Word of Mouth

Originally posted at Keller Fay. 

As far as we have been able to determine, the phrase “Word-of-Mouth Advertising” was coined by Ernest Dichter who, in 1966, published an article in the Harvard Business Review entitled, “How Word-of-Mouth Advertising Works”

Dichter was a psychologist by training.  His firm focused on consumer behavior and the motivations that drive them, including the role of persuasion in advertising.  He is generally considered to be “the father of motivational research,” and the first to coin the term “focus group,” a technique that helped him understand “why,” why people were motivated to buy or do or think something.  His work helped advertisers to shift their focus from straightforward product information and statistics, to image and persuasion.

Dichter brought this perspective to his HBR article, which began with the observation  that whenever his firm would ask consumers “what made you buy this brand or particular product?” the answer invariably came back, a friend, expert or relative who told me about it.  To Dichter, this prompted the important question, “Why in a time of increasing advertising volume does Word-of-Mouth recommendation loom so high?”

To provide answers, Dichter launched a large scale research project to investigate the ways in which word-of-mouth recommendations affect advertising, and the flip side – the ways advertising affects word-of-mouth.  Dichter’s goal was to help advertisers refine their techniques such that they could embrace word of mouth and use it to their advantage, rather than seeing it as a force that was at odds with their advertising.

In many regards, it was a precursor to the desire many marketers have today to integrate three major communications assets – paid, owned and earned media.  Rather than treating them as independent silos, or worse, forces that work in opposition to each other, Dichter sought to understand how these assets should work together.

How Can Advertisers Earn Word-of-Mouth?

Dichter provided concrete ideas to advertisers about ways to “earn” word of mouth and thereby earn a bigger return on their investment in “paid” media.  Although Dichter’s advice was given almost 50 years ago, many of his ideas are similar to the guiding principles that social media and word of mouth practitioners deploy today.  Some of these include:

1. Advertisers should provide “proof of friendship” to the consumer, in order to separate themselves from their role as “sales channel” and become a trusted friend of the consumer.  Examples include providing small, but thoughtful “gift packages” to say thanks; helping your customer to feel that they are being initiated into an ‘exclusive’ group by using your product; or “establish audience kinship” through the messages and style of your advertising to illustrate that you have things in common with the customers and truly understand them.
2. Trace “the company myth” – i.e., convey the back story of the product’s founding or the way early consumers used it – in order to personalize the product and create authenticity.
3. Provide “customer testimonials” to simulate word of mouth, which if done properly will allow the viewers or readers to believe that the third party endorser is truly speaking spontaneously and truthfully, and not as a “hired hand.”
4. Design the advertising itself to provoke, stimulate or produce word of mouth.

Dichter’s underlying messages to the advertising community stands the test of time and is as relevant today as it was a half century ago:

• Advertising cannot sell against personal influence;
• Advertising must change from its traditional role of “a salesman who tries to get rid of merchandise,” to a new role of “advertiser as that of a friend who recommends a tried and trusted product”;
• Advertisers should do so by understanding the steps that make person-to-person interaction powerful, and modify mass media approaches accordingly; and
• There is a ready-made market of “influencers, experts, or afficionados” that can be reached and, in turn, influenced by advertising in the right media and with the appropriate creative approach.

The Golden Age of Advertising, or a Missed Opportunity?

Dichter , together with Katz and Lazarsfeld (whom I wrote about previously) and leading thinkers at that time were (for example, Everett Rogers) were not the only ones to extol the importance of word of mouth and influencers during these “early years,” but they were the leading lights and their insights are enduring.  The stage was set, and advertisers were challenged to act and behave differently in order to maximize the impact of their marketing efforts by embracing, rather than ignoring the power of personal influence and word of mouth in the buying process.

Sadly, this didn’t happen.  Instead marketing was overtaken by the era of the “Mad Men.”  It was an era during which the great ad man David Ogilvy felt it necessary to say to his colleagues: “The consumer isn’t a moron; she’s your wife.”  His quote reminds us that it was a male dominated business, and that the consumer certainly wasn’t at the center. Advertising executives were enamored with their own brilliant creativity and their ability to persuade the mass market through the power of their ideas, delivered primarily through TV advertising.  It was a top-down, “father knows best” world, despite the reality that decisions then (as now) were being made “horizontally and socially.”

Many call this time period “the Golden Age of Advertising”; and if you were in the ad business it undoubtedly was. We would call it a three decades long “missed opportunity” for Madison Avenue’s clients.  During those years, the power of word of mouth advertising, influencer marketing, and the like not only failed to take hold, it began to recede from the marketer’s consciousness.  There was relatively little focus throughout the rest of the 60’s right up through the late 1990’s.

In my next and last post on the history of word of mouth, I’ll pick things up in the late 1990s with the publication of the Cluetrain Manifesto and it’s exhortation that “markets are conversations.”

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Gadgets

 Read the full story at Davide Houle.

I am frequently asked about what technology I carry and use.  This is due in large part because I am a futurist and to many people technology and the future are close to synonymous.  That of course is not wholly true, but certainly understandable as it is technology that seems to trigger the changes in our lives.

In addition I often have conversations with people who, like me, travel a lot about what technology works best on the road.  So here is what I use, like, travel with and therefore heartily recommend as action speaks louder than words.  Of course the list below is the current iteration that is different than last year’s or probably next years due to the speed of innovation.

Laptop

I am making the transition back to Mac after 15 years of PC use.  I will probably use both going forward for a while.  That said, I am in love with my new MacBook Air with an 11” screen.  It literally is intoxicating to open it up and use.  It is simply the most beautiful and fastest laptop I have ever used.  Why the smallest screen Apple sells?  Simple.  I write a lot so I can always carry this laptop wherever I go as it only weighs several more ounces that the new iPad, but has a great keyboard, 256 gigs of fast flash memory and a fabulous screen.  Anything bigger is not necessary to travel with.   Love at every touch.

Music Player

I travel with the iPod Classic with 120 gigs of storage.  I travel a lot, write a lot and work a lot on the road and at home.  I therefore have a huge variety of music, 90 gigs of it that I carry with me.  This, along with the following two items, allows me to create my personal audio environment wherever I go.

Noise Reduction Earphones

For years I have traveled with Bose noise reduction headphones.  I love them and use them at home.  The problem I have always had is that they are simply so big that they take up precious space in my briefcase.  Fortunately I was introduced to the Westone Series 4 In-Ear Monitors.  They fit into the ear and are not much larger that a standard pair of cell phone earpieces.  Westone is the company that makes all those ear buds worn by rock stars and other musicians when performing on stage.  Simply put they provide great sound, great noise reduction and fit into a hard carrying case smaller than a pack of cigarettes.  They are simply the best for great sound and great noise reduction on the road.

Portable Speaker

When I check into a hotel and the room doesn’t have an iPod docking station [I am continually amazed how many hotels still have basic alarm radios for music] and I am tired of wearing my Westones, I pull out my WOWee base amplifying speaker.  Plug this into my iPod, mount the sticky gel backed WOWee on a wood surface – or better yet a glass surface – and I have sound for the room with a solid base beat.  This great speaker solves the problem of tinny sound from small portable speakers.

App Phone

My primary phone is the iPhone 4 and secondary phone is the Android Motorola Atrix .   Since I have not had a land line in years and also travel a lot I need a back up cell phone.  I also need to experience both the Apple and Google ecosystems as they are and will be the dominant smart phone platforms in the foreseeable future.  I am habituated to the iPhone, but have found the Atrix  to be faster across the board.  I will upgrade to the next version of the iPhone, when Siri is in her new improved iteration.

Tablet

I carry the Amazon Kindle Fire.  I have been a huge fan of Amazon for 15 years and have therefore been a Kindle user since 2008.  The Kindle Fire has a gorgeous screen, the whispersync technology so that I can read on both the Fire and, with the Kindle app, on my iPhone and of course, since I am an Amazon Prime customer I get a lot of free video streaming.  I do not have an iPad and have never really desired one as I already had the iPhone , the iPod and Kindle when it came out.  I do read a lot and the Kindle family of readers are great for travel as I can take all the books I need or want every trip.  I do suggest to people that their app phone should be stocked with books as you always have your phone with you so when waiting in line or a late lunch date you can settle in for a 5-10 minute read.

So that is the technology that keeps this futurist productive and happy on the road.

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The Challenger Sale

Originally posted at Media Biz Bloggers.

When I became VP of Sales Strategy and Development at AOL’s Interactive Marketing division in 1998, I was asked to become active in a membership that the division had in the Sales Executive Council (SEC), part of the Corporate Executive Board.

I remember attending my first meeting of the SEC with top-ranked marketing and sales executives of GE, DuPont, Time Inc., and several large banks, and I was blown away with what the SEC had to offer based on extensive research it conducted in sales organizations of major global corporations.

One of the reasons I appreciated the SEC research is because I had come to AOL from having an endowed chair at the University of Missouri School of Journalism, which I had been hired, in part, because I had an MS in Journalism and was a.b.d. for my Ph.D, which also meant that I had taken several advanced research courses and had some understanding of what good research and methodology looked like.

The SEC provided such insightful information that I used much of what I learned in subsequent sales training at AOL, other organizations I have done training for, and in the fourth edition of my textbook, Media Selling: Television, Print, Internet, Radio.

Well, the SEC and the Corporate Executive Board have done it again. Matthew Dixon and Brent Adamson have written a sales management blockbuster titled The Challenger Sale: Taking Control of the Customer Conversation, and it’s an absolute must read for media sales and marketing executives, especially for those in digital (internet and mobile).

The reason I’m not recommending The Challenger Sale to media salespeople is because, even though they might benefit from it enormously, they will be extremely frustrated and discouraged because there are so few media companies that will be willing to embrace the changes necessary to implement such a successful approach that The Challenger Sale recommends.

Alas, because most media companies sell to advertising agencies, that could care less about solutions to advertiser problems, the approach recommended in The Challenger Sale must be adopted and customized, which most media companies are unwilling to take the time to do. But the major points made that sales reps must “Teach for Differentiation, Tailor [the solution] for Resonance, and Take Control of the Sale” all work in media selling.

The only media companies I know of that come close to the Challenger Sale are Apple (not a pure media company), Google, and ESPN (Disney), but they are not run by bean-counting financial types or narcissistic, greedy cliff-dwellers who think old-style relationship selling is good enough.

If you’re a sales executive who works for the latter type of media company, buy the book, have it shipped to your home, don’t tell anyone you’re reading it, and surreptitiously put into practice all that you can of the Challenger Sale with your flexible, growth-oriented sales reps.

Good luck.

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Originally posted at TV HOWL.

Oprah Winfrey

Oprah Winfrey’s OWN isn’t working for the simple reason that Oprah herself seems passé.

Why opine on this subject today?  Because the news is all over the place that losses are mounting at OWN.

Among other places, a front-page story in the Wall Street Journal says Discovery has sunk $312 million into OWN with no predictions of profitability except for a lukewarm forecast that losses are expected to continue through 2012.

So has Oprah lost her touch?  In a word, yes.  How?  Well, that’s always hard to say.  For some, the decline in her influence stems from the repetitive statements she issues continually, in public appearances and interviews, about “her journey” and “her mission” and her “legacy.”  Truth be told, it all feels tired, not to mention off-putting.

It also comes across as self-centered and egotistical, as if the viewing audience has some kind of stake in helping to ensure Oprah Winfrey achieves fulfillment in her “journey” and accomplishes her “mission,” which has something to do with empowerment and living one’s “best life” and yada yada yada.

Taken together, the shows on OWN play like the TV equivalent of having to eat your spinach.  And here’s an observation I once made about self-help: I once was acquainted with a guy whose bookshelves in his New York City apartment were filled with self-help books — perhaps the most I’d seen in any one place that had been purchased over the years by a single person.

Perhaps he was sincere in his search for guidance when he bought these books, but I was fairly certain he hadn’t read very many of them.  More than likely, he read part of them, perhaps the introduction and first chapter, and then never finished them.  Why?  Because self-help books, like self-help TV shows, are decidedly unentertaining (is that a word?).  In fact, I can say from personal experience with the few self-help books I have tried to read that reading them is a chore.

Try watching “Oprah’s Life Class” — yes, a “class” about “life” led by Oprah, with the assistance of some guest motivational speaker — and you’ll see what I mean.

When you really stop and look at it, there never really was any evidence, much less a guarantee, that Oprah Winfrey could build an entire TV network from the ground up in the first place.  She was hugely successful in a variety of endeavors in the TV business, but launching an entire network was not on her resume.

Oh, yes, there was plenty of evidence that Oprah was capable of making a lot of money for herself and anyone who had the good fortune to go into business with her.  She’d done so with her syndicated daytime show, which probably generated — what? — a billion dollars or more over its 25 years.  And she added to that sum with the other daytime shows and personalities she championed and developed — Dr. Phil, Dr. Oz, Rachael Ray.

But even more than those successes, the impression that Oprah could mine gold from virtually anything she touched began to form long ago, when her (seemingly) off-the-cuff endorsements of exotic soaps or artisanal popcorn could make the entrepreneurs behind these products suddenly flush with orders, not to mention money.

Nothing represented Oprah’s power in this regard more than her impact on the book business.  Sure, that was fun while it lasted, especially if you were the publisher of some book Oprah just happened to read recently and then mention on her talk show.

But like afternoon talk shows, the book business has changed a lot in the last few years.  Who knows if Oprah could drive book sales today, when books themselves are looking more and more passé.

Certainly, a prominent TV personality falling victim to changing tastes is no crime, especially if you’re Oprah and already a billionaire.  You know, most people don’t get a chance to strike it rich twice in a lifetime.  And it could be that Oprah’s best life was the life she had when she dominated daytime TV for one hour every afternoon.

Now, those halcyon days are gone, and it appears increasingly unlikely that Oprah will be able to return to anything resembling them anytime soon.

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Facebook Friends

Originally posted at Keller Fay.

On May 22, my new book, The Face-to-Face Book:  Why Real Relationships Rule in a Digital Marketplace will be published.   Coauthored by Brad Fay, it is a book about the hugely important social wave that is rolling across the world of business today.  But unlike many books and articles argue that online social networks are creating this social wave, we argue that the largest and most important part of social influence is that which happens when conversations happen in the real world, face to face.  There is a vast array of tools and approaches that can be tapped by marketers to drive these real world conversations. You can download a free excerpt from the book here.

While researching the book, I reviewed the history of word of mouth and social influence.  It was a clear reminder that past is prologue.  From a marketing perspective, focus on the role of word of mouth was quite robust in the 1940s, ‘50s and into the ‘60s, before marketing was overtaken by the era of the Mad Men and “the Golden Age of Advertising” and long before the Internet or online social networking.

The ‘40s and ‘50s, we were the dawn of the mass media era, and many people ascribed vast power of the radio and the emerging medium of television.  A prevailing theory of the time, known as the “hypodermic needle model” or “magic bullet theory,” held that powerful mass media could “inject” ideas into people who would directly (and passively) accept and act on those messages.  One incident often cited in support of this theory was the 1938 radio broadcast of the War of the Worlds, and the subsequent nationwide panic that ensued.

To those who advocated the hypodermic needle model, this “cause/effect” was proof that people would hear what the media reported, and take immediate action. But soon thereafter, this theory about how mass communications works was discredited by the eminent Columbia University researchers Paul Lazarsfeld and Elihu Katz.

Their argument was based on research – known as “the Decatur study” — the purpose of which was to ascertain how average women in a typical American town (Decatur, Illinois) made decisions about everyday products and services.  The results of the Decatur study were published in 1955 in a seminal book called Personal Influence by Katz and Lazarsfeld.  Among the many findings from Personal Influence were two that are particularly relevant to today’s social era.

People Persuade, not Advertising

The first was that the mass media do not “cause” people to do things or make purchase decisions in isolation, as the “hyperdermic theory” held.  Rather, it identified an important relationship between advertising and word of mouth.  The study noted, “The traditional image of mass media must make room for ‘people’ as intervening factors between the stimuli of the media and resultant opinions, decisions, and actions.”  Katz and Lazarsfeld went so far as to say that mass media, generally, don’t do a very good job at persuasion, but rather tend to reinforce pre-existing views.  Persuasion, they said, happens best when mass media connect with everyday consumer influencers who pass along the message to others, and in so doing are better able to generate new customers.  They called this the two step-flow of the mass media.

Which brings us to a second important, and lasting finding.  In their discussion of these “everyday consumer influencers,” Katz and Lazarsfeld were the first to document the impact of influencers – not people in official positions of power but a group of everyday people, be they family, friends, or neighbors, to whom people look for advice and recommendations because they find them to be trustworthy and knowledgeable.  They observed that influencers are heavy users of media, who tend to learn about and share with others things that are new, interesting, and important.  “Leadership at its simplest, “ they called it:  “It is casually exercised, sometimes unwitting and unbeknown, within the smallest grouping of friends, family members and neighbors. . . it is the almost invisible, certainly inconspicuous, form of leadership at the person-to-person level of ordinary, intimate, informal, everyday contact. . .”

Remarkably, many of the fundamental truths noted by Katz and Lazarsfeld still pertain today, despite massive changes in the media and marketing landscape.  Their findings are an important reminder that people are the force that drives social influence; and that media and technology are enablers of rather than cause people’s desire to share and learn from each other.

In my next post I’ll continue this historical review, focusing on the first advice to advertisers to embrace word of mouth advertising from a 1966 Harvard Business Review article – it is also quite fresh and relevant to today’s times.

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Mass Marketing dominated the last century: You need to reach the masses through as many channels as possible. You need retail stores, fliers, website, PR, Ads, Social Media, and and and and and…until you finally reach critical mass and you succeed.

Target is a mass marketer, Huyndai and Delta. Once you achieve ubiquity you get revenue, advancing the cycle, ultimately, reaching scale.

Mass Marketers love macro (soft) metrics while direct marketers love micro (hard) metrics.

Direct Marketers need to get it right on a small scale. The mailer can be forwarded to 200 people, gets a 4% response rate; now you can mail it to thousands of households with confidence.

Direct Marketers experiment on a small scale. When they scale up, they are confident it’s going to work. The Mass Marketers place a big on thousands of little cues, little signals, converations.

A Direct Marketer is the guy at the Blackjack table, placing constant $5 bets. The Mass Marketer is the guy placing a million dollar bet on one number on the Roulette table.

Why do we still revert back to Mass Marketing?

It’s easier to put off the day of reckoning, hoping for a miracle two months in, not wanting to admit failure. Almost every marketing initiative is better when you treat it like direct marketing. Many of the Mass Marketing initiatives are based on hope. Brands rather invest in marketing that’s based in results.

It’s very romantic, ‘Mad Men-like’ to spend the majority of the money at the start. That’s a big bet and you might lose miserably. Rather, bet small in the beginning and scale up when you see a pattern.

We all need to be direct marketers now.

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Functional Resume

Originally posted at MENG Online.

Never means never.  I’ve been reviewing resumes for several years for MENG and have never (that word again) seen a functional resume that was worth considering [A functional resume organizes information by skill sets and accomplishments rather than the more standard specific positions, titles, and reverse chronology.].

A functional resume immediately communicates to an executive recruiter that you are hiding something. 

These are some negatives that I’ve seen executives trying to hide:

• Old (from the recruiter’s point of view)
• Many short-term jobs
• Few promotions
• Marketing services career (aiming to move to clients)
• Long gap since last job
• Long tenure in a contracting industry
• Currently in a lower level or part time job
• Everyone searching for a new job has some blemishes. Unfortunately, no good recruiter is going to miss them before sending us to their client

Functional resumes are confusing.

Where did you accomplish what you are so proud of? Is their business similar to mine?  What was your level and responsibility?  What else was happening at that time?

Functional resumes simply group related types of accomplishments into a litany that doesn’t provide enough context to be understood or appreciated.

A functional resume can’t tell a great story about you.

Stories have a beginning, middle, and end.  There are problems to be overcome and successes to be celebrated.  And every great story has surprises and distinctive personalities.  All of this is easier to convey in a reverse chronological resume than a functional one.

A function resume doesn’t shout to a recruiter why they should be interested.

Have you:

• Been at a targeted company in a targeted category?
• Had the targeted job titles?
• Progressed in your career, especially via promotions?

A recent study found that recruiters spend eight seconds screening resumes.

They are focusing on job titles and companies in the initial screen.  It’s impossible for a recruiter to spend eight seconds on a functional resume and find a reason to screen you into consideration.

Push back

I can almost hear some people reading this blog virtually yelling at your computer screen:

But the reason I’m using a functional resume is that I have some of the problems that you’ve mentioned and therefore no recruiter is interested in learning about how my previous accomplishments prove I can help their client.

There are better ways than functional resumes to overcome your resume problems.

1. Forget recruiters. Network.

Recruiters are hired to find the exact square peg.  If your career has serious gaps and issues, you may need to avoid starting with recruiters.  Most jobs are found via networking anyway.  Once you’re brought to the attention of a recruiter by a mutually respected contact, your resume will be seriously reviewed.

2. Lead with a bio (no resume).

Career coach and MENG member Peter Engler has been preaching the benefits of bios for some time.

A bio lets you tell your story however you want.  Take advantage of this and use it when networking.  After someone has expressed interest, you’ll usually need to follow up with a reverse chronological resume that will be positively reviewed since you presold yourself with the bio.

3. Lead with a direct response letter (no resume).

This has the same benefits as leading with a bio.  Either one requires a very well written document that you many need help writing.

If you’ve been using a functional resume, try the bio or direct response letter approach before going to a regular reverse chronological resume which will still be expected.

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Communication

Originally posted at Keller Fay blog.

MIT Professor Sherry Turkle wrote a powerful opinion piece in this past Sunday’s New York Times Sunday Review in which she draws a sharp distinction between conversations that take place face-to-face, in the real world, and connections that get made online through social networking sites.

“We are tempted to think that our little ‘sips’ of online connections add up to a big gulp of real conversation,” she writes.  “But they don’t.  E-mail, Twitter, Facebook, all have their places – in politics, commerce, romance and friendship.  But no matter how valuable, they do not substitute for conversation.”

Texting, emailing and online posting, she says, allow us “to present the self we want to be.  This means we can edit.  And if we wish, we can delete. Or retouch:  the voice, the flesh, the face, the body.  Not too much, not too little – just right.”

Meanwhile, she says, “human relationships are rich; they’re messy and demanding.  We have learned the habit of cleaning them up with technology.  And the move from conversation to connection is a part of this.”

And then Turkle makes clear her view that technology is neither the same as nor a substitute for human interaction:  “[I]t’s a process in which we shortchange ourselves. It seems that over time we stop caring, we forget that there is a difference.”

We forget there is a difference.  That’s a fundamentally important point.  My colleagues and I talk regularly to clients and audiences about the significant differences between offline and online word of mouth, and routinely people ask whether what happens online isn’t merely a reflection of what people do and say offline.  The answer is a resounding no, as we argue in our forthcoming book, The Face-to-Face Book.

The differences between online chatter and that which takes place in the real world have important implications for brand marketers, for whom it is a very big mistake to think they are the same, or that online social media is a substitute for offline word of mouth.   The evidence is increasingly clear that people use offline and online communication channels for very different reasons.

According to recently released academic research, the primary drivers of online word of mouth are (in order):  social signaling, functional, and emotional.  The primary drivers of offline word of mouth are the reverse:  emotional, functional and social.  According to the researchers, “Offline conversations, which are mostly in one-on-one settings, are more personal and intimate by nature and thus allow people to share emotions such as excitement and satisfaction. Online WOM, which usually involves ‘broadcasting’ to many people (e.g. twitter), is more appropriate for social signaling (e.g., uniqueness).”

In other words, offline and online conversations are not mirror reflections of each other, but serve different needs with different implications for brands.  Marketers should not choose a “social strategy” without first understanding the motivations of consumers to share.  Online social media will be most effective if you have a new product or a new message for which social currency will be gained by sharing. But if you are seeking to tap the emotions that come with strong brand satisfaction and excitement that comes as a result of a recent purchase or exposure to an advertisement, then look for ways to help consumer share those stories offline where they will have their best chance for success.

Successful social marketing requires marketers to take a holistic view that considers all the ways that people gather and share information. To tap the full potential of social marketing you need a people-centric strategy, not a channel-centric strategy.  Remember, there is a difference between connections through technology, and conversation in real life.

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