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Monthly Archives: January 2012

From a CIP to paying $5 to pee

23 Monday Jan 2012

Posted by Malcolm Auld in Branding, Direct Marketing

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I was once a CIP. In case you’re wondering it’s a Commercially Important Passenger on a certain Australian airline. A CIP is more valuable than a VIP, because the CIP pays full freight for their tickets, whereas VIPs mostly get freebies, or rarely pay full price.

The reason for my status was that each week I was flying between Sydney and Melbourne at the pointy end of the plane. The company contracting my services paid the freight and did so for around 18 months.  It was an insane waste of money, but who was I to argue?

A CIP does have its benefits in terms of ego-stroking, foot massages on arrival, extra tipples during the flight, offers to be a godparent to flight attendants’ kids and the like.

But eventually the contract finished and so I quickly slipped back to ordinary Platinum status. No longer did I receive the faux genuine interest into my wellbeing from the flight crew. Now it was simply “right hand side of the aisle” and a glib smile as I boarded.

I fly quite a bit around the country, mostly for my clients. Like all good businesses, they tend to buy the cheapest airfares possible, so I found myself using a variety of airlines. This meant that despite my travelling lots, a computer turned me into a Gold member of the FF club. Not to worry, I had never paid for an annual membership in over 20 years due to my flying status and I could still get into the lounge to wait out the inevitable delays.

There is something that has always fascinated me though in airport lounges. It’s the way seemingly normal rational executives behave, once the hot party pies are delivered to the bain marie. Don’t ever get between frequent flyers and free party pies, you could lose a limb! What comes over people to cause such behaviour, just for a quick fix of gristle, fat, pastry and gravy? (Maybe is says something about their home cooking?)

But back to frequent flying. Trying to stay loyal to one airline has become very difficult, given the delays, attitude of staff and the self-service culture that now prevails.

With all the new computer technology at airports it seems the Spirit of Oztralya is now “do it yourself maaate!” Book online yourself, print your boarding pass yourself, check-in yourself, drop your bags off yourself – but hey, don’t call the airline for help or you’ll be fined a few thousand points for the privilege of talking to a human. And forget about a discount for doing it all yourself. Next they’ll gouge customers for membership to the baggage handlers union, or start charging you $5 to pee on the plane.

Mind you, the airlines have now started to charge different prices for seats – no longer does the ticket price include the seat. You’re just paying for being in the air when you pay for the ticket. Once you’ve selected your flight, you choose a seat and get charged a fee for the seat based on its location in the plane. Yet there’s no standing-room-only or sit-on-the-floor option?

Recently the computer-generated letter advised me my FF membership was down to Silver – a long way from those heady days as a CIP. I can’t use the lounge, my points tickets are limited to seats located in the back three rows or cargo bay and I have almost no negotiating power when it comes to making flight changes.

The point to this little rant is that in all the years I’ve been a FF, I have not received a single telephone call from the airline – except possibly when there was a cancelled flight.

Can you imagine any other industry ignoring their best customers if they reduced their spending so drastically? They would be on the phone to find out why and do as much as they could to win you back.

They wouldn’t rely on a computer to do the human side of their business. Or at least they would have a database system that works to keep the humans aware of potential lost customers.

It’s the same with a certain telco that makes outrageous claims about its 3G network. The service drops out so much you find yourself redialling up to 6 times just to reconnect your conversation. It got so bad I thought I had a problem with my smart phone, so I went to the telco shop. I took my account with me to show them the number of times I was redialling a number when the service dropped out. The assistant advised me they had lots of problems with the network and gave me a form to complete to advise them where the phone was dropping out. Apparently they didn’t know where they had problems!

I showed her my account, which clearly displayed the location of the problem, as it was how the invoice was calculated. The invoice has the cell location next to the charge. I suggested they had the data in their accounts system, but was advised they couldn’t access that data and was asked to complete the form.

Just like the airline, the telco has all the data they need to provide a decent service to their customers, but it gets ignored because they don’t have a layer of humans to analyse and act on the data. If a company has a computer system sophisticated enough to track purchase behaviour, why doesn’t it have humans analysing the data to ensure they keep customers?

The purpose of business is to make and keep customers profitably. The purpose is not to replace humans with computers and email autoresponders. Once you take the humans out of the equation, you enter the business of selling commodities at the expense of customer loyalty and brand value.

Storing valuable data in computers is useless unless the spreadsheet jockeys use the data to gain customer knowledge to grow the business. After all, if your customers don’t make you rich, who will?

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The two ways of marketing – and there are only two!

23 Monday Jan 2012

Posted by Malcolm Auld in Direct Marketing, Marketing

≈ 3 Comments

Everywhere you look there’s a new type of marketing technique and buzzword being invented – experiential, digital, e-mail, collaborative, user-generated, social, word-of-mouse, whisper, interactive, out-of-home, out-of-car, out-of-mind, etc.

But the reality is different. There really are only two ways of marketing.

The easiest way of marketing is what has traditionally been called, mass marketing. It’s been taught at universities and tertiary institutions and is the basis for much of our marketing theory. I teach some of this at university.

The formula is simple and one with which you’re no doubt familiar – create a brand proposition (there are many to choose from for every product or service) and develop advertising executions for mass media channels.

Put a media budget behind the advertising campaign and repeat the advertising as often as possible in mass media, at the lowest cost to reach each thousand members of the audience. The objective is to get the consumers to remember the message and choose the advertised brand when they go shopping.

This was the dominant way of marketing, particularly in western economies after the Great Depression and it grew dramatically after WWII as it became easier to reach audiences in their homes via a handful of television channels.

In the 1980s mass marketing started to decline as an effective way of marketing, as database technology emerged and manufacturers, as well as retailers, started to communicate more directly with consumers.

With the expansion of the internet in the early part of the 21st century, it has become even harder for mass marketing to generate a profitable ROI. Media is fragmenting and the ability to reach mass audiences cost-effectively, in a handful of media channels, is now more difficult. The purpose of advertisements in mass media has changed – directing people to respond to websites and phone numbers, rather than just positioning brands in the minds of customers.

The other way of marketing is direct marketing, where the marketer deals directly with the customers and prospects or where the customers and prospects respond directly to the marketer – in any media. There is always an exchange of either data and/or money in the process and all activities are rigorously measured.

You’ll note a subtle language difference here – mass marketers talk about consumers, while direct marketers talk about customers and prospects. That’s because if you don’t know anything about your individual customers or prospects, you have to address them as broad segments, using terms such as “consumers”.

In 2007, Shelly Lazarus, the Global CEO of international brand advertising agency Ogilvy & Mather, made a significant statement to a conference of over 15,000 of her closest marketing colleagues.

In summary, her presentation said:

“There is now only one way of marketing… 

it is direct marketing and it’s being driven by the digital channels.” 

At the time this was a seismic shift in marketing thinking at the top end of traditional mass marketing land – from someone whose career was built in brand advertising. It is even more remarkable when you consider the following:

“Direct marketing is the hardest thing you can do in marketing” 

The reason is this: You are trying to get the customer or prospect to do what you want them to do, when you want them to do it. And it often involves parting with money as soon as they consume your marketing message. This requires specialist skills, not usually found in traditional or digital agencies.

Now that the digital channels are dominating the growth in marketing media, these direct marketing skills are at a premium. Yet “digi-experts” keep trying to persuade marketers that the skills needed to succeed with online marketing are related to binary code – something only alleged digital agencies possess. Of course, nothing could be further from the truth.

Consider this question for a minute: What is a digital agency? 

Does that mean all other agencies are analogue agencies? Should advertising agencies be renamed ‘cathode-ray tube’, or ‘pressed-metal type’ agencies? It appears many digital agencies are simply art studios that use Dreamweaver, instead of InDesign software – technologists, not marketers. And most have never created marketing campaigns in a recession – they’ve only known the good times in a rapidly growing naïve market, awash with online budgets.

Even Stan Rapp, global marketing educator and practitioner says in his recent seminars, “…there is no such thing as a digital agency. Digital is technology, it is not marketing”.

Interestingly, while the marketing world is fascinated with the internet and related digital media, human behaviour isn’t changing as quickly as the digi-experts would have us believe. We’re reading more books than ever before, watching television on large flat screens in home theatres, breaking box-office attendance records at the movies and filling stadiums to watch live bands. Direct mail and printed catalogue volumes continue to rise, yet e-mail open-rates are declining in many categories. 

Drayton Bird, named by Campaign magazine as one of the 50 most important individuals in UK advertising during the previous 25 years says “online marketing is just accelerated direct marketing” – and he’s absolutely right.

If you really want to succeed in the era of digital marketing, you’ll need direct marketing skills, not binary or mass marketing skills. While technology changes, the way we market doesn’t. We either talk directly to our customers and prospects – even get them to talk about us – or we talk with masses of consumers to try to elicit a direct response, in all media.

Understanding how to get people to respond in an increasingly advertising-cluttered time-poor world, is the challenge – after all, if it was simple to do, we’d all just open a digital agency.

Malcolm Auld

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