While this isn’t the usual thing I would blog about I feel compelled to say my bit on the London riots of last night. Some things I am qualified to comment on and others are just my personal opinion not necessarily facts.
While like most people I feel the same sense of disgust and revulsion when I see all the videos circulating online I can’t help but think that when it happens on this scale there is more to it than simply dismissing them all as idiots.
A Perfect Storm
I think there are a number of things at play. Personally I don’t think one is more significant than the other but rather as in the Middle East there is a perfect storm brewing.
Firstly I think there is a generation that has been let down by society. It isn’t a few bad apples it is a national societal problem which I think will become clear over the coming days as this spreads to other inner-city areas across the UK.
Secondly social media and mobile phones have connected us to our peers in a way never seen before. Without it there would be no Arab Spring and for sure no London Riots. The difference between the two is the Arab Spring is connecting around a purpose. The London riots show what this connectedness does without giving society and community purpose. It leads to anarchy.
I will address the matter of purpose a little later.
Detached & Disenfranchised
Kids especially these kids don’t have buckets of empathy and so are prone to mob mentality of grotesque levels so are particularly vulnerable to an anarchic connectedness.
There is a whole list of society ills that led to a lack of respect for any kind of authority:
-Hands off parenting & teaching
-Society insisting on treating kids like adults
-The shadow of a corrupt world of politicians
-An increasingly violent world (I bet they see more blood and death on the BBC News than they do in any movie)
This leads to detached and disenfranchised members of society.
Unashamed Materialism
Combine this with high levels of unemployment for young inner city men (a recipe for disaster in any country) you have political unrest. The problem, referring back to my earlier point, is these people don’t even have a politick. Well they do but it’s unashamed materialism imported from the US. The fact they call the police the ‘Feds’ sums it up for me.
However this ghettoisation of older male teenagers is seeing them groom younger children for criminality (nothing new in other parts of the world think Brazil and elsewhere). Armies of ‘soldiers’ without empathy or anything to lose. How long has this kind of violence been inwards on itself? One young male after another shot of stabbed to death on our streets. This shocked but didn’t interrupt our day to day lives. Now it has united and turned outwards on to wider society – an unavoidable social consequence. It finally has our attention.
The fact this happened in August (holiday season) is no coincidence and without a fix could become as regular a fixture as the May Day riots.
Personally I think these older males should be charged with child abuse for their role as Fagan but it still doesn’t stop the momentum of why.
To purpose:
Connected and empowered is good…. with purpose. Without it you have anarchy. This is the new reality Governments around the world will face over the coming years. It’s the Age of Connectedness.
I believe here in the UK we need to invest in programmes (the new non-military version of national service) for our young unemployed in rewarding community-oriented initiatives.
It will help them develop empathy, keep them busy with money in their pocket, connected to a mission and purpose developing skills that will be very useful in future life.
Being able to work well with others will be the single most important skill in the Age of Connectedness. This should be our societal purpose.
The problem with Groupon
March 31, 2011
I read a blog post recently which points out one of the many flaws in Groupons model. This time for the B2B customer using the platform and its mass impact on the SME marketplace. I suggest you read it before you do this as I speak directly to it and its author..
I think it’s good to look under the bonnet of such a runaway successes. Its consumer proposition is fairly clear but people are right to ask what is the true value for advertisers?
Before I respond I will make clear I am not an economist but I do have experience in high-churn promotion lead industries which is usually a race to the bottom that you describe. However I think that experience does and doesn’t apply in the context of your example and Groupon generally.
Race to the Bottom
There is only a race-to-the-bottom if there is no / to little product differentiation. Then all you have erosion of price in the market place.
Many do make money there at the bottom. You only have to look at insurance and specifically car insurance here in the UK to see how much money has to be spent in the acquisition phase and the annoying lengths they go to be front-of-mind.
However insurance companies are big and very good at math. Your average SME isn’t.
Apply this to local SMEs and I think despite minor erosion price may be the primary deciding factor in the first phase of the purchase life-cycle but will factor less in repeat high-street behaviour where decisions are often more complex including environment, staff, proximity etc.
Losing Promotions
The best comparable form of online marketing that can shed some light here is affiliate marketing.
In markets where affiliate marketing & CPA (Cost Per Acquisition) play a big factor, if you didn’t know your projected ratio of customer types by; life-value, churn / drop-off rate and true CPA you would find out 6 months later you had actually made a loss from your promotion. Paying too much for too little.
Why because a small savvy few would game the system by deal hunting with no intention to be a repeat customer. These will almost definitely be the early adopters of Groupon. If it makes it more mainstream this effect will diminish with more repeat / less savvy customers. The odds should play out.
Good predictive modelling, math and daily tracking would help you optimise your ROI. HOWEVER I don’t think Groupon will be helping you figure out what happened next.
Even if they wanted to they couldn’t because they can’t serve every SME with an account manager. Google haven’t even got close to this after all these years. AND a self-service dashboard is only relevant to a small number of tech savvy SMEs not the masses.
As you point out they could see noticeably more people through the door but less money in the till at the end of the month. They could sadly assume this to be part of a wider macro-trend, probably economic, or worse for Groupon simply writing it off as a failure. Both would be missing the point.
Missing Factor in your Math
What’s missing in the formula on this blog and in Groupon’s model as a whole is retention and its measurability. Groupon is just one part of the mix and in isolation won’t do itself nor its customers justice.
Here you cover just the one-off basket value but actually the only way you could see the true ROI is by understanding life-value of a customer.
This would allow you to understand the ratio and value of passing trade (who may be gaming the Groupon system) and returning customers allow you to adjust your promotions accordingly.
Missing Expertise
So this is actually where the Groupon’s business model and importantly valuation ($25 Billion IPO) falls apart along with Four Square and others. Most SMEs and especially independent high-street shops, bars and restaurants can’t and won’t ever do the math here.
For Groupon or any other SME focused B2B model you must be able to develop a service to allow customise to get real and visible value to come anywhere close to realising the valuations flying around at the moment.
Conclusion
Actually I think the targeting of Groupon promotions is rubbish but let’s assume they get it right. To use it well is complex and needs some hand-holding. Second the value actually resides in the gap between promotion acquisition, loyalty and retention.
Stop saying you’re a great business and become one
July 8, 2010
I’ve been a customer with O2 (UK Mobile Operator and Broadband Provider) for over 5 years as has my partner. I travel a lot, my personal phone is my work phone, I access the Internet via it a lot too, so have spent significant money with them. I signed up to the 16 month contract to get the iPhone.
I did once have massive issues with reception, it was none existent for me in my house, but I stuck with them and now it’s fine. So I’ve been a loyal customer. Why? Well until very recently I’ve been too busy to have an issue with them. I want an easy life and have other priorities.
However I’m increasingly told by my peers they are not the best around. Three of my colleagues and friends have left to Vodaphone for a variety of reasons one even setup this group ‘O Poo’ in a stand against new data caps which is a big issue for me. I’m due an upgrade and can’t get the new iPhone 4 because none of the o2 stores, that fit into my schedule, have it in stock. But my colleague just left and immediately got one with Vodaphone. So I’m beginning to feel a schmuck.
Today I was on the tube and saw this ad:
Whilst it’s for broadband it’s still o2 in my mind, The fact that they house all related o2 stuff in the same Facebook page would imply it’s the same to them too. When I saw the ad I got excited that o2 were going to really deliver on their Advertising pledge of ‘nobbling those niggles’ and the ad was implying you can work with them to help improve their solution in a Starbucks My Idea type way.
Instead you get a game where you can kill those typical problems with broadband. GREAT. THANKS O2. For me this sums up O2 and how seriously they take their customers. I want a better O2 not a game. I am willing to help you give me a better service. Looks like below others are too.
Spend your money on making your business better by using things like your Facebook page rather than ad campaigns and crappy games to make people think you are doing something. If you are good you won’t have to make games to drum home the point. People will tell people will tell people.
Right now I have three issues with you. I am still a customer. This is the extent to which I will invest in helping you keep me. Save me the hassle of moving. It is more efficient for you to retain me than spend loads of money trying to acquire a new customer. That’s basic math.
Listen, Serve, Retain, Acquire in that order.
Being the CEO of a Platform Business
March 9, 2010
In a long-tail world it’s becoming increasingly impossible for any single organisation to deal with the fragmentation of demand. Apple’s solution – with its iPhone – was to become the platform for others to service demand they identified. Those closest to their own niche could deliver products and services which were a better fit than Apple could ever had hoped to meet alone.
The Iphone came with a range of universally one-size-fits-all apps – weather, maps, clock, and calculator all so ubiquitous as to have become productised. But to reach genuine scale they had to see themselves as a platform organisation. 10 per cent effort from inside the org, the remaining 90 per cent from outside.
Apple provided an actual platform (the iphone itself), enabling technology (open API) and even a way to monetise (app store) which provided win-win innovation for all parties. The result has been hundreds of millions of downloads and a very successful couple of financial years for Apple. If you look at their advertising you can see what they feel their USP is..
In a world where teenagers in a bedroom can disrupt established markets over night the ability to innovate can’t be slow or expensive. If you can’t beat ‘em join ‘em or better invite them in to co-create.
To us at 90:10 every business not just those in the tech game should become a platform business. The role of the platform is to light the spark, find and manage the crowd to shape the outcome.
Why wouldn’t you want to grow your workforce by 1000% without the contracts, legal fees and salaries to care for? Nimble and lean yet scalable and flexible. Changing the course of a platform business does not mean crippling redundancies just new focus and partnerships. The strength of a platform business is that it can and should disrupt its own model by seeking to innovate at the edge of markets not fight it out in ‘me too’. Blue Ocean over Red Ocean (Red Ocean being bloody).
90:10 is setup as just that. Currently we use our collective knowledge of the networked world and the application of social technologies to help other’s existing businesses adapt primarily as a service company. But we also are a platform for our employees and partners to innovate making the most of what we know. When the world has adapted to this cultural shift and nobody needs our consulting services we will already have our own network of businesses profiting from our collective knowledge, experience and eye for future disruptions.
This is the spirit of 90:10 Enterprise. We are a group of entrepreneurs backed up by a dedicated and skilled team (platform) of marketers, developers and project managers. We are the only consultants in this space who are thought leaders but also businessmen out there doing. Our greatest single value as a service provider is we know the realities of doing business and in doing so avoid the kind of naiveties that would frustrate business leaders.
90:10 Group is in a sense an experiment of doing business wholly in the principle of the platform business model. We can be as puritanical in this as we like because we are starting from scratch. We are the end result of what I propose all my current clients become. So I’ve decided not to talk through the usual thought leadership of the various disciplines that 90:10 Group offers on this blog anymore, I will leave that to folk like David Cushman . Instead I’m going to focus on the successes and strains of being CEO of a 90:10 Platform business. The implications to resourcing, product /service development and innovation. There will be mistakes along the way. I aim to make them before my clients do. We are small enough to get away with it.
So welcome to ‘Being a Platform Business’.
The Death of Advertising – Media owners time to innovate
March 1, 2010
David Cushman and I recently attended OMEXPO in Madrid to present ‘The Death of Advertising’ to the Spanish digital industry (Powerpoint below). What we are getting at is that we believe all the energy put into making the way ads are delivered online better hasn’t led to much value for either the user, the advertiser or the media owner. This is because the Mass Marketing method that followed us from Broadcast Media simply doesn’t work in a networked world. So why continue to flog a dead horse, as we say in the UK.
Put the energy into finding a new ways to use the greatest tools we have ever had to connect with one another. Put simply it is our belief media owners should act as platforms to connect business and consumer to make better stuff. Stuff that actually people want. You don’t have to spend millions convincing them it’s what they want when you have involved them in making it.
Rather brilliantly we are actually in dialogue with 3 large global media owners about how to do just this. Only once we have fixed the media issue can we expect organisations to make best use of it.
The market cycle for social technology, at least outside of the US only recently crossed the ‘Chasm’ from simply being this disruptive innovation that nobody, apart from the founders, made any money out of…. Social Media.
In part this ‘chasm’ was crossed largely by PR applying the technological innovation to their business function. That made sense because it was understood as a new ‘media’. But now the rest of the business is seeing that this technology brings benefits beyond another place for it to do campaigns. Many are playing around in this space but few outside the US have done so with significant investment on an operational par with their traditional processes.
I recently spoke with the team behind BT Care, BT’s online customer initiative, and discovered that whilst comparatively small, traditionally they handle 100,000,000 calls, 20 million emails, 750,000 letters ayear, they have 15 staff handling 3500 online conversations a month. They have made significant investment in making it a core part of their operations and in some cases changing how they work as a business to accommodate its demands and opportunities. I was very impressed with what I heard and have summarised the key aspects below:
Q1) Why BTCare?
-Part of a wider initiative to go where the customer is and migrate an increasing amount of customer service online. They felt being a broadband business they simply had to be there.
- Drive customer satisfaction and as a result advocacy
- Understand the negative, learn from it and improve
Q2) How did it start / evolve?
- Began manually listening to negative conversations in forums such as Money Expert, Twitter and blogs.
-Went on to develop ‘Debate Scape’ some proprietary listening technology with a bespoke dashboard that feeds into their workflow systems at an industrial level. By taking advantage of their businesses legacy and knowledge in customer service systems the BT Innovation team built it from scratch.
-The rationale for creating Debate Scape rather than licensing existing 3rd party solutions was they knew for it to make any real impact it needed to be at an operational level. This required a level of investment on same terms.
Q3) How do they measure success?
-They use something similar to the Net Promoter Score – Detractors, advocates etc. as well as their traditional customer satisfaction scoring system.
-Because everything can be tracked digitally, transcripts with tweets, it is easier to truly understand satisfaction scoring. Because you are permanently connected via social tech, they don’t stop following someone on Twitter once a problem has been rectified, they can always check in with the customer over a longer period of time.
Q3) Can and do you measure its direct financial ROI?
Quite simply they achieve customer service 20% more cheaply and with 20% more customer satisfaction. So greater efficiency and retention.
4) What were the key benefits?
Faster, response time is quicker, more efficient, and whilst ‘traditionally it was all about one contact resolution now it’s about single channel resolution’.
5) Has there been an impacts on other parts of the business?
The Group CEO and Retail CEO now regulary talk every month about how the benefits can be brought across other areas of the business such as Sales etc
Business silos are starting to break down. Recognising a blurring between pr, marketing, and customer care. They deliberately brought in marketing people into the customer care team for this very reason.
The BT Care team will take an issue to PR / marketing, consult with them and because they have bought their confidence through demonstrating operational capability and success in the delivery mechanism can then go and implement the action themselves.
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What’s really interesting in this case-study is the impact on the old ways of defining roles and responsibilities. It’s great to see BT in this space and embracing the opportunity presented to them to innovate and improve efficiency by social technologies. I look forward to seeing how the rest of the business follows.
Social Technology: Making Big Business Small
November 16, 2009
I was recently at Barcamp Hamburg hosted by 90:10’s very own Franz Patzig (Head of Germany). Before he was a successful blogger, digital analyst and social media strategist I recently found out he started out his working life doing ‘time’ in his family’s chain of butchers. I know the cliché of a German and sausages has not been wasted on me nor him for at least a for a couple of days worth of jokes.
His father had built this small start-up enterprise into somewhat of an empire by being what in recent times would be referred to as an obsessive workaholic. He meticulously knew every area of the business, every member of staff’s name and deliberately spent more time out of the office and on the shop floor. He tried to spend as much time with the customer as possible to understand their needs, wants, frustrations and concerns and tirelessly sought to remedy them. It seems to be common behaviour in leaders that go on to make small businesses big. The success all comes down to the time invested in relationships both internally and externally. These relationships allow the leader to understand inefficiencies and ineffectiveness throughout their business. Good ones innovate to fix them. So if that’s what makes businesses big why do their leaders stop when they get big?
If we look at how the corporation is structured the typical leader simply has too much in the way of this golden opportunity to connect and can sometimes almost appear isolated, on the outside, and overly reliant on management teams to interpret the business for them. They can only broadcast into it through these managers and out of it via marketing teams. They are reliant upon information slowly making its way to the top if at all. Few department heads report actual failings and are naturally more optimistic in outlook. The only folk that have direct contact with the customers are limited in their opportunity to fix the cause of problems and often spend time fire-fighting. We all know the frustrations of being passed from department to department trying to find answers let alone solutions.
So if the only people I have a relationship with from within a business are those trying to either sell me something or when I have the negative experience it leads to discontent. I am locked out of the process a far cry from Mr Patzig’s face time relationship driven model. This limits advocation and WOM and restricts my market to only those that I must pay to reach.
Social technologies from blogging, to Twitter, Yammer and Wikis mean business leaders can break down the silos that distanced them from their employees and more importantly customers. They free the information flow and give visibility to real issues faced in the field. They lead to greater efficiency and innovation and invite the consumer into the process. Because they are involved and getting a better service, and hopefully product, they advocate. This advocation powered by the same social technologies means markets have potentially no boundaries as each makes it relevant to their community of peers. Put simply it allows big business to act like small ones on steriods.
