is also important to remember that not all innovations will be successes. Scott D. Anthony, author of The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work, reminds us that companies should also focus on decreasing the cost of failures.
Based on the above criteria, we have come up with a few simple rules to improve innovation performance - which frankly should apply regardless of economic cycles, but are particularly in the spirit of the now. We think it is just what companies need to get out of the quagmire.
1. Prioritize ideas by costs and potential return on investment. Already at an early stage ideas should be evaluated for potential. Many times, low cost ideas are just as good as high cost ones – and they entail lower risks.
2. Accept that 80% is good enough. Those last 20% can be very costly and you can achieve more and reduce risks by spreading your resources on multiple innovation initiatives.
3. Use agile development techniques. You gain flexibility to make changes along the way without having to discard or make substantial changes to detailed product specifications.
4. Test your ideas on a user group. Testing need not be expensive. Especially for qualitative feedback, a small group tends to come up with many of the same comments a larger group would do. If customers are too expensive to get hold of, use internal user tests.
5. Increase pace of decisions. This does not mean making uninformed decisions, but advocates avoiding long decision-making rounds. Cancelling flawed projects early reduces costs and allows you to focus on the best ideas (Thanks to Scott for this one).
In the eyes of Joseph Schumpeter (1883-1950), the entrepreneur spirit is that which drives progress, and the actors that drive innovation and the economy are big companies which have the resources and capital to invest in research and development. If Schumpeter was still around, he too would likely have advocated that the way out of the economic crisis is through innovation. Food for thought, big companies.
Monday, March 16, 2009
Card opportunities in digital worlds
Innovative online digital services and devices increasingly affect everyday life. We communicate with friends and business partners through social network services such as Facebook, LinkedIn, Twitter and Flickr. Macs, iPhones and iPods are brought on the subway, to the gym and to school. Computer and video games have become a social phenomenon with games such as Singstar, Guitar Hero and Buzz, and online gaming is becoming mainstream entertainment. In fact, according to the Entertainment Software Association (ESA), the average US gamer is 35 years old and 40% are women.
Banks and card issuers in the US have adapted to these habits and launched credit cards that both subsidize monthly subscription fees for online games through card use, and that give bonus points redeemable as iTunes music downloads. Nordic card companies, however, have yet to realize the full potential of digital content and the gaming industry.
World of Warcraft Visa
To illustrate, in May 2007, Blizzard and First National Bank released the World of Warcraft Visa card. World of Warcraft is the world’s leading MMO (Massively Multiplayer Online game). The MMO market, measured in terms of estimates for active player accounts, doubled in size from January 2005 – January 2008. Estimated active player accounts for World of Warcraft as of January 2008 surpassed 10 million worldwide, with 2.5 million in the US, according to statistics provided by mmogchart.com. This is an enormous customer base with the majority being potential cardholders. Furthermore, the main revenue driver for World of Warcraft is automatically renewed subscriptions paid for on a monthly, quarterly or biannual basis. This provides a minimum card spend of USD 13-15 per month – or USD 156-180 per year, depending on the payment plan, for an active player who charges his game account to the card.
The World of Warcraft Visa card provides a 1% cash back bonus redeemable in playing time, and the first purchase made with the card rewards the cardholder with one month of gaming (value USD 15). There is no annual card fee, a 6-month 0% APR introductory offer, and the player currently can choose among 13 game-related images for the card’s visual design.
Entropia Universe
The Swedish software company MindArk has designed the virtual universe Entropia, an MMO marketed as “The first virtual universe with a real cash economy”. The games uses a currency called PED (Project Entropia Dollars), which is exchangeable for USD at a rate of 10 PED = 1 USD. Players can purchase items and services in the game using PED acquired through playing the game or by purchasing the virtual currency using real world money. Similarly, the player can sell items and services in the game for PED – and exchange the virtual money for real world money, which can be transferred to an international bank account.
For a time money could be paid out in cash at ATMs through Entropia Universe Cash Cards issued by CardOne Plus, available for purchase inside the game, but the product was suspended in January 2007 due to problems on CardOne Plus’ end. Rumors have since persisted of a new MasterCard-branded card in development, possibly a prepaid card.
UPDATE: 18 March 2009: The Swedish Financial Supervisory Authority has granted a license to conduct banking activities to Mind Bank AB, a wholly owned subsidiary of MindArk PE AB. Mind Bank will be the first bank that fully incorporates real money transactions with activities in a virtual world. According to the press release, Mind Bank will function as a central bank for all virtual worlds in the Entropia Universe, but also offer services to customers on the conventional market.
Opportunity: Funcom
The Norwegian game developer Funcom has created several MMOs. The most recent release with the highest number of players is Age of Conan, which was launched in May 2008. At one point, Age of Conan had 700,000 accounts, but attrition has been higher than expected, and an estimate at the beginning of 2009 is 100,000 active accounts. It remains to be seen whether Funcom can reverse the trend for Age of Conan, but the company has a new MMO under development, The Secret World.
Both of these MMOs could represent opportunities for card companies in the form of a co-branded card program inspired by the World of Warcraft Visa card. Card companies could also investigate the prepaid subscription products sold through retail outlets for MMOs, which are targeted at young players without access to credit and debit cards required for online payments options.
This article is an excerpt from the report Nordic Card Trends and Opportunities 2009-2010.
Want to know more? Download a free information pack!
Banks and card issuers in the US have adapted to these habits and launched credit cards that both subsidize monthly subscription fees for online games through card use, and that give bonus points redeemable as iTunes music downloads. Nordic card companies, however, have yet to realize the full potential of digital content and the gaming industry.
World of Warcraft Visa
To illustrate, in May 2007, Blizzard and First National Bank released the World of Warcraft Visa card. World of Warcraft is the world’s leading MMO (Massively Multiplayer Online game). The MMO market, measured in terms of estimates for active player accounts, doubled in size from January 2005 – January 2008. Estimated active player accounts for World of Warcraft as of January 2008 surpassed 10 million worldwide, with 2.5 million in the US, according to statistics provided by mmogchart.com. This is an enormous customer base with the majority being potential cardholders. Furthermore, the main revenue driver for World of Warcraft is automatically renewed subscriptions paid for on a monthly, quarterly or biannual basis. This provides a minimum card spend of USD 13-15 per month – or USD 156-180 per year, depending on the payment plan, for an active player who charges his game account to the card.
The World of Warcraft Visa card provides a 1% cash back bonus redeemable in playing time, and the first purchase made with the card rewards the cardholder with one month of gaming (value USD 15). There is no annual card fee, a 6-month 0% APR introductory offer, and the player currently can choose among 13 game-related images for the card’s visual design.
Entropia Universe
The Swedish software company MindArk has designed the virtual universe Entropia, an MMO marketed as “The first virtual universe with a real cash economy”. The games uses a currency called PED (Project Entropia Dollars), which is exchangeable for USD at a rate of 10 PED = 1 USD. Players can purchase items and services in the game using PED acquired through playing the game or by purchasing the virtual currency using real world money. Similarly, the player can sell items and services in the game for PED – and exchange the virtual money for real world money, which can be transferred to an international bank account.
For a time money could be paid out in cash at ATMs through Entropia Universe Cash Cards issued by CardOne Plus, available for purchase inside the game, but the product was suspended in January 2007 due to problems on CardOne Plus’ end. Rumors have since persisted of a new MasterCard-branded card in development, possibly a prepaid card.
UPDATE: 18 March 2009: The Swedish Financial Supervisory Authority has granted a license to conduct banking activities to Mind Bank AB, a wholly owned subsidiary of MindArk PE AB. Mind Bank will be the first bank that fully incorporates real money transactions with activities in a virtual world. According to the press release, Mind Bank will function as a central bank for all virtual worlds in the Entropia Universe, but also offer services to customers on the conventional market.
Opportunity: Funcom
The Norwegian game developer Funcom has created several MMOs. The most recent release with the highest number of players is Age of Conan, which was launched in May 2008. At one point, Age of Conan had 700,000 accounts, but attrition has been higher than expected, and an estimate at the beginning of 2009 is 100,000 active accounts. It remains to be seen whether Funcom can reverse the trend for Age of Conan, but the company has a new MMO under development, The Secret World.
Both of these MMOs could represent opportunities for card companies in the form of a co-branded card program inspired by the World of Warcraft Visa card. Card companies could also investigate the prepaid subscription products sold through retail outlets for MMOs, which are targeted at young players without access to credit and debit cards required for online payments options.
This article is an excerpt from the report Nordic Card Trends and Opportunities 2009-2010.
Want to know more? Download a free information pack!
Tuesday, February 24, 2009
New marketing law
Norway’s revised marketing law comes into effect on 1 June 2009. After attending a seminar organized by the Consumer Ombudsman in Norway, we conclude that telemarketers will face new hurdles, while three interesting opportunities arise: contests, coupons and bargain gifts.
The marketing law governs marketing, business practices and documentation requirements, and applies primarily to activities directed towards consumers, but also contains a chapter on protecting the interests of businesses. The revised marketing law replaces the current marketing law of 1972, and incorporates elements from EU directives – including a “black list” of marketing activities that are banned.
The black list contains activities related to unfair business practices, with emphasis on “misleading” and “aggressive” practices. For example, it is misleading to employ certificates or quality or environmental brands without fulfilling requirements and attaining necessary permissions to use them. Aggressive practices can, for instance, be creating false impressions that a consumer has won something, when there is no prize involved – or the reward requires costs for the consumer.
Telemarketers face increasing regulation. The weekend is declared a telemarketing free zone, which confines telemarketing activities to 09:00-21:00 Monday through Friday. Computer assisted calls will no longer be permitted, to prevent “no voice on the other end” cases, which have been a cause for distress among some consumers. There will also be stronger information requirements for telemarketers, and most importantly, consumers will have to provide written consent to telemarketing sales. The format of the consent could be e-mail, SMS, fax or some other form of communication, as long as the format supports the necessary information requirements.
The most visible changes to consumers will likely be three elements that are strongly regulated in the current law, but which have been omitted or moderated in the revised marketing law. These are contests, coupons and bargain gifts (Norwegian “tilgift”).
Contests with random winners are not allowed in the current marketing law, only skill-related contests. This helps explain why we have quiz questions in commercials and TV shows with questions such as “How much is 2+2?” or “What is the prime minister’s name?” When the new law comes into effect in June 2009, this requirement is forfeited – and we will be spared the ridiculously easy questions designed to circumvent the current law.
Coupons are an interesting area, as they can assume many formats – not just the old “cut the piece from the newspaper” variant some associate the word with. To which extent will coupons be virtual, and how will they be distributed? SMS is a viable channel, and mobile ticket solutions already exist in the Norwegian market, provided by the mobile marketing company InCent.
Bargain gifts may well represent the most interesting change. A bargain gift is essentially a bundled additional product provided along with the main product you purchase. In the current law, there is a requirement that a bargain gift needs to be associated with the main product, for instance a bargain gift t-shirt along with a pair of jeans is accepted, while a CD is not. This requirement becomes obsolete with the new law. In theory, we could see cars being bundled with apartments, credit cards bundled with iPhones, household appliances with a new mortgage (there’s an incentive to switch banks!), or movie tickets to go with flowers for your date.
The new marketing law comes into effect 1 June 2009. Marketers, get ready, set… go!
The marketing law governs marketing, business practices and documentation requirements, and applies primarily to activities directed towards consumers, but also contains a chapter on protecting the interests of businesses. The revised marketing law replaces the current marketing law of 1972, and incorporates elements from EU directives – including a “black list” of marketing activities that are banned.
The black list contains activities related to unfair business practices, with emphasis on “misleading” and “aggressive” practices. For example, it is misleading to employ certificates or quality or environmental brands without fulfilling requirements and attaining necessary permissions to use them. Aggressive practices can, for instance, be creating false impressions that a consumer has won something, when there is no prize involved – or the reward requires costs for the consumer.
Telemarketers face increasing regulation. The weekend is declared a telemarketing free zone, which confines telemarketing activities to 09:00-21:00 Monday through Friday. Computer assisted calls will no longer be permitted, to prevent “no voice on the other end” cases, which have been a cause for distress among some consumers. There will also be stronger information requirements for telemarketers, and most importantly, consumers will have to provide written consent to telemarketing sales. The format of the consent could be e-mail, SMS, fax or some other form of communication, as long as the format supports the necessary information requirements.
The most visible changes to consumers will likely be three elements that are strongly regulated in the current law, but which have been omitted or moderated in the revised marketing law. These are contests, coupons and bargain gifts (Norwegian “tilgift”).
Contests with random winners are not allowed in the current marketing law, only skill-related contests. This helps explain why we have quiz questions in commercials and TV shows with questions such as “How much is 2+2?” or “What is the prime minister’s name?” When the new law comes into effect in June 2009, this requirement is forfeited – and we will be spared the ridiculously easy questions designed to circumvent the current law.
Coupons are an interesting area, as they can assume many formats – not just the old “cut the piece from the newspaper” variant some associate the word with. To which extent will coupons be virtual, and how will they be distributed? SMS is a viable channel, and mobile ticket solutions already exist in the Norwegian market, provided by the mobile marketing company InCent.
Bargain gifts may well represent the most interesting change. A bargain gift is essentially a bundled additional product provided along with the main product you purchase. In the current law, there is a requirement that a bargain gift needs to be associated with the main product, for instance a bargain gift t-shirt along with a pair of jeans is accepted, while a CD is not. This requirement becomes obsolete with the new law. In theory, we could see cars being bundled with apartments, credit cards bundled with iPhones, household appliances with a new mortgage (there’s an incentive to switch banks!), or movie tickets to go with flowers for your date.
The new marketing law comes into effect 1 June 2009. Marketers, get ready, set… go!
Sunday, February 15, 2009
Profiling your customers
Profiling and keeping track of competitors is a common activity for companies that want to stay on top of market developments. But few companies monitor their customers using the same methods despite clear advantages to doing so.
While a CRM system typically allows tracking of contact data, customer communication, order history and marketing campaigns, there are elements they tend to overlook. Customer corporate goals and strategies are seldom described in CRM systems, nor is information about business performance, new product releases, major contracts and agreements, organizational restructuring, or statements from key personnel - all of which can give the sales force an edge in following up customers, or evaluating a potential new customer.
If your sales force had company profiles containing the above information (and more) on your top 5 or 10 key accounts, none would dispute that their ability to identify opportunities and threats to the customer relationship would increase. Not only does your sales force improve its knowledge, but your customers will be duly impressed by your knowledge about them. The same holds true both for following up existing customers, and when preparing for the crucial first meeting with potential new customers.
The great Chinese general Sun Tzu once said: “Know the enemy, know yourself, and victory is never in doubt - not in a hundred battles. He who knows self, but not the enemy, will suffer one defeat for every victory. He who knows neither self nor enemy, will fail in every battle.” Had Sun Tzu not been a warrior, but a merchant, he might have included the customer in his saying. “Know the enemy, know yourself, and know your customer – then victory is never in doubt.”
MACAW research can provide company profiles for you to keep tabs on both competitors and customers. But don't just take our word on it when you can judge for yourself. We want you to see with your own eyes what we can do.
So contact us and we will send you a free sample company profile. No strings attached.
While a CRM system typically allows tracking of contact data, customer communication, order history and marketing campaigns, there are elements they tend to overlook. Customer corporate goals and strategies are seldom described in CRM systems, nor is information about business performance, new product releases, major contracts and agreements, organizational restructuring, or statements from key personnel - all of which can give the sales force an edge in following up customers, or evaluating a potential new customer.
If your sales force had company profiles containing the above information (and more) on your top 5 or 10 key accounts, none would dispute that their ability to identify opportunities and threats to the customer relationship would increase. Not only does your sales force improve its knowledge, but your customers will be duly impressed by your knowledge about them. The same holds true both for following up existing customers, and when preparing for the crucial first meeting with potential new customers.
The great Chinese general Sun Tzu once said: “Know the enemy, know yourself, and victory is never in doubt - not in a hundred battles. He who knows self, but not the enemy, will suffer one defeat for every victory. He who knows neither self nor enemy, will fail in every battle.” Had Sun Tzu not been a warrior, but a merchant, he might have included the customer in his saying. “Know the enemy, know yourself, and know your customer – then victory is never in doubt.”
MACAW research can provide company profiles for you to keep tabs on both competitors and customers. But don't just take our word on it when you can judge for yourself. We want you to see with your own eyes what we can do.
So contact us and we will send you a free sample company profile. No strings attached.
Monday, February 2, 2009
Optimizing loyalty programs
Loyalty program managers face a paradox during the global economic downturn. Recent research from airmiles.co.uk suggests that consumers value reward programs more during a recession. But at the same time loyalty program managers are faced with demands to cut costs. Can the short term benefits of cutting costs be aligned with long term customer retention?
The answer is yes. Cutting costs does not only have a short term effect on a company’s result, but also a long term positive effect, assuming that the value of the cost cuts is not surpassed by revenue losses. The latter is what program managers fear; that cutting costs will lead to customer attrition and cause long term net loss. The key to avoid this scenario is to know which loyalty elements to cut and which not to. We will briefly walk you through our process to successfully trim a loyalty program.
One approach to resolving this dilemma is to study the elements of the loyalty program as follows. First, by measuring which elements customers value, and optionally their impact on overall satisfaction, program managers will gain insights into which elements are the key loyalty generators and which are less important. The next step is comparing perceived value to the costs of maintaining individual elements.
By creating a matrix with two dimensions, perceived value and cost, we can map program elements into four groups. Of particular interest are those with high perceived value and low costs. These are the elements you usually want to keep. Elements with low value to customers and high costs for the company should probably be removed from the program. What to do with benefits in low value-low cost and high value-high cost combinations is bound to be debated. By adding a third dimension to the study, customer awareness, one can measure to which extent individual program elements are known to customers. This in turn gives program managers more information to go on.
High cost elements with high value and high awareness are likely to weaken loyalty if they are removed. Similar elements with low awareness could either be removed, as few customers will miss them, or optionally they can be emphasized in future marketing efforts to both existing and potential clients to increase the perceived overall value of the program. For low cost and low value elements, we argue that the consequences of removal should be small regardless of awareness, though it should be noted that any elements with high awareness are more likely to be noticed as missing. Again, the consequences should be small, as long as the elements indeed have low value to customers. That’s really all there is to it.
To summarize, companies should do the following to optimize their loyalty rewards programs.
1. Measure perceived customer value, costs and awareness of individual reward program elements.
2. Keep high value- low cost elements. These elements give the best return on investment.
3. Cut low value- high cost and low value-low cost elements. The former will have greater impact on the bottom line.
4. Consider keeping high cost-high value elements with high awareness. Consider cutting or increase marketing of similar elements with low awareness.
The answer is yes. Cutting costs does not only have a short term effect on a company’s result, but also a long term positive effect, assuming that the value of the cost cuts is not surpassed by revenue losses. The latter is what program managers fear; that cutting costs will lead to customer attrition and cause long term net loss. The key to avoid this scenario is to know which loyalty elements to cut and which not to. We will briefly walk you through our process to successfully trim a loyalty program.
One approach to resolving this dilemma is to study the elements of the loyalty program as follows. First, by measuring which elements customers value, and optionally their impact on overall satisfaction, program managers will gain insights into which elements are the key loyalty generators and which are less important. The next step is comparing perceived value to the costs of maintaining individual elements.
By creating a matrix with two dimensions, perceived value and cost, we can map program elements into four groups. Of particular interest are those with high perceived value and low costs. These are the elements you usually want to keep. Elements with low value to customers and high costs for the company should probably be removed from the program. What to do with benefits in low value-low cost and high value-high cost combinations is bound to be debated. By adding a third dimension to the study, customer awareness, one can measure to which extent individual program elements are known to customers. This in turn gives program managers more information to go on.
High cost elements with high value and high awareness are likely to weaken loyalty if they are removed. Similar elements with low awareness could either be removed, as few customers will miss them, or optionally they can be emphasized in future marketing efforts to both existing and potential clients to increase the perceived overall value of the program. For low cost and low value elements, we argue that the consequences of removal should be small regardless of awareness, though it should be noted that any elements with high awareness are more likely to be noticed as missing. Again, the consequences should be small, as long as the elements indeed have low value to customers. That’s really all there is to it.
To summarize, companies should do the following to optimize their loyalty rewards programs.
1. Measure perceived customer value, costs and awareness of individual reward program elements.
2. Keep high value- low cost elements. These elements give the best return on investment.
3. Cut low value- high cost and low value-low cost elements. The former will have greater impact on the bottom line.
4. Consider keeping high cost-high value elements with high awareness. Consider cutting or increase marketing of similar elements with low awareness.
Saturday, January 31, 2009
Core values - too close to the core
When we hear the term business strategy, certain words come to mind. Corporate visions, missions, business objectives, core values, goals and so forth. These terms permeate modern business culture and are a central part of corporate communication. Let’s focus on one term - core values. Both small businesses and major corporations convey their core values to us through websites, presentations, media coverage, and so on. Now stop and think. What do core values actually communicate?
Core values are basic principles that form a foundation in corporate culture. They are communicated to us as customers, employees, investors, or other stakeholder roles. Essentially, core values are a segmentation variable, just as you can segment groups by age, occupation, income, roles or color preferences. The underlying assumption would be that there are some fundamental preferences that guide our behavior, in the roles we assume when interacting with a company. Thus a company projecting the” right values” to us would intuitively seem more appealing than one that doesn’t match our fundamental preferences.
Few people would argue against calling core values a convention. When something is a convention, it means very many are using it. Thus differentiating a company based on core values becomes increasingly difficult. Think of your bank, internet service provider or a travel agent. What are their core values? Don’t feel bad if you don’t remember, as we have a hypothesis that most people don’t pay more than a few seconds of attention to core values that don’t stand out. We assume this is because the communicated values are “too close to the core” of our preferences, as we will explain below.
Let’s take a look at some of the core values we have gathered from a handful of websites for major corporations. “Professionalism”, “Competence.”, “Integrity” and “Quality”. While all these are fundamental characteristics a company should comply with, they don’t help set the company apart from its competitors. Is there anyone who would actually deal with a company that is unprofessional and incompetent, or one with low integrity and shoddy quality? We hope not. In fact, we expect that those we deal with adhere to such elementary principles. But they are not core values we notice. They are too basic and too many companies flag them as their core values for us to react to them.
The values highlighted above are all “too close to the core” of running a business. Companies that wish to differentiate themselves based on their core values need to look outward from this inner set of traditional core values. Beyond terms such as “Professionalism” and “Competence” there are values such as “Interaction”, “Simplicity”, “Experiences”, and “Ownership”. Companies need insight into what values they should focus on to appeal to us, whether we are customers, employees or other stakeholders.
Six questions summarize the knowledge companies need to choose core values that make them stand out.
1. What is your company good at?
2. What are your competitors’ core values?
3. What is important to your stakeholders?
4. Are there unclaimed core values with high importance to stakeholders?
5. How large is the gap between what you are good at and the preferences of your stakeholders?
6. What will it take to close the gap?
Core values are basic principles that form a foundation in corporate culture. They are communicated to us as customers, employees, investors, or other stakeholder roles. Essentially, core values are a segmentation variable, just as you can segment groups by age, occupation, income, roles or color preferences. The underlying assumption would be that there are some fundamental preferences that guide our behavior, in the roles we assume when interacting with a company. Thus a company projecting the” right values” to us would intuitively seem more appealing than one that doesn’t match our fundamental preferences.
Few people would argue against calling core values a convention. When something is a convention, it means very many are using it. Thus differentiating a company based on core values becomes increasingly difficult. Think of your bank, internet service provider or a travel agent. What are their core values? Don’t feel bad if you don’t remember, as we have a hypothesis that most people don’t pay more than a few seconds of attention to core values that don’t stand out. We assume this is because the communicated values are “too close to the core” of our preferences, as we will explain below.
Let’s take a look at some of the core values we have gathered from a handful of websites for major corporations. “Professionalism”, “Competence.”, “Integrity” and “Quality”. While all these are fundamental characteristics a company should comply with, they don’t help set the company apart from its competitors. Is there anyone who would actually deal with a company that is unprofessional and incompetent, or one with low integrity and shoddy quality? We hope not. In fact, we expect that those we deal with adhere to such elementary principles. But they are not core values we notice. They are too basic and too many companies flag them as their core values for us to react to them.
The values highlighted above are all “too close to the core” of running a business. Companies that wish to differentiate themselves based on their core values need to look outward from this inner set of traditional core values. Beyond terms such as “Professionalism” and “Competence” there are values such as “Interaction”, “Simplicity”, “Experiences”, and “Ownership”. Companies need insight into what values they should focus on to appeal to us, whether we are customers, employees or other stakeholders.
Six questions summarize the knowledge companies need to choose core values that make them stand out.
1. What is your company good at?
2. What are your competitors’ core values?
3. What is important to your stakeholders?
4. Are there unclaimed core values with high importance to stakeholders?
5. How large is the gap between what you are good at and the preferences of your stakeholders?
6. What will it take to close the gap?
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