Thinking the unthinkable about how to do business
Some universally accepted beliefs about how to do business are just plain wrong, according to new myth-busting research.
Marketing is full of myths. There are certain beliefs about how companies should do business that everybody seems to buy into. And like all good stories, as more people accept and pass them on, these myths gain credence until it is thought that there is no other way to operate.
But now several marketing myths are under attack from new strategies, technologies and business models. I’ve recently seen changes in three areas – loyalty, return on investment and scale – that suggest some of our most popular marketing myths may no longer be so accepted.
The first marketing myth to go is the idea that you have to please your customers. Yes, that’s right. Don’t bother trying to go the extra mile because it simply isn’t worth it for either yourself or the consumers.
Before I’m burnt at the stake by a million angry customer service consultants, let me explain. Research from the Customer Contact Council (CCC) in the US with more than 75,000 people has apparently discovered that exceeding expectations during service interactions has a negligible impact on customer loyalty.
People are not made more loyal through being delighted by brands offering them great service. They are made more loyal by companies reducing their “customer effort” levels – letting them solve problems quickly and easily.
The CCC has created a new metric based on this research to measure loyalty. The company claims the “customer effort score” is the one that really counts. The ideal score is zero – the lower a brand rates, the less work people have to do to buy, enjoy, use or complain about its products.
In some instances, simply changing customer service representatives’ language can help boost this score. By moving away from negative phrases and stonewalling people with stock answers such as “that’s our policy, I’m afraid”, the customer effort score can soar.
The second marketing myth that’s no longer necessary is the idea that everything comes back to return on investment. The acronym ROI is what keeps hearts beating in marketing departments all over the world, but now the famous phrase is under attack even from the global management consultant businesses.
The new ROI is “return on integrity”. While this sounds like a cheesy slogan for an ethical bank, the guys in suits are taking this concept seriously. PricewaterhouseCoopers has now launched a global drive for business integrity, demanding that corporations be judged by their behaviour as well as profits on the balance sheet.
In its report Build Your Next Competitive Advantage, the company outlines how behaving with integrity needs to become more than a catchphrase: “It is difficult, but necessary, to turn that commitment to transparency into a specified management process because the investing public is demanding action.”
The first marketing myth to go is the idea that you have to please your customers. Yes, that’s right. Don’t bother trying to go the extra mile because it simply isn’t worth it for either yourself or the consumers.
PwC doesn’t want to stop at talking about return on integrity. It’s keen to define other intangibles and bring them into the financial accounting process. It also believes that organisations should measure their staff performances as “return on talent” with fact-based metrics to demonstrate this. PwC confesses this is “a bit trickier than standard financial reporting” but is necessary in the modern age.
The third marketing myth to be debunked is the idea that you need to obtain every possible customer on the planet. This may seem like logic initially but trying to get nearly 7 billion people to love your brand is probably not only ambitious but unnecessary.
Reebok should be seen as a cautionary tale. The brand has recently signed basketball star John Wall to a five-year, $25m deal with his own signature shoe. But why is the brand bothering? This is pure Nike territory; it controls 93% of the basketball shoe market, according to SportsOneSource. A massive 73% is the Air Jordan brand alone.
So why press ahead with the deal? It seems the company still believes that it needs to own part of every market out there. But with the market for basketball shoes shrinking 17% since 2005, according to AdAge, the business would be better off focusing on females, where its special toning shoes have seen it jump from a 3.3% to 8% share of the women’s footwear market.
Reebok has already proved that by moving into niche areas, such as leg toning for women, it can provide something that differentiates it from its larger rival. So now it just needs to let go of its urge to compete on every level and instead accept it’s better off following its own route to success.
And while these three marketing myths might be those on my radar right now, there are plenty more to choose from out there. Think, for example, about the great controversy over the past few months about Rupert Murdoch’s paywall strategy for The Times and The Sunday Times.
So is Murdoch making the right decision to block his content in a digital environment where the majority of news outlets allow theirs to appear for free? Or is this a myth? Perhaps the news that an American paper, the Sun Chronicle, is now charging people even to comment on its stories online will shed some light on this debate.
Yes, now not even your own thoughts are free. If you want to engage in the Sun Chronicle’s community, you need to cough up a nominal 99 cents to do so. It’s a move that is directly contrary to most of the free digital community-building efforts by publishers all over the world.
So next time you find yourself saying to your chief executive that something can’t be done because that’s simply not how things work, take a moment to think again. Whether adopting a new strategy works or not, you don’t want to end up being one of those dusty old myths yourself.
