Monday
Oct032011

Listening is the New Engagement

How can companies be so deaf?  Why is it so difficult for them to listen to their customers? Do they not know that our unhappiness is not good for their business?  Do they not get that partial truths and obfuscation are not good for business? 

Reebok, owned by Adidas, is the most recent example of corporate deafness.  The company believes that the “toning shoe”, with its trademarked EasyTone technology, “promises better legs and a better behind”. Reebok claims that feedback from thousands of women support the claim that these shoes strengthen legs 11% better than regular shoes, and shapes bottoms 28% better than regular shoes.   The company asserts that the testing they conducted proves these results.  Designed essentially to make walking more challenging, these shoes require the leg muscles to work harder – hence the alleged better results.

Not surprisingly, there are customers who do not believe these claims. The US Federal Trade Commission (FTC) initiated an investigation, and found the study results insufficient.  In addition, The National Advertising Division of the Council of Better Business Bureaus found that “the results that suggest potential toning are clearly insufficient to support unequivocal claims that you tighten and tone with EasyTone.” The financial result is that Reebok is set to pay $25 million in customer refunds to the unhappy customers.

There could have been other ways of dealing with unsatisfied customers. Reebok could have convened the customers who were not convinced of the efficacy of the toning shoes, listened to their concerns and criticisms, brought in their technology experts and athletic trainers to explore the different experiences and concerns.  Armed with this knowledge, Reebok could have then altered the product, shifted the advertising or at minimum set up a “tell us what you think” chat room.  Something to acknowledge that there was at least debate about the shoes’ efficacy.

How else could this have been dealt with: Reebok might have collaborated with the FTC and disgruntled consumers in structuring research.  Instead of battling competing research findings, Reebok could have worked together with other entities so that they could at least agree on the rigor of the research process.  Or Reebok could have altered the brand positioning away from the “evidence-based claim” of leg toning, to something in the zone of “the shoe that makes it just a little easier to get some exercise”. 

Reebok chose the “we will prove to you we are right” route.  There are certainly good, solid legal reasons for taking this, but from an outsider’s perspective It is difficult to understand how those reasons trumped the dire consequences to reputational equity, credibility and ultimately the company’s financial bottom line.  Now the challenge – and threat – to Reebok is not about the credibility of the claim of what the shoe can or cannot do, it is that Reebok has made it clear it does not listen to, or respect, its consumers.  And that is far more damaging than performance credibility issues. 

Companies have been exhorted for many years to get involved in “stakeholder engagement”.  This is not complicated.  It means talking and listening honestly and openly with people – your employees, customers and partners.  Yes, this requires a hefty degree of honesty and trust, and demands that you genuinely respect the people you are talking with – and not to.  Welcome to any good human relationship; welcome to the world of social networking.  Listening is the new “engagement”. 

Speak to us as if you respect us.  Don’t market questionable falsehoods.  Don’t hide behind legal contortions.  Speak a truth.  That is what will win our respect, loyalty and continued purchase – even when you make mistakes. 

How is this complicated? 

Monday
Sep262011

The Age of Loyalty

We may be witnessing the dawn of The Age of Loyalty.  Howard Schultz, the CEO of Starbucks Coffee Company has written a full-page letter to Americans published in the New York Times.  He calls on Americans to work with him to restore the American dream, to “set in motion an upward spiral of confidence”, and to pledge together to “put citizenship ahead of partisanship”.  While Schultz’ primary objective is to demand that Washington get over its petulant, dysfunctional behavior, the deeper objective is to say to America that we need to be loyal to each other, and to the dream of individual and collective improvement.

Discontent with, and embarrassed by Washington politicians, Schultz hopes his call to action will energize the citizens of the country.  Schultz is exhorting us to get involved, to respect the American motto E Pluribus Unum (out of many, one). This is because only together will we be successful.

While the letter is addressed to Americans, it speaks to larger social trends that threaten the viability of our future. Schultz is, I believe, articulating an important ingredient of social life that we need to pay attention to – loyalty.  With loyalty we are connected, empathetic and supportive.  Without it, individualism trumps compassion, disconnection triumphs over cohesion, and social solutions become impossible.

Schultz is telling us that we need to take responsibility, individually and collectively.  In the face of the decline of individual and corporate responsibility and the growth of litigiousness, Schultz is exhorting us to step up to the plate of responsibility, if we want to improve how we live.  Blame is not the solution; we need to understand that we are all complicit in the problem and makers of the solution.

This is doubly true because the social issues confronting us are too complex and complicated for any one agency, or agent, to drive effective change.  Governments, corporations, communities, individuals really do need to see that successful solutions will be the result of honest debate and collaboration.  

To spur us into action, Schultz calls on the contemporary approach to social change – crowd-sourcing.  He asks people to submit their pledge to upwardspiral2011.org.  Leveraging the tool of social loyalty, Schultz is calling on us to be more loyal to each other.

One could argue that it is precisely intense parochial, or ideologically-based loyalties, that are part of the problem. The intransigence that comes from intense loyalty is the source of the bankruptcy of American politics. 

Loyalty is both the problem and the solution.  And perhaps that is our eternal conundrum.  We are individuals who crave and need to be loyal to others and to purposes greater than our individual selves. 

What is interesting is that a significant corporate leader is standing up and asserting the need to overcome dysfunctional loyalties that are preventing us from living the lives we can.  Corporate leaders recognize the power of loyalty. 

They have learned that loyalty is good for business.  Providing social purposes that employees can get involved in improves the pride and performance of employees, turning them from employees into ambassadors.  Offering customers loyalty programs encourages tighter consumer bonding.  And offering social programs that encourage crowd involvement improves permission to operate, and has the potential to make a positive difference in communities. 

As CEO of Starbucks, the company that turned coffee drinking in a social activity, Schultz understands the power of the marketplace to drive social change, because he understands the power of social loyalty. 

We are living in the Age of Loyalty.  Characterized on one level by loyalty marketing and loyalty networks, and on another level by involvement in purposes that are greater than individual self-serving consumption, loyalty can be the source of business success and social improvement.   

Thursday
Sep082011

Purpose is the New Brand

Social purpose is the new brand. Want proof? Of the 18 full-page ads in the September 3-9, 2011 issue of The Economist, 9 are conventional brand adverts showcasing the functional excellence of the company.  The other 9 are adverts showcasing the social purpose idea or commitment of the company.  The companies that advertise in the world’s leading financial cum world politics magazine, designed for the upper echelons of power and influence, understand that it is their social purpose that will make them distinctive and interesting.

It is interesting to examine a few of these ads in detail and how social purpose is becoming the new brand. 

BMW has a double-page spread that showcases the discussion BMW has launched on Innovation and Technology.  Not an ad about the performance qualities of the cars, this is a pronouncement of how BMW is hosting evenings where guests are “asked to explore their worlds and how they saw macro issues impacting technology innovation”.  Moving beyond conventional brand advertising, BMW is presenting itself as a champion and host of encouraging technology and innovation.  Aligned with their business expertise and interests, yes.  Important cultural and social issue, yes.  Point one:  social issues are now business issues and warrant corporate attention.

Shell’s full page ad opens with the header “Let’s clean Feng’s clothes with cleaner energy”, followed by a description of Shell’s commitment to natural gas, cleaner energy and ultimately their aspiration of “trying to build a better energy future”.   Point two:  for the companies that are in the most criticized -- and critical -- industries, being the champion of environmentally sustainable solutions is essential.

Siemens full-page ad about their public transportation systems is framed as providing “answers for mobility” that help create more jobs and make it possible for people to get to those jobs. Why?  Because as the ad states, “mobility is more than just transportation”.  The ad comes complete with a brief description of what has been accomplished in Charlotte, North Carolina:  a 20-year initiative designed to “move people and attract businesses in a way that’s also good for the environment”.  Siemens is making it clear that they are committed to a triple bottom line in the work they do – good for the people, the planet, and the business.  Point three:  building human communities is good for people and for business.

Southern Company’s full-page ad opens with the header “Idea Power.  We’re tapping into the most powerful resource on earth – the human mind”.  Committed to generating a new kind of energy that will be sustainable for generations, Southern Company knows that the business they are really in is human ideas and ingenuity.  Point four:  excellent functionality is built and created by human beings so supporting human thinking and creativity is essential for business.

And then the Qatar Foundation has a full-page ad introducing us to Nadia Merchants, who is a medical student.  The Qatar Foundation is creating the opportunities and proper conditions for women like Nadia to study, discover and excel, making Qatar a “centre of knowledge that is helping the entire world move forward”.  The way to make Qatar the world centre they want it be is to support individuals in their endeavors; or as the tagline tells us – “unlocking human potential”.   Point five:  success and respect is earned when you champion people.

In comparison, there is the full-page ad for Verizon that tells the reader how Verizon offers the “best wireless service in the world”.  Functional excellence is why we are meant to believe in Verizon, with a small note of support by the publication Global Traveler.  Point six:  functionality is necessary but not sufficient to earn our attention, interest or respect.

Somewhat more retrograde is the full-page ad for Koran Air:  a gorgeous, long-legged beauty stands atop a picture of Incheon Airport with the tagline line – “Experience global networking on a whole new scale”.  Asserting their superior service, Korean Air believes that a beautiful woman and a functional description of who they are will entice us.  That may be true, but point seven is that enticement is short-lived, while true purpose is enduring.

And finally there is the full-page ad for Mandarin Oriental; a picture of Christian Louboutin, the shoe designer-maker famous for his red soles, we are told “He’s a fan” followed by the fan icon that is the Mandarin Oriental.  They believe that we will want to stay at their hotels because the famous and well heeled do.  Again, while this might trigger my “be famous by association” aspirations, I know it to be false.  Lesson eight is that delusion may be an effective attention getter, but it will not make me genuinely loyal.

The overarching conclusion of this summary of a few of the 18 ads in The Economist is that social purpose has penetrated at least the marketing approaches of leading global companies.  They recognize that to stand out, be respected, and be distinctive they need to showcase a purpose deeper than their functionality.  Purpose is the source of attraction and bonding.

What we hope is that these companies also understand that they actually need to be committed to issues or approaches that have the potential to make the world a better place.  Because when they make the world more inhabitable for humans, when they support the social livelihoods of people they create healthier conditions for their own success.  

Indeed, social purpose is not just the new brand; it is now the source of enduring business success.  

Monday
Aug292011

Marketing Authenticity

White washing has an expanded colour palette.  Originally (16th century) an inexpensive paint, whitewash was used politically in the 19th century in reference to American President Adams.  Today we use it colloquially to mean “covering up bad behavior” – and now it comes in different hues.  Green-washing is when companies make environmental claims that are superficial at best, fraudulent at worst; Blue-washing are superficial claims around improving water footprint; and now there is Pink-washing, superficial claims around supporting women’s breast cancer. 

These terms reflect our deep distrust of corporations.  We believe that corporations are motivated only by profit maximization, and can’t possibly be genuinely concerned about social and environmental actions.  If they are it is because of business considerations.  For example, when Walmart is committed to reducing transportation costs and creates a new mechanism that can load more palettes on delivery trucks it is not about protecting the environment, it is about reducing energy costs.  By reducing their operational costs, Walmart is able to deliver on its business mandate – deliver the best quality products at the lowest possible prices – and its Brand promise – Save Money. Live Better. 

Whether Walmart is motivated by environmental considerations or not is not the point.  They can be making the world environmentally a better place because of their business motivations and mandate.  Holding on to the notion that pure intentions matter misses the great good that companies can and do achieve. 

Savvy social and environmental activists understand this:  one needs to speak to the interests and motivations of companies and individuals if you want them to pay attention. Companies have adopted environmental stewardship because it satisfies the need for cost reduction.   Historically most human resources policy was adopted because it improved employee performance, attraction and retention.  Every person who has ever had to convince a child or a partner to do something knows the power of “speaking to the listening”. 

But we hold onto the notion of authentic intentions.  While we might get the behavior we want from our partner because we successfully convinced them, we will probably be dissatisfied because we want them not only to act, but to be motivated in the right way.  I don’t just want you to just say you are sorry, I want you to really believe that you are sorry.  And that is what we expect of corporations.  We judge their intentions, not their actions.

But perhaps the deeper question is can you market authenticity?  Can a company, even when genuine, convince us of their authenticity?  The conventional communication tools speak some form of washing:  public showcasing of executives often feels like PR spin; creative communication campaigns feels like slick marketing; cause marketing feels like “you buy, we give”; and where there are sometimes real action on one hand there is conflicting corporate behavior on the other.  Think Coca Cola Live Positively and all the community issues they are committed to – it all sounds great until we remember that the company still markets and sells sugar drinks to kids. 

So what if companies could speak in authentic ways, would we be able to hear and absorb?  I am not sure.  We the audience have been nurtured on marketing which makes us savvy consumers of corporate speak, but we have also been rendered unable to understand anything but the creative reductivism that is marketing language. 

Whether it is Nike and Just Do It, Apple and Think Different, Amex and My Life. My Card, or DeBeers and A Diamond is Forever, these taglines have become our truths. And now we need all truths presented in this short, snappy, often grammatically incorrect manner.  Brands discovered a creative and entertaining way to tell us who they were.  Nurtured on this, we now live in a world dominated by the short and snappy; Think Twitter, think news headlines. We have created a world of marketing tropes that prevents the complexity of ideas reaching us. 

So even if a company or a brand were genuinely committed to a social or environmental issue it is not clear we would ever see or hear that.  They would feel they need to tell us the story in simple, entertaining terms and we would read that as brand marketing which by definition is selling us image not truth. The short and snappy combination is incapable of delivering authentic truth. 

We have created our own conundrum.  We lust after image, but we crave authentic connection.  We want to be marketed to, but we judge by intention.  We are the creator of, and slaves to marketing that is powerful precisely because it has reduced complexity.  But it may have also made authenticity impossible.  

Monday
Aug222011

The New Retail Therapy

Nordstrom is bringing new meaning to the concept of retail therapy. For those of you unfamiliar with the concept, retail therapy is shopping with a purpose; when you are feeling forlorn, out of sorts, like the world is not giving you what you need and want you go shopping. Shopping satisfies the “I am important, valued and beautiful” and gets you engaged in looking, trying on and excessive self-reflection. Well Nordstrom has created retail therapy 2.0. Now you can go shopping and make the world a better place. This may be the perfect combination – self-interest that improves the world.

Nordstrom has launched its new Manhattan store – Treasure and Bond. A smaller footprint, these stores will contribute their profit to charities, more specifically children’s charities. People will be able to follow how much is actually contributed on the web site, and will be able to see which charities are receiving funds, as they will change every three months.

Viewed as an “incubator”, product and service ideas that work at Treasure and Bond may be transferred to the for-profit Nordstrom stores. Conceived by Vogue Editor Anna Wintour and, according to the report in the New York Times (August 16th, 2011), a New York philanthropist, Catherine Marron, Nordstrom’s charity store certainly extends and improves upon the typical cause marketing we are used to seeing from other retailers.

This is “retail with a purpose”, and reflects a more serious commitment to truly making a difference to a social cause. First is the financial commitment: Treasure and Bond is not expected to contribute to the parent company’s financial bottom line. What the parent company understands is that this approach will win our respect not only because of the qualitatively more serious commitment, but also because Treasure and Bond will make it easier for us to do good while we purchase. They allow us to do good while exercising our self-interest.

It is true that the Treasure and Bond (note, we will treasure the goods and the purpose which will drive our bonding) has borrowed a model used by a number of global charitable organizations, perhaps most notably Oxfam. Marrying the model of selling products and using revenue to support social projects with a leading brand tells us at least two things.

First, that retailers are finally seeing the power they have to drive purchase and social good. Moving beyond the conventional approaches of momentary cause marketing, where retailers contribute percentage of sales on a given day, or offer charity-designated clothing where percentage of profits go to that charity (think Livestrong, or Red), Treasure and Bond is committing the entire business model and saying we will contribute all “profit”. This challenges the retail world to stand up and be more genuine in their commitments.

And this reflects the company’s knowledge that we are savvy consumers and smell the disingenuousness of cause marketing. The conventional alignment of brand and cause does nothing to alter our perception, awareness or respect of either. We experience conventional approaches as part of the marketing mix, not as a serious or honest commitment to making the world a better place. Treasure and Bond’s commitment will contribute significant financial contributions and to a focused area – enabling the company to potentially make a real difference.

Was this expected or anticipated? Certainly there are numerous retailers that assert a social purpose or connection. Kenneth Cole for example has been an ardent, and edgy supporter of social causes. Aldo has been a long-term supporter of HIV/AIDS programs. Macy’s supports a number of social causes, often linked to the holiday calendar. Nike is partnered with Livestrong; Roots with Right to Play. And the somewhat faded stalwarts of The Body Shop and Benetton were early supporters – and spokes-entities – for social causes.

Nordstrom has had a commitment to being an “ethical” company and one that “incorporates social responsibility across all aspects of our business and everything we do” since they began in Seattle. Nordstrom Cares is their social responsibility arm, and has been doing interesting things in environmental sustainability, contributing to programs that support minority communities, improving the skills and knowledge of their employees. It still however comes as surprise that would create a new retail line of business devoted to supporting children’s causes.

Because like so many companies, they have been relatively silent about their activities. Not wanting to be experienced as self-serving, or cautious about the authenticity and thoroughness of their commitments, companies that are doing good-to-great things in terms of social sustainability typically do not let us know. Treasure and Bond creates a new standard of action and communications.

We are swayed by evidence and experience. Treasure and Bond will have the evidence of real contributions and real effort to earn our respect. And we individually will have the personal experience of knowing that when we are shopping we are contributing to that real difference. We can not only shop guilt free, we can know we are doing good while shopping.

And just in case you think these are the words of a singular proponent of shopping for good, Hope Logan of the globally famous daytime series, The Bold and the Beautiful, proclaimed this past week during the launch of her new fashion line – HOPE – that “we are defined not only by the clothes we wear, but by the beliefs that we share” and her new clothing line is about “raising the standards of social and sexual responsibility”. Perhaps if the marketing experts can cross-pollinate, we might see the HOPE line in the new Treasure and Bond store.