Saturday, February 27, 2010

Digital Channel - Paradigm shift of Metrics

This blog post is about the most happening Online digital medium and the way this medium has matured into the most happening channel of communication and revenue generation.The way we measure the success or define success has changed since the invent  of the New age social networks.

Earlier websites used to measure the success of their Online presence by counting the numbers such as below:
1) No. of hits to the website
2) No. of page views
3) No. of Unique visitors
4) No. of  form submissions etc....

However, these metrics are mere numbers that make little / no sense in this age of Digital socialism. The success of an online channel is not only about the short lived popularity but how can it prove to be successful in the long run.Gone are the days when the website owners were churning out heaps of content and expect the public to endorse them. Yes this is the age of Trust and no matter how good a product is there is a heavy chance to lose the customer base as the competition is growing everyday to make better quality products.

So, what is that differentiator when it comes to building a sustainable online business model? Is it about the speed of churning out new content?? Is it about the variety of products that a company sells online? Or is it about the advertising genius of the ad agency working on the website. To my surprise I found that the answer is an astounding No to all this. What matters at the end if the day is the way a community is built around a good product which helps achieve a level of customer advocacy. Customer advocacy is the trust that the customer has that whatever product / service is being offered is absolutely based on his / her needs and the company does what is best for the customer and the society as a whole (sometimes).

Let's take an example. I visited the website Vim website a detergent manufacturer and found an image of a woman showing her back and a loud scream that Vim is the best detergent and it helps clean everything under the sun.Well I don't deny the fact that yes Vim could be good product but the Brand message is all about screaming out loud. This is obviously the 80's way of selling a product and god forbid I don't have to visit the website to see a woman's back again when I come the next time. Obviously the ancient metrics are the ones that would be used on such websites. Now let's focus our attention onto an similar product manufacturer called Seventh generation. The hero banner on the Home page screams "Protecting Planet Home". Wow look at the difference between this and Vim website. Here the message is very clear. "We invite you to join this initiative to make a better planet for you and the upcoming generations". Look at the kind of connect that is brought out by this website. It tempts one to really look up to their products because of the Customer advocacy that it creates. I would really love to buy this product and would definitely recommend this website to all my near and dear ones simply because of the opportunity it creates to share my views, complaints, recommendations and what not??The site is connected to all the major social networks like facebook, twitter, myspace and youtube. Also, it makes me much more comfortable that the company is very open to my views and helps choose a product that  I think is best for me and my home. There is no compulsion on my part to buy the product now and I made comfortable that at the end of the day it's my call whether I need to buy this product or not. Probably as a short term this could mean ROI is delayed. But I am sure ROI would eventually become 3-5 times more than what a competitor can get in a peirod of 6months-1 year. Now look the paradigm shift in metrics when it comes to measuring the online success of this website:
  1. No. of re-tweets on twitter (Engagement potential)
  2. No. of followers on twitter and Facebook(Popularity)
  3. Ratio of incoming messages per outbound message (Conversational ability)
  4. Net promoter score (Loyalty index)
No where in these metrics there is just mere volume sans Digital socialism. And ofcourse sales online is the last of the metrics that will be the effect of all the causes tracked via these New age metrics. So, as we see Online channel has become the face of the company and I would say it is more approriate to provide the right brand image online rather than spending millions in offline branding that is fast becoming extinct and costlier.
Also, it is all about matured branding Online by focusing on the Brand strategy and Key product features rather than on mere screaming that is increasingly becoming irritant to the ordinary buyer who is moved up the Maslow's hierarchy towards Self-actualisation and wants instant gratification of his recognition needs.I will write more about self-actualisation and how it relates to marketing today in my next blog. Until then cya.Keep sending in your comments...


Thursday, February 18, 2010

Wonderful Article - Have Breakfast or Be Breakfast

An interesting management article from Dr.YLR Moorthi.

Have Breakfast… or…Be Breakfast!

Who sells the largest number of cameras in India?

Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones.

Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sony’s and Canons are taking note.

Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).

Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther from truth.

Nokia confessed that they all but missed the Smartphone bus. They admit that Apple's I phone and Google's Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?

The "Mahabharata" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question – "who is my competitor?"

Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."

In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?" The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.

In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!

India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment). Cricket season might push films out of the market.

Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.

One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!

On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast …or…. be breakfast"! That sums it up rather neatly.

—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of Management Bangalore. He is an M.Tech from Indian Institute of Technology, Madras and a post graduate in management from IIM, Bangalore.

Saturday, February 13, 2010

Interesting facts in Six Pixels

Just thought of sharing some interesting facts that I read in Six pixels of seperation the book by Mitch Joel. There were some interesting stories about how thinking Out of box helps businesses grow manifold in this age of competition.

Story 1: "Little Mismatched Socks" a business model which became a great success purely because of capturing the hearts of the young American girls who show off their creativity and express themselves by just buying a little mismatched set of socks and contribute a portion of the cost towards women empowerment in the U.S

Story 2: "E-bay" & "Amazon" on how they revolutionized selling online by banking on the "Wisdom of Crowds" & "Trust Economy". Bringing in a new era C2C Marketing

Story 3: "Radiohead" rock band on how they sold online by asking the buyers  to fix a price for their album for controlling music piracy and cutting out the middlemen. And how they proved the concept of "Homo Economicus" as false. Surely, a stepping stone to build trust and re-look at the marketing concepts

Story 4: "Free hugs" campaign and how it attained international acclaim by just using "You Tube" as its promotional platform clearly showing the chain reaction that the Online channel can create

and many more... This is the greatness of the book and it grounds you to reality by showing some living examples.

More in my next blog... Jayu