The British government has just released its latest housing white paper, aiming to address the chronic shortage of homes across the country. But what caught my ear when listening to the news on the radio was how keen minister Sajid Javid was to avoid focusing solely on getting people onto the property ladder, and how much he wanted to broaden this to include having more homes available to rent. Partly this is down to the enormous cost of buying a first home in most places, which puts it out of the financial reach of many young people, but also I think it reflected a change in how goods and services are bought and consumed. And it is a trend that marketers need to wake up to.
Quite simply, consumers, particularly younger ones, are now renting things that in the past they’d have bought outright. Why buy music or DVDs when you can access a huge library through services such as Spotify, Amazon Prime or Netflix for a monthly charge? Do you need to buy a car outright when you can hail an Uber or sign up to a flexible leasing scheme that means you never actually own the vehicle.
In many ways this reflects two major things that have happened over the past five years or so. The pace of innovation (and the uncertainty in the world) means that many people don’t want to be locked into a big ticket commitment such as buying an expensive TV which could be out of date in less than a year. They want to get things on-demand. You may pay more overall, but the flexibility, ability to change and regular billing rather than a one off lump sum makes up for the additional cost. It also fits with the more demanding expectations that consumers now have – if they don’t like something they can switch to a rival, rather than being locked into an agreement that they can’t get out of.
As I say, this dramatically changes how brands need to market themselves – in three key ways:
1 Build for the long term
We’ve all had the experience of thinking we’re valued by a business and then seeing new customers receive a better deal. Every year I have to point out to the AA that I could just cancel my membership and sign up for less, rather than pay the renewal fee that they want to charge me. With on-demand services companies have to keep the good experience going, day after day, week after week, if they want to retain customers. And that means marketing to them constantly, but without confusing them with complex offers that are designed to dupe them into spending more
2 Be personal
The advantage of on-demand services for marketers is that they are constantly generating data – what you watch, what you download, where you are driven by Uber. This is incredibly powerful knowledge, that needs to be used to personalise services and make the experience special. At a basic level it is recommending other films you’d like to watch, but it is also about offering better ways of using a service that may even save the customer money. That’s how you build real loyalty.
3 Exploit the network effect
The reason tech firms such as Facebook grow so quickly is the network effect – the more of your friends use a service, the more reasons there are for you to join. Keeping customers happy through clever marketing means you retain them, going beyond that by incentivising them to recommend you to their friends helps widen your customer base. Bear in mind the reverse also applies – annoy a customer and they’ll not only leave, but are likely to share their frustrations with friends and the wider world via social media.
The on-demand economy is changing many traditional markets, from consumer goods to automotive and travel. Marketers need to understand that this isn’t a passing fad, but a trend that more and more people are joining. It requires a move away from old-style marketing where the goal is getting someone to sign on the dotted line, to one where you need to keep nurturing customers to make them feel special. Campaigns need to be faster, more personalised, more adaptable and more immediate if you want to succeed in the competitive on-demand economy, whatever industry you are in.
Let me know if there are any areas I’ve missed when it comes to on-demand marketing in the comments section below.
Image courtesy Ryan McGilchrist on Flickr, licensed under Creative Commons https://flic.kr/p/bRt3qV
Theresa May’s description of a squeezed middle of Britons who are “just about managing” may have been a passing aside that seems to have dropped by the wayside, but it made me think. A similar problem affects technology businesses. Everyone loves the innovation, excitement and (often) wide-eyed naivety that drives a start-up, while having respect for those organisations that have grown to lead their industry or niche. Consequently there are clear ways of marketing both these types of business – essentially you either focus on the hopefulness of youth or the solidity and strength on old age. After all, no-one got fired for buying IBM.
Where does this leave the squeezed middle – companies that are still growing, but not at the hyper-powered speed of a start-up, and are not yet big enough to be the safe choice that old-timers provide? These organisations are affected by a number of challenges:
1.Differentiating themselves in the market
With competition increasing, how can they remain relevant to existing clients while fighting off rivals from above and below?
2.Attracting and retaining staff
In incredibly competitive markets, the squeezed middle lacks the name recognition and safe salaries of older businesses, while not offering the potential rewards of getting equity in the next Facebook provided by start-ups.
3.Choosing where to expand
After building a base in a single country or segment, companies need to look at their next steps. But with limited resources they have to choose wisely and invest enough to drive success, without risking their overall survival.
4.Keeping the excitement going
Five years on from being a start-up, teams can become tired and see the world from jaded eyes. How can you keep people motivated, particularly when that IPO or acquisition seem further away than ever?
5.Attracting continued attention
Start-ups can manufacture news, while established players have a pipeline of new products, partners and customers to publicise. For companies in the middle, finding new things to talk about can be hard – journalists and social media flock to the next big thing, rather than celebrating incremental progress.
Over the years, I’ve worked with a number of organisations in the squeezed middle and there are a number of ways of marketing yourself that can differentiate your from larger and smaller competitors:
1. Be known for something
Don’t try and take on established players by talking about the speed or even cost of your product – even today, many buyers are reassured by the expense of buying from a big company, while start-ups will be more than happy to make wild claims/offer below market pricing to build their business. Focus on the business issues your potential customers suffer from, and become known as the answer to their problem. This might mean looking at just a part of what your product does, but if the niche is big enough you can dominate it. The same applies to marketing – don’t try and out-compete the big boys through a playbook of hundreds of messages or campaigns. Cover a few, but do it well and keep repeating it to hammer it home, so that you are known as an expert in at least one thing.
2. Focus on the customer
It is an obvious point, but to get where they are, middle aged companies have had to sign customers. And often these companies are passionate about the benefits that their products have delivered to their operations, making them the best possible evangelist for the business. Nurture them, treat them well and involve them in strategic planning (through things such as customer days and customer advisory boards), so that they remain onside and are happy to be involved in your marketing.
3. Build the right culture
Retaining staff – and attracting new blood – is crucial to growing your middle aged business, but it is about continuity rather than revolution. Set out to build the culture that will make the most of your advantages, such as international reach, but include the flexibility and inclusiveness that big companies don’t have. Show that every member of staff can contribute and make a difference – without the imminent threat of closure that underfunded start-ups face.
4. Keep doing it, all the time
It can be tempting for middle aged/midsize businesses to try a lot of different things, searching for a silver bullet that turns them into a star overnight. Unfortunately, marketing doesn’t work like that. What is needed is constant, consistent, campaigns that hammer home a message day after day, month after month. Do the basic things right and don’t be downhearted if things aren’t an immediate hit, but build over time. Obviously look at measuring results and improving what you do, but keep on keeping on. It may sound like an uninteresting approach, but it doesn’t have to be – it is just a question of avoiding the flightiness of a start-up or the random changes that big businesses can often make in an effort to be trendy.
In competitive sectors, middle aged tech companies can easily get an inferiority complex – to succeed in their marketing they therefore need to make the most of their advantages, apply hard work, and focus their efforts if they want to thrive.
This week saw Bernie Ecclestone replaced as the head of Formula One, after essentially running the sport for 40 years. It is no understatement to say that Ecclestone built Formula 1 from a disparate collection of races into an extravaganza that ranks as the third most watched sports event in the world, behind the Olympics and football World Cup. The fact that Liberty Media paid $8 billion for the sport is a further demonstration of the value of the F1 brand.
However, at the same time, Ecclestone has been a controversial figure. Tried for blackmail in Germany over previous sales of F1’s TV rights and accused by some teams of pocketing a fortune while leaving them struggling financially, he also cosied up to autocratic regimes in countries such as Russia, Bahrain and Azerbaijan and was fond of provocative utterances such as praising Hitler and calling women ‘domestic appliances’. In many ways he echoed the power and dubious practices of other sports leaders such as Sepp Blatter at FIFA and Lamine Diack at the International Association of Athletics Federations (IAAF), meaning his removal marks the end of an era.
So how do you turn a squabbling series of teams and races into a polished product that is worth $8 billion and is known across the world? There are four communications lessons – good and bad:
Ecclestone was continually coming up with new ideas – whether it was changing the qualifying format or awarding double points for the final race of the 2015 season. These didn’t always work in terms of spicing up the spectacle, but they generated discussion and hence interest in the sport.
2.Be approachable and open
By all accounts Ecclestone was always visible in the F1 paddock and accessible to journalists. He may not have necessarily answered their questions, but always gave good quotes, meaning his own profile (and that of F1) moved beyond the sports pages to reach the general public.
3.Don’t forget new audiences
Every sport or brand needs to attract new fans, otherwise it will eventually become irrelevant. Yet Ecclestone seemed disinterested in investing in younger generations – due to the hosting fees he charged circuits to hold grand prix, ticket prices were enormous, pricing many families out of the market. The main focus appeared to be corporate guests and sponsors – he famously asked why F1 should appeal to 15 year olds as they were unlikely to buy Rolexes or bank with sponsors UBS, ignoring the fact that they are undoubtedly buying Red Bull. At the same time more and more TV rights have been sold to pay TV channels, limiting the available audience by shutting out the casual viewer.
4. Don’t forget the internet
One of the big areas that Liberty Media has promised to address is the internet and social media. F1’s presence and use of these channels has been pretty woeful, taking years to even come up with a Twitter hashtag for races. Again, this stems directly from Ecclestone who said he didn’t see any value in “tweeting, Facebook and whatever this nonsense is”. While it may not directly lead to money coming in, fan engagement is crucial to every sport today, and is an area where F1 as a brand (unlike teams and drivers) has been lacking.
And before his detractors see Ecclestone’s departure as the end of the era of fast-talking, slightly dubious, deal-making dinosaurs take a look at the new resident of the White House. Perhaps if Ecclestone was on Twitter, he’d still be leading F1……………
Photo Habeed Hameed [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)%5D, via Wikimedia Commons
Who do you trust? Perhaps unsurprisingly given the political turmoil in 2016, the answer is ‘no-one at all.’ That’s the headline finding of the latest Edelman Trust Barometer, which found that trust in politicians, media, business and ‘the system’ has dropped precipitately over the last year. Less than a quarter (24%) of those surveyed in the UK trust the media, and just 26% trust the government. Figures continue to drop – comparing data from the end of 2016 and beginning of 2017 shows that trust levels fell a further 11%.
What is most worrying is that while trust in politicians is at rock bottom, the majority of people believe outspoken, spontaneous ‘straight-talkers’ over diplomatic communicators. This echoes Oxford-educated Michael Gove’s boast during the EU referendum that the British public “have had enough of experts”. 53% of people believe the system has failed them and that the odds are stacked against them. They blame immigration, technological change and changing values and simply don’t trust existing politicians and organisations to sort them out.
As someone who studied history it is easy to draw parallels with the 1930s. The immediate impact of the Wall Street Crash was bad enough, but the failure of things to return to normal over time led to disillusionment and the rise of radicalism and racism. Existing liberal institutions thought they could control these forces, hence trying to do deals with the likes of the Nazis. Instead, it had the opposite effect, making them appear stronger than they actually were and encouraging a rise in support.
What is especially concerning is that things could be about to get much worse in 2017. We already have the prospect of Donald Trump in the White House, and the triggering of Article 50 to launch a hard Brexit. But elections are also due in France, Germany and the Netherlands (and potentially Italy), where extremist and anti-establishment parties are expected to do well with disenchanted electorates.
The impact of two of the main factors driving the breakdown in trust (immigration and technological change) are going to accelerate, further weakening support for the status quo. It is a vicious circle – isolationism and suspicion reinforce themselves, allied to the fact that many of us now get our news through social media networks that reflect our own background and views, rather than leaving us open to ideas that are different.
What can be done to change this? And, can it be changed at all? The first step is to wake up to the seriousness of the issue. Just as politicians and the public seemed to sleepwalk into the rise of the far right in the 1930s, there is a danger that the same thing will happen again. Politicians need to take a stand and outline exactly what the benefits of the current system are, taking steps to be positive about what it delivers to people. This is what the Remain campaign singularly failed to do during the EU Referendum vote.
Secondly, equip people to deal with change. Automation and artificial intelligence are hollowing out the workforce, but they are also creating new jobs. It is up to government, working with business and trade unions, to put in place the training to help reskill people on an ongoing basis. The old system of early education needs to be complemented by lifelong learning with access for all.
Thirdly, the media must take a stand against extremism and those that are wantonly making up ‘facts’. They need to call out deliberate lies from politicians, even if that makes their job harder. And companies like Facebook need to be considered part of the media, and redouble their efforts to stamp out fake news on their networks, given that this is where a large (and increasing) percentage of the population get their information.
The breakdown in trust that the world is currently suffering from cannot be easily remedied. But that doesn’t mean that it isn’t worth trying. Public relations professionals should be playing their part, but it will take a sustained effort from all the groups named in the Edelman report (business, politicians, government, the media and NGOs) to change perceptions and rebuild trust.
Home automation is the next battleground for technology. Following on the heels of Amazon’s launch of its Echo and Echo Dot devices, which feature its voice-controlled personal assistant Alexa, Google has unveiled its plans for a range of hardware to control the smart home. The Google Home speaker features a virtual assistant, excitingly called Google Assistant, that lets you give commands and then either provides information or controls your smart devices. For example, you can stream music, control the temperature and turn the lights up/down/off, as with the Echo. And Amazon and Google are not alone, with Apple announcing its HomeKit standard which will allow users to control devices through their iPhone via either apps or Siri.
When it comes to mass adoption, it is early days in the home automation market, and each one of the major players will need to overcome four big obstacles:
1 Do we need it?
Smart home kit has yet to really take off, with many consumers not willing to pay extra for internet-enabled light bulbs or thermostats. While Google Assistant and Amazon’s Alexa can do more than control your home, with the ability to find information, check the weather/traffic, book an Uber taxi etc., you don’t really need a separate device for this. You have one – your smartphone. So what each player has to do is find ways of encouraging people to adopt it, developers to create apps that use its functions, and manufacturers to incorporate it into their own hardware. Given that we’re talking about white goods such as fridges which are replaced infrequently and are normally price-sensitive purchases, this last point is going to take some time. As an early adopter I’m going to give Alexa a go, but I can’t see a compelling reason for mainstream consumers to buy an Echo or Home, until the ecosystem around them are more mature.
2 Is it clever enough?
As an existing Siri user I know that for a smart assistant it can be pretty dumb. It doesn’t really know enough about me to provide helpful answers and most attempts at ‘conversation’ end with switching it off and trying a Google search instead. Amazon and Google promise that their assistants will be much cleverer and will learn about you in order to provide a personalised experience that understands your context, location and previous behaviour. The jury is still out on whether it can be intelligent enough to replace human interaction for basic tasks.
3 Is it private?
The self-learning promise of Assistant and Alexa also has a darker side. Essentially, you are putting an internet-enabled microphone in the heart of your home, where it can listen and learn about you, before sharing that information with Google and Amazon. While both have privacy safeguards, the less you let it share, the less useful it will be. Many people will be concerned about where their data is going, and how it will be used – particularly given the amount of information Google and Amazon already possess about us all.
4 Are we going to be trapped in silos?
For me the main issue behind each of these platforms, is that essentially they are silos. You can’t play any music stored on iTunes on either of them for example, but have to either rely on Amazon Music, Google Play Music or Spotify. Even in an age of technology giants, very few of us rely on just one platform – we tend to use bits of each and value the fact that we can pick and choose where we get email, buy products or listen to music from. By their very nature, rivals are not going to push their competitors’ services, and no-one wants to have to buy multiple hardware to cover all their bases. What is needed is some form of interchange between all platforms, a kind of one ring to rule them all – but I can’t see that happening soon.
As with any innovation there’s a lot of hype around virtual assistants, and the hardware that they control. What is needed is some equally smart marketing that overcomes the objections listed above and really focuses on the benefits – otherwise mainstream consumers are likely to simply keep their dumb homes as they are.
I’m probably one of the few people in the country with some sympathy for Sam Allardyce. Once the Daily Telegraph ran a story on how he’d advised undercover reporters pretending to be businessmen on how to get around player transfer rules, his days looked numbered in the job. Add in the allegation that he accepted a £400,000 deal to represent the businessmen to Far Eastern investors and his fate was sealed. Rule bending and big payments never look good in headlines.
Allardyce has definitely committed a serious error of judgement, in talking about getting round third party player ownership rules, criticising his predecessor Roy Hodgson and his assistant Gary Neville, and complaining that FA president the Duke of Cambridge didn’t attend meetings.
However, I put a lot of blame for the situation on his employers, the Football Association. Given the high profile nature of the role, he was bound to be targeted by reporters in one way or another – did he not have training or warnings about how he should behave in such situations? Imagine he was a senior manager at a company – standards of ethics, what he could and couldn’t discuss and his general behaviour would have been drummed into him. Remember that despite his status, the England manager isn’t a CEO and he has a boss in the FA chief executive Martin Glenn. There should be organisation wide policies that were drummed into him, yet none of the press coverage mentions them. As World War Two posters proclaimed, “Loose lips sink ships”, and Allardyce’s job has been sunk after just 67 days in charge.
There is also much that any business (or anyone in the public eye) can learn from Allardyce’s misadventures:
1.Nothing is off the record
Any conversation, even private ones, can be made public. In the days of smartphones and tiny microphones anything can be recorded and used against you – as the Queen found out when she was overhead complaining about Chinese officials at a garden party.
2. If it looks too good to be true, it probably is
Always look a gift horse in the mouth. While Allardyce said he would have to run the £400,000 payment past the FA before accepting the deal, business people appearing out of nowhere with large sums of money should have rung alarm bells, even in the world of football. The fact that he took his agent and accountant to the meeting shows how seriously he was taking things – it would have been better to have cleared it with his bosses first.
3. Beware the friendly journalist
Most of us are hardwired to want to be accepted and get on with people, and a big part of any interview or meeting is building rapport between everyone involved. So when a journalist or anyone else asks a question or raises a subject people are normally happy to jump in with an answer that either makes them look good or agrees with the general conversation. Hence why pretty much all sting operations get their victims to ditch the dirt on their colleagues or ex-colleagues. It is simply human nature to be helpful, but you need to be on your guard at all times.
4. Make sure everyone knows the rules
As I say, the FA must have strict rules on what members of staff can and can’t do, particularly when it comes to deals that personally benefit themselves. Make sure everyone knows them inside out, with proper training sessions rather than simply burying them in a contract or a staff handbook. Keep them front of mind and ensure that people realise how important they are.
Sam Allardyce won’t be the last celebrity to be caught in a sting operation, but his fate should be a warning for anyone in the public eye about how they should and shouldn’t behave. And, most of all, it should be a wake-up call for employers to set policies and train people so that they don’t end up in the same boat.
For anyone like myself who was around during the dotcom boom, it is hard not to feel that you are suffering from déjà vu. Many of the exotic ideas and concepts that spectacularly flopped at the time have been reborn and are now thriving. Take ecommerce. Clothes retailer Boo.com was one of the biggest disasters of the period, burning through $135 million of venture capital in just 18 months, while online currency beenz aimed to provide a way of collecting virtual money that could be spent at participating merchants.
Offline, we were continuously promised/threatened with smart bins that would scan the barcodes of product packaging as we threw it away, and automatically order more of the same. And goods might arrive from a virtual supermarket, run as a separate business from your local Tesco or Sainsbury’s. You could pay for low value goods and services with a Mondex card instead of cash (though initially only if you lived in the trial town of Swindon). The first Personal Digital Assistants (PDAs) were launched, providing computing power in the palm of your hand. We’d already laughed out of the court the ridiculous concept of electric cars, as typified by the Sinclair C5.
Fast forward to now, and versions of all of these failed ventures are thriving. There are any number of highly graphical, video based clothes retailers, while you can take your pick of online currencies from Bitcoin to Ethereum. We’re still threatened with smart appliances that can re-order groceries (fridges being the latest culprit), but Amazon’s Dash buttons are a neater and simpler way of getting more washing powder delivered that put the consumer in control. And Dash bypasses the supermarket itself, with goods dispatched direct from Amazon. I can pay for small items by tapping my debit card on a card reader – even in my local village shop. More and more cars are hybrids, if not fully electric, while handheld computing power comes from our smartphones.
What has driven this change? First off, the dotcom boom was over 15 years ago, so there’s been a lot of progress in tech. We have faster internet speeds (one of the reasons for Boo’s demise was its graphics were too large for most dial-up modems to download), better battery life for digital devices and vehicles (iPhones excepted), hardware and sensors are much smaller and more powerful, and network technologies such as Bluetooth and ZigBee are omnipresent.
However, at the same time, the real change has been in the general public. Using technology has become part of everyone’s daily lives, and those that are not online are the exception, rather than the rule. It is a classic example of the move from early adopters to the majority, as set out in Geoffrey Moore’s Crossing the Chasm. And it has happened bit by bit, with false starts and cul de sacs on the way.
So what does this mean for marketers? It really brings home the importance of knowing your audience and targeting your product accordingly. Don’t expect raw tech to be instantly adopted by the majority, but build up to it, gain consumer trust (perhaps by embedding your new tech in something that already exists), and prepare to fail first time round. And the other lesson is to look at today’s big failures, and be prepared to resurrect them when the market has changed in the future……