Friday, May 29, 2009

Information Without Meaning

We live in the “information age”, or so we are consistently reminded. And while it’s true that business people have vast amounts of information at their disposal, the fact remains that making good decisions hasn’t gotten any easier. In some cases the challenge is too much information. In others, it is having the wrong information. However, the primary limitation of information isn’t its quantity or quality, but rather its application.

Facts, figures and insights have no inherent meaning. If a company discovers that 55% of its current customers give it a favorable rating for customer service, is this good or bad? It depends. If the company is in a category with historically low customer service ratings, it is probably good. If the company had a higher rating last quarter, it’s bad. If the competition has lower ratings but gained ground since the last measurement, it’s a mixed blessing. Information derives meaning from its context.

Context also influences the relative importance of information. “Price” will rise to the top of virtually any purchase criteria survey conducted. However, if consumers perceive that every competitor in a category is similarly priced, how important a role does price play in the purchase decision? If consumers perceive one company’s product to be more expensive than its competition, is this important? It depends on who was surveyed and the business strategy of the company. This isn’t to say that price isn’t an important criteria, just that this particular criteria might not be important when diagnosing and solving every business problem.

Unfortunately, too much research is conducted without a clear understanding of the context in which it is needed. Misinterpreted data leads to ineffective execution or, more often, inaction. Smaller quantities of actionable data have the greatest value. Since people solve business problems through their actions, only the pieces and combinations of information that produce constructive behavior have utility. The rest is just taking up space on our bookshelves.

Friday, May 15, 2009

A Rose by Any Other Name

A few years back North Dakota wanted to change its name to Dakota. Supporters of the idea argued that the word “North” suggested that the state climate was cold, and thus discouraged tourism. The national press got a hold of the story and the plan was abandoned under the scrutiny.

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There were two problems with the plan. First, the perceived cold isn’t North Dakota’s most significant barrier to tourism. North Dakota is relatively sparsely populated with few widely known attractions so the state gets overlooked. Second, North Dakota’s climate is among the coldest in the union, and changing its name isn’t going to change the weather.

Despite the obvious futility of pretending to be something we are not, it seems a natural inclination to change our name when we don’t like how we’re perceived. AIG is the most recent example. While there is enough gullibility and disinterest out there to defer some of the negative perceptions, simply changing its name won’t fool the majority. More importantly, changing its name does nothing to address the behaviors that created the negative perceptions in the first place.

Promoting state tourism is no different than promoting a company. Both have strengths and weaknesses that influence the consumers they can attract. When the obstacle is inherent, as in the case of North Dakota’s weather, the solution could be to view the obstacle an asset (a topic for a future post). When the obstacle is of one’s own making, the solution is to change behavior. The adage goes, “you can’t run from your past.” And while it may seem more difficult, making amends is usually more efficient and effective than avoidance.

Friday, May 1, 2009

Social Media Is A Tactic

You can’t read anything marketing related these days that doesn’t mention social media. And with a short enough memory, you might even think social media is the only vehicle presently available to marketers. Certainly the pundits think so.

The expansion of social media is a phenomenon worth noting. Participation has been growing at an astonishing rate and its ability to influence public opinion is remarkable. It has given consumers a bully pulpit, and they haven’t shied away from using it. Yet despite the medium’s popularity, it is only one option among many and not necessarily the right choice for every company or situation.

From a business standpoint, social media is simply a tactic. And like all tactics, why and how it is used determine its efficacy. Social media, TV, radio, print, collateral, product design, pricing, distribution, etc. are all tools for managing people’s perceptions. The key to using any marketing tool effectively is in knowing which perception, if created, will produce advantageous business results.

When a business knows which consumer audience matters most to its success and how it would ideally be perceived, it becomes fairly self-evident when and how to use tactics. The impression a company desires to create is a strategic filter guiding its behavior. A company that is struggling to determine how it’s going to use social media likely doesn’t have the strategic foundation to use it (or any other tactic) effectively and might want to abstain until it does.