The View from Bear Creek

Frustrating Software and Inertia

Seth Godin had a post today on dumb software, defined as software that's oblivious to the way he uses it.  The package that set him off does not make it easy for him to delete outdated e-mail addresses, does not realize that "PM" should be the default for a 2:00 appointment ... you get the idea.  He closes with:

"Desktop software (like Word) is insanely unaware of what I do, why I do it and who I do it with. Right now, the desktop folks have the momentum of the incumbent. Not for long."

I worked in IT for over 20 years, and could not understand how some products could remain market leaders.  Then I read Geoffrey Moore's "Crossing the Chasm", and I understood.  Once something has become a clear market leader ... like Word ... it's hell to replace.  Your people are already trained in Word (or, if you don't train, they've already figured it out on their own).  You've already got acres of storage in Word documents that you won't be even be able to read if you go to something else.  Every one of your clients and vendors wants documents from you in Word.  Well, you're not going to abandon Word for some competitor when the only thing that competitor has going for them is a superior product.

I can't think of anything, apart from software, that sells so well and is hated so much (and the hate part is justifiable).  In this case, the momentum of the incumbent may well last for a very long time.

Interruption Marketing Never Stops

1:10 PM, telephone rings.  It is a computer-generated voice from my pharmacy ... the one my health care plan chose for me, not the one I selected at my convenience years ago.  The voice tells me that I may have prescriptions due to be refilled.  "If you are ... Philip McLean ... please press one now". 

I press one.  "In order to verify that you are ... Philip McLean ... please enter your eight digit date of birth now".  I hang up.  It is 1:12 PM.

Somebody thought that this was a convenience.  It isn't; it's an interruption.  In order for me to tell if I need to refill a prescription, I have to go get the pill bottles, which I do not keep next to the phone.  Most important, I'm not doing this on my schedule ... I'm doing it on theirs.  Well, actually, I'm not doing it at all.  I'm busy with something else.

Did they ask any customers how they felt about these surprise calls?

Let's Make The Same Mistake Over And Over Again!

You just expect this from time to time ... a Continental flight, operated by ExpressJet, was diverted to Rochester, Minnesota last night.  The airline hoped that the weather would clear up enough to get it into Minneapolis/St. Paul.  The weather didn't clear up, the flight crew went over their time limit, and the plane was going to sit on the ground for hours.  Continental says they could not let the passengers into the terminal because the TSA screeners were gone for the night; the airport manager says that passengers could have been allowed into a secure section of the airport, but nobody talked to him until it was too late.  Forty seven people were in the plane for about six hours.  Now Continental's PR agency, whoever that is, has to compose a letter of apology, and the airline will issue vouchers for free travel (to people who are probably swearing that they will never fly Continental again).

Like I said, you expect this from time to time, and that's what frustrates me.  If you run an airline, you know that the day will come that you will have a planeload of passengers stuck on the ground for hours.  Instead of PR-by-reaction, why not be proactive?  Get in touch with the airports you might divert to, and start putting together contingency plans, with the goal being to get people off the plane (all the really bad publicity is tied to "we were trapped in the airplane for hours").  Then the next time it happens, pull out your plan and run the checklist.  Sure beats apologizing to the TV cameras.

The Low Bar of Customer Satisfaction

An article in today's Wall Street Journal talks about things some firms are doing to try to improve customer satisfaction without actually spending any money on it.  Turns out that some of them are actually able to come up with things that work.  What struck me was the account of Sprint Nextel's call center, whose operators "now are rewarded for solving problems on a customer's first call, rather than keeping calls short".

Who thought that keeping calls short was a good idea?  Real world experience tells me that, if you pay me to keep the call short, it's going to go like: "Thank you for calling Sprint!  Your call is important to us.  You're ugly, and your mommy dresses you funny.  How may I help you?"

Think about what you're rewarding.  Think real hard about what you're rewarding.

Positioning and GM

GM is emerging from bankruptcy, and ... what's next?  I hope that it's sinking in that you cannot cut your way to greatness, and it may have occurred to a few people that the big problem for GM (among other firms) is not so much on the cost side as the revenue side.  They'd look a whole lot better if they sold more cars.

I saw this article this morning, quoting Michigan marketing prof Christie Nordhielm: "Marketing is never successful ... without a great product and a great product strategy.  That piece of it has to be fixed first".  She went on to say that GM has to identify its long-term strengths, and concluded, "Toyota is about reliability.  BMW is about performance.  What is GM about?  Until they figure out the answer to that question, any marketing efforts will hurt them rather than help them".

Unusually wise for a B-school prof.  First, they have to have the product.  Then, decide what you can do differently from your competitors.  Right now, when you think Toyota, you think quality (something they've pursued for years).  When you think Honda, you think efficiency (something they've pursued for years).  When you think Porsche, you think "47 year old male trying to compensate for his faded youth" (a big enough market to keep Porsche going).  And, today, when you think Ford, many people think "did not accept bailout money" ... and Ford's picked up market share from GM and Chrysler.

When you think GM?  Sedans so bland they make vanilla ice cream look like Shrimp Vindaloo?  Cars with so little identity they seem to go invisible if you squint at them?  Successful brands stand for something.  They have to pick a spot in the consumer's minds, move to that spot, and stick with it for years.  Then they'll have some kind of positioning compared to their competition.

The Dirty Job of Selling Fords

The Discovery channel has a show called Dirty Jobs.  Host Mike Rowe, each week, performs some nasty, smelly job that you probably would not want to touch ... garbage collector, bridge painter, exterminator, crab sheller ... it goes on and on.  Much of the appeal is Rowe himself: a cheerful Regular Guy with a self-deprecating sense of humor.  He'll step in, week after week and show after show, and actually do the job, rather than just filming someone else getting themselves filthy.

It might occur to you that Rowe would be in demand as a corporate spokesperson for, say, Stanley tools.  Well, Ford got him first.  He did some ads for Ford pickups, which I've not seen because, I guess, I don't watch too many shows that skew to the pickup demographic.

I did see this one, and felt I should comment.  They've wasted Rowe.  "And that difference is in every vehicle in our lineup, which includes the most fuel-efficient midsize sedans in America?"  That is not how Mike Rowe talks!  That sort of copy is acceptable when you have the anonymous voice-over reading the line, but when you have a well-defined personality on the screen, you use that personality.

How?  Plunk a tape recorder down in front of Rowe, have him read over your draft, and let him comment on it.  Hand the guy a beer, crack one open yourself, and talk cars.  Then go back to your tape and rewrite your words using his words.  "Hey, you're looking for a midsize car?  Ours have the best gas mileage in America". 

Don't hire a real individual and pay him to be bland.

Service Still Succeeds in Retailing

I'd posted about Circuit City, back when they were trying to survive by doing more of what ruined them in the first place ... and here, in today's Wall Street Journal, we see what happened to smaller competitors who did the exact opposite of the late, unlamented Circuit City.

The article (page B1 in the ink-on-your-fingertips edition) talks about hhgregg and other electronic retailers who are exploiting the vacuum left by CC's departure.  They're expanding ... during a downturn ... and bringing something interesting to the party: experienced, knowledgeable salespeople.  Some customers actually find this reassuring, especially when they're about to drop $1200 on that 47-inch LCD TV.

We know that service works on expensive merchandise, but Publix and Wegman's are able to get it to work in groceries.  And Wawa gets it to work in convenience stores!  Apart from state prisons, convenience stores are the last place you expect actual service.

Professional service: people will usually pay a little extra for it, and history tells us your competitors will be scared to copy it.

Yet another bad example

From a Citigroup press release, dated 1 May 2009 (this stuff is like shooting fish in a barrel):

New York – Citi (NYSE: C) today announced that it has reached a definitive agreement to sell its Japanese domestic securities business, conducted principally through Nikko Cordial Securities Inc., to Sumitomo Mitsui Banking Corporation ... In connection with the transaction, Citi and Sumitomo Mitsui Financial Group (hereafter SMFG) have agreed to enter into an alliance agreement to provide SMFG with access to Citi's global networks in corporate and investment banking, including M&A and sales and trading services, while continuing the longstanding partnership between Citi and Nikko Cordial Securities in originating and distributing capital markets products to investors in Japan and globally.

Look carefully: they agreed to enter into an agreement. 

We might also wonder, in the first line, about the "definitive agreement" ... I look at a dictionary (remember those?) and this agreement does not appear to be any more definitive than any other contract to sell some part of your business to someone else who does not yet realize that it's hopeless.  The release concludes:

Nikko Citi Holdings' CEO Doug Peterson said, "Citi has a proud history of delivering our global capabilities to clients in Japan, and we will continue to have a large local presence here, with market-leading investment banking and corporate banking platforms, the largest retail banking presence among foreign-owned banks and one of Japan's top premium credit card businesses."

Citi's Institutional Clients Group advised Citi on this transaction.

The purpose of a press release is to entice some reporter into doing an article.  Therefore, you try to include things that people might find interesting.  Is there anyone, outside of the Institutional Clients Group, who gives a flip that they advised?

As for Mr. Peterson's quote, I think we all realize by now that "market-leading" means "not actually going out of business this month".  And, without spending more time on this than it deserves, I've got to guess that "banking platform" is short for "bank".

Does anyone even proofread any of this?

GM and Brand Management

Once upon a time, GM had five main brands - Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac.  Alfred Sloan looked at Ford, the leading automaker at the time, and saw that Ford's marketing was one-size-fits-all.  Sloan decided that he would segment the market and target each of his brands to one segment: Chevrolet for the common man, Pontiac for the college grad, up to Cadillac for the senior partner.  By the 1930s, he had not only passed Ford, but had created the biggest industrial company in the world.  And this strategy worked until the 1960s.

Then the lines between the brands got a bit blurry.  By now, of course, all of GM's competition was doing market segmentation, and as each division tried to position itself against its competitors -- well, it wasn't so easy to tell the difference between a Buick and an Olds anymore (although Olds pushed the "Rocket 8" engine in their ads).  John DeLorean stuffed an outsized engine into a Pontiac Tempest and created the first muscle car: the GTO.  It sold well, but it changed Pontiac's brand, and it competed with Chevrolet's Corvette.  Sloan would never have permitted it in 1950.

The one thing that killed the brand distinctions more than anything else came in 1977.  It may come as a surprise, but the best-selling car in the US was the Olds Cutlass.  The 350-cubic-inch engine for the Olds was similar to the Chevy 350, but not identical.  The Olds engine plant could not keep up with demand, so GM quietly slipped some Chevy engines into the Cutlasses.  Inevitably, someone tried to work on his own car, found that the Olds replacement parts did not fit -- and, oh, the screaming!  Buyers pointed out that, if they'd wanted a Chevy, they'd have gone to a Chevy dealer -- and paid less.  Some state Attorney Generals started talking about enforcing the truth-in-labeling laws.  And then GM, in one of the worst decisions in the history of brand management, attempted a legal defense: they announced that there was really no difference between the engines of the various divisions, and if any consumers had been gullible enough to believe the advertising, they had only themselves to blame.  By about 1980, the marketplace had accepted that the GM brands differed only in the trim and the shape of the logo (apart from Cadillac and the Corvette).

I really think part of GM's problem now is: their brands mean nothing.  "Brand" means "consumer's expectations", and what do you expect from a GM brand these days?  Segmenting the market with no brand identity is like slicing a pizza with the edge of a sponge.  They could have been in much better shape.

Perception, Reality, and Pickup Trucks

Today's Wall Street Journal (page B1, available online only to subscribers) reports that Washington, who now passes judgment on GM's actions, is suggesting that the GMC brand be sold or shut down.  GM says that their strategy, which is to combine Buick, Pontiac, and GMC into one sales network, is unchanged.  The issue is: GMC, which used to make trucks and buses, now has pickup trucks and SUVs as its bread and butter, but these are relabeled Chevrolets.  So: does it make sense to keep selling what is basically the same thing under two different labels?

They give one example: the Chevy Silverado (2008 sales: 465,000) and GMC Sierra (169,000) are basically the same vehicle.  The GMC version, marketed to commercial users, tends to have a higher resale value than the Chevy, which is marketed mostly to individuals.  And Sierra sales dropped only 19% in '08, while Silverado sales were down 25%.

I'll talk more about how GM fumbled its brand management in a week or two, but just for now:  if customers think GMC and Chevrolet are really distinct products -- if they have different expectations for those two nameplates -- then they are different brands.  As long as the vehicles are pretty much identical, it'll be hard for GM to maintain that distinction, but perception beats reality, and it does make sense to keep the two labels.