Monday, March 18, 2013

Buy This Book: "Can't Buy Me Like," Marketing and Purpose in the Social Era

"Can't Buy Me Like" is a new, very worthwhile book from Bob Garfield, well known ad critic and co-host of NPR's On The Media, and Doug Levy, founder and CEO of  creative and strategic agency MEplusYOU. This is the book every CEO should read, every marketer should ponder and every social media professional will want to distribute. It is not another exploration of social media but of the way the consumer and brand world is changing, what this means to brands and how "marketers can and must define their brands not by the ads, press releases, slogans, coupons, sponsorships and even product offerings but by their core purpose." (Disclosure: I had the opportunity to review the book prior to publishing and share feedback--mostly praise--with the authors.)

This is the sort of book that can help open eyes, alter thinking and spark change. It thoroughly makes the case that the necessary evolution is not merely one of tactics or even strategy, but something even deeper and more fundamental. Garfield and Levy are bold enough to state from the start that their "immodest goal is to be not merely financially, but something approaching spiritually, transformative." But make no mistake, this is not some fluffy sermon on the importance of caring and tweets; the book's brilliance is in how it ties the need for core mission and new ways of marketing to financial outcomes.

The book begins with a damning study of why the practices that succeeded in the Consumer Era are wilting as we enter the Relationship Era. Levy and Garfield probe "the limits of advertising," which does not sustain brands but works only for as long as marketers feed the ad budget beast. As it does time and again, "Can't Buy Me Like" supports its claims with actual case studies and examples; for example, Colorado tourism catapulted from 14th place to first among states as a summer resort destination thanks to a new $12 million ad budget, but it plummeted to 17th place in one year when that ad spend was eliminated.

Garfield and Levy are not anti-advertising, but they suggest there is a more sustainable way to collect and keep customers in the Relationship Era. The book introduces the Brand Sustainability Map, which graphs brands on two axes--Transactions and Trust. Sure, your brand can get high transactions with low trust, but these "reluctant relationships" are expensive to maintain and remain constantly at risk. Better to fall within the "emotional relationship" or "sustainable relationship" quadrants (depending upon your transaction volume), which can sustain and expand relationships thanks to high levels of trust. Put another way, "Indifference is expensive. Hostility is unaffordable. Trust is priceless."

Social media comes up time and again in this book, but "Can't Buy Me Like" is not a social media manual; instead, it makes the case that social is part of the change occurring around us and not a new tactic to be deployed. "There is no magic in Twitter or any other social-media platform," assert Garfield and Levy, "but there is a sort of magic in properly cultivating trust relationships." Once again, the book makes the case with a brand case study: Kimberly-Clark's Kotex shifted from advertising that perpetuated the stigma of menstruation to adopting a mission that confronts the taboo head on. announced, "This is more than a Web site. This is a social movement aimed at changing the conversation," and it garnered four million interactions, received three million sample requests and contributed to an increase in market share from 4% to 7.8%.

"Can't Buy Me Like" is packed with more studies and case studies than any other book I can remember.  The examples and research support key points made throughout the book:
  • Need evidence that brand building creates value? BrandPower research on "familiarity" and "favorability" across 800 companies demonstrates that brand equity accounts for 5 to 7% of total equity value for the average company and as much as 21% for the strong brands, such as Apple.
  • Have difficulty believing that corporate purpose matters? The thirty companies identified in Sisodia, Wolfe and Sheth's 2007 book Firms of Endearment as being driven by purpose saw stock increases of 1646% from 1996 to 2011 compared to the S&P average increase of 157%.
  • Think "real time marketing" means having your social team ready to post during the Super Bowl or Oscars? P&G's Secret brand learned of Olympic medalist Diana Nyad's plan to swim the 103 miles between Havana and Miami. A perfect sponsorship opportunity? Yes, but by the time the brand learned of it, the event was just seven days away. In one day, its agency was on the ground at her California home filming three promotional videos; days later, the Secret Clinical Line was an official sponsor. (As it turns out, complications forced a series of delays in Nyad's swim, but with Secret's support, she went on to attempt the feat three times. She won the respect of millions and sales of Secret's Clinical Strength Waterproof doubled.)
  • Do you thumb your nose at the small scale of social media compared to the reach of your ad budget? Secret's "Mean Stinks" program launched on Facebook and encouraged teens to apologize for and discuss bullying. The activity created 339,000 text and video engagements yielding 1.3 million placements in users’ newsfeeds. Sound small compared to NCIS's 20 million viewers? Then you do not understand the power of engagement versus passive views of an advertisement. Reports the brand manager at P&G, "In the fiscal year that Mean Stinks launched, total brand dollar share was up 8%. Our Clinical family of SKUs, which were the products associated with Mean Stinks, grew 20% in volume versus the previous year. On our Facebook page, we saw fan engagement increase 24x with the launch of Mean Stinks, and about half of those fans engage with the page on a regular basis."
"Can't Buy Me Like" offers a rich vein of these sorts of brand stories and research insights, but it also strives to provide brands with a roadmap to embrace the Relationship Era. The book shares a seven-point plan to help brands move from listening to engaging to leading to measuring.  It also shares Do's, Don'ts and "No, really, don'ts." And it conveys the real-life challenges of brands that have lost consumers' trust. 

I can highly recommend "Can't Buy Me Like." Reading it inspired in me the same sorts of feelings I experienced in my 20s when "In Search of Excellence" aroused a shift in my worldview and career. I think this book can benefit everyone from young professionals (who recognize the world is changing but cannot often connect that to the business outcomes their bosses demand) to senior leaders (who have tired of some of the social media hyperbole but also recognize something profound is changing in the consumer-brand relationship). This is a book you will want to read, quote, share, recommend and buy for others.

Visit the "Can't Buy Me Like" web site for more information and to download a free excerpt from the book.

Regulators to Financial Service: Stop Fearing and Start Embracing Social Media!

Financial service firms are a conservative lot, filled with risk, compliance and legal professionals who are ever vigilant detecting, preventing and mitigating risk. Generally, that is a good thing, since no one wins when your bank, insurance company or investment firm takes unnecessary risks.

Actual photo of FinServ executive
considering social media regulation.
But at times, in periods when technology, consumer behavior and customer expectations are rapidly evolving and regulation seems less certain, this natural conservatism can get in the way of good decisions. When this happens, opportunities to enhance and protect the interests of both the business and customers can be lost.

Now is one of those periods, but change is imminent. Even Federal regulators, in their own subtle and maddeningly vague manner, are telling FinServ firms it is time to stop fearing and start embracing social media. Two recent publications from the FFIEC and SEC demonstrate regulators are looking for financial institutions to be more assertive in realizing social media benefits and independently managing social media risk.

Waiting for perfect guidance from regulators is never the road to success, since perfect guidance is never furnished; consultants and law firms make rich livings in the gap between regulatory guidance and certainty. Moreover, as financial institutions wait for better guidance from regulators, it can leave the industry in general and certain companies in particular lagging far behind more innovative competition, not to mention the level of service and responsiveness consumers have come to expect. With a careful reading of the two new reports from Federal regulators, it seems they, too, are concerned that an overly cautious approach is harming the industry.

Social Media Risks: Present but Manageable

Social media poses new risks for FinServ firms, and there are good reasons for firms to proceed with caution; however, there are no good reasons for the level of anxiety and sluggishness seen at many firms. Many Financial service companies can proceed with a great deal more alacrity for several reasons:

  • Substantial guidance has already been furnished by regulators, including FINRA (Financial Industry Regulatory Authority), SEC (Securities and Exchange Commission) and the FFIEC (Federal Financial Institutions Examination Council). At the state level there is a patchwork of regulators across 50 states, but thus far organizations such as the NAIC (National Association of Insurance Commissioners) and state regulators have taken a very similar tact to Federal regulators; the association's December 2011 social media white paper for state regulators was not terribly different than the guidance coming at the Federal level. While there are gray areas (such as whether a LinkedIn recommendation is really a forbidden testimonial), many actions by firms and licensed professionals are clearly within the safe zone, provided reasonable precautions are taken. For more information, check out the excellent guide to FINRA regulations in social media from Actiance.
  • No firm or person has yet been been cited by a regulator for actions in social media, unless those same actions would have been cited in any other medium. Regulators' enforcement has been sane, reasonable and understandable. Do not do anything in social media that you should not do in email, print, in person or on the web, and you will find it difficult to run afoul of the regulators.
  • For years, tools such as Hearsay, Socialware and Actiance have been available to help firms mitigate and manage social media risk. These platforms are not complete solutions--firms still need to take additional actions such as educating financial professionals, monitoring social media for violations and archiving to the requirements set by Rule 17a-4--but existing social media management platforms help mitigate much of the risk.
  • The risks to firms from actions of registered representatives (RRs) can be limited with reasonable precautions. An excellent post on the Hearsay Social blog cites an instance when the Department of Justice declined to take action against a firm because it had adequate measures in place that were circumvented by an RR in the course of violating the rules. That case did not involve a social media issue, but Hearsay states, "as long as firms have a clear and concise social media policy with a governance structure that identifies roles and responsibilities and incorporates controls for the use and monitoring of social media, an employee training program, and appropriate oversight and monitoring of social media use, they should not have liability for an individual RR’s violation." 
In 2013, there are new signs regulators are not just open to but are actively encouraging financial institutions to adopt a more assertive stance in social media with respect to both exploiting benefits and managing risks. In two recent publications, the FFIEC and SEC tell the industry it cannot ignore social media and must apply good judgment to its social media interactions and processes. Of course, neither government body says that in such clear language, but you do not need to dig too deeply to see that financial regulators do not want to overburden FinServ companies (or themselves) with needless and detrimental social media regulation.

Social Business Referenced in FFIEC Proposed Social Media Guidelines 

In January, the FFIEC issued proposed guidelines on social media. The FFIEC is an interagency body that encompasses the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB). Also of note is that the FFIEC, upon finalizing this guidance, will urge state regulators to adopt the same rules.

It is not difficult to sense that the FFIEC sees social media changing not just marketing and communications but financial products and services. The document addresses and references the advanced use of social media and social business by FinServ firms several times:

  • "Financial institutions may use social media in a variety of ways, including marketing, providing incentives, facilitating applications for new accounts, inviting feedback from the public, and engaging with existing and potential customers, for example, by receiving and responding to complaints, or providing loan pricing." Note the inclusion of forward-thinking social strategies, such as providing incentives and facilitating applications within social media; this gives a hint at how the FFIEC views social impacting business, not just being used for service and communications.
  • Some firms may choose to "use(s) social media to engage in lending, deposit services, or payment activities" and "Social media may be used to market products and originate new accounts."
  • Social media can be used to "to facilitate a consumer’s use of payment systems" and "under existing law, no additional disclosure requirements apply simply because social media is involved."
  • Not only are financial firms not discouraged from prospecting in social media, the FFIEC provides reasonable guidance for doing so, stating that "a financial institution that relies heavily on social media to attract and acquire new customers should have a more detailed program than one using social media only to a very limited extent."
  • Generally, regulators concern themselves with risks and regulation rather than promoting the advantages of new technologies, but the FFIEC makes a point of addressing that social media "has the potential to improve market efficiency" and can "help users and providers find each other and match products and services to users’ needs."
At a time when many FinServ firms are afraid even to mention products in social networks, federal agencies are suggesting financial institutions might use social media for applications, lending, deposits, payments and matching products to customer needs. This should be a huge wake up call to FinServ executives.

The document observes there are risks in social media, but it takes pain to pin those risks not to actions in social media but the potential failure of firms to monitor and manage those actions. The FFIEC expects people to make mistakes and, at times, use poor judgment, but the responsibility falls to firms to protect themselves and their registered representatives: "Increased risk can arise from a variety of directions, including poor due diligence, oversight, or control on the part of the financial institution."

The FFIEC also tells FinServ firms that there is no way for them to avoid addressing social media, regardless of what they opt to do in the channel. "A financial institution that has chosen not to use social media should still be prepared to address the potential for negative comments or complaints that may arise within the many social media platforms... and provide guidance for employee use of social media." The report also notes that inaction on the part of some firms is increasing risks because institutions' "policies and procedures governing certain products or activities may not have kept pace with changes in the marketplace."

When a group of federal agencies begins to outline new business opportunities furnished by digital and social technologies and suggests companies are accepting risk by failing to keep up with the changes in our world, you do not need to read between the lines to get the message. The FFIEC is not suggesting recklessness, but it is clear they do not want firms failing to exploit new opportunities out of fear of regulation.

Greater FinServ Independence and Judgement Advised in SEC Social Media Guidance Update

In a new "Guidance Update" published by the SEC last Friday, the agency cries "Uncle" with the flood of social media content that firms are filing with FINRA. It cites "an abundance of caution" that is causing "many mutual funds and other investment companies (to) file materials on their social media sites with FINRA unnecessarily." (That's regulator-speak for "Stop being a bunch of wusses!")

The report is an acknowledgment that the SEC must furnish more specific guidance, but it also is evident the SEC believes firms must begin to apply better judgment in social media and be more assertive in managing risks rather than deferring them to regulators. The SEC's Update gives a level of specificity far beyond anything furnished by other regulators to date, even going so far as to provide actual tweets and posts that "would not trigger a filing requirement." The guidance suggests that the following social media posts are safe and do need to be filed with the agency:

  • An incidental mention of an investment company or family of funds that is not related to a discussion of the investment merits. What is notable is that you can market your financial products in social media, provided you do not mention the investment merits. For example, the SEC suggests this is an acceptable tweet that need not be filed:  “Consumer Reports has written an article in which it mentions our Brand X Rewards Card. Are you a card member?"
  • The incidental use of the word “performance” in connection with a discussion of an investment company or family of funds, without specific mention of a fund’s return. The word "performance" is not forbidden in social media, provided you do not promote a fund's return. For example, "Click on this link (website url) where we provide full details of our yearly performance since inception.”
  • A statement unrelated to a discussion of the investment merits of a fund that includes a hyperlink to general financial and investment information or commentaries on economic, political or market conditions. The SEC notes you can tweet things like "Here’s a Q&A with our Portfolio Manager, John Doe, regarding his views on the economy for 2013. (website url)"  or "Gold and silver have provided a relatively low correlation to stocks and bonds over the last few years. (website url)."
  • A response to an inquiry by a social media user that provides factual information not related to a discussion of the investment merits of the fund. Firms need not fear direct and detailed responses in their social media replies, provided they do not discuss investment performance. For example, if a consumer asks, "What was the NAV for ABC fund on Friday?," the SEC says firms may reply "$xx.xx." Another example furnished by the SEC notes that you can address the reasons investments are included within a fund; for instance, if a consumer posts "Why are your funds such a large investor in ABC Manufacturer’s stock?" it is acceptable to respond, "As you know, ABC Manufacturer is found in many broad-market indices that our index funds are obligated to track so some of our index funds hold those shares as a result."
Did you detect the recurring theme in that guidance?  "Not related to a discussion of the investment merits or return" is repeated in one form or another time and again. The SEC is clear in telling financial service firms they can talk about their products, provide links to their products and share general market commentary without needing to file this content with FINRA--just don't tweet returns and investment merits. Firms have been proceeding too cautiously and over-filing, which means the are not using social media to the extent the SEC believes is possible and good for the industry.

How Financial Service Firms Can Sensibly Embrace Social Media

There are many practical steps FinServ organizations should follow to exploit social business benefits. Entire books can be produced on this topic, and since this blog post is already too lengthy, I will not attempt to address the governance, training, monitoring, policies, procedures and tools that are necessary to manage risks in social media. Instead, allow me to suggest three high-level barriers leaders and social media professional may address today:
New York Life CEO has been vocal on social media
advantages: "We're getting tremendous benefits." (Source)

  • Visible and assertive support from senior leadership: Senior leaders must set social business expectations for their firms and remove barriers. This begins with a recognition that social media is becoming a vital business medium and not just a place where the firm can make some fluffy tweets and posts. Socially mature organizations such as American Express are already driving business change via social, and as noted, the FFIEC has broached the subject of using social media for applications, lending, deposits and payments. A sea change is happening, akin to what is already occurring with mobile (where banks find they are saddled with unsustainable branch networks now that consumers can accomplish what they need on their smartphones). This is no longer a marketing issue, it is a business one, and if your senior leaders are not on board, social media professionals at financial organizations must raise the stakes for their bosses.
  • Recognize business and reputation risks equally with legal and compliance risks:  Too often, the attorneys and compliance specialists dominate the dialog of social media risks, but as we have seen, regulators also see risks with inaction and "an abundance of caution." In an industry starving for greater trust, stronger relationships and higher advocacy, it should be obvious that those who manage reputation and brand risks must have an equal voice with those who manage legal and compliance risks. In addition, FinServ firms should be reminded that what they do or not do in social media is a business decision, not a compliance one. Business leaders must listen to all concerns, challenge employees to develop and execute risk mitigation plans, and make decisions that are right for the firm, its stakeholders and it customers.
  • Set a social business vision to overcome ROI mania:  In 2000, ecommerce was just a single percent of total US retail; some companies saw this and felt no need to act while others recognized how ebusiness would soon impact the bottom line. It is 2000 all over again, and some companies are making the mistake of seeing social as something insignificant while others are rapidly embracing new social business models. ROI may be difficult (although not impossible) to come by in the short run, but firms will find it easier to justify investments in social business strategies if they look to how social will change financial services in the future rather than just how social can increase the bottom line today. In 2000, Borders cared only for whether ecommerce could move its bottom line immediately while Amazon saw and invested in the change. Which company does your firm choose to emulate, today?

Monday, March 4, 2013

Plug In and See the Beauty

This past weekend was a "National Day of Unplugging." Did you unplug? I hope not. While the intent of the organizers is admirable--to remind people to slow down and focus on what matters--the plan left much to be desired, in my opinion.

Technology is all around us--it is not something apart from us but an extension of us--and if it is separating you from the things and people that matter, that is not the fault of technology but yourself.  We should not need to unplug ourselves to reclaim our humanity; instead, we should strive to celebrate our humanity through our technology.

There was a time when communities had to be formed around places on the Earth where water was available. Every day, people would visit the well, river or lake to collect water for their families, and this act brought us closer--we shared stories, conveyed news and created a strong community. Then along came running water and indoor plumbing and something was lost, but more was gained. Progress marches onward.

As we change technology, technology changes us; this has been the case since we first crafted tools, harnessed fire, adopted language, controlled electricity, transmitted radio waves and connected our homes to the Internet. And with each change, some people shook their fists and claimed we were losing ourselves. They were right, and they were wrong, but they did not stop the march of change around us or to us.

Today's technology is wondrous. We can get a more accurate and timely picture of what is happening in our world, within our families and with our friends than ever before. We can control what we see and do in ways past generations could only dream about (or read about in far-fetched science fiction novels). It is up to us whether we use that incredible power to embrace our humanity or merely live a world of our own choosing. Either way, the challenge isn't to be more human on a single day we deprive ourselves of our technology; it is to be more human every single day in the presence of our miraculous and evolving technology.

Below are some photos posted by strangers of sunrise this morning. This is just an hour or so worth of images, shared from Canada to Mexico and from New York to Chicago. Plug in and see the beauty. It's there if you look for it.

Friday, March 1, 2013

Happy marchFIRST: What I Learned From My Dot-Bomb Experience

Happy marchFIRST, everyone!

If that looks off, then you do not remember marchFIRST, a dot-com era firm that burned brightly and disappeared quickly. If you do recall marchFIRST, the name probably conjures up memories of hubris and failure. Those remembrances are not incorrect, but it is regrettable that marchFIRST's legacy is not more expansive. It was, after all, one of the first organizations to understand and act on how the Internet was going to change everything. By bringing together systems integration firms, digital agencies and brand consultancies, marchFIRST was designed to help clients adapt everything for the digital era.

I was an employee of that firm--one of around 13,000 globally at marchFIRST's peak--and I learned a lot from my experience. Some of it was positive--to this day, I still use the Brand Experience Journey that I helped develop in collaboration with many other bright people in the brand practice--but most of what I learned came from frustration, fear and even shame. I recall:

  • I kept an empty box on my desk, because at any time, my name could have been among those let go in the increasingly frequent RIFs (a new word to me, which stood for Reduction in Force.) I was among the many people working very hard to bring value to clients, but there is nothing one guy shoveling coal in the engine room can do to prevent the Titanic from sinking once it strikes the iceberg.
  • I was assigned to a huge team that charged a great deal of money to the nicest clients in world to deliver an un-executable strategy--hundreds of thousands of dollars for binders full of paper. I did my best to elevate my corner of that project, but the years have not dulled the regret I feel for being a small cog in a big machine more dedicated to keeping employees billable than delivering value to that client.
  • During the interview process at USWeb/CKS (one of the firms merged to form marchFIRST), I was exposed to a strategy process deck, and I was blown away. Even though I was an experienced digital strategist, I saw charts, tables and diagrams that I could not even comprehend, and I was excited to join the team and elevate my game. I was hired and immediately began to dig, eager to learn the new process, but I was having a curiously difficult time getting details. Months later, I came to realize those charts, tables and diagrams were meaningless--mere props, designed to entice prospects and gullible candidates like me.
  • In the waning days, with the office filled with empty Aeron chairs and the specter of bankruptcy and unemployment looming large, I was brought into a team desperately working to complete a significant deal that might keep the wolves at bay (or make our office more desirable for acquisition). My role was small--I was the guy who knew PowerPoint best--but I quickly realized the team was selling a solution that had no basis in research, customer need or reality. It was clear we should be pitching not an entire solution but a strategy engagement to validate the right course, and I voiced this. The room grew silent, I was pulled aside, and I was reminded both of my role on the team and the need to complete the sale at all costs. Those costs included my pride and principles.
I could tell more stories, but suffice to say it was an unpleasant time. It took me some years to look back, overlook the emotions and realize I had learned many positive and important lessons from that experience. They include:

  • Desperation, fear and pride can drive even the best among us to become the sorts of people they do not wish to see in the mirror. One can have principles and be ethical, but when unemployment is high and a family's source of income is on the line, even good people can do dubious things.
  • There is no overcoming poor leadership. I worked with the finest group of professionals I had every seen up to that point, but all the brains, passion and hard work in the world cannot overcome leaders who do not lead in the right direction.
  • Making money is not the goal of a company--making happy clients and customers is the goal, and profits are an outcome. Once an organization puts profits ahead of clients and customers, it is (sooner or later) doomed.
  • Make hay when the sun shines, but remember that winter is coming. marchFIRST made buckets of money at first, and leaders acted as if the gravy train was endless. Then the dot-com bubble burst, and there was no way to support the Class A office space, the outlandishly expensive Herman Miller cubicles, the enormous salaries and bonuses and the network television advertising (see below). Excessive margins are fun when you are lucky and skillful enough to earn them, but they are not sustainable. I don't think even a conservative course would have allowed marchFIRST to survive the bubble burst, but I do know a lot of people would have been better off and saved a great deal of pain had leadership been more humble and sensible.
  • I can always be a better person. Most of us go through life pretty sure we are good people. I certainly did--until I realized how quickly I would violate my principles out of fear for my job and career. Should I have simply quit rather than compromise my beliefs? I was diligently seeking another opportunity, but with the dot-com world crashing, jobs were scarce. That's not an excuse--I am ultimately responsible for my actions--but after the dust settled, I committed myself to (and constantly struggle to live up to) being aware of the impact I have on those around me, avoiding victim mentality and never allowing fear or laziness stop me from doing what is right. I also want to acknowledge a book that, in many ways, helped me to appreciate my difficult marchFIRST experience and channel it into something positive. The book is Leadership and Self-Deception, and I have recommended it to hundreds of people in the past decade (and now I am recommending it to you). 

Years later, I had the chance to lead an agency team, and the lessons of marchFIRST weighed heavily. The agency team grew, had happy and loyal customers, did spectacular work and became the tightest and most cohesive group of professionals of which I have been a part. I was lucky to have such a great team, but I would like to think the lessons of marchFIRST also helped me to be the kind of leader I aspire to be.

For a long time, all I could see about my mortifying marchFIRST experience was the lemons, but I have come to realize I have made a lot of lemonade in the twelve years since. And maybe that is the most important lesson of all.

Happy marchFIRST!