The revenge of Apple Maps and what it means to you.

Posted on January 27, 2013 by Barry Gesserman

Samsung’s 4th quarter profit jumped 76% on the strength of surging smart phone sales, including its newest big-screen Galaxy S line. Samsung’s share has grown 8 points to 28%, while Apple increased just 1 point to 21%. Apple’s shares have slumped 37% since its September all time high.  What is going on?

The superficial answer: A recent WSJ article questioned if Apple has lost its cool to Samsung. 

  • A pointed $200 million ad campaign poked fun at Apple and may have knocked it off its icon pedestal.
  • Strong engineering with some innovation (bigger screen) shows leadership.
  • Lower cost models have undercut Apple’s market.
  • Developers are increasingly working on Android apps first.

The deeper answer: The revenge of Apple Maps and a betrayal of trust.

  • It is well known that Steve Jobs was at war with Google, promising not to get ‘Microsofted’ again, so it is understandable why Apple would be committed to putting its own mapping tool on its phones.
  • However, it is unlikely that Jobs would have allowed a high visitility, statement Apple app like this to launch before it was ready to replace and surpass the established, well-liked Google Maps.
  • The Apple app was, despite some well publicized flaws, a fairly strong entry with some new features.  But by taking down Google Maps, Apple set a high bar.

Trust Betrayed. When users experienced or read about the Apple Maps software flaws, they felt betrayed.  Apple was clearly acting in its own interests, not in the best interests of its customers.  Apple broke the trust.  How else to explain the glee with which the app’s flaws were publicized?  While earlier technical problems with service or antenna could be deflected by a media star like Jobs, poor Tim Cook had to issue an apology.  With this backdrop, it is a lot easier for consumers to jump from Apple to well-designed, innovative, and low priced Samsung products.

If Apple stagnates or declines, the the root cause may be traced to the disastrous launch of its map application.  It marks the point where internal agendas undermined commitment to the user experience, the bedrock upon which the Apple brand was built.  Apple may have felt it was riding a wave and could do no wrong, but it provided a loose brick for Samsung to dislodge.   Apple remains formidable, of course, but its brand took a hit and it now appears vulnerable to a strong competitor like Samsung.

What it means to you: Strong brands are built on many different platforms and benefits, but they all stand on a foundation of trust.  The pressures to deliver results can lead to putting managers’ interests ahead of customers’ interests.  It takes years to build trust for valuable brands.  Don’t throw it away with short term bad judgement.

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Three Strategic Imperatives that Every Business Should Learn from RIM’s Downfall

Posted on June 30, 2012 by Barry Gesserman

RIM’s sudden catastrophic fall from grace is a hot topic and a future classic Harvard Business School case.  But the lessons to be learned are not limited to the high tech or mobile world.  The traps that ensnared RIM can impale any business whose management is too narrowly focused on the strengths of its own solution, who fails to recognize shifts in the marketplace quickly, and whose leadership team is not aligned.

What happened to RIM?

The short answer is that they were simply steamrollered by the Apple strategy of bringing fabulous, game-changing products to the marketplace.  Apple’s victims litter the marketplace, including Nokia, Motorola, and HP with its short-lived tablet.  What company could envision, let alone survive such a tsunami that changed the landscape?

On the other hand, there is plenty of evidence that RIM’s management was myopic and complacent, having captured nearly 50% of the U.S. smartphone market by 2008 and counting millions of executives among its ‘Crackberry’ addicts.

  1. The core benefit outflanked. At its core, RIM’s Blackberry products provided secure, mobile email.  It limited innovation to those features that supported email- all else was superfluous.  As a result, it did little to enable internet browsing, game playing or photography, until it was forced to play catch-up.  Apple envisioned the smartphone as a mini-computer at the center of an Apple ecosystem powered by apps created by outside vendors.  RIM never got beyond the mobile email concept.
  2. The core customer replaced. RIM’s customer was the corporate IT executive who bought Blackberry’s for the employees.  When workers began buying their own iPhones and getting the ok to use them for company email, RIM lost its core customer.  Evidently, the iPhone security was good enough, and companies saved millions by not buying the phones, which played well during the economic downturn.  In a flash, the RIM customer was no longer the corporate purchaser, but the end user.
  3. The core leadership model broken.  As Co-CEO’s, Mike Lazaridus focused on product development, manufacturing and R&D, while Jim Balsillie focused on carrier partnerships, sales and marketing.  It was a classic ‘Mr. Inside,” “Mr. Outside” setup that worked well for many years.  Under the stress of unprecedented competitive challenge, however, this led to divergent strategic focus and dissension in the ranks, as each leader pursued his own vision for the future.  For Lazaridus, this meant new technology (QNX operating system) and new products, while for Balsillie, this meant licensing agreements for RIM’s proprietary technology.

What you should do to maintain your strategic edge.

  1. Take notice and respond to early signals from the marketplace.  RIM’s management dismissed the threat ot touchscreens and the pull of the internet for too long.  Secure in its high market share position, it ignored competitive threat.  It never hurts to be slightly paranoid when assessing the competitive marketplace.
  2. Be open to questioning your core business model.  Apple changed the game, but RIM did not realize this until it was too late.  While RIM could never be Apple, neither did it do an adequate job of pushing the boundaries of its own business model.  Better that you tear down and reinvent your business, than leave this job to the competition.
  3. Recognize that a management structure can outlive its utility.  Conditions and challenges continually evolve, sometimes necessitating change in leadership or organizational structure.  Either way, it is critical that leadership and the team be aligned.

 

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Why Spirit Airlines soars and Bank of America flounders. A Tale of Two Fees.

Posted on May 18, 2012 by Barry Gesserman

Spirit Airlines charges a fee for everything and continues to grow profitably, while Bank of America cannot make a $5 debit fee stick.  It’s all about the relationship your brand has with your customers that matters most.

In November, Bank of America announced plans to impose a $5.00 per month debit card fee.  Consumer advocates howled, and even President Obama criticized the fee. Organized consumer protests developed.  Within a short time, BofA scrubbed the plan.  Said David Darnell, co-chief operating officer. “Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.”  Whether BofA was hearing the voices of customers or politicians, you have to wonder why the bank was caught off-guard by the fallout.  Banks have become an easy target, but much of it is a mess of their own making as they have forfeited their customer relationship on behalf of the industry forces driving the acquire and go big strategy.

Spirit Airlines recently became the first airline to charge a fee for carry-on bags- from $30 to $45 a pop.  Yet it is still flying at 90% capacity and in 2011 earned a whopping $2.1 million per plane!  U.S. Airways earned a paltry $.21 per plane.  Spirit also charges $5 to print a boarding pass at the airport and $3 for a bottle of water and $4 for peanuts. Says Spirit Chief Executive Ben Baldanza, “If you’re going to bring a lot of bags, fly Southwest.”  When you add up all the fees, sometimes other airlines offer a cheaper total cost.  The secret in Spirit’s sauce is that their fee-based pricing structure takes out cost as travelers require fewer desk agents, take fewer bags, and lighten the weight of the plane to save on fuel.  Seating is crowded because they squeeze more rows in with less leg space.  Flights are often late because their schedule is based on 30 minute turnarounds.  But for those whose money is more valuable than their time, and might not be able to travel at all if prices are higher, Spirit offers a unique, clear and valued proposition.

It’s not whether you charge a fee or not, but rather the context in which your customers view your actions.

  1. Know whom you serve.  Ben Baldanza and Spirit Airlines know exactly who their target is: the super budget non-business traveler like hair stylist Kristin Flood, whose only baggage was stuffed beneath the seat on a recent flight. Quoted in the WSJ, she said, “We fly Spirit whenever we can. We just pack as little as humanly possible.”  Service fees are not inherently evil and need not be a lightning rod for consumer or political attack.  When they work to inform behavior for the right target customer, in transparent fashion, they serve a valid market function.  In Spirit’s case, it is to keep costs and prices as low as possible at the expense of comfort and convenience.  This will work as long as its travelers understand the fees as Spirit’s way to help them fly cheaply, and not a scheme to trick them into spending more.
  2. Earn their trust by serving them well over time.  New research from The Relational Capital Group shows that customers relate to brands the same way they do to people.  Brands, like people, earn trust by behaving in ways that show their intentions are worthy (warmth) and that they have the capability to act (competency).  However, when intentions are perceived as unworthy, like those of the big banks, a level of mistrust and suspicion develops to the point where even a simple debit card fee triggers a negative response, inviting your competitors (and politicians) to fan the flames.

The branding and business lessons you should learn.

  1. Your brand’s persona and relationship with your customers is the great enabler or inhibitor.
  2. Be transparent and consistent about whom you are serving and why.  Do not betray their trust.
  3. Stay focused on the customer target segment your brand serves.  You can’t please everybody.
 Click here to download whitepaper on Brand Warmth and Competency.
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Bill Draper’s Ten Traits of a Winning Startup Team

Posted on May 2, 2012 by Barry Gesserman

The business model is, of course, important.  But for Bill Draper, legendary Silicon Valley venture capitalist, more critical is the quality of the people and the makeup of the entrepreneurial team. Over 50 years of experience in the business has taught him the trademark characteristics that increase the odds of success.  “No one person is likely to embody them all, but the collective team members ideally should,” he told a standing room only crowd at the Angel Venture Fair in Philadelphia on May 1.

  1. Optimism.  Entrepreneurs must have a fundamentally optimistic view of the world.  This should be grounded in realism, but having a positive belief in the future is a prerequisite.
  2. Courage.  Being an entrepreneur is not easy and requires breaking new ground, often in the face of naysayers, name-callers and critics of all kinds.
  3. Detail oriented.  Bill mentioned this third, although he did not say the list was in order of importance.  Suffice it to say, someone on the team has got to have the capacity to focus on relevant detail to ensure strategic validity and executional excellence.
  4. Persistence. Whether speed bumps or a crevasse, the startup team will encounter obstacles and experience failure.  The strength and fortitude to bounce back is critical, whether on the same path or pivoting in a new direction.
  5. Empathy.  Who will facilitate relationship-building, both internally to build the team, and externally to find partners and close deals?
  6. Fun/happy culture.  Bill acknowledged this may be a bit of a throwback idea, as he thinks a lot of the fun has gone out of startup work today due to a much more competitive environment and the expectations of investors.  Nevertheless, a fun work environment that creates happy employees can drive exceptional performance.  He cited Zappos, in which he was an early investor, as exhibit A.
  7. Brainpower.  There is no substitute for haveing smart people on the team, with the knowledge, education and expertise to move the business forward.
  8. Character.  Know what behavior is required when.  Show integrity and make principle-based decisions.
  9. Sharing.  If the founder is not willing to share generously in the success of the business and recognize the contributions of others, it is like poison in the well.  Sharing is one of the keys to #6.
  10. Willingness to work hard. Those who work hard tend to create their own good fortune.
  11. Visionary.  Ok, this is the 11th, but Bill mentioned this at the end as well.  The kind of visionary he looks for is not a futuristic dreamer, but rather someone who keeps the company’s mission, goals and direction in focus, adjusting them as necessary along the way.

Of course, any business of any size would also benefit from these same characteristics.  Bill’s driving point is that because starting a company is so hard and the odds of succeeding generally so low, knowing how to insightfully bet on people is a strategy that has served him and his investors very well.

 

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5 Reasons why SnipSnap for Coupons is a Big Deal.

Posted on April 27, 2012 by Barry Gesserman

Mobile apps continue to change our world in big ways and small.  Now a new coupon app, SnipSnap, enables shoppers to have their printed coupons with them in their smartphone.  And that’s not all.

What is SnipSnap? 

SnipSnap is the first mobile app to let you scan, save and redeem printed coupons on your smartphone.  No more fumbling for crumpled coupons or regrets about leaving them at home.  A user snaps a picture of the offer and the app scans and parses the coupon value, bar code, expiration date and images.  Users can then search and retrieve coupons at checkout, and get location-based and expiration date triggered notifications.  Users can also access coupons snapped and shared by friends or uploaded directly by partner manufacturers.  The app is now available as a free download on the AppStore and will soon be available for Android as well.  I attended two events this past week where founder Ted Mann, a former Gannett exec, pitched his app against others- he took first place both times.

Why is SnipSnap significant?

  1. Experience re-imagined.  SnipSnap is a classic example of how routine behaviors and tasks performed by millions every day are transformed by mobile app technology.  This is but one example among thousands of how mobility, connectivity and powerful data capability combine to deliver a whole new experience.
  2. App Ease.  Ted Mann had an epiphany six months ago and now has a game-changing app ready to download.  With the aid of easy-to-use design software Keynotopia he created his first version of the software to test viability, then hired an engineer and designer to create the version he envisioned.  New apps like CloudMine will make app creation even easier in the future.
  3. Industry disruption.  SnipSnap has great acceptance with many retailers such as Target and Bed, Bath and Beyond. It has little penetration in the grocery store industry today, but that will change.  The only question is whether Sunday FSI coupon giants Valassis and News America will rush their own mobile apps to market or purchase a company like SnipSnap.
  4. Coupon Centric Consumers.  From cents-off grocery store coupons to deep deal purveyors like Groupon, consumers are drowning in deal offers and being trained to never buy without a coupon.  Digital deals, whether via email, text, location-based services or new apps like SnipSnap, make having a coupon with you when you want to use it the new norm.  The digital proliferation of coupons presents a strategic pricing and merchandising challenge to manufacturers and retailers.
  5. More Big Data.  SnipSnap will have access to terabytes of consumer purchase and behavior data at the user level.  The opportunities to mine and utilize this data for new insight and targeted offers is almost endless, although managing and harnessing ‘big data’ is a major challenge.  Catalina currently serves this need for the grocery industry by capturing checkout scan data at the user level over time via loyalty card id.  SnipSnap can now do the same thing for user-specific purchases made with coupons via smartphones across retailers and channels, something retailer checkout-based loyalty card systems like Catalina cannot do.

The ‘facebook of couponing?’

The big question is whether one user interface platform, whether SnipSnap or another, will capture enough users quickly enough to establish itself as the ‘facebook of couponing.’  If so, the potential to transform the industry is staggering.  Smartphone penetration is fast approaching 50% and within two years 80% of web searches will be via smartphones or other mobile devices.  It is inevitable that the coupon industry, currently dominated by print, will shift to digital due to accessibility, flexibility, immediacy, cost and metrics.  Will consumers want to manage their digital coupon and deals from one central platfom app or manage separate apps from a multitude of vendors?  Ted Mann is not competing with Mark Zuckerberg today, but he has created a great new app that coupon-clipping consumers will love to use.  Click here to see learn more about SnipSnap.

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The Dollar Shave Club. Why Gillette should worry and what you can learn.

Posted on April 24, 2012 by Barry Gesserman

The Dollar Shave Club has attained a lot of visibility on YouTube and in the press.  Some might think it is just another viral video story.  But the truth runs much deeper and this business strategy just might succeed.

Dollar Shave Club is a startup ecommerce business offering men’s razors cheap: from $3 to $9 on a monthly subscription basis, shipped to your door.  Customers sign up for one of three plans that give them a razor and a supply of blades every month, from twin-blades to a four-bladed or even six-bladed razor.  Founder and CEO, 33 year old Michael Dubin, created a humorous and on-the-mark video, which has been viewed over 4 million times on YouTube.  Over 12,000 men signed up in the first 48 hours.

Why Gillette isn’t worried.

Gillette dominates the razor and blade business, with 66% share of a $12.8 billion global market.  In an April 12 WSJ article, Gillette spokesman Damon Jones said his company isn’t worried about losing marketshare, in part because other subscription-based companies have tried and failed.  “If you want to spend 10 bucks a month, we have Gillette products available at all of those pricepoints,” he said.  If price were the only pain point, Jones might be right.  After all, 15 Gillette Mach3 cartridges can be purchased for as low as $2.06 each on Amazon.com, if the buyer agrees to recurring shipments.  So what’s the rub?

Why Gillette should worry.

What DSC is all about is simplicity and backlash.  Men generally hate to shop.  Many go to great lengths to extend the life of their blades to cut down the monthly cost.  ’Stop paying for shave-tech you don’t need!’ pines Dubin in the video.  What Dubin is saying in his own funny, irreverent way, is that the Gillette’s of the world have been inventing ever more complex new razors and raising price every year to pad their pockets, not serve your needs.  The appeal of DSC is not only that it is easy and saves you money, but that buying a razor from them is a very public way of saying to Gillette, ”I’ve had it and I’m not going to take it anymore!’  This goes beyond price points to a much more fundamental identification with the brand and Michael Dubin.  If DSC razors, with lubricating strip and pivoting head, and its service levels, are good enough, repeat business and strong cash flow will follow.

Why has The Dollar Shave Club raised $1 million in funding from saavy venture-capital firms Andreessen Horowitz and Kleiner Perkins Caufield & Byers?

These guys are not stupid.  Gillette is truly a great brand and has earned every share point.  Yet, in following the classic CPG playbook to drive value for its investors via ever greater revenue and profits, Gillette has left many dissatisfied and disengaged users in its wake.  When someone comes along like The Dollar Shave Club and changes the dynamics of the playing field by tapping into a deep consumer sentiment that is easily understood and shared, what you get is not just a funny viral video, but a potential game-changing business model. If DSC can make it work for razors, what other categories might they shake up?

What this means for you.

  1. Nobody can sleep soundly in the new ecommerce internet world.  New business models can pop up overnight from anywhere with a relatively modest investment, and with the right value proposition and brand positioning, can cause headaches for even the largest companies.
  2. Brand identity, personality and values are still incredibly important to consumers.  Tapping into them in a genuine and authenic way, to the relevant target market, is the path to sustained profitability.
  3. Consumers feel overwhelmed and stressed.  Simplify their lives in some meaningful way while saving them some money, and they will reward you.  Serve it up with a little well-done humor in a way that says ‘we understand,’ and they will embrace you.

Click here to watch the DSC video.

 

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What true leadership looks like: S.A. Ibrahim, Radian CEO

Posted on March 23, 2012 by Barry Gesserman

‘It’s all about people,’ says, S.A. Ibrahim, CEO of the $7 billion re-insurer Radian.  Short, balding and stocky, he does not project as a leader until he starts talking about the principles that helped him lead Radian through the perilous period of the mortgage market implosion.

Radian is very fortunate to still be in business.  Many of its former competitors have shut down.  This is easy to appreciate when you consider that Radian’s business is reducing risk for home mortgage lenders, buyers of municipal bonds and buyers of Credit Default Obligations (CDO’s).  The role of its mortgage insurance business, its largest division, is to take the credit risk out of mortgages sold to home buyers who put less than 20% down.  Wells Fargo is its largest customer.  S.A. Ibrahim stepped in as CEO in May of 2005, less than a year before the first signs of trouble in the home mortgage market began to surface.  The company not only survived, but has an AA rating (better than many countries), with $7 billion in assets, $110 billion in credit exposure, and 30% of the mortgage re-insurance business.

How did he do it?  S.A. would be the first to tell you that it was not what he did, but rather what his people did.   “Creative, imaginative, dedicated people who do not accept defeat can overcome obstacles that you thought you could never handle,”  he said at a business networking event on March 21 .  His team had to deal with things they never encountered before and maneuver in unknown territory.  They stopped writing bond insurance and focused on the mortgage business.  S.A. credits CFO Robert Quint with recommending a technical reorganization of the business units that sounded crazy at first, but proved to be a critical factor in the firm’s ability to handle losses and survive the cash crunch.

S.A. Ibrahim’s Principles of Leadership

  1. Exude confidence and optimism during times of crisis.  Wear a smile into the building.  Be aware that how you behave and what you say will be amplified throughout the organization.  This does not mean showing false bravado, but rather creating a supportive and reassuring atmosphere that encourages sustained commitment and productive work.
  2. Be a cheer leader.  Find the best in everyone and build on individual strengths.  This will enable people to do more than they or you ever thought they could.
  3. Maintain your own standards of business judgement.  In a rapid growth or high pressure business environment, competition is likely to engage in questionable strategies or practices.  As the trend builds, the pressure to join the crowd and suspend your own better judgement becomes enormous, but you can’t do something just because everyone else is.
  4. Find the right formula to reward and motivate.  Often, the corporate reward system is too closely tied exclusively to stock price growth.  Sometimes this growth happens due to factors totally extraneous to the firm’s activity.  Sometimes the stock price fails to increase despite magnificent work on the inside.  S.A. found ways to reward people and keep them motivated even in dark times.

Radian is poised to reach ‘the finish line of profitability’ as its profitable post 2009 ‘new book of business’ grows and the losses on its ‘old book of business’ diminish.  S.A. attributes much of his personal strength and success to his roots in Hyderabad, India’s fifth largest city, where he grew up.  His Sunni Muslim family was in business, surrounded by Hindus, Muslims and sub-sects observing many different holidays, or observing the same holidays with different practices.  Perhaps that is where he learned to appreciate what it takes to get along with and recognize the value of the people around him.

 

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Innovation and the ‘Industry Expert’ Trap

Posted on March 16, 2012 by Barry Gesserman

Innovative thinking and effective problem solving often require ‘outsider thinking.’  In fact, the naive question is often the key to unlocking new opportunity.

In an essay in the WSJ on March 12, John Lehrer discussed the latest learning on effective innovation.  Among the many findings of recent research was the value of ‘outsider thinking.’  An analysis of solutions posted on InnoCenter, a crowdsourcing innovation website for scientific problems, showed that chemists were able to solve molecular biology problems that stumped the molecular biologists.  While the chemists’ knowledge was close enough to grasp the problem, it was not so close that it impeded creative thinking.  As outsiders, the chemists could ask the naive question, which can be a tremendous advantage, but the molecular biologists could not, precisely because they were ‘experts.’  “It is the ability to attack problems as a beginner,’ says Lehrer, ‘to let go of all preconceptions and fear of failure, that’s the key to creativity.”

Seeing a problem in a new light or connecting a solution to the problem it was seeking (PostIt Notes), often requires ‘mental restructuring,’ which is promoted by asking a completely new kind of question.  The ability to connect seemingly unrelated elements is enhanced by diversity of thinking, which is often a product of exposure to diverse experiences.  As Lehrer points out, the key to Apple’s succes was ‘connecting things’ that already existed in a new and better way.  Gutenberg invented the printing press based on his experience pressing wine.  The Wright Brothers airplane prototypes were based on their knowledge of building bicycles.

How to avoid the Industry Expert Trap

The temptation to build your team with, or seek consulting advice exclusively from your ’industry experts’ is strong, but probably wrong, if effective innovation is a core strategy.  While poets cannot be expected to solve rocketry problems, finding people with the core skills to understand your business and apply a new perspective and knowledge base is something to consider.  A former supervisor of mine was fond of saying “the most value a new hire offers is in the first six months of employment- after that they become one of us.”

  • If you are more conservative, seek specialists and experts in your industry with diverse experience somewhere in their backgrounds.
  • If you are more aggressive, seek people who can relate to and function effectively in your world, but who bring an ‘outsider’ frame of reference.
  • The bigger the innovation challenge or prize, the more alert you should be to the danger of the industry expert trap.

 Read the full WSJ article here.  Online subscription may be required.

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Is the Trust Factor growing or killing your business? Part 2

Posted on February 9, 2012 by Barry Gesserman

Trust has always been a critical factor in the customer buying decision, only now it is more critical and visible than ever.  Have you assessed your brand/company ‘trust factor’ and its impact on your business? 

In Part 1 of this post, we discussed how to build trust and what destroys it.  But trust can mean something very different, depending on the category and what is at stake for the customer. In this post, we address these remaining questions:

  1. How much and what kind of trust are required to enable purchase in your category?
  2. What depth of trust must your brand achieve to be a leader?

The risk and consequences of making a bad purchase defines the threshold level of trust required for a purchase decision.  Trust is measured along a continuum. Here are some considerations that impact where your category and brand plays.

  1. Substitutability.
    • Food and Home & Beauty products are easily tried, evaluated and repurchased- or not.  The cost of a bad decision is low.  If unhappy, you buy something else next time.  Some level of trust is required for purchase, which will vary by occasion, but is on the lower end of the continuum.
  2. Ease of trial.
    • It is not easy to test out a bed, dishwasher, furnace, replacement windows, or air conditioner before purchase or installation.  Cost is significant.  Returning or replacing the item is difficult.  The cost of a bad decision is painful and endures, often for years.  Trust is required at different levels by category for factors like quality, performance, customer support, and safety..
  3. Future performance.
    • You hope you never have to find out if the airbags in your car were installed properly, but you will never know until you need them.  You will never know how well your life insurance policy was handled by your representative and company- period.  You can’t verify the future, but you do want to have confidence that the airbags and insurance will perform as expected.
  4. Depth of commitment/dependence.
    • Products or services that are used in an integrated way, as part of an ecosystem, are very costly to replace or difficult to duplicate.  Companies must have a high level of trust in Salesforce.com’s reliability, security, support and longevity to use that service.  Once they buy and embed it into their sales process, the cost of switching to another system can be staggering.

Determine the necessary scope and depth of trust for your brand to win.

  • Gather data on what consumers are saying about your brand, competitors and category.  Evaluate reviews, listen to conversations, create forums on your website for questions and discussion.  Talk to your customers on Facebook, Twitter or wherever they digitally reside.  Conduct customer satisfaction surveys for your brand and the competition.  Be sure to focus on your target customer.
  • Determine what attributes of your product or service are most critical- these drive the depth of trust required for purchase. Rank your brand’s trust factor for these critical elements in absolute and relative terms.  Score your findings and see where the category and the competitive brands fall.
  • If your brand or category rank low on a critical trust factor, focus on the problem and fix it.  The problem may be the fit of performance to promise.  If so, either improve performance or refine your promise.  The problem may be difficulty of trial or verification.  If so, consider upgrading return policies or warrantee programs.  Do all you can to provide as much information, testimonials or other reassuring cues that impact trust.  After taking action, make sure people know about it so your brand gets the credit.

The ‘know… like… trust’ buying paradigm is still in force.  Scoring high on trust is rewarding at many levels.  Think about how people, products and services you trust save time/energy, reduce stress and add to the quality of every day life.  If you do this for your customers they will love you and do more business with you.  But, you do have to earn their trust and then work hard to keep it.

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Is the Trust Factor growing or killing your business? Part 1.

Posted on January 31, 2012 by Barry Gesserman

Trust has always been a major factor in the customer buying decision, only now it is more critical and visible than ever.  Have you assessed your brand/company ’trust factor’ and its impact on your business?

According to the 2011 Edelman Trust Barometer, over the past 12 months  85% of respondents said they bought products or services of a company they trusted, while  conversely, 73% said they refused to buy products or services from one they did not trust.   The depth of trust required for purchase depends on the category and what is at stake.  Where does this leave your brand?

There are three questions you must consider.

  1. How do you build trust and what destroys trust?
  2. How much and what kind of trust are required to enable purchase in your category?
  3. What depth of trust must your brand achieve to be a leader?

Building and destroying trust.

  • Never before has performance been more transparent and shareable.  Social media is the new word-of-mouth and user product reviews are the new Consumer Reports.  Failing to respond to problems posted in blogs and forums can damage your brand’s reputation in a heartbeat and erode trust.  Consumers are doing their homework before they buy.
  • Deliver on your promise.  Brands must set clear product or service performance expectations and meet them.  Advertising hype is not a substitute for a value proposition, well communicated and well executed.  Customers, like bosses, don’t like surprises.  They just want their problem to be solved.
  • Understand who your target customer is and focus narrowly.  This is not so much about demographics as the user persona, the skills or capacity required to use your product or service, and what it does best.  More sales to the wrong target provide short term revenue, but when these unhappy folks return product, complain in public forums, and berate your service staff, it is a lose-lose situation.
  • Customer support must be great.   Customers want to know that you will be there for them when they need your help.  Responding within 3 minutes to 95% of the calls to customer support may be terrific, but even a handful of customers left on hold for 30 minutes, who post complaints to highly visible sites, can undermine hard-earned trust.
  • The best defense is a good offense. Solicit testimonials and conduct customer satisfaction surveys to post and share.  Get your expertise and thought leadership out there in front of consumers via blogs, newsletters, Facebook, webinars, YouTube videos and Twitter chats, depending on where your customers hang out digitally.

At the highest level, trust is a function of two things: intent and competence.  Customers need to believe that the people running the business have the intent to serve their interests fairly and have the competency and resources to do so.  Your job is to create a body of evidence, appropriate for your category, that gives your target buyer reasons to believe in and trust your brand.

We will address questions 2 and 3 above in Part 2 of this post.

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