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Marketing Chaos

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by Don Peppers …

by Don Peppers

http://www.1to1media.com/speakingservices.aspx

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  • 1. COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 1
  • 2. 20 million+ Google searches every hour, 24/7 COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 2
  • 3. New technical information now doubles every two years. By 2015 it will be doubling every 72 hours COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 3
  • 4. 80% of companies use Linked In to recruit employees COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 4
  • 5. Generation Y considers email old-fashioned COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 5
  • 6. 1 out of every 8 US couples married in 2008 met online COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 6
  • 7. No matter how …tomorrow it innovative your will still be a product is today... commodity. COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 7
  • 8. …tomorrow it will still be a And commodity. And tomorrow comes faster now than it used to COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 8
  • 9. Accelerate Natural Dietary Supplement ENERGY BOOST Impact Guaranteed Technological Progress is Accelerating COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 9
  • 10. driving faster and faster economic growth COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 10
  • 11. By 1960, growth increased again, to about 2.3% p.a. By 1900, the rate of growth had climbed to 1.5% p.a. Around 1700, steady economic growth started, at about 0.75% p.a. For 100,000 years, the average human being lived on the equivalent of $400 to $600 p.a. COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 11
  • 12. Question: Of the 100 entities in the world generating the most revenue, how many are nation- states, and how many are businesses? 76 businesses 24 nations COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 12
  • 13. Competing now in a different dimension Strategy. Execution. Results. Customer Needs Relationships are required Satisfied Customer Centricity Share of customer Product Centricity Market share Customers Reached COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 13
  • 14. Managing customer relationships Identify Differentiate Interact Customize …customers as …by value, …more cost - …some aspect of unique addressable behavior and efficiently and the company’s individuals needs effectively behavior, offerings, or communications Customer Insight Customer Experience COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 14
  • 15. Competing now in a different dimension Strategy. Execution. Results. Customer Maximizing the value Needs created by each customer Satisfied Customer Centricity Share of customer Maximizing the value created by each product Product Centricity Market share Customers Reached COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 15
  • 16. The Goldfish Principle Strategy. Execution. Results. Hey! Look at that! Wow! Look at that! COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 16
  • 17. Strategy. Execution. Results. Optimizing by customer COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 17
  • 18. Two Strategy. Execution. Results. Requirements For Earning Customer Trust Intention to act in the customer’s interest Competence to carry out that intention COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 18
  • 19. Strategy. Execution. Results. Acting in the Customer’s Interest COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 19
  • 20. Strategy. Execution. Results. Lack of trust slows transactions down and imposes frictional costs When more trust is required, business thrives, as obstacles are reduced The Need for More Trust Has Boosted Business COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 20
  • 21. works because customers Strategy. Execution. Results. are social animals Bees and ants communicate new discoveries to benefit the group COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 21
  • 22. Strategy. Execution. Results. In the absence of communication among your customers, advertising rules But when customers talk to each other, it’s the customer experience that counts Now suppose you were a food source for bees… COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 22
  • 23. Emergent Behavior Strategy. Execution. Results. Why do groups make better decisions? Diverse Perspectives COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 23
  • 24. Strategy. Execution. Results. Four key space shuttle contractors Jan 28, 1986 – 11:39am Rockwell Lockheed Martin Morton built the managed Marietta Thiokol built Challenger ground built the the solid fuel and its support external fuel boosters engines tank “No clues” on the day of the event, and the actual investigation required six months to complete But by 11:50 am, Thiokol’s stock was down the most and remained lowest throughout the investigation COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 24
  • 25. Strategy. Execution. Results. Four key space shuttle contractors Jan 28, 1986 – 11:39am Rockwell Lockheed Martin Morton built managed Marietta Thiokol built Challenger ground built the the solid fuel and its support external fuel boosters engines tank How did the market know? COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 25
  • 26. Death by word of mouth… Strategy. Execution. Results. Box office receipts down 40% the day after release! COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 26
  • 27. Screw up today, and the Strategy. Execution. Results. “news” will be permanent “You can’t un-Google Yourself” Linda Kaplan Thaler, CEO, Kaplan Thaler Group COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 27
  • 28. Screw up today, and the Strategy. Execution. Results. “news” will be permanent “You can't take something bad off the Internet. That's like trying to take pee out of a swimming pool.” Grant Robertson, blog post, May 1, 2007 COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 28
  • 29. What are brand advocates worth? One academic study of customers compared “spending” to “referral” value LTV = CLV + CRV (i.e., spending plus referrals) Surprise: Highest spenders aren’t always the best references! Source: “How Valuable is Word of Mouth?” Harvard Business Review, October 2007 COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 29
  • 30. A telecom company CLV vs. CRV - Telecom Company $2,500 $2,000 $1,500 Most valuable referrers Value CLV $1,000 CRV $500 $- 1 2 3 4 5 6 7 8 9 10 Most valuable spenders Customer Decile Source: “How Valuable is Word of Mouth?” Harvard Business Review, October 2007 COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 30
  • 31. Strategy. Execution. Results. Networks evolve, using “preferential attachment” Preferential attachment can create a “cascading” effect COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 31
  • 32. Strategy. Execution. Results. Cascading is Unpredictable COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 32
  • 33. Strategy. Execution. Results. Netscape has a million collaborating members But 13% of Netscape’s “most popular” postings were done by a single user Cascading is Unpredictable COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 33
  • 34. Strategy. Execution. Results. Netscape has a million collaborating members 900,000 registered But 13% of Netscape’s “most popular” users on Digg, but postings were done one third of all by a single user home-page postings come from just 30 users Cascading is Unpredictable COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 34
  • 35. Strategy. Execution. Results. 900,000 registered users on Digg, but one third of all home-page postings come from Reddit’s most just 30 users widely read user, Cascading is Adam Fuhrer, has millions of page Unpredictable views, including MS Vista reviews COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 35
  • 36. Strategy. Execution. Results. Reddit’s most widely read user, Cascading is Adam Fuhrer, has millions of page Unpredictable views, including MS Vista reviews Adam Fuhrer is 12 years old! COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 36
  • 37. Strategy. Execution. Results. Cascading is Unpredictable Adam Fuhrer is 12 years old! COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 37
  • 38. Path dependent local randomness Strategy. Execution. Results. Collectively predictable emergent behavior NETWORKS have COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 38
  • 39. and sometimes networks get it completely wrong Strategy. Execution. Results. In 2005, a blogger wrote about bad service with Dell This “Dell Hell” story cascaded online, until BusinessWeek and The New York Times picked it up Dell’s reputation suffered terribly, and its financial results declined, as well One year later, a UK consulting firm analyzed the incident and concluded it was not Dell’s fault at all Most of the controversy was generated by misinformation that cascaded through the online network of bloggers COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 39
  • 40. Evolution operates as a network also Strategy. Execution. Results. A total of 35 completely new body plans emerged during the Cambrian Explosion, 570 million years ago. No new body plans have evolved since that time! Multi-cellularity Discovered Path dependent local randomness Bacteria Complex Insects Interactions Invertebrates Vertebrates Collectively predictable emergent behavior COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 40
  • 41. Evolution operates as a network also Strategy. Execution. Results. Path dependent local randomness Collectively predictable emergent behavior COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 41
  • 42. Evolution operates as a network also Strategy. Execution. Results. Path dependent Collectively predictable local randomness emergent behavior COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 42
  • 43. Business innovation takes an evolutionary path Organizations compete to survive in an “evolutionary” economic system Over time, as in life, business models evolve into more complex and highly ordered “species” COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 43
  • 44. Because innovation proceeds by trial and error Lisa computer failed  Apple Macintosh succeeded Newton PDA failed …success  iPod succeeded comes to First phone (with Motorola) failed those who “fail wisely”  iPhone succeeded COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 44
  • 45. Failing Wisely The Wright brothers tested 200 wing designs and crashed seven times before their first successful flight James Dyson built 5,127 vacuum cleaner prototypes Why is WD-40 called “WD-40”? COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 45
  • 46. Failing Wisely Because the first 39 “water displacement” formulas designed by the Rocket Chemical Company in 1953 failed Why is WD-40 called “WD-40”? COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 46
  • 47. Collectively predictable, locally random “If we mapped 3M’s portfolio of business units on a strategic planning matrix…the matrix would utterly fail to capture how this portfolio came to be in the first place.” Jim Collins and Jerry Porras Built to Last, 1994 COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 47
  • 48. Collectively predictable, locally random World’s largest camera company? World’s largest music retailer? COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 48
  • 49. Scary thought: By 2010, Gen Y consumers will Generation Gap? outnumber Baby Boomers COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 49
  • 50. 96% of Gen Y consumers belong to a social network COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 50
  • 51. Ask a Gen Y about privacy… COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 51
  • 52. “The future is already here. It’s just not evenly distributed yet.” William Gibson COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 52
  • 53. Source: “SAS for Social Marketing,” 2009 Leader: High number of Network contacts in his/her community and reciprocity Social among them. Follower: Person with a Analysis similar profile to leader but in less grade. He/She has direct communication with the leader. Outlier: Person with a high number of contacts both ways, but with low reciprocity. 1st Grade Marginal: Person with a profile similar to the follower, but he/she is not near the leader. 2nd Grade Marginal: Profile not similar to the rest of the roles. He/She has few or no bidirectional relationships. COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 53
  • 54. DoubleClick identified Quantitative network survey of 6,000 Web users influencers 1,000 influencers with certain traits Use the Web more than twice as much “People often ask my Pay more attention to online ads, and advice about…” want more relevance “I am an expert in But also more likely to clear their cookies certain areas…” regularly, as well as fast forwarding through video commercials COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 54
  • 55. Within Social Networks The only way to succeed in a networked world Build and influencers and maintain a connectors reputation for are curious and trustability inquisitive people. COPYRIGHT © 2009 PEPPERS & ROGERS GROUP|ALL RIGHTS PROTECTED AND RESERVED | 55
  • 56. Computers will never do everything Strategy. Execution. Results. COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 56
  • 57. The real secret to a great brand… The “Mechanical Turk” COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 57
  • 58. There has to be a person in there What you want: Self-organization Your employees need to be Engaged in their work and Enabled to accomplish their mission COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 58
  • 59. Strategies for succeeding in a random world Identify emergent behavior early, and make plans for dealing with it The direction of innovation is predictable, so plan for the capability, not the technology Word of mouth is random, but can be maximized with transparency and straight talk COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 59
  • 60. Strategies for succeeding in a random world Recognize that inputs are more important than outputs Measure performance not just by outcomes, but by effort, creativity, and preparation Celebrate “wise failures,” and promote experimentation COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 60
  • 61. Strategies for succeeding in a random world Focus on your company’s culture, and encourage self-organization Do a network analysis of your own employees to identify key influencers Develop a philosophy of business based on customer trust COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 61
  • 62. Strategy. Execution. Results. Come face to face with a real customer at least once a week… Facilitate networked, moderated product reviews, including your own Some things you can do now COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 62
  • 63. Strategy. Execution. Results. In B2B: Help advocates within prospects by providing ready-to-use PPT decks Provide location-based information to fit personal mobile technologies Let customers sign up “buddy lists” for checking their friends’ opinions COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 63
  • 64. Strategy. Execution. Results. Mix up your business groups – juniors, seniors, male, female, trends and tattoos Assign a 20-something to monitor your brand mentions on social media sites Above all, have fun! People like to connect with other people. Help them! COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 64
  • 65. @DonPeppers Peppers & Rogers Group Management consultants in customer strategy issues Magazines, newsletters, research white papers Offices and clients around the world To subscribe to the “1to1 Weekly” email newsletter: dpeppers@1to1.com COPYRIGHT © 2009. ALL RIGHTS PROTECTED AND RESERVED. 65