Bill Nichols

26 February 2015

Bill Nichols

If You Can’t Get No Satisfaction (Ad Astra 022 – 26 February 2015)

For many firms, Satisfaction is an obsession.  They follow Mick Jagger’s  mantra:  “I try and I try and…”  They make it the judge-and-jury.  They blazon it on the corporate balanced scorecard.

But, guess what, customers still defect.  Including 65-85% of the satisfied ones, as marketing guru Fred Reichheld demonstrated nearly 20 years ago.

Many grumbling CEOs probably agree with Mick’s later sentiment in ‘I Can’t Get No..’.  It’s all “some useless information/Supposed to fire my imagination”.

But before you ‘fire’ satisfaction – and try some new fad – here’s a cunning thought (and some new research)…

The Wrong Sort of Satisfaction

….You’re probably measuring the wrong sort of Satisfaction.   (Like the old British railway joke about the ‘wrong sort of snow’).

Last Train to Satisfaction Junction

Last Train to Satisfaction Junction

Your sort, you see, is probably the rational one.  Most Satisfaction measures presume rational, reflective assessments of utility and value.  They apply the ‘disconfirmation paradigm’.   This model subtracts your pre-purchase expectations from your post-purchase perceptions.

The Rational Way

Imagine.  Your new partner invites you out to dinner.  You expect, say, a perfectly acceptable, average French restaurant.  You get:

  • The Ritz.   You are blown away.  On every aspect. This is positive disconfirmation;
  • Greasy ‘Fish-and-Chips’ at the local down-market pub.   Serious problem: negative disconfirmation.
Mine's A Pint of Satisfaction

Mine’s A Pint of  Disconfirmation!

All fine so far as it goes.  Scorecard happy!  Unfortunately, this sort of Satisfaction is only a short-term (weeks) predictor of retention and repurchase.  Like a blip on the chart.  And highly susceptible to competitive advertising (*1).

The Emotional Way

Marketers, of course, focus long-term.  Established research on the emotional side of Satisfaction demonstrates that we connect, enjoy richer experiences and are far more likely to remain loyal if

…If we feel fair treatment, pleasure, ‘belongingness’.

Such feelings take longer to nurture. No scorecard surge.  But they are far more robust.

Imagine:

  • Your partner is really rather fond of that pub. A ‘regular’ for years and usually meets most of his/her friends there.  The conversation is good and the food generally ok.

So the morning after your disaster?  OK your partner is temporarily dissatisfied.   But a few weeks later? They’re just as regular (and happy) as before.  You’re even getting used to it yourself!

What To Do?

The recent research summary (*1) highlights four beneficial emotional engagements.  To:

  1. Adopt and promote customer values e.g. social responsibility (pub charity event?)
  2. Invest in image campaigns which increase prestige and reflect well on customers (pub chains are usually poor here)
  3. Embed customers in networks which consult on products and in special events (darts, music, quiz nights)
  4. Encourage front-line employees to communicate positives and foster company-customer identification. (After all a good barman is worth 1000 pints!).

Caveat:  you may find some texts call this second sort of emotional satisfaction something different.  Don’t worry:  it’s the right sort!

-ends-

Bill Nichols

26 January 2015

Bill Nichols

Justifiable Ambiguity: Shades of Grey in Strategic-Communications (January 2015)

Working in strategic-communications, is it ever acceptable to lie? (writes Dr Bill Nichols).

If strategic-communications is confronted by say terrorism, financial implosion or executive misdemeanour? When unvarnished truth meets e.g. risk of public panic, loss of jobs or investment damage?

Note this is a double challenge: acquiescence in falsehood and strategic purpose.  The conflict lies at the heart of PR’s classic dilemma.  Is the PR executive ‘truth-guardian’ or ‘client-advocate’.   The ‘lie-test’ demands a strict ‘no’. But it also prompts a compelling – and exceptional – case to deploy ‘justifiable ambiguity’.

In this zone of conflict ‘should’ tussles with ‘is’.  Resolution, in my view, marks a mature profession.

Here’s why and how.

 ‘The Truth, The Whole Truth…’

The ethics ‘lie-test’ is commonplace in my University PR classes. At first pass, it’s black-and-white. Most day-to-day PR emphasises clarity.  It serves and engages the information-recipient as ‘customer’.  It does not require the ‘dark arts’.  I.e. the “stunts, spin, lies and assorted PR ‘b******t” – dismissed with alacrity by most students.  Frequently, indeed, PR practice is undermined by them.

But ‘shades of grey’? Pause for thought

Duty and Justifiable Ambiguity

‘Should’ inclined textbooks and codes generally deny this issue.  PR’s excellence tradition exhorts us to embed ethics in planning and to become guardians.  Ultimately promoting ethics “will result in your helping the organisation to improve not only its image but its reality…. the real duty of a strategic communications manager (*1)” .   This approach leads, for example, to active and thoughtful corporate social responsibility (per my earlier blog).

But, as a thoughtful new case-based study evidences, this ‘guardian’ duty ultimately must defer to the real game-shifter.  It’s the ‘S’ word.  Strategic – properly understood – spotlights organisational purpose, intent and, consequently, selection.

Where ends and means conflict, ‘strategic’ shows us the communicator’s first duty to his organisation. It is – to paraphrase St AugustineSt. Augustine’s famous concept of the just war – to seek ‘order, the right disposition of things according to their proper end’.  War is acceptable if it serves peace.  We should also observe J S Mill’s framing of liberty: ensuring that our exercise of liberty does not make ‘a nuisance to other people’.

So, in making the best possible presentation, corporate communicator-advocates must not lie. But conversely they are neither judge nor jury.  They must deal in shades of grey which embrace both ‘ambiguity and deception’ (*2).

The Practice of Ambiguity

The practice of justifiable ambiguity, suggests the new study, comes in three flavours: syntactical,  the crafted positioning of phrase or clause; lexical, the precise practice of semantics; and pragmatic, the visual production of mitigating context and indicative image.

More on strategic-communications practice and ambiguity in a future blog. Your examples, ideas and feedback are hugely welcome here.

-ends-

*1 Powell, M (2011), Ethics and the Public Relations Process in Moss D., and DeSanto, B (eds) Public Relations: A Managerial Perspective. London UK: Sage.

*2 Dulek, R.E., and Campbell, K.S. (2015). On the Dark Side of Strategic Communication, International Journal of Business Communication, 52 122:142

Bill Nichols

18 August 2014

Bill Nichols

Variations on Leadership – Tribute to Warren Bennis 

017 – August 2014

Are you over-managed? Or perhaps over-led? (Under-paid, for sure!).

Leadership guru, Warren Bennis, sadly died at end-July. Most famously, I was reminded in an obit, he charged that “failing organisations are usually over-managed and under-led”.   This, he attributed in part (and rightly) to an increasingly scientific and research-orientated business school curriculum.

True and agreed, too many ‘Theorists’, immediately chimed my 35 years’ client experience.

Hang on, replied cooler reflection, at least in larger firms.  In practice, fading smaller entrepreneurial players – especially PR-type ones – manifest the reverse. Those ‘Creatives’ are often under-managed and over-led.  They’ve bags of vision and direction: but are poor on execution and detail.

Leadership and Management Quadrant

 Leadership Box

And what about larger public sector organisations (e.g. higher education)? They’re often characteristically both under-managed and under-led.  These ‘Zombies’ function, tick boxes and linger uncomfortably.

So, prompted reflection, there must be a fourth dimension?  But over and over?  Easy: a succinct definition, surely, of organisations suffering political interference.  They are the ‘Politicals’.

And, you ask, is there then a perfect middle?

“True leaders,” added Bennis, “make dreams come alive”.  They manage, he said, four competencies: attention, meaning, trust and ‘oneself’. That’s leadership.

Amen.

 

 

Bill Nichols

18 April 2014

Bill Nichols

014 – 2 April 2014

Practical Social Investment by SMEs – Making CSR Work

My anti-CSR recantation continues.  Here’s a special guest blog on how and why the careful application of the TAAR (trading, adapting, aligning, relating) formula works for SMEs.

A special guest blog on Trading for Good for Tim Grant.

Dr. Bill Nichols

Bill Nichols

24 February 2014

Bill Nichols

013 – 24 February 2014

Back to Basics: PR Product Reviews – Why and How Best

The humble product review is a staple of the PR business.  So ‘humble’, it’s barely mentioned in any standard text -book– even PR for Dummies!

It is – everyone seems to assume – obvious: one of those ‘good things’.

But does it work?  When, why and how?  A research check to fill this ‘black hole’ finds a surprisingly subtle tool – at its best for weaker brands and with four clear tips for best practice.

So what is it?  Properly it refers to a serious robust bench-test.  Not the re-mixed product news releases which, as the excellent Tom Foremski laments, sadly pass for journalism in so many quarters. And not the rather sexier ‘product placements’ whose merits and ethics garner much ink.

It covers anything and everything.  From cars to laptops, DVD players to smart-watches and heart-rate monitors for joggers. The world-over, junior AEs and press officers engage daily in punting out their wares for various outcomes:  traditional media bench-tests (MBs), online blogger reviews (OBRs) and online customer reviews (OCRs).  (My classification incidentally).  Four- and five-stars on Amazon is the new aspirational frontier.

And the value of reviews? 

Thirty years ago, an early agency boss obsessed about them.  They demanded: constant reviewer contact; great clarity and precision; and total care and attention to every aspect. They helped companies, he argued, ‘punch above their weight’.  And they achieved, he believed, greater PR RoI than any other output.   But that was 30 years ago.  Essentially gut-instinct and without evidence.

Wind forward 20 years.  Our Paris office was fast-disappearing under boxes and boxes of Apple kit.  Soon three of our four-strong account team worked full time to manage it all.  I was increasingly sceptical.  We were preaching to the converted.  Squeezing out far more valuable PR opportunities.   And my shins were badly bruised.  But hey, who argues with Apple?  And that was my gut-instinct…

One for the weak

Now today.  Well, smugly, we were both right (my old boss and I)!  New research (*) confirms that properly-conducted product-reviews deliver greatest benefits to weak brands.   They are the fast-track to stronger positioning.  Positive reviews for the weak create a virtuous circle.  More sales, increased brand equity etc.  Conversely negative reports are far less impactive on weaker brands because less visible.

Meantime, product reviews have minimal impact for stronger brands.  They simply reinforce the perceptions of loyalists and refuseniks alike.  While weaker brands make progress by ‘flipping the funnel’, once you are in the top brand tier with established equity, further major market shifts require high-visibility classic advertising and promotional tools.

Four tips to make reviews work

And the best techniques?

  1. Make comprehensive (non-promotional) information available and easily accessible for reviewers.  As separate confidential Henley research I supervised confirmed, social media will set colour, context and muzak but hard data will create the final shape.
  2. Establish brand communities and early adopter clubs.  Perceived customer privilege will provide ‘seed’ positive feedback and enable rapid modification to address the ‘negative’.
  3. Consciously seek out expert review sites.  They often set the review editorial agenda for others.
  4. Incentivise your evangelists to post early reviews.

And, last but far from least, beware subterfuge!  In the social media age, if you’re found out posting negative reviews for competitors, you can create a tsunami for yourself…

Not so humble after all those product reviews…

-ends-

(*) Ho Dac, N.N, Carson, S.J and Moore, W.L.  Journal of Marketing, November 2013.

Bill Nichols

29 January 2014

Bill Nichols

Maturity and The New PR Measurement Dashboard

Dr. Bill Nichols  – 012 – 29 January 2013

It’s one thing to measure, say, reputation:  quite another to understand and manipulate what influences that metric.  And for all the brouhaha about PR measurement, here there is silence.  More or less.

For some answers,Vital Signs Report (2014) publishes today.  The first in a benchmark series, its insights flow from my recent collaboration with leading tech PR firm, EML Wildfire (1).  Its data is provided by some 80 clients and contacts across the firm’s network in the UK, US and Europe.

Unusually, we assessed the combined impact of in-house and agency teams: i.e. the total PR competency.  From the literature (2), we identified 10 possible factors or influences.  And we concluded by creating a three-part ‘dashboard’ for any PR organisation.

First up – ‘Business Results’ (i.e. leads, sales, profit)

In PR this is the P&L equivalent.  It tracks immediate gains and losses.  Here our top factor is ‘strategic planning’ (SP).  In fact, statistically, it’s the only significant factor that explains a substantial component of ‘Results’ (3).  Overall our sample is most positive about near-term SP.  It commends teams for such aspects as messaging, business strategy alignment, action plans and focused campaigns.

But our respondents are far more cautious further out.   To improve effectiveness, they highlight:  applying evidence consistently, sustaining a mission and pursuing long-term advantage.

And?  Other factors like creativity or techniques?  Actually not much else has any impact. Sobering given all the chat.

Second up – target ‘Reputation’

We see reputation as the ‘balance sheet’ equivalent.  The long-term tracking of net PR assets on the PR dashboard.  Here two factors are in play.

First, and unsurprisingly, ‘relationship orientation’ is the strongest influence on reputation. Attitudinally – the soft stuff – our teams are particularly well-placed.  They are, our sample reports, committed.  They seek authenticity.  They respect stakeholders and they will ‘go the extra mile’.  But they’re less effective at the practical execution of relationship-building.  Such as the analysis of broader perspectives, dynamic tracking of the influencer landscape and (again!) planning.

Second and intriguingly, limited evidence suggests that PR’s prized ability to generate ‘opportunistic’ activity may be a negative influence on reputation.  Short-term results gain: long-term reputational pain.

Third, bonus ball – ‘Maturity’

Our study also introduces a third lead measure: maturity.  It’s the equivalent of cash-flow and it’s a potentially major contribution suggested by the EML Wildfire team.  Maturity is a well-established construct in organisational studies.  Operationally it’s best characterised by that PR jewel: the ability to manage the unexpected and to cope with ambiguity.

To create a clear blueprint for managing maturity, we identified three factors at work.  They are professionalism, engagement and, especially, leadership.  Specifically maturity deepens as PR seniors acquire serious leadership skills and, above all, the confidence to play an active role at the C-Level.

Seeking enlightenment

As business gurus confirm, the act of measurement adds value if – and only if – it helps define and deliver a desirable outcome. Such as, in PR, a behavioural change.  This presupposes we understand the mechanism.  That we know what and how to influence the target.  A little more ‘X’, a little less ‘Y’ – that kind of thing.

But, as the Headmaster of Eton observed recently, “we live in an age of measurement and not of enlightenment.”   How true of PR.  Some cling to the old-time religion of the AVE. Others evangelise Barcelona and the new analytics.   In this ‘promised land’ we measure anything – and everything.

But we have little understanding of the influencing factors. Vital Signs Report (2014) offers our starting point.  Especially that new measure of maturity.  It correlates well with both results and reputation.  It may, we think, be the key moderator – a crucial focus for out study’s next round.  Join us at EML Wildfire to add your inputs to what is planned as a long-term project.

More to follow and, meantime, here’s to enlightenment! And better PR measurement.

-ends-

(1) Special thanks to directors Debby Penton, Lorraine Jenkins and Richard Parker.

(2)  Based on the Nordic three-dimensional service quality model.  So (A) hard/technical = (i) media platform, (ii) measurement and evaluation, (iii) techniques; (B) functional/integrating = (iv) resources/budget, (v) strategic planning, (vi) leadership, (vii) creativity; and (C) people/reputational =  (viii) professionalism, (ix) engagement and (x) relationship orientation.  Each factor successfully tested using Cronbach’s alpha: eight > .7 and two >.6.

(3) Using the 95% confidence level and multiple regression analysis.

 

 

Bill Nichols

4 January 2014

Bill Nichols

011 – January 2014

Bye Bye Scepticism: How and Why CSR Communications Works

If the PR world has an equivalent of the UK’s PPI mis-selling scandal, it is surely the CSR-based communications campaign.   .

Note, this isn’t scepticism about underlying policy or philosophy.  Heavyweights on either side – e.g. Forbes (for) and WSJ (against) – continue to debate.  Companies may, or may not, have a social responsibility.  But, motivation aside, behaviour indicates value.  90% of Fortune 500 companies have explicit CSR objectives.  Half issue specific CSR reports1.  Even two-thirds of crusty CFOs see return, says McKinsey.

But it is serious scepticism about the current value of CSR presentation investment.   All too often CSR campaigns appear worthy and unfocused.  Just-in-case insurance policies, they ‘tick’ the politically- correct compliance ‘box’.  Yet how they work – or to what intended hard business outcome (if any) -remains unclear.

But the research case for the value of strategic planned CSR communication really is building.  And, as Keynes supposedly said, “when the facts change…”  Here’s how.

Evidence and Engagement

The B2C research ‘jury’ is already long-term supportive.  Active CSR promotion drives positive brand and product evaluations.  It also increases both satisfaction and loyalty2.

Now new US research3 is surprisingly positive about B2B.  For corporate comms professionals, it offers a practical evidenced prescription.

As a necessary preliminary, the new work distinguishes two forms of CSR engagement for B2B:

  • Business practice (BP) CSR focuses on e.g. employees and customers: think brand     sponsorship or cause-related product marketing.
  • Philanthropic (PH) CSR addresses e.g. community and third-sector: think community volunteering, social marketing or corporate charitable contributions.

BP CSR and Trust

In the B2B context, BP delivers trust and (ultimately) enhanced loyalty.  The BP toolkit is particularly powerful, the research finds, in three specific scenarios:

  • Compensating high market uncertainty or turbulence
  • Supporting/shifting product perceptions
  • Offsetting infrequent customer engagement and shallow relationships.

How and why does it work?   BP is practical or ‘instrumental.  Grounded in classic social exchange theory, it’s based on competitive ‘survival’ drivers and highlights concrete actions. This is active stakeholder marketing in which something is clearly ‘traded’.  And the acquired strong CSR reputation signals trustworthiness.

PH CSR and Belonging

But now posit situations where trust is necessary but not sufficient.  Where, say:

  • Competitive market intensity is high
  • Or the customer itself reveals a strong CSR orientation.

If your task is to create a strong association – or ‘belongingness’ – then, prompts the research, switch to the PH toolkit.

How and why?  PH activities are soft: expressive, emotional, even ‘warm and fuzzy’.  They  signal the societal or ethical.  Their outcomes are human welfare and goodwill.  They drive measurable customer identification.

So let’s leave philosophy and political correctness to others.  Even this long-term sceptic concurs: as a communications toolkit, it seems to work.  Embrace it!

-ends-

Hope you enjoyed the latest blog.  Thanks for reading and do please comment.  For earlier and regular updates join me on Astrophel for publications and blog or on Linkedin and Twitter.  

(1) Luo and Bhattacharya (2009), Journal of Marketing, 73 (6) 198-213.  (2) Bhattacharya and Sen (2003), Journal of Marketing, 67 (2) 76-88. (3) Homburg, Stierl and Bornemann (2013), Journal of Marketing, 77 (6) 54-72.

 

Bill Nichols

6 September 2013

Bill Nichols

Telling Tales:  The PR Narrative Revenue Opportunity   

009 – September 2013

‘Narrative, narrative, PR narrative’ everywhere.  It’s a staple of consultancy creds.  Every PR campaign and every brand, apparently, should have one.

But how exactly do you sell it?  Make money? And, as a client, what are you buying?

Cynics say 20 years of narrative chat is just consultant re-packaging – backstories and news agendas remixed.  A case of: ‘the sun shone down, having no alternative, on the nothing new’ – to quote a favourite narrative opening!  (‘A’)

Maybe.  But my own research review is surprisingly positive. It comes with two caveats.  That: (1) PR folks really are the great storytellers; and (2) PR consultancy management teams really want to exit their traditional comfort zone and exploit their intellectual assets (e.g. storytelling).

So what are the prospects?  This little narrative is a ‘will-they-do-it?   And like ‘whodunnits’, we need means, motive and first…

Opportunity Knocks

No question, storytelling is fundamental to effective PR.   It’s the ultimate human way to learn and persuade. But, as content consumption fragments across multiple formats and platforms, it’s ever more challenging.  So, agencies that deliver a clearly-defined service offering in this environment should command premium fees.

And those fees are likely dwarfed by the wider marketing opportunity.  Especially the bridge from research.   From NPD and market planning to brand personality, the skilled storyteller is in demand.

Here’s why. Today serious marketers get much input from advanced quant analytics.  It’s marvellous, necessary but insufficient.  By definition, quant analytics structures, reduces and limits – often using predetermined models.  However detailed, for example, a segmentation grid lacks intimacy. To paraphrase: analytics quantifies everything but teaches the human value of very little.   This is – popularly – red-light thinking (‘B’).

So marketers want more.  To capture, and apply, active market learning.  To be inside the room.  Watching, listening and participating.  They want the human stories.  Stories with time-lines which are granular and richly revealing.  Stories, not least, which are suffused with an emotional texture as we hear, see and feel what actually matters (‘C’).

This is the province of  the storyteller (PR as bridge or translator).  As the philosopher-linguist, Roland Barthes wrote:  “narrative does not show, does not imitate…. (It is) a higher order of relation which has its emotions, its hopes, its dangers, its triumphs.” (D).

Why and How – Motive and Means

Sounds like fun?  But there’s far more motive than good fees.   For PR storytellers, this is a way up the food-chain to that mystical top table.  Buyers want new thinking and possibilities for innovation.  Per Coca Cola VP, Stan Sthanunathan, they want: ‘inspiration and provocation’ .  (http://www.slideshare.net/TheARF/research-must-change-11257698).  In short, they want the green-light stuff.  Real value-added.

Now, you’re thinking, the tough part: the means.   Can PR deliver?

Relax.  If you really want to get into narrative, there are endless options for classy models and frameworks.  You’ll be on solid ground, centuries old.  Up there with the old pros like lawyers and doctors.  There’s literary theory, narratology, linguistics and one more…

Ethnography (out of anthropology) is one of the oldest research forms.  It’s about immersion (‘ethno-dunking’ as some practitioners delightfully call it).  It’s become a major tool for blue-chip market research teams from Xerox and Wells Fargo to Procter & Gamble.

And ethnographic storytelling has emerged a major way of transforming viewpoints and disrupting old modes of thinking (C).

And not just for marketers.   It is, researchers suggest, capable of driving a new ‘storytelling organisation’.

What About PR?

So a massive opportunity for in-house and agency teams alike; strong motive; and really powerful means.    But ‘will-they-do-it?’ Will they embrace ‘PR narrative’?

Mmm.  Would love to see it.  But the PR industry seems to hesitate when offered the chance to move off home base.  Fear? Lack of confidence?  Purism?

Watch this space. Another chapter? Maybe…

(A)  Beckett, S, Murphy (1938); (B) Green A, Creativity in PR (2010); (C) Cayla, J and Arnould E, Journal of Marketing (2013, No.4 – July); (D) Barthes, R, Image, Music, Text (1977).

Bill Nichols

1 June 2013

Bill Nichols

Beyond Magic: Making Your Client Referrals and Testimonials Work Harder

007 – June 2013

Most agency and B2B-firm bosses appreciate fully the power of their client referrals and recommendations.  Such positive ‘advocacy’ often delivers warmed-up prospects – half-inclined to buy.   In some cases, it contributes up to 50% of converted new business.

And it certainly beats the hard slog.  All those cold-calls.   Expensive pitches.  And, worst of all, those bible-size procurement tenders.

So wise managers work on advocacy.   They apply popular techniques such as the ‘net promoter score’.  They cultivate loyalty and goodwill (http://therightthingtodo.co.uk/index.php/2012/07/hunters-got-us-into-this-mess-will-farmers-get-us-out/).  They cherish their advocates’ willingness to encourage friends and contacts privately over a drink or two.  But, best and most powerful of all, they seek to achieve open public advocacy.  That is published testimonials delivered via print, website, conference or collateral.

Now stir in the ripple effect of social media distribution.  And settle back…

Magic or Model?

But (interesting but) how and why exactly does this testimonial ‘magic’ work?   Which carefully-crafted testimonial has greatest resonance and works hardest?   What, if anything, could deliver more?

Is it just a case of ‘any reference is a good reference’? Or is there a secret ingredient:  personality or brand; client size or value; intrinsic newsworthiness; or the techniques and results reported?

The answers come in a new concept: ‘Business Reference Value’ (BRV).   A new study (*), founded on some serious number-crunching, will help you unpack the magic.  And compute, analyse and apply the hard cash value of your testimonials.

The study tracked the BRV mechanism over a six year cycle.  It explored its impact on conversions and profitability.  And it found four major drivers of BRV.  They are the:

  1. Size of the client firm (generally the larger the stronger the impact)
  2. Length of relationship reported (the longer the stronger)
  3. Media format employed (generally the richer the better e.g. video over audio over written case-study) and
  4. Congruency or relevance to the prospect (generally the closer the better).

Typically size and relationship longevity lead.  But they do not dominate.  They add up to about 31% of the impact while media format delivers a potentially amplifying 14%.   Interaction effects between drivers chip in 9%.  Meanwhile congruency – the largest single effect – contributes 17%.

For many this last finding will be intuitive.  No matter how fabulous the brand, washing machines (say) will simply have less resonance for a fashion prospect than another fashion brand.

True, but the relationship is more subtle.  Within congruence, matching prospects to (1) a similar service or product client certainly has the largest individual impact.  But it is enriched (2) by industry association and, further, (3) by role alignment with the advocate.  As a prospect, as social influence theory predicts, we want to hear from someone like us.  Someone just like us.  So, for example, the mid-ranking marketing manager will – by far – prefer his own industry/own product peer to the glamorous if alien global VP from another sector.

Increasing Power

Perhaps most intriguingly the study indicates that BRV is playing a steadily growing role in a prospect’s decision to adopt and buy.   Speculatively, it’s a case perhaps of an increasingly virtual social community re-imposing itself over complexity and distance.

The lesson?   Construct, maintain and constantly build a comprehensive portfolio of references.  Recognise that – for someone somewhere – even the dullest sounding reference may count.  And count significantly. Deploy and target them carefully in each case.  Seek total congruence on the ‘less is more’ principle.

Next start to build up a tracking mechanism for your referrals.  What works, when and how. What yields most.

So, yes, referral (BRV) is the major asset wise managers always knew it was.  But it doesn’t just happen.  And it’s certainly not magic.  You can deploy it and target it actively and precisely in your business development toolkit.

-ends-

(*) Kumar, Petersen and Leone (2013).

Bill Nichols

6 May 2013

Bill Nichols

Managing Velocity: When You Can’t Do Right for Wrong in Client Relationships

006 (May 2013)

Know the feeling?  Everything is going swimmingly with your ‘significant other’.  Then something flips.  At first you’re barely aware.   Your ‘five minutes late’ meets a surprising chill.  Next come monosyllabic replies to calls and texts.   Then a task not done properly prompts a rant.  Finally jokey remarks kindle major conflagration.

Baffled?  You’re watching relationship dynamics and the power of relationship velocity (‘RV’, direction and speed) as it accelerates.   It’s well founded in psychology and personal relationship studies. And it offers retention-focused agency managers a critical missing link.

Key new research (*) adds the RV measure to established understanding about the value of tracking client relationship levels (the ‘goodwill’ bank account).  In brief it means that inter-firm client-agency actions have no absolute value.  Speed and direction affect their impact.  Payback when clients have positive RV will far exceed the agency’s return when it is already sliding down the slippery slope.

This makes intuitive sense.  Personally flowers may be a happy bonus in good times but rarely a ‘get out of jail’ card.  In business, a sales tip off may score well in positive mode but an expensive client lunch is an unlikely salvation when the brown stuff is flying.

Where We Were

First what we already know.  As I’ve written extensively elsewhere e.g. (http://astrophel.co.uk/wp-content/uploads/2013/01/Making_Most_Loyalty_PSMG_January_2010.pdf), each client relationship is best understood in terms of it its own ‘goodwill’ bank account.  Keep that account positively in the black and you can foster many desirable outcomes. These range from exclusive preference/retention to public word-of-mouth promotion.   It will also allow you to survive a major failure without suffering account loss.

But once let it slip into the red? Then even the simplest error or issue can cause major problems.  Ultimately a parting of the ways.

This ‘bank’ model integrates two major streams of research.  The first confirms the critical role of commitment and trust in securing long-term business outcomes (account renewals, profitability, additional projects).   The second demonstrates that just like personal relationships, our inter-firm liaisons have a developmental cycle over time (honeymoon, growth, conflict etc.).

All fine and helpful.  But, for all that, the ‘goodwill’ bank account is a static concept.  The absolute level or stage of a relationship only helps so far.  We can check when we wish but we won’t necessarily see movement.

Tellingly firms that have worked with the goodwill bank-account tend to find most useful the early-warning indicators that I call ‘empowerment’.  These track, for example, a tendency to growing client micro-management vs. increasing freedom to get the job done.  They may catch the ‘turn of the tide’.

What’s To Do?  

So what’s going on?   According to the research, the power of trust weakens over time.  It may continue to increase but like an over-used drug without the same positive effects. It’s necessary but not sufficient to deliver continued relationship growth.

In personal terms, this is the ‘comfort zone’:  we take the ‘significant other’ for granted.  In account terms likewise. We tick the boxes, do the job (yes probably a good job) and issue the invoices!   In both cases we cease to work at and learn about the relationship.

So what to do?  Every top client-handler I know rightly highlights the importance of frequent client dialogue.  But it is depth and progress – as much as frequency – that really count.  They offset the weakening impact of trust.  To use the techno-speak, we need to recognise that our ‘bilateral communications capability’ actually creates a form of individual account IP.   Accumulated knowledge and established ways of exchanging information serve to create flexibility and adaptability.  They allow us to refresh.  To see growth and new opportunities on both sides. In short to sustain positive relationship velocity.

Sound frustrating? Too much like hard work?  The challenge for agency ceos is to make hard-worked retention just as sexy as winning the next new business pitch. Otherwise ‘sudden chills’ will continue to translate into ‘major conflagrations’.   When you can’t seem to do right for wrong!

-ends-

(*) Palmatier, R., et al (2013), Journal of Marketing 77 (1) 13:30.