Earning Friends

This weekend the Stars have descended in the UAE! I am referring to the shining sport personalities competing in the Standard Chartered Bank Marathon and the HSBC Abu Dhabi Golf Championships this weekend. Everyone everywhere seem to have nothing much to talk about, but these two events. One such conversation took a dangerous turn and led us to one of unsolved mysteries of marketing - why do companies spend money on event sponsorship? What business impact does it have? If it does have any impact how do companies know (measure)?

I was surprised by two things during this conversation. Firstly, the unanimous admission that companies normally know that the sponsorship has an impact but nothing else beyond that belief. Secondly, a primary focus on brand awareness as the objective of sponsorship.

The raison d'être of this blog is to leverage academic work to help answer these questions. One of the commonly used research framework to study this question is Fritz Heider's Balance Theory or more commonly called the POX theory. The fundamental principle behind the theory is that we like to be in a state of cognitive balance, in other words " it should make sense". For example as illustrated in the POX theory (where P and O are two people and X is an object)

Paul loves Oprah

Paul hates Dogs

Paul thinks Oprah loves Dogs

Based on the above scenario, the relationship from a Paul's perspective is in imbalance. He will have to either change his attitude to Oprah or to dogs to ensure cognitive balance. Research suggests that the human mind makes these adjustments in attitude so that it can tell a cogent story.

Since the balance theory was published in 1958 several other variations have been researched and documented. For example the limitation of the triadic relationship being only two states - like and dislike has been explored to reflect degrees of likes and dislikes. Also, the limitation of two people and a object relationship has been extended to include group or social relationships as well.

Applying the above theory to brands and sponsorships, it is a three way relationship between the brand, the consumer and the event being sponsored. Brands need to first understand the perceived associations between the consumer and the event and the brand and the event, with the objective being to strengthen the relationship between the consumer and the brand. If consumers have a negative association with the event, then brands could be setting themselves up for equity erosion or only building equity for the event at the brands expense.

Given the critical implication of a positive or negative outcome on target consumers, it is important for companies to take a strategic view on sponsorships rather than take on any adhoc sponsorship opportunity. To reinforce the point, it is common for most marketeers to study the upside of a sponsorship opportunity but not the downside. This framework also draws attention to brand equity as the primary objective of sponsorships.

On another level, the implication of this theory is about the core intention behind the sponsorship. Brands that take a long term view and support causes that are important to customers will earn friends ( and then money) but brands that pounce on any opportunity with an eye on visibility and awareness will earn 'impressions'' but not friends.

King of Memories - RIP

It is vey ironic that my last post was about the primacy of memories and on Jan 18th the legendary photo company Kodak filed for bankruptcy. The company that helped millions of people around the world capture and enjoy their memories is now history.

This moment is a dramatic one, one that Kodak themselves would have called a "Kodak Moment". The company that started out 132 years ago and dominated this industry for over a century is now closing its shutters,no pun intended. Experts and knowledgeable experts worldwide have commented on the digital disruption and the inability of Kodak to adapt to this change. It is very fascinating to study the journey of Kodak from being the innovative industry leader to the yellow dying dinosaur it is now.

To me Kodak was a great company worthy of admiration for over a century but it lost its way in the last 15 -20 years. I think Kodak was obsessed with the film and their superior "color competence" that they missed out on the end consumer emotion they were meeting - saving precious memories. If only Kodak believed its first marketing tagline "just press the button and we will do the rest" and followed through with it's Kodak Moments idea , I am optimistic that they would approached the digital disruption with an open mind. I strongly believe that they failed not because they were not innovative but because of a rigid biased attitude. ( let us not forget that it was Kodak that invented the first digital camera)

Beyond Kodak I think this a wake up call to many more industries and companies. Kodak is not the first and definitely not the last company that did not see change coming or if they did see it coming responded very slowly and ineffectively. One of the industries that is already in the face of disruption is banking. This observation may come as a surprise to many but I am sure that is how Kodak must have reacted a decade ago. The arrogance of immortality of the current business model blinds sensible leaders to the waves of change right in front of their eyes. Not convinced, pause and spend some time thinking about the impact of some these players - Square, Google Wallet, ISIS, Zopa, Bitcoin, Facebook credits, bankSimple, Movenbank,...

Economist had a great article on Kodak, they ended it by saying " market dominance is only a snapshot in time" and I think it so succinctly reminds of the need for humility. For with humility comes the acumen to see the world as is rather than the way we want it to be.

Experience vs Memory of Experience

Do you know what you did 11am last Friday? If you were like most people, you have a perplexed expression on your face now because nothing specific comes to your mind. Why is that we do not remember things from just a few days ago?

I had a story of how memory works. I visualized that every moment or frame in our life is photographed and stored in our brain and all we needed to do was to recall that image. I have now learned that my story is completely incorrect. Incorrect in two ways, firstly we do not store everything that we experience and secondly, what we store may not even be what actually happened!

Daniel Kahneman, the psychologist who won the Nobel Prize for Economics in 2002, has done extensive research and he puts forth this very interesting idea. He indicates that there is an experiencing self and a remembering self. If a doctor presses your arm and asks does it pain? It is the experiencing self that responds. On the other hand, as you enter the doctor’s room, if the doctor asks you how have you been feeling? It is the remembering self that responds. More importantly, it is the remembering self that drives how we choose brands and make decisions. In other words, memory of the experience is more important than the experience itself in influencing our decisions.

A key trait of the remembering self is that it is a master story teller. It remembers events as stories and as with any story; it needs a good beginning, a decent plot and a good ending for it to be memorable.

How is this concept relevant to us as marketing and customer experience stakeholders? Let us step back and think about the various interactions our companies have with customer’s everyday. Most of it is likely to be very transactional and definitely not memorable. The challenge is to recognize that the remembering self is a story teller and design experiences as enjoyable stories that customers can recount. In building (or shall I say scripting) the experience story, the small yet thoughtful elements have the same if not greater impact than the bigger and more expensive initiatives.

Here are some classical genres of tools to design these enjoyable stories. "Thank You" is a great tool. A fine example is The Pepsico Chief Indra Nooyi writing a thank you letter to the spouses and parents of her direct reports. Another tool is to turn mundane events/things into "Fun" events. Do you remember the interesting animals that await your arrival in your hotel/resort room, I am referring to the towels cleverly folded in the form of animals. The third genre of tools is "Empathy". A good example is the "Are you Ok?" question that AllState Insurance call centre agents greet customers who call for insurance claims post an accident.

Going back to question we started out with, I am not sure if last Friday was memorable but I am hoping that whenever you are reading this blog is memorable. Why am I optimistic? because I am hopeful that I have given you a story that you can narrate to others.

Why this blog?

Why now? These are questions I have been asking myself. The subject being the sudden urge to setup this blog and share my thoughts on marketing and customer experience. If I spent an hour or so I could easily articulate a very cogent rationale for why I have started blogging. However, I now humbly accept that, the rationale I may come up with will not be the actual reason.

I think the fundamental flaw is not in the answer but in our question. We have now assumed as fact that humans actions are guided by very clearly reasoned thoughts weighing the costs and benefits, pros and cons. This is simply far from truth. We decide emotionally and explain rationally.

I have been for the last few years (still on one) on an exciting journey of discovery. A journey through the human mind, a journey exploring the way we make choices and decisions. This journey has taken me through various fields of neuroscience, psychology and behavioural economics. I have read and followed the works of leading minds in these fields, the likes of Daniel Kahneman, Richard Thaler, Dan Ariely, Sheena Iyengar, Daniel Gardner, V S Ramachandran, Dan Hill, Christopher Chabris to name a few. Trying to absorb the lifetime work of these eminent people has been a fascinating experience.

I have been trying to understand the business implications of such path breaking research and more importantly trying to apply them in the field of customer experience management and marketing. It is fun and exciting and I wish to share those emotions through this blog. I feel that as businesses practitioners we have not leveraged the rich body of knowledge that has been created by the academic super stars.Our mission in this forum will be to take as many of the insights as possible,understand how we could apply it in our businesses and learn from others who have applied such principles.

Going back to the question we started out with - why this blog and why now? Well, let us just say , I feel like writing this blog now. Maybe that is the real reason,