Measuring Up

If I can't understand it, why would I trust it?

Ever hear of the online small business review site known as Yelp? I hadn't until recently when it became the subject of some pretty harsh public scrutiny and a few class action law suits, to boot.

You see, Yelp's value proposition is that reviews are based on a very intelligent "algorithm" that crunches hundreds (or thousands) of opinions from people who have directly experienced specific small businesses everywhere. These businesses are everyday neighborhood restaurants, retail shops, and a host of service companies. The more customers enter their opinions on such topics as price, service, quality and brand appeal, the more relevant Yelp becomes to any consumer who wants valuable information before deciding to buy from a particular small business.

Here's the catch. Yelp makes money by selling advertising on its site to small business owners. Many of these small business owners are up in arms (and have been posting their angry comments on Internet chat boards) because they claim that Yelp sales representatives are pressing them to buy advertising with a clear threat that if they don't...the reviews will be manipulated in a not so flattering way. Talk about a conflict of interest and a serious legal dilemma, if in fact, these accusations are true.

Last Sunday, this Q&A with Yelp's CEO appeared in The New York Times (link to Talking to the Chief of Yelp, the site that businesses, love to hate). You can see that Jeremy Stoppelman tries to diffuse the crisis by answering a number of very pointed questions about this small business owner claim (which he flatly denies ever took place) and a variety of other misunderstood issues regarding Yelp and its model. The company has also recently posted direct answers to these heated questions on its blog and this video tries to simplify what Yelp is all about by proactively answering a variety of questions in a very friendly tone with explanations that are also easy to understand.

With the exception of one critical flaw, I commend Yelp for moving quickly to try and diffuse this situation through open, transparent communications to all stakeholders. Unfortunately, this flaw is something I can't overlook, though and it focuses on Yelp's nebulous algorithm. Yelp's entire positioning is to provide the consumer with trustworthy reviews that can be counted on. Yet, the algorithm used to calculate this information is murky. And, when Jeremy is asked (in The New York Times article) to explain how this algorithm (or filter) is used to determine whether a review is trustworthy, he refuses to reveal anything. In fact, his answer is downright patronizing ("I really can't be very specific. The more that we explain the algorithm, the less effective it becomes"), as if we (the readers and his consumers) are too small minded to understand it.

I'm a firm believer in measurement. But, whether one uses formulas, algorithms are anything else to get at an end outcome, the methodology has to be something that can be implicitly understood. If not, why should anyone believe that the actual score (or in this case, review) is verifiable. Jeremy's absurd answer stopped me in my tracks and turned me off to Yelp. That's kind of ironic since it's the lesser of the issues that this company is actually dealing with right now.

I think that Yelp still needs a little help...

Dealing with a severe crisis? Which stage are you in?

Yesterday I heard former GE CEO and legendary business guru Jack Welch espouse his crisis management philosophy. Naturally, the news was mainly focused on Toyota. The Squawk Box anchors eagerly wanted to hear Jack’s thoughts on what Toyota should do now and how (if any) crisis management approach can work for the embattled company, at this point. Jack rattled off his five stages that corporate managers typically go through during a severe crisis such as this. I found his comments to be pretty insightful and accurate (based on the many crises l've counseled clients on).

Each stage actually focuses on the worst actions/situation that often occurs when companies make extremely poor decisions (i.e. Toyota). I have to say, from my experience, there are plenty of examples where some of Jack’s stages were not realized because the severe crisis was contained as effectively as possible and some of these behaviors were never exhibited. Here’s what Jack had to say:

Stage 1:  Denial – The crisis hits. And, it’s really bad. Most senior executives and their subordinates walk around for days (and sometimes weeks) in complete denial. They believe that their company is too fortunate (and good) and are generally thinking, “Bad things just don’t happen to us.” Toyota had been the shining star within the automotive industry for close to a decade. While Jack wasn’t inside the company, he feels that denial was an absolute reality in Toyota and it helped to create bad decision making (or no decision making at all), which led to bigger and bigger problems.

I’ve seen many corporate executives stay in this denial phase far too long and similar results ensued.

Stage 2: Containment – In the worst case scenarios, Jack points out that even the most capable leaders try to make the problem go away by giving it to someone else to solve. Of course, that never works because the ultimate decisions need to be made at the top (for such severe crises.) Also, those subordinates who now own the problem are left to their own devices to create solutions… and that usually doesn’t end in any type of smart (or sometimes legal) solution.

Quite often, by the time Peppercom has been called into a severe crisis situation, we’re already past the initial containment stage. And, as Jack stated, it’s because someone down the ranks made an awfully bad decision about solving the problem. So, now we’re offering advice as to how to communicate the damage and next steps to key stakeholders.

Stage 3:  Shame Mongering – Now the problem is out in the open (which could mean that the media and audiences on the Internet are writing/discussing it).So, human nature takes over and there is a shameless dance of self defense where fingers are pointed and the blame game begins. Jack feels that this stage is very problematic because executives are often too engrossed in protecting their own hide to focus entirely on fixing the problem at hand.

On the flip side (to what Jack said), I’ve consulted with a few really well managed companies where this shame mongering stage never took place. I witnessed senior executives stand up and fully accept responsibility for the crisis at hand. That was refreshing to see.

Stage 4: Blood on the floor – Understanding how Jack managed with an iron fist (and a neutron bomb), I knew the word blood would be highlighted in one of his stages. We’re all familiar with this part. Who is going to “take a bullet” or “fall on his/her sword” for being ultimately responsible for this crisis? Many times, this person will wipe out an entire crowd with him/her  before accepting failure. Once the company does this, it is basically telling the world that those responsible have been punished, we’re a better company now and let’s move on.

We’ve seen this happen at Merrill Lynch, Bank of America, General Motors and a variety of other companies that went through the worst of crises in the last 18 months. Quite often, when a crisis reaches that magnitude, the CEO is on the chopping block because a new leader will signify a fresh start.

Stage 5: The crisis is fixed – According to Jack, despite prophecies of doom and gloom, almost all companies that survive a severe crisis are actually better off. The old cliché what doesn’t kill you makes you stronger is ultimately true. Those organizations have hopefully fixed the issues that led to the problem. More importantly, because they made it to Hell and back, managers and employees understand so much better how important it is to understand vulnerabilities and not take as many risks. And, they are all better prepared to manage a crisis, should one happen again.

I agree with this last point except in the case of many Wall Street companies who specialize in financing.  While in each case the major crisis hits and then things finally come back to normal, the fact is that because this industry’s risk/reward system is completely out of whack (i.e. making money becomes important at almost all costs,) many companies never really learn (or seem to care) about the next crisis until their leadership finds themselves smack in the middle of one again. And then, it’s just too late.  

The art of successful communications is to first understand what your audiences really care about

The economy is still in shambles. Tens of thousands of people still don’t have jobs. We are  fighting wars on two fronts (and soldiers are still dying.) And, my country club just sent me a very serious letter announcing that the Board will now allow denim to be worn one night a week, only, as a “test.

Now tell me, which sentence does not belong in that paragraph?

This tongue and cheek opening paragraph shows how out of touch my (not to be named) country club is with its members. And, that’s a real problem. We’ve watched membership steadily decline over the last 18 months as families realized that this luxury is simply that. For some, it’s been a simple decision because the main bread winner in the family lost his/her job and the cost is unaffordable now. For others, they just realized that some smart belt tightening was in order to safely survive these choppy economic times. But, overall, this club (like many) is really pressing to increase lost $$$ and that means the need for more members.

I can only speak for myself. But, I don’t think anyone really give two sh**s about how the club is slightly changing its dress code to allow us one day (or evening as is the case here) of jeans heaven. No, this subject comes across as pretty superficial, considering the times we are in. Instead, what would be 100 times more appealing and would hit the mark so much harder, is if the communications focused on how the club was/is finding new ways to make costs easier to swallow. Or, perhaps if it presented new ideas/thoughts/suggestions/strategies on what the plan is to find new members. A third (also smart) point or message would be to focus on REAL benefits that the club is now offering… uh… that we actually care about.

My guess is that our older members feel that this issue (denim) is a big one. Some of them had some real issues when the club severed the mandatory jacket and ties rule.  OK, I respect that. But, this club has been focused for years on recruiting new, younger families who should now make up the bulk of its membership. Do younger families really care about denim versus so many other issues that now weigh on their minds every day? I seriously doubt it.

As my headline reads, communications all begins by understanding your audience really well. That means, you need to first find out what is on their mind, what issues they want to hear about from you and what will make them feel better about you. After you understand this, think about how you can then communicate a specific stimulus to get a desired response. It’s really all about psychology. And, it isn’t that difficult to do if the first step is always followed.

We refer to this as Communications 101 in the public relations world. Now, where is that denim jacket I used to own, because I’m off to the club for dinner…

Reinventing a phrase that lost its way

Today's guest post is by Michael Dresner, CEO, Peppercom’s Brand² Squared Licensing Division.

For nearly a century, brand owners have developed philosophies and tactics to engage deeply with their end-user. Develop a product that matches an unmet need, advertise to generate trial, maintain quality to ensure repeat purchases, and provide customer service to trouble-shoot. Connect with consumers, so you have leverage over distribution, and potential competitors have a higher cost of entry. Classic stuff.

The phrase “customer service” is adrift.  Author Emily Yellin’s brilliant “Your Call Is (Not) That Important To Us” has hit this issue head-on. I’m not saying no one is great.  But too many stink. The shared, unpleasant experiences are countless.

I was having dinner the other night with Max MacKenzie and Jillian MacKenzie, two of the three founders of Sprout Baby Food, an organic infant food brand that is five years old. Sprout Baby Food has focused on superior taste, packaging and nutrition (among many other features) to connect with parents. The third founder, incidentally, is celebrity chef Tyler Florence, who adds a combination of category expertise and marketing panache. The results have been astonishing. As a private company they do not release their financials, but each 12-pack of servings has a suggested retail price of $14.95; in the United States alone over 3000 retail locations merchandise at least 12 of their SKUs. Impressive numbers for a young company indeed. (In full disclosure, we are working on a potential project together.)

They were describing the operations of the company, how new products are developed, the qualities they look for in staff. The subject of customer service came up, and Jillian MacKenzie mentioned in passing that she personally speaks to every consumer who calls in.

I stopped right there. Every single parent that contacts Sprout Baby Food? Via e-mail, via the 800 number? Everyone, I asked? Yes, she said.

Do they ever speak with anyone else? No.

Is there ever a consumer to whom you do not get to reply? No. 

How much time does this take up? Sometimes a few minutes. Sometimes an hour, she replied.

Per day? No, Jillian said. Per call. We don’t quantify the total amount of time attributed to this. (Sprout Baby Food, to digress, is deeply systematic and data-driven. This function appeared to be an anomaly.)

You have to be concerned with the time value of money, I said. And ultimately as you scale up, Sprout Baby Food has to delegate customer service. Jillian MacKenzie said no. This is too important. Parents are transcending from milk or formula to solid food for the first time. This stage is angst-ridden, frustrating, and emotional. And, when it comes to giving food to an infant for the first time, the issue cannot be resolved in the first phone call. This isn’t a hammer or a bottle of shampoo. So if parents cannot interact directly with a co-founder, and follow-up with that co-founder, then how can we expect them to buy our brand again? Plus, Jillian emphasized, a depersonalized response to the consumer is just not right.

Jillian and Max continued. Think about the parents who raise concerns and have them resolved not only by the same person, but by a company founder. Can you imagine how that makes them feel?  As it happens, I can. This stage was a nightmare for my son, and most relatives say “It’s a stage, it’ll pass.” That doesn’t help. If I’m a typical parent, it was a feeling of failure. That’s what Jillian diffuses with other new parents. Now, Jillian and Max said, what will those parents do? They’ll blog about us. Their comments will be consistent, positive, passionate.  We’re turning troubled consumers into brand ambassadors. And given our media budget, that’s a requirement for our success.

In response to its success, Sprout Baby Food is scaling up. Quickly. They will bring on added staff to help with this responsibility. There are only so many hours in a day. But, Max and Jillian emphasized, the new staff will not necessarily be “customer service” experts. New employees will bring direct experience not in handling phone lines, but in working directly with new parents at a time of need, and ensuring these parents become social media/word of mouth champions for Sprout Baby Food. That’s a skill set totally separate from what consumers typically experience on a customer service line.

We all discussed how even calling this a “customer service team” would defeat the purpose for two reasons. First being the sadly negative connotation that phrase now brings. Secondly, that is not what these people do. They will be in the business of parental bonding, community relations, and brand championship.

When was the last time you dialed a customer service number and talked to someone who did not care about your problem, who had no authority to address why you called, who mentioned at least once during the conversation “the computers are working slowly today?”

Is it possible Sprout Baby Food’s exponential growth despite long-established competitors is partly attributable to not having any customer service department at all? If you’re a parent that buys Sprout Baby Food, you don’t have the luxury of a customer service rep from 1-800-WECARE2. You have the luxury of Jillian MacKenzie, a co-creator, a confidante, a champion of parent needs. If you’re a brand owner that competes against Sprout Baby Food, or carefully nurtured brands like Sprout Baby Food, and a parent has something to say… who picks up your phone? Think about it. Because another company has rediscovered the customer service you may have lost.

Mad About Barbie

Today's guest post is by Michael Dresner, CEO, Peppercom’s Brand² Squared Licensing Division.

Over three television seasons Mad Men has grabbed the attention of millions with a dark, funny, and  disturbing portrait of the ad industry in the 1960s, and the families, clients and political issues with which the industry was intertwined. Most of Mad Men’s characters can be described as anything but wholesome– cocktails are poured long before lunch, marital fidelity is an afterthought, and gender sensitivity is, well, insensitive.  Yes, honesty and humility liberated Don Draper at the end of Season Three. That aside, the characters are magnetic, but rarely emulating. 

So how does the most beloved children’s character ever created beyond Disney– Barbie, Mattel’s rite of passage for pre-tween girls, and isle of safety for parents– justify a co-branded partnership with the unlovable foursome from Sterling Cooper– Don, Betts, Roger and Joan? Ken and Barbie– the King and Queen of Wholesome– are now linked to arrogant, dishonest, unfaithful, drink-swilling characters from an era beyond which we have evolved. Does this make sense?

Yes. And for more reasons than Jon Hamm’s uncanny (perhaps inspired) resemblance to the Ken doll.

Barbie has maintained market leadership in dolls (and in many other product categories, from food to first aid to bedroom décor) for 50 years by engaging girls who love the brand, and Moms who grew up with it.  Frequently the message is singular. As frequently (to the brand’s credit) the message is bifurcated. The persona(s) of Barbie have changed with the times, but parents want to remember the time during which the brand was theirs. That’s why a line of Barbie dolls is manufactured for adults. With a collector’s positioning, they target a passionate, mature, price-insensitive consumer, in a channel wholly distinct from the mass merchants where little girls’ Barbies are sold. By maintaining a connection with both consumers, catering to each need differently, Mattel ensures the brand stays relevant. Disney lost sight of this with so many of their characters from the mid 20th century.  These are now collector’s brands that sadly capture little interest among children.

So- how can the Barbie brand most effectively recreate the era in which it was first introduced?  The answer is leveraging the lens through which our society now sees the spring of 1960. The Mad Men lens. As deplorable as some of the behavior on that show is, I am convinced that its popularity is attributed to genuine affection people have for that era. Hats and ties were worn to work. People read newspapers rather than texting on smart phones. Meals were made instead of delivered. Kids drank milk, not juice boxes, and went outside after school rather than logging onto Facebook. Mad Men has captured wholesome intricacies as well as debauchery. The program identifies how we have evolved, but also captures what we’ve lost. By leveraging Mad Men, I believe the classic brand Barbie will remind us of the things we got right in 1960- as opposed to a children’s brand association with the things we got wrong.

One last thing. I have seen related articles this week in the New York Times, the L.A. Times, a feature of this alliance on ABC News, and of course repeatedly in the licensing trades.  I can only imagine this is one of thousands of blogs written on the subject. Even major brands can barely afford working media in this economy, and 50 year-old brands must do something revolutionary (or face a massive recall) to secure earned media. A Mad Men alliance makes Barbie newsworthy– and deservedly so. For a marketer, how cool is that?

Can social media bring divided factions together?

Anyone who’s ever worked inside a large company understands that corporate politics and turf battles are almost always a reality of day-to-day business. From our consultant viewpoint, we’ve pretty much seen all of the ways companies get stuck in their own inertia. One run-of-the-mill infrastructure issue we often see involves functional departments competing over budget sizes and resource allocations. And, within departments, managers often jockey for control over specific projects/campaigns or groups of employees. In these cases, the end goal (whatever it might be) is typically sacrificed because of power battles.  My least favorite (though) is when great ideas (that have the ability to “move the needle”) are killed for no other reason than because of petty personal insecurities (i.e. it didn’t come from me, and I don’t want that guy to look good).

We were discussing many of these issues last week during a day-long workshop that Peppercom co-led with CableFax, the cable industry trade publication, and Access Intelligence (its parent company). The workshop focused on how cable and media companies can learn to leverage social media more effectively within their current internal and external communications/marketing efforts. No surprises really came from this group. In many cases, even the largest companies are just dipping their toes into the digital water right now. Others haven’t created a social media strategy due to lack of resources, expertise or because their organization is still figuring out where this new functional discipline should be housed internally.

We also had two excellent guest speakers, a research team from MTV Networks who discussed how their organization is using social media research to serve its many properties (i.e. MTV, VH1, Nickelodeon, etc.) from a content and marketing standpoint. What I found most interesting, though, is how they’ve leveraged social media to unite so many different business functions within the organization. In their experience, this still misunderstood medium can bring many factions within a company together for the first time. And that’s exciting.

How is this possible? Well, after applying some logical analysis, it makes sense. What we heard is that most companies (at least in the cable and media industries) have not yet created one social media function or division within the organizational chart that runs across the company. Instead, various resources are often siphoned from different departments within the organization to take the lead on figuring out social media. These people are then deemed “social media experts.”  I’m sure that outside specialists are also brought in to show the way in many cases as well. But the point for MTV Networks is that, because its many business lines, brands and marketing areas are all intently trying to learn how to apply social media to their communications/marketing/audience engagement efforts, these factions find themselves opening up, integrating and simply working better with each other to learn and leverage best practices. More specifically, our guests discussed how social media research serves to play this unifying role (i.e. everyone wants it to make better decisions about specific campaigns/projects that should be created or not based on this first-time research).

In essence, because social media is so new and still somewhat mysterious (at least to its ultimate effect), it can actually serve to change the unwritten political rules that govern how internal behavior works within large organizations. Of course, this was but one example from one workshop. But, the possibilities are still pretty exciting.

Hiring freezes send shivers down clients’ spine

The other day, I was reading in a PR industry trade that one of the largest public advertising holding companies has finally lifted its 18 month hiring freeze. I guess either business has come back (at least a little) for this mammoth marketing services company, or it finally decided that it just can’t maintain a complete hold on bringing in new talent forever.

This definitely brought back memories (mostly negative) of my days at J. Walter Thompson. I remember that we had an “unofficial” hiring freeze for about a six month period. While, no official edict had come down from the corporate decision makers in the UK, all senior executives understood very well that any new hires had to be approved in triplicate form by the top brass, or there would be hell to pay. This reality meant that a typical hire could take a long time to be approved (in some cases four to five months). So, the effect caused many firms within the global network to either just give in and find ways to maximize current talent (as they had lost the stomach for fighting against the system), or become ultra creative to work with outside talent, but not officially hire them. This often included fudging the use of consultants/freelancers or even offering people jobs, but being very creative in how their salaries were hidden within a larger cost structure.

Of course, the only ones that really felt the collateral damage with these across the board freezes, were clients. Think about it. Let’s say there are over 200 individual marketing services companies in a typical advertising holding company. I guarantee that even in the worst of times, at least five, ten or even 20 of those companies are doing just fine because their businesses ran counter cyclical to the masses. As a businessman, I understand the need to cut costs and protect the larger entity as a whole, but the 5-10 percent of firms who still need to hire because business is coming through the door, can’t when this mandate is set. So, what happens? Clients are promised x, y and z in terms of quality and quantity of talent to service their account. And, you can bet your bottom dollar that some of that is sacrificed because as much as the agency rants and raves to higher level management sitting in their ivory towers, the resources needed, simply can’t be allocated. A secondary evil that then transpires is that very good account and creative leaders and managers within those well to do agencies start walking out the door. They are frustrated beyond belief and have had quite enough with the big agency model. Sometimes the domino effect ensues because the delicate agency balance between having really great talent to service new business and top accounts diminishes once the anger and frustration spreads.

Any way you slice it, across the board hiring freezes are just dumb policies. This whole topic is kind of ironic considering that agencies are only in business to service clients in the highest way. So, the big, public holding companies (without saying it) actually advocate doing the opposite during bad times through these poorly created mandates. 

Big, bureaucratic policies like these, which have no room for flexibility to meet the most basic client needs (and demands), represent some reasons why we started Peppercom in the first place. When times are bad, it’s understood that sometimes resources need to be let go and adding staff just can’t happen. But, most independent firms are smart and would never just implement something so inflexible as a cast in stone hiring freeze. Instead, it’s about understanding which marketing or communications areas clients need the most professional help in. Then, if necessary, these smaller agencies make trade-offs or just plain invest their own money to ensure that clients are being served they way they promised to. Profit levels are often sacrificed when this happens, but that’s understood. The public agencies can do no such thing because they are under the constant pressure of their investors.

I’m not a public holding company basher (at least, not usually). It’s just that this practice has been happening for so long and just hasn’t changed. You’d think someone at the top would get it (finally). But, I guess not.   

Making Oscar ethical again...

I found this article amusing. As you'll read, one of the co-producers of the highly acclaimed small budget film "Hurt Locker" has been banned from attending this year's Oscar Awards Ceremony.

It seems Nicholas Chartier broke Academy rules by emailing some Academy judges in February, urging them to vote for his film as movie of the year. In the same email, he lambasted the high budget, fan favorite (Avatar) that is the clear front runner.

Academy campaign rules ban direct personal communications with members, and explicitly ban any attempt to cast a negative light on a competing film. Mr. Chartier has apologized. But, his penalty is set in stone.

It's hard for me to say whether this man's "ethical” lapse in judgment calls for a penalty like this. But, I find this whole episode ironic. From what I hear, personal emails such as this are really just the tip of the iceberg when it comes to how studios (and their representatives) now market, lobby and directly sell, push and prod to convince Academy judges to vote for their films.

Yes, this has become a big business within Hollywood. And, one that isn't taken lightly by PR, promotions, advertising, agents and other niche service providers who make big bucks spending lots of time and energy waging hard hitting campaigns to achieve results. The pursuit of the Oscar is understandable. Winning one these days means instant fame for newbie's in the business and creates an ongoing spotlight of recognition for any actor, director (or even sound producer) who is continually looking to build his/her career. It also means the ability to command a lot more money on any future films, promotions and sponsorships.

Peppercom has never gotten involved in the Hollywood scene (thank God). A firm really needs to have deep Tinseltown roots to be effective in that city (which is all about who you know versus the substance of one's communications strategy). That just never interested us. But, I have marketing and entertainment friends who are highly networked into this scene. Most agree, that the battle to obtain the Oscar has become an absolute obsession which has forced friendly competitors to become hostile combatants who often take on a "win at all cost" attitude. I've heard that it's not uncommon for campaigns to include "unofficial and casual" lunches or drinks with Academy members, as well as gifts (offered under other auspices) and nasty public relations battles behind the scenes with Hollywood media and other influencers who can help sway both perceptions and decisions. And, of course, in typical Hollywood fashion, malicious and often scandalous rumors about directors and their actors/casts are routinely spread to undermine credibility and their appeal.

I wonder if this one-off penalty will really have any impact on a system that is plagued with ethics problems and has gone completely awry? No doubt, the Oscar founders didn't have this in mind when the platform was created. It seems to me that a complete assessment and then revamping of the rules and principles guiding how the participants "campaign" for the Oscars really needs to be looked at versus this insignificant band aid approach.