Gulf Oil Spill Solutions

As the clean up of the oil spill in the Gulf appears to be moving towards completion (and we us that word loosely), we were pleased to learn that one of our clients, Turner Designs, played an important role in helping with the clean up. Always a leading supplier of an instrument called a fluorometer used to monitor and measure “stuff” (our technical term, not theirs) in the water, they provided fluorometers specifically designed to detect oil in the water in the Gulf.

Their C3 instrument provides real-time data to allow the Coast Guard a better picture of how oil is distributed in the water both horizontally and vertically. While we never like to see a disaster happen, we are happy to know that Turner was able to provide instruments to help focus and facilitate the clean-up.

Mitch

BP’s culture

Last week one of our Principals, Bayard Bookman, blogged about BP’s culture being the root cause of many of their current problems. Now that they have made news by changing CEOs, Rep. Edward Markey, D-Mass is quoted by AP as telling the CBS Early Show, “I’m hopeful that Mr. Dudley will be more responsible, but a total change in culture of this company in necessary.”

Mitch

About that Staples Warranty

Well, I finally RTFM (or brochure – I have an excuse: I’m a guy; we don’t RFMs) and it turns out that you get your Warranty purchase price back, not in real (that is cash) money, but in a Staples cash card, redeemable, of course, only at Staples.  So if you don’t give Staples their margin on previously purchased service within 2 years, they get it in purchased products after 2 years.

And that’s brilliant!    I don’t understand why more companies don’t do this.  For example, when I buy tires, I always turn down the “extra protection plan” because I know it’s an insurance product and I’m better off self-insuring on all the tires I’ll buy over my lifetime.  But if I got that plan’s purchase price applied to my next set of tires if I didn’t use it, I’d take it every time.  It’s win-win.

No wonder Marketing gets no respect

I ran across an article on “Navigating the Marketing Measurement Maze” from The Journal of Integrated Marketing Communications and, while it is a journal focused on marketing communications, it nevertheless got my attention because of the authors’ apparent lack of understanding of what Marketing really is about.

A section of the article stated “Market characteristics also change often due to competitive and external forces. For example, a pantyhose manufacturer released a new product only to have a competitor almost immediately replicate the product at a lower price. Unless the original manufacturer’s metrics account for relative pricing across the category, these measures may incorrectly attribute the unsuccessful product launch to the marketing or product design itself.”

Excuse me, but since when do you think Marketing is not responsible for predicting and reacting to competitive responses to new product introductions? The vast majority of new products introduced into the market fail. Due to a lack of effective Marketing … and I don’t mean just marketing communications.

Mitch

It’s the little things

It doesn’t take a lot to make a BIG impression in today’s mediocre service world. (Maybe that’s better than in the 1980s when Tom Peters said you could stand out in the crowd if you could raise your service to mediocre.) We hear about big companies that have outstanding service policies like Zappos. But there are small companies that quietly delight their customers by surprising them.

Today’s example is The PrintWorks Collection. My wife is a crafter and she needed some new ink pads. (Outliner inks to be specific.) She placed her order on their website and a few days later her order arrived. Turns out they were out of one of the colors she ordered in the size she ordered, so they sent her a smaller pad and refill at no charge while they wait to fill the order as placed.

She was pleasantly surprised and said she LOVES this site.

How are you providing a positive surprise to create loyalty with your customers?

Mitch

Free Warranties

My wife bought a new computer today at Staples.  When the sales person offered the 2-year extended warranty, she was ready to turn it down, but then he said that Staples has a new policy: if you don’t use the warranty, you get the price refunded!  That means that there’s  nothing to lose; don’t we wish that all of our insurance policies came with that policy!

What this has to mean is that instead of pricing the extended warranty on an actuarial basis like a normal insurance policy, it’s instead priced on a psychological basis, because the only way they make money is if you forget to claim the refund.  (Of course, they are also borrowing your $150 for two years interest-free, but with the cost of capital cheap to first-rate borrowers these days, I doubt that’s the biggest way Staples makes money on these warranties.)

This may be a new trend, one that others will have to adopt.  It’s just another way that competition is constantly driving prices down and margin pressure up.

Ralph

When Culture Turns Deadly

This is a guest post from one of our co-workers, Bayard Bookman.

An organization’s culture and its sacred cows are often put to the test in times of crisis. A crisis can be any type of ‘black swan,’ which is a totally unexpected event … and that can hurt. British Petroleum is a good, real-time example of what happens when things go terribly wrong. It also exposed their flawed culture to the public eye as never before.

In an article entitled, “Who’s to Blame at BP?” in Fortune, July 26, 2010, author Geoff Colvin noted that BP’s culture supposedly revolved around safety. This is based on the following statement: “…no accidents, no harm to people, and no damage to the environment.” Wow, what happened to the practical application of this lofty goal?

It appears, at least to me, that money got in the way through BP’s desire to control costs and maximize profits. According to a blue ribbon investigation panel from a few years back, a culture took hold at BP several years ago that emphasized ‘savings over safety.’ This culture no longer aligned with the stated goals … and then it turned deadly.

That culture did not evolve in a vacuum. It permeated the entire company until it literally blew things up. Is your culture truly in alignment with your goals and values, or are they just printed on parchment and ignored?

Bayard

Re-learning to listen … maybe

USA Today had an interesting article in the July 20th issue that suggests “Buick wants to know how they really feel.” A reporter followed a Buick research team as they did in-depth interviews with potential customers about features of interest in future Buicks. The Buick team was gathering customer insights.

The article stated that “Similar research takes place regularly across the auto industry.” Of course it does. The question is: what is done with it? Too much research is designed to support a position the researcher already holds rather than gain true customer insight. Too much research tries to prove the customer thinks like the supplier rather than helping the supplier truly think like the customer. This is obviously true of the U.S. Auto Industry, which has been losing market share for decades.

We commend Buick and any other company that spends time with its customers. Just make sure you do it with an open mind, open ears … and a closed mouth.

Mitch

Toyota and Apple:Two peas in a pod

Toyota and Apple have both been facing some bad publicity recently. Toyota for unintended acceleration and other issues with their cars, and Apple for the “death grip” issues around the iPhone 4. Both companies seem to have taken the same first step: blame the user. And both seem to be getting away with it to a degree most companies could not.

Let’s be clear, the exact nature of each problem has yet to be completely determined. While Toyota’s problems can lead to worse consequences, both companies are defending their products while admitting there may be some issues. Toyota is being sued big time. Apple’s legal issues are still minor. However, both companies seem to be maintaining a solid connection with their customers. Why is that?

Simple really. Both have VERY loyal customers. Both make outrageously unique products that their customers are hugely attached to, and most of those customers have not had a problem with their respective products. Both companies appear to have been sufficiently apologetic, while still not accepting blame, to mitigate what the press is trying to do to them. Will it continue to work? Probably for as long as the problems remain limited to small number of users.

What can we learn? Intense customer loyalty has lots of upside when things go wrong. And one way you can tell you have it is when your customer stand by you during those tough times.

Mitch

Old dogs and new tricks

Who says old dogs can’t learn new tricks and that big companies can’t serve narrow niches? The new General Motors is trying something that seems quite amazing. Will it work? Who knows, but it is daring. What are they up to?

If you buy a 2011 Corvette Z06 or ZR1 you choose the option of assembling your own LS7 or LS9 engine at their Performance Build Center in Wixom, MI. It is apparently a six-hour task you perform under direct supervision of an experienced technician. Capacity is about 15,000 engines per year. Total Corvette sales last year were about 14,000.

And to bring new meaning to the old joke about the hourly rate being higher if you help, GM dealers are charging about $6,000 for the privilege of assembling your own engine. Plus travel expenses to get yourself to MI. However, if you fit this demographic, I suspect this is pretty cool.

Thinking like the customer.

Mitch