Tuesday, January 31, 2012

Your New Year's Resolution for 2012: Write!

Is it a little late to make a New Year's resolution? By the first week of February, most of us are already well on our way to breaking our promises to lose weight, quit smoking or get out of debt, but here's a resolution you can and should keep: Write. Religiously. Every week. Starting right now.

I would recommend that you blog, but if (for now) you lack the confidence to share your ideas and observations with the world, start by writing for yourself. Select a topic--I'd recommend a professional one, but you can choose any topic in which you have passion and curiosity--and commit to capture your thoughts every single week.

A young peer recently asked me if I would recommend returning to school for her MBA. I was surprised by the question but more surprised by my answer. I told her I thought she would get more personal and professional benefits if she committed that same time every week to read and comment on others' blogs, watch TED Talks, keep up with news, develop her ideas in a blog and build a network. Since then I have questioned if dismissing education was really the right call, but this soul searching has left me even more convinced that I have gained more through writing this blog than I ever could sitting in a classroom.

Writing was not an easy habit at first, but now it has become so essential that in those periods when I have trouble finding time to write, I become uneasy. The ideas start piling up. I begin to capture them in snippets of text that I email myself. I can actually begin to lose sleep because I lay in bed composing in my mind the blog posts I am not producing. It is not rare for me to wake from a fitful sleep with a developed line of thought, head directly to my PC and furiously type before I lose the idea and perspective. (As with most dreams, sometimes those ideas stand up but other times they melt under the morning light.)

Do I sound like an addict? Perhaps, but there are worst things than being addicted to a habit that leaves you empowered, educated and improved. I have experienced strong and demonstrable benefits because of my work on Experience: The Blog. Here are the ways you might benefit by making a commitment to write regularly:
  • Reaffirm and strengthen the ideas you bring into the world: The process of blogging forces me to take an idea that I think is fully developed and discover the holes--and trust me, some of your strongest beliefs begin to look awfully shaky as you convert a string of ideas into a cohesive viewpoint. As I compose a blog post to convince others of my perspective, I must first convince myself. I do this by filling in the blanks, taking time to conduct research and citing links that substantiate my arguments. Once the blog post is fully baked, it not only becomes a piece of content for my blog but also a fervently held principle in my brain--one I can call upon in meetings, when I am presenting or when developing strategies on the job.
  • Discredit ideas before someone discredits them for you: You know those scenes in old movies when the frustrated writer rips a sheet of paper from his or her typewriter and tosses it into a pile of crumbled ideas around the wastebasket? Well, that happens in real life, too. For every four blog posts I publish, I begin and discard one more. I frequently find that something I believed to be a solid and thorough concept is really just a bundle of random notions. Sometimes, I even discredit my own hypothesis--the opinion I was certain would change others' minds is so flimsy it fails to convince even me. There is true value in destroying your own ideas; better you do it while writing alone then have someone else do it for you.
  • Develop a point of view: We recognize that brands are strengthened not when they are all things to all people but when they focus on one important and meaningful perspective for one important and meaningful audience. Writing helps you focus your thinking in a way that develops your personal brand. When you write--particularly when you blog for others--you begin to think about who you want to read your content and what you want them to think and do. As I have focused my blog's topics, I have also been focusing my thinking and developing a point of view. My blog and my audience force a discipline in the things I read, research and think that I otherwise may lack.
  • Improve your writing: This benefit is obvious: the more you write, the better you write. I hesitate to say this because you may be thinking, "But Augie, you suffer from run-on sentences, passive voice and just misused the colon in the last sentence." All may be true, but I have come to realize that people inflate the fear of grammar but too often discount the fear of weak thinking. In the midst of a strong and persuasive argument, most will overlook (and not even notice) a missing comma or dropped preposition, but the best grammar in the world cannot save a weak idea. I can look back at my early blog posts and easily recognize the ways my writing and proofreading have improved. Any embarrassment I may feel about my past writing skills is more than compensated by the realization I'd still be stuck at that level had I not started and committed to my blog.
  • Build a network around ideas: The world is full of curators; millions of Twitterers share links to interesting articles and blog posts. Curating is valuable service, to be sure, but without creators, there would be nothing for curators to curate. At this stage in social media development, it is no longer easy to develop a following by curating--too many people share too many of the same links--but the world can always use more creators. Creators are the people who stop (or decrease) social media from merely being an echo chamber, and creators also earn the most attention. There is no more powerful way to bring attention to you and build an engaged network than by giving others content and ideas to think about, to react to or that they can share with others.
  • Create your own database of news and statistics: Ever have the experience of vaguely recalling an interesting statistic or survey but being unable to locate the content when you need it? Blogging is a great way to create your own personal database of the content you want to find again in the future. If I find interesting data or the results of a pertinent study, I write about it and link to it, and that means I can always find it by returning to my own blog. Take my last blog post, "Eight Ways Social Business and Mobile Tech are Changing Your Business": That one blog post contains 39 links; as a result, I will never have to waste time searching for the study that found teens sometimes opt to meet friends online rather than drive to meet them in real life. Whenever I need a data point for a deck I'm compiling, I will often use the search engine on my blog rather than go to Google--my blog has better and more helpful results (at least as far as I'm concerned). 

So now you know my secret--I write as much for myself as I do for you. Of course, if you and others didn't get value from my content, then this would be an unvisited and unread online diary and not a blog. 

I wish the same benefits for you. The process of reading others' content, developing your own ideas, legitimizing your point of view and connecting with others is its own reward. 

I hope many of my blog posts change minds, at least a little, but nothing would make me happier than to have someone thank me a year for now for encouraging them to write, share and connect in 2012. You may not get thousands of readers right off the bat, but there are people who are waiting to hear your voice. Do not disappoint them--or you. 

Monday, January 30, 2012

Eight Ways Social Business and Mobile Tech Are Changing Your Business

We are still very early in the social media era, and it will take years for social and mobile technologies and behaviors to affect fully the way business operates. However, some changes are already evident if you look close enough. Is your business watching for these changes and investing so that it is prepared when consumers are ready for new business models?

Today, many companies have happy customers and a sound business model, and they are confident that social media will have a nominal impact on their organization. If this sounds like your enterprise, beware! This was the mindset of companies like Borders and Kodak at the dawn of the Web era, but these organizations scrambled--and failed--to catch up to competitors that were quicker to understand, invest and evolve into new business models.

Whether your company will be Borders or Amazon (or Blockbuster or Netflix) (or MySpace or Facebook) will depend on whether it is willing to continually invest and adapt to fundamental changes in consumer mobile and social behavior over the next decade. Here are eight ways the business landscape will change:

  • Your purchase funnel becomes more complex and mutable: We already know that social media is affecting the way consumers become aware of products and narrow their consideration set. Brands like McDonald's, Ford and Kellogg's have made social media a substantial part of their strategy to raise awareness in the early potion of the funnel. As an example of using social tools to improve the end of the funnel, Forrester (my former employer) notes that USAA (my current employer) is effectively using ratings and reviews to increase conversions. (Sorry, a subscription is required to read the Forrester report.)

    Some say the funnel is dead, flipped, irrelevant, a maze, or a dozen other analogies. They are all right and they are all wrong, which demonstrates the complex, ever-changing world in which we operate. Attracting and binding consumers to your brand will take far different strategies than have worked in the past. The brands that succeed will be the ones that recognize they need agile strategies to capture different customers in different ways and to exploit moments of opportunity as they arise. Think Old Spice, which realized it had a hot property with Isaiah Mustafa's TV spots and rapidly deployed a real-time social media campaign that doubled sales.

    Inflexible multi-year marketing plans that focus on traditional tactics and media and that do not connect directly to product development and customer service will result in a disjointed and anemic funnel for the enterprise.
  • Your employees need new skills: Today's employees, who seem to spend every waking moment updating their Facebook wall or Twitter stream, may seem like they possess the skills your enterprise needs in the social business era. That assumption is wrong--it is akin to saying that people who text friends on their cell phones are prepared for the mobile technology and business models of the future.

    A skill gap is forming. Take the banking industry, as an example. For decades, the single deciding factor that people used to select a bank was the location of branches and ATMs, so banks put the vast majority of their channel dollars into branches. Times are changing quickly, and most banks are not altering their strategies accordingly. In Branch Today, Gone Tomorrow, Brett King predicts the number of bank branches will shrink by 50% in the coming years. Few of today's banks are prepared to differentiate on the products and services they furnish in mobile and social channels rather than the location of or service in their branches.

    What new skills will today's change-counting, window-staffing branch employees need tomorrow, and what will happen to employees who do not develop the right skills? Tough times are head for some. Brett King points out that the four largest banks employ just under 1 million people in North America while the three top tech firms manage with only 150,000 employees--and the tech firms earned 37% more profit last year. The employees of banks contribute $22,256 each to the profit of their employers, while the tech employees contribute $195,973 each. Banks must shrink, and they are not alone, so the imperative to adapt or be left behind is no less pressing for individuals than it is for organizations.
  • You must be (or try to be) early adopters or face dire consequences: Social and mobile technologies are increasing the speed of business. Though many firms identify themselves as "fast followers," the speed of today's business has killed this concept. Today's true "fast followers" are companies that thought and invested as if they would be a leader but got there behind a speedier competitor. If a firm thinks it will sit on the sidelines, watch what develops, and start to invest after new business models and processes are proven, the best they can hope for is to be a laggard and not dead. The business cycle will be increasingly unforgiving to companies who try to follow rather than lead.

    We live in a world where consumers on social networks expect answers in hours and where PR disasters evolve in real time. However, this is not just about the speed of your PR and customer service; it is also about the shrinking life cycle of your products.

    In 2006, Pure Digital Technologies unveiled the Flip Video camera, and product reviewers and users quickly hailed it as an amazing and revolutionary innovation. In 2010's Empowered, Josh Bernoff and Ted Schadler shared how one employee armed with a cheap Flip video camera rewrote the rules of training at Black & Decker. Yet in April 2011, Cisco announced it would cease to produce the Flip. Forget the "hype curve," this is the survival curve: From groundbreaking, jaw-dropping innovation to yesterday's stale product in just five years. How will your products keep up in the future?
  • Your products must be social: Social is not something you turn to at the end of a product development cycle merely to promote your new product. In the future, if your product is not innately social, it's nothing. Admittedly, it is difficult to make consumables like chewing gum or bananas more social, but what about the durable goods with which we interact every day?

    Cars seemed like an unlikely product for the integration of social, yet innovative automakers are leading the way with social technologies built into their product. You have already seen ads promoting cars such as the Chevy Cruze that permit drivers to interact with social networks. Even more ground breaking is Mercedes-Benz' new telematics app, CarTogether, which allows drivers to find people with whom to share rides and helps to cut down on emissions by reducing the number of car rides people have to make.

    Too many brands seem to believe that inserting a "Share This" button or implementing a Facebook widget on their site makes their brand social. Instead, they need to consider why consumers share, when they are most likely to share, and how the brand can facilitate this process from within the product and service experience. For example, after you book a restaurant through OpenTable, the company sends a timely email asking if you would consider rating the restaurant while your memory is still fresh. Another example is Amazon, which gives customers a one-click method to share their recently completed purchase with friends. The key to social won't be to have the most creative social media marketing campaign but to make it easy for your customers to share from within the product or service experience.
  • You must prepare for significant shifts in people's perceptions of ownership and status: In the Western world, things have come to define us: our address, the car we drive, the clothes we wear, the computer we use. (Everyone wants to be Justin Long and no one wants to be John Hodgman--except me, apparently.)

    The status of things will not go away, but today's teens are demonstrating different priorities--they get status from their networks and access to things, not just ownership of things. Ask a parent of a teen what their child's attitude is towards driving, and you are likely to hear a different story than when you were young. A study by the University of Michigan Transportation Research Institute finds that the percentage of 19-year-olds with driver's licenses dropped 14% in the past 18 years. Younger teens have seen an even greater decrease; today 33% fewer 16-year-olds have their driver's licenses compared to 1983.

    The decrease in driver's licenses for teens may be due to legal or parental restrictions, but a study by ZipCar suggests that teen and young adult attitudes are considerably different from prior generations. Millennials are twice as likely to be open to public transportation, car sharing and carpooling as seniors. More than half of Millennials drive less in order to protect the environment. In addition, almost seven in ten Millennials say they sometimes choose to spend time with friends online rather than driving to see them. Finally, 18- to 34-year-olds are roughly twice as likely as those over 55 to participate in media sharing, car sharing or home sharing programs.

    Can we still call consumers "consumers" if they are actively adopting ways to consume less? And what does this mean to your business model?
  • You must show consumers what you stand for, not just what you sell or make: Anyone in the world of brand strategy knows that consumers have always considered what your brand stands for when evaluating competitive products. That much is not new, but it has changed in two ways. The first is that who you are has never been more important. As Bob Garfield and Doug Levy shared in Ad Age, the 2006 Edelman Trust Barometer demonstrated that "quality products and services" was the top response in identifying the standard of trust, but by 2010, "quality" had dropped to the third slot. "Transparent and honest practices" is the new number one, with 83% of respondents citing it.

    Not only is your reputation more important than ever, your organization has never had less say in your reputation. In the mass media era, your organization was largely defined by your advertising and PR in few tightly controlled media channels. Today, consumers define your brand with their interactions in social networks, rating sites and other online communities (not to mention their face-to-face influence in the real world). Bank of America invested $1.9 billion in marketing in 2010, yet it could not defeat a cost-free groundswell of angry consumers led by a 22-year-old nanny and a 27-year-old gallery owner.

    Apple will make an interesting case study in the years to come. To date, it has been the gold standard for how your brand benefits when it means something more to consumers. Apple is the most valuable company in the world, yet for all its wealth the company has escaped the indignation heaped on rich corporations by the Occupy movement. That may be about to change--recent articles have questioned Apple's environmental policies and a blistering New York Times article last week made disturbing accusations about Apple's treatment of workers overseas. Apple CEO Tim Cook has refuted the article, but some observers fear Apple is following a traditional course of PR management by denying the accusations and responding narrowly.

    Apple will not retain its valuable place atop the list of trusted brands without a different course of action. Even then, it will be consumer reaction to Apple's policies and not letters from Tim Cook or slick advertising that determine Apple's fate in the future.
  • Your enterprise must prepare to be on the right side of a new wave of disintermediation and reintermediation: Social and mobile business will affect every enterprise, but some will be more impacted than others will. I predict three broad groups of businesses will be affected sooner than others:
    • Companies that own assets and make them available to consumers for rent: Hospitality and car rental companies face new competition from peer-to-peer models. In New York, hotels now compete against 10,000 rooms, apartments and even spare couches offered by consumers on Airbnb. (I find Airbnb's self-reported claim that the average New Yorker is making $21,000 per year renting on the social service highly dubious, however.)

      For most consumers, their car is one of the most expensive assets owned, yet the average consumer uses their car just 8 percent of the time. It is this low utilization that is leading some to offer their cars for rent, and RelayRides reports the average person using the service makes $250 a month renting their car. (I find this claim less dubious but still would like to see the data.) And as consumers get access to the cars they need when they need them, ownership becomes less attractive; one study found that people who use car sharing services were 72% less likely to buy or lease a car in the future.

      For both hotels and cars, more supply means lower costs for consumers and less revenue for providers. In addition, the new social business competition has a vastly different cost structure from traditional providers--Airbnb and RelayRides do not need to purchase, own or maintain assets, while IHG Group holds more than $1.5 billion of fixes assets and Hertz owns more than $13 billion of fixed assets.
    • Companies that facilitate business between consumers: If you are in the business of earning fees to take something from one customer and get it to another customer, social business models will challenge your business. I am not talking eBay or Craigslist--they already are the standard for peer-to-peer (P2P) disintermediation and reintermediation, having killed newspapers' classified ad business.

      Instead, look at banks, which take money from savers and lend it to borrowers. Today, savers get little, but this is not the case for folks lending money on Prosper and LendingClub. Yes, the risks are higher, but so are the rewards (which, any economist will tell you, is the basis for capitalism.) While the regulatory hurdles for being a "bank" are high, companies are skirting the regulations and bringing down costs to consumers with new mobile wallet, P2P money transfer and P2P lending models.
    • Companies that manufacture durable goods: We have already discussed how younger consumers are less interested in obtaining drivers licenses and prefer to meet friends online and to decrease miles in order to save the environment. It is clear that P2P and sharing business models will affect the auto business (and related industries such as auto parts and auto insurance).

      The buck does not stop there, however. Take, for example, garden and home tools. Some people are avid gardeners or DIYers around the house, and these people will want to own their own tools. But what about the average consumer? Must every household in every neighborhood own a circular saw or hedge trimmer--equipment that the owner uses for just a handful of hours each year? Today, many neighbors borrow from one another, but watch for social business models to put this on steroids. If consumers can share what they own more easily, widely and with a profit motive (and not just a neighborly intent), ownership of some durable goods could drop.

      It would not surprise me if in ten years Home Depot or Lowe's (or some upstart competitor) made more money from renting or facilitating P2P lending of equipment than from selling durable goods outright. While retailers that move quickly can have a key role in the future of social business, what about manufacturers? What does it mean if the market changes so that millions go from wanting to own an underutilized piece of equipment to merely wanting to rent it in real-time? Answer: Fewer items manufactured and sold and a shift in the market toward commercial-grade products that can withstand more punishment and usage.
  • You must prepare for consumers empowered with greater information about you, competitors and their own money: Social and mobile business models have a way of empowering consumers to make better decisions. For example, as car owners, we tend to think of short trips as cost free, but this is not the case; we give little thought to how each trip means more costs for gas, maintenance and insurance, so the cost of a single trip is not immediately obvious or relevant to our decision to make that trip. Conversely, when we rent a car and must pay for the trip immediately and directly, the cost becomes a significant part of our decision.

    People who rent cars through car-sharing programs make better decisions, combine trips and find alternatives. This is the finding of a ZipCar study one year after introducing the service in Baltimore. The company surveyed customers and found that the number taking five or more car trips in a month decreased from 38 percent to 12 percent, and the number driving fewer than 500 miles per month increased by more than 17 percent.

    Mobile wallet applications will have the same affect on consumers by allowing constant monitoring and control of credit card and checking balances. Today, consumers spend by swiping a card, with no immediate feedback; tomorrow, each swipe of our NFC-enabled phone will show our credit balance rising or debit balance falling. In addition, applications can help us track spending to budget, manage cash flow in real time, collect discounts, create more usable records of our spending and furnish a host of benefits that permit better control of our money. In addition, using our phones as barcode readers holds can furnish real-time access to competitive prices, product reviews and, perhaps, to additional information such as the environmental or labor policies of the manufacturer.

    Social and mobile business tools hold the promise of making consumers more aware of the effect of each spending action. Will this newfound power overcome the innate human desire to impulse buy? Who knows, but it seems we will all be more empowered and informed in the future. 

I am excited about the next decade. Better-informed consumers will have more access to information in real time and can avail themselves of new social and mobile business models that save money. Companies will scramble to keep up with lean new competitors and consumers' rapidly changing technology habits and sharing behaviors. The companies that quickly create a vision and begin to invest against it are the ones who will succeed, but the organizations that take a wait-and-see attitude put their stakeholders' interests in considerable danger. 

Thursday, January 26, 2012

Ten #Fails in Professional Twitter Profile Pictures

Not everyone is on Twitter for professional reasons. If not, get the heck off my blog and go read The Oatmeal or TMZ or something. However, if you are on Twitter to create a professional network, learn, educate and build your reputation, let's talk about your profile pic.

I am consistently surprised by the way some professionals portray themselves on Twitter. You have precious few ways to introduce yourself to new people on Twitter. Before someone can access the pearls of wisdom in your tweets, they first need to follow you, recognize you and want to know you. What impression do you create in the split second someone takes to consider following? And when people scan their tweet stream, what does your profile picture do to lend credibility to your tweets?

People who wish to achieve professional goals on Twitter must select profile pictures that advance, not  hinder, those goals. Of course, if you are on Twitter to have fun, all of the following advice is null and void, but if you are spending time to construct a professional persona and create a professional network, here are ten ways your profile picture may undermine that effort:

  1. Illustrations: Remember when Mad Men had that app that converted your picture into a hip illustration? That was cool--in 2009. Creative, artful versions of yourself are fun, but if your goals are professional, do you really want to be defined by a cartoon character?
  2. Logos: If you are a company, a logo is fine for a profile picture, but if you are a person, ditch your employer's logo (except, perhaps, a tiny one in the corner). You do not introduce yourself at professional events as "Hi, I'm XYZ Corp," so do not do so on Twitter.
  3. Significant Others: We're so happy that you found your soulmate, but unless you're surgically joined at the hip, think with one mind and have a single conjoined career, two heads are not better than one. Save the romantic couple pictures for your desk, not your Twitter avatar. (And do not get me started about wedding shots as profile pics--it was the happiest day of your lives, not your most professional.)
  4. Crop Crap: If your profile picture contains a mysterious disembodied hand or shoulder or, worse yet, you cropped off your ear to eliminate another person from the shot, it is time to smile for the camera and take a new picture. Severed body parts are for horror movies, not your profile pic.
  5. Webcam: Webcams are amazing devices--for capturing video. If your profile picture is a dark, muddy shot of you hunched over your kitchen table staring into a fish-eye lens, then take a real picture with a real camera already.
  6. Boobs: I am not being sexist--this advice applies to both men and women: Button it up and cover your chest. Twitter is not Match.com. If you do not want people staring at your chest at work, you should not want them to stare at it on Twitter.
  7. Outdated: Ever meet someone in person that you have only known online and thought, "What the hell happened to you?" Your first meeting IRL should not leave people wondering if you borrowed someone else's photo or had a disfiguring accident. If your photo is more than three years, 25 pounds, or two hairstyles different from reality, update it.
  8. Animation: I don't see this often, thank God, but please omit animation from your profile picture. Yes, it makes your avatar more obvious and grabs attention--so much so that many people will unfollow you to avoid the blinking annoyance.
  9. Frequent Changes: Staying fresh is important, but remember that your profile picture is your face to your Twitter friends. When people scan their tweet stream, it is your photo and not your name they are most likely to recognize at a glance. Consistency may be last refuge of the unimaginative, but it is also the best way to be recognized in a sea of tweets and avatars.
  10. PURE ENERGY!!!! You think your wide-open mouth and eyes convey that you are energetic, exciting, and unafraid to express yourself; instead, it tells us you may be slightly crazed, prone to emotional outbursts and apt to break into Richard Simmons' routines. Unless your profession is cheerleading, impress us with your competence, not your exuberance. 

I considered the profile pictures of the people I follow most closely, retweet most often and with whom I've built the strongest relationships. With very few exceptions, they all share one thing: Their profile pictures feature high-quality headshots.

It may be a digital world, but your face still matters. It conveys trust and personality more quickly and effectively than your 160-character Twitter bio. Be sure to put your best foot, er, face forward.

Tuesday, January 24, 2012

The Role (and Death) of Marketing in the Social Media Era

Copyright Warner Bros. Entertainment
The other day I noticed that my December 2009 blog post, "2010: The Year Marketing Dies," was my blog's most popular article. Here it is, 2012, and CMOs are still employed and Marketing Departments still exist. Oops!

Should I be embarrassed? Before you answer that, I would like to make the case that Marketing is already dead, but marketers just don't know it yet. Like Wile E. Coyote after he has dashed off the edge of the cliff but before gravity has kicked in, I think the profession of Marketing is hovering and waiting for a fall.

I will cop to employing some hyperbole in both my December 2009 blog post and the one you are reading now, but less than you might think. Exaggeration aside, the discipline of marketing has some profound and painful changes coming.

Just this week, we witnessed yet another in a long string of marketing blunders. McDonald's promoted the #McDStories hashtag as a way to get people talking about their McDonald's experiences. People talked, all right--they used the hashtag to vent on everything from poor service to the chain's treatment of animals. Marketing observers can add this faux pas to a long list of recent marketing missteps:

It is important to note that I am not citing cases of mistakes or service blunders that became social media disasters (a la PayPal/Regretsy, Chrysler's F-bomb or GoDaddy's Elephant-Killing CEO). Nor are these examples of consumers taking to social media to rail against corporate policies (such as Greenpeace/Mattel or Bank of America's debit fee). Rather, all of these blunders are something entirely different--companies deploying marketing strategies and tactics that consumers reject, resulting in brand damage.

Prior to the social era, it was damn near impossible to have a marketing campaign head south. About the worst that could happen was nothing--a brand might waste its marketing budget on a campaign that fell flat and failed to move consumers. Nowadays, every month brings another story of a marketing campaign that not only fails to help the brand but bites it.

It is at this point in similar blog posts about the state of marketing that the blogger usually says something like, "In the social media era brands cannot control the message, but in reality brands never could." That is a nice narrative--and it is complete horse manure. Whether it was the power of mass media, unsophisticated consumers or a society more willing to trust authority, the truth is that marketers wielded incredible power back in the day. Thanks to pervasive and often misleading marketing, consumers thought smoking was safe and pale skin was unhealthy for decades before the dangers of cigarettes and suntanning were revealed.

Just look at Kodak. They were the poster child for how marketing can create a brand. More than ten years ago, I read an article on branding that contained a line I still recall: "Kodak is memories; the other guys are just film." That was pure, marketing success--a generic product with a powerful brand that delivered decades of protected market share and higher margins.

Today, Kodak is bankrupt. Branding expert Al Ries believes Kodak's problem was not that they failed to adapt to the digital era but that "Kodak means 'film' photography; Kodak doesn't mean 'digital' photography." I believe Ries is wrong--if brands were that inflexible, then Apple would be a defunct desktop computer manufacturer instead of the company that just reported a record quarterly profit of $13 billion derived mostly from sales of music, music players and phones.

The comparison between Kodak and Apple is instructive. Almost every single person who reads these words owns an Apple product, I'd venture, but what about Kodak cameras? I am a photo buff who bought thousands of roles of Kodak film in my lifetime, but I'm on my fourth digital camera and have never once been tempted to purchase a Kodak camera. They were never as small, fast, affordable or feature rich as comparable Nikon, Canon and Fujifilm models. In fact, look at ZDNet's annual holiday buying guides for compact digital cameras in 2008, 2009, 2010 and 2011: out of the thirty cameras listed, just one is from Kodak.

The problem that Kodak faced--that all brands face today--is that marketing in the social era increasingly works only for brands that first furnish a positive experience. In the social era, marketers can amplify brands that create positive experiences with products and services, but great marketing cannot save mediocre products and services.

If the company is unable or unwilling to differentiate the product or service experience, what is left for marketers to do? For brands with little positive sentiment to amplify and an army of empowered consumers ready to pounce at disappointing products and clueless marketing, the best marketers can hope for is to build buzz not about the product or service but about the marketing itself. "Don't like our burgers? Then here's a free social game that will get you buzzing about something other than our burgers." Marketers for undifferentiated products and services can create retweets, likes, comments, engagement and shares--everything except actual improvement in consumer consideration, intent or purchase behavior.

Certainly, there are some great recent examples of marketing that works. I've been impressed with the work being done by P&G, RadioShack, USAA (my employer) and others, but their success begins with the right product and service. P&G's Let Her Jump campaign would not have soared if women didn't trust Secret antiperspirant; RadioShack's #UNeedANewPhone hashtag campaign would have backfired if the retailer didn't carry the phones consumers wanted; and my employer's evocative TV ads wouldn't create trust if our service failed to earn trust in the first place. In recent weeks, USAA has been named the top firm in Forrester's Customer Experience Index, ranked by JD Power among the top auto insurance companies in customer satisfaction, and named a People's Choice insurance company in a study by Insure.com. At USAA, marketing is the icing on a cake baked with great products and services.

Marketing is creaking like an aged man leaning on a cane. The real power to create or destroy brands now rests with product managers and service leaders. If marketers are unable to influence the strategies, investment and staffing that impact customers' product and service experience, they are (much like Wile E. Coyote) running in place in thin air, hoping to gain traction.

I've argued my case. Now I'll repeat the question at the top of this blog post: Should I be embarrassed by my December 2009 blog post, "2010: The Year Marketing Dies"? Feel free to shame me in the comments of this blog post.


There is a little story behind my post, "2010: The Year Marketing Dies," that you may find interesting. Shortly after accepting my offer from Forrester's Interactive Marketing team, I received a call from my new boss about a change in their blogging policy. The research firm wanted analysts' content and wisdom in one place rather than spread across hundreds of personal blogs, and so they asked me to give up my personal blog and instead write for Forrester's Interactive Marketing blog.

The strategy made sense, but I was concerned Forrester might not appreciate some of my wilder material. My new boss assured me that Forrester had no interest in censuring bloggers, so to test the waters, I decided to write a blatant provocation: as my first blog post as Forrester's new marketing analyst, I announced marketing would die in the coming year.

I shared my proposed blog post, confident a speedy rejection was forthcoming; instead, the blog post was approved without edit. It was a terrific sign as I started my new job that Forrester would be a great fit. And it was!

That blog post may have been intended as a deliberate affront, and I admit I was exaggerating the point, but I'll still stand by that article. Marketing professionals need to help firms build their brands first with products and services and second with advertising, influencer programs and imaginative social media marketing campaigns.

Monday, January 23, 2012

The Incredibly Difficult and Important Job of Community Manager

Happy Community Manager Appreciation Day! The idea for this worthy annual event came from Jeremiah Owyang, and it is a terrific idea. Most organizations truly have no idea how much authority and power they have imparted on their Community Managers, and recognizing the people who fill these difficult and important roles seems very appropriate.

This blog post is dedicated to and inspired by the community managers on my team at USAA, who execute their duties with energy, creativity, passion and grace. Analisa, Jessica and Raul, with the support of Josh and Julie, have taught me a great deal about the challenges and rewards of the job. I would like to share that wisdom with you.

One of the great challenges of being a Community Manager is that few people seem to notice when you do something right, but everyone seems to know when a rare mistake is made. When your Community Managers keep all the spinning dishes from crashing to the ground, the outcome is an engaged community that grows steadily, avoids inflaming detractors and creates loyal customers. We ought to celebrate that with banners every day because those are the results that matter, but instead we tend to heap attention on those who spend the brand's dollars on a program that delivers 250,000 retweets or "likes."

When do Community Managers get attention? Their work becomes the focus of leaders and fodder for case studies when an uncommon mistake is made. Answer a thousand difficult and sensitive questions and you may get a pat on the back, but mistakenly post a personal message to the brand Twitter feed or respond with a frustrated and very human message on Facebook, and everyone from the President to the maintenance crew hears about it.

Another challenge that Community Managers face on a day-to-day basis is how much of themselves to bring to the job. A million blog posts tell brands the importance of being "real," "personal" and "human" in social interactions, but what does that mean where the rubber meets the road?

When your Community Manager is sitting at a computer looking at the brand's Facebook page or answering a question in a brand community, is it "I" or "we"? Are humor and emoticons appropriate or not? Can a Community Manager say "I'm sorry" or does that impart legal responsibility and risk to the company? Even with written brand standards, balancing the voice of the brand against the need (and desire) to make human connections is not easy.

The Community Managers at USAA are very cognizant of the need to balance their voice with the brand's. In the past, my team has debated things like whether or not they should append their names to the end of Facebook comments on the brand page. (We do so, now.) And when, in preparation of Community Manager Appreciation Day, I suggested we make a Facebook post to let our community get to know the team a little better, our Community Managers wrestled with whether or not it was appropriate to bring this much attention to themselves. We decided that our Community Managers embody the personal commitment USAA employees have for the military community, so later today we'll introduce our community folks with a post to the USAA Facebook page.  

It is one thing to struggle with the balance between being personal and being the brand voice, but it's another thing when your customers make that choice for you. We had one customer accuse one of our Community Managers of manipulating a Facebook contest to benefit her friends. The accusation was baseless and an expression of frustration by a person upset her entry was not receiving more votes, but no matter how much one can logically explain a customer's angry and accusatory post or tweet, it is still difficult and frustrating when it is directed at you personally. There is no situation in which it is more important nor more difficult to set aside personal feelings and bring the brand's voice.

I've shared some of the frustration of the job, but what about the benefits of being a Community Manager? There are some career advantages to being employed at the cutting edge of how brand building is changing; for example, USAA's Community Managers have had the opportunity to directly teach the association's president and other leaders about social media. It also is exciting to be part of every single campaign or important communication initiative within the organization. Plus, one important bonus for handling consumer concerns and needs in social channels is the opportunity to see detractors become advocates.

And finally, there's the autonomy and importance of the job--Community Managers are creating and reinforcing the brand through hundreds of public interactions a week. Your brand's advertising and PR is reviewed by a dozen executives before it is released, but the tweets, posts, comments and replies that fashion your brand in social media go directly from the hearts and minds of your Community Managers to your customers. There are few if any people within the enterprise who so personally epitomize and feel ownership of your brand like your Community Managers.

I hope the USAA Community Managers know how much I appreciate their hard work every day, but I am sure I fall short of bringing this to my daily interactions with Analisa, Jessica and Raul. Today my challenge to you isn't merely to thank your Community Managers on Community Manager Appreciation Day but to consider ways to bring appreciation throughout the year.

In your communities, every day is Community Manager Appreciation Day. Shouldn't it be the same inside your organization?

Wednesday, January 18, 2012

The Shrinking Half-Life of Never

"The future belongs to those who see possibilities before they become obvious."
                      - John Sculley, former CEO of Apple

There are many reasons why people fail to see the future, even when it is pounding down their front door. Some are too busy in the now to see the world changing around them; some see trends and mistake them for fads; and some are simply too invested in today's skills and business models to consider their evolution. No matter the etiology of the disease, the symptom is usually the same--bold and unassailable declarations such as "I will never..." and "Our customers will never..." If you hear these words, recognize them as the danger signs they are.

The threat of overlooking vital market trends is certainly not a new phenomenon. Just ask the powerful railroad companies of the early 20th Century, which failed to understand the changing needs and technology of society. Stuck in the mindset that they were in the rail business and not the transportation business, railroad companies watched as rail passenger travel declined 84 percent between 1945 and 1964. In the first half of the 20th Century, the Pennsylvania Railroad was the largest publicly traded corporation in the world, but by 1970 the merged Penn Central declared bankruptcy.

The forces that undid Pen Central 40 years ago are the same forces that torpedoed Borders in recent years. As recently as two years ago, Borders Group operated 511 superstores across the globe; late in 2011, the company liquidated its last store. Unwilling to see (or adapt) to the way media sales first went online and then went digital, the company struggled. It first turned to Amazon as its online store provider, but by the time Borders tried to establish its own online store in 2008, it was too late.

How do highly compensated executives--recognized and experienced experts in their field--miss profound change on this scale? You do not need deep insight into the railroad or book selling business to understand how this phenomenon works. If you are over 40, you've experienced it firsthand. Chances are you have repeatedly declared (either aloud or silently) "I will never..." only to prove yourself wrong time after time:
  • In 1994: I will never own a personal computer.
  • In 1997: I will never waste time on the information superhighway.
  • In 1999: I will never be tethered to a mobile phone every hour of my life. 
  • In 2001: I will never submit my credit card number through a Web site.
  • In 2003: I will never need a smartphone--my email can wait until I get to my PC.
  • In 2007: I will never share my personal information on those crazy social networks.
Never isn't what it used to be. It took most of us no more than two to five years to move from "I will never..." to "I am doing it religiously..." for all of these behaviors.

Many of those who laughed at the nerds typing away on their Atari STs and Commodore Amigas are now on their third generation of personal computing, having transitioned from desktops to laptops to tablets and mobile. The people who declared they would never be stupid enough to trust their credit card number online are today storing their Visa numbers on Amazon and checking their investment accounts on their cell phones.

When we personally misjudge the future, the implications are relatively minor. The folks who mocked Treo and Blackberry addicts changed their minds, bought iPhones and Androids, and caught up to the early adopters. Conversely, the organizational implications of misjudging the future are far more serious. "I will never..." too easily becomes "Our customers will never..." which is expressed as "Our organization will never..." By the time "never" becomes "OMG!," it is too late to steal market share from more agile and established competitors; it is even more difficult for a fading brand to recover lost trust and convince consumers it is still relevant. Buy books at Borders? That is so 2007!

Today, what are you saying you will never do? How will your 2017 self prove your brash and ignorant 2012 self wrongheaded and shortsighted?

How about, "I will never lend money to a stranger through a peer-to-peer (P2P) web site?" Many bankers today think peer lending is a minor blip, but with the leading P2P lending sites growing more than 100% per year, this may well be a social business model many will regret discounting. (Given all that goodwill many of the big banks have accumulated, I'm sure they have nothing to worry about.)

Other executives say "I will never spend more on social media than traditional advertising," even though the transition is already well underway; Coca-Cola has shifted 20 percent of its marketing budget to social, for example. The trend toward social will not abate soon. Forrester reports that 55 percent of marketers expect "created social media" to grow in effectiveness while 21 percent expect the same of television and just 10 percent anticipate radio advertising effectiveness to rise.

The cure for the disease of business myopia is quite simple: Never say never. Recognize that the half-life of "never" has never been shorter. The quicker we appreciate that "never" is not a very long time in today's environment, the sooner we can start leading our organizations to embrace the remarkable changes ahead.

Thursday, January 12, 2012

Four Ways to Fix Social Media Marketing

My last blog post, "Social Media Marketing is Broken," was a rant, and while rants are fun and cathartic, they are not helpful. (I'm also disappointed to note that rants tend to draw more retweets and visits, so perhaps I should aspire to be the Lewis Black of Social Media.) Since I strive be helpful and create positive dialog on this blog, I'd like to explore four ways social media marketing can be fixed:

  • Don't report fan page increases without reporting engagement level: It's too easy to add fans and followers for the wrong reasons. Run a sweepstakes on Facebook, and hundreds of thousands of freebie hunters with no interest in your brand will click "Like." As a result, your engagement will go down, your EdgeRank will not improve, and your brand's posts will not reach a larger audience. Let's be clear: Increasing your fan count with disinterested fans who do not engage means you've squandered your precious budget dollars.

    If you need a simple engagement metric, look no further than Facebook's recent addition to fan pages, the "talking about this" number. Divide your page's "talking about this" figure by the "like this" count, and you get an easy, free measure of engagement. How does your brand's ratio compare to your competition's? More importantly, how does it compare from month to month for your own page? Investing in strategies that increment your fan count while leaving "talking about this" unchanged means you are NOT engaging more people where it counts--on their walls. (And any page administrator who has glanced at his or her Facebook Insights knows that relying on large numbers of people to visit your wall is a losing proposition.)

    By the way, I used the word "report" and not "measure" for a reason. It isn't good enough merely to measure your fan count and engagement numbers, you should report both metrics to leaders and peers. This is the only way to educate them on the importance of maintaining and increasing engagement rather than obsessing over the easy to monitor but less important fan count total.

  • Don't report on engagement level without reporting on quality of engagement: That simple engagement metric I just suggested comes with one major caveat: It is easy to manipulate. If all you do is post jokes, viral videos and silly questions, you will increase engagement, but probably in way that increases your brand's EdgeRank to the wrong people for the wrong reasons.

    Don't get me wrong, there's a place for posts that help your brand convey more personality on Facebook, but it is imperative you focus engagement-raising tactics on the people who matter most to the brand. If your target prospects and customers are seniors or B2B buyers, it does no good to increase your EdgeRank with viral videos that appeal to younger people (even if it does boost your "talking about this" number).

    How can you report to your boss the quality of engagement? Many Social Media Management Systems can divulge the demographics of the people you're engaging. If you don't have the budget for an SMMS, a simple way to call attention to the people you are engaging and the ways your brand creates engagement is to report the most engaging content posted to the wall each month. If doing so raises difficult questions about the topics you are posting or the audiences you are engaging, that's a strong sign your social content strategy needs tweaking.

  • Don't report on quality of engagement without reporting on brand or business metrics: What good is investing in social media marketing tactics if all you're getting is digital babble without driving any value for the organization? Driving WOM isn't a true business measure if all those retweets and shares don't change minds, spark consideration or alter buying behaviors.

    Remember Taco Bell's "Yo quiero Taco Bell" chihauhua? Of course you do. Back in the late 90s, that campaign became what we'd today call a "viral success." It got lots of people talking and sold 13 million stuffed animals. Alas, what it did not do is sell tacos. The campaign and agency were scrapped after same-store sales dropped six percent. "Viral" and "Engagement" do not equal "successful" if no business value is created.

    Business value can be derived in a number of ways. Short-term and direct business measures include site traffic from social sites and tracking links through to conversation. Longer-term measures are harder to come by but are even more important, because we in the social media arena are in the relationship business and not the direct response business. Using brand measures and media mix methodologies validates that today's social media investments equate to tomorrow's consideration, intent and sales.

  • Make marketing the SECOND most important thing you do in social media: Much of the reason social media marketing is broken is that the medium is not, primarily, a marketing channel. It's a channel for connecting, sharing, conversation, collaboration and sentiment. Your brand may want to connect with customers on marketing matters, but your customers have different goals.

    I'm still amazed at the number of brands that will constantly update their status in Facebook while ignoring virtually everything posted by consumers. Regardless of the intent or quality of your content, your actions are delivering the message that your brand only cares about itself. I'm reminded of one of my favorite Ralph Waldo Emerson quotes--a phrase I consider the defining maxim of the social era--"What you do speaks so loud that I cannot hear what you say."

    The beauty of prioritizing customer service over marketing in social media is that doing so will actually enhance your marketing. By demonstrating you care about customers, your messages are more likely to be received. Engaging to solve customer problems also increase sentiment. And creating dialog about the issues customers care about increases your EdgeRank, making your posts more likely to get through to your fans' walls.

We can make social media an appropriate and successful medium for marketing--some brands already have--but until we improve upon the metrics and goals in social media, we cannot improve social media marketing itself. The poor grab bag of freebies and sweepstakes that are too common in social media marketing today are hurting more than helping, and it is well past time for Marketing 2.0 thinking to match our Web 2.0 world.

Sunday, January 8, 2012

Social Media Marketing is Broken

"I am going to Germany for seven months," announced my friend on Facebook, and her confused, concerned and excited friends erupted with a dozen urgent questions. An hour later came the explanation: "It was a cancer awareness meme. Sorry to have put bad info out there." Well, I feel so much more aware about cancer now, don't you?

This is just the latest example of how social media marketing has become (or always was) broken--a chase for memes for memes' sake. Social media marketing is an insular and largely meaningless game where the perceived winner is not the brand that gains awareness, consideration or purchase intent but the one with the most retweets and likes.

The problem rests not with social media but with marketers. I blame marketers for focusing on quick fixes and easy metrics rather than appreciating that--as always--brands gain customers' trust, usage and loyalty through hard work and not button clicks.

The problem isn't only in social media, of course. Too many marketers have been lazy, focusing more on saying different things about the brand in paid media rather than helping the brand to be different in meaningful ways. These marketers continue to invest in lookalike ads, hoping the right headline or creative imagery will catapult the brand forward, ignoring the preponderance of evidence that validates people are drawn to brands for deeper reasons.

For example, the 30 companies featured in the book "Firms of Endearment," selected because they are driven by purpose rather than quarterly earnings, grew their stock by 21.06% annually compared to 3.3% for the S&P. These "firms of endearment" advertise, but not like everyone else. Take Patagonia--while other retailers were using Cyber Monday ads and emails to pump discounts, Patagonia used the same channels to tell its customers "Don't Buy This Jacket." Patagonia won not by telling customers "Pick me! Pick me! I've got the best discounts!" but by encouraging customers to "buy less and to reflect before you spend a dime on this jacket or anything else."

IKEA, another "firm of endearment," is again demonstrating why it belongs on the list. IKEA could've had a sweepstakes for a Fado lamp or given away a virtual Klobo loveseat for Farmville farmers; instead, the company listened to the people who launched their own fan page entitled, "I wanna have a sleepover in IKEA." VoilĂ , a perfect combination of PR, social media and fan-building loyalty program with a 100-person sleepover in an IKEA store.

In social media, marketers suffer from the classic problem of failing to understand cause and effect: "Starbucks is a social media success with 26 million fans on Facebook, so all I need to do is gain fans by giving things away in Cityville and I'll be a success, too!" I am not suggesting Starbucks hasn't done some savvy marketing in social media (more on this later), but Starbucks does not succeed because they have Facebook fans, they have Facebook fans because they succeed at providing a product and experience with which people connect.

Seek social media marketing case studies and you will find a typical assortment of tired marketing promotion tricks ported into the social media era--brands that gained new "fans" by giving away a freebie or offering a sweepstakes. These tactics have been around for decades, so why is it we see them featured in so many social media case studies but so few brand marketing case studies? Because experienced marketers know these tactics do not (for the most part) work.

Freebies and sweepstakes accomplish very specific things--they help launch a new product, promote a new product feature, penetrate a new market or secure display space on retailers' shelves. They may raise trial and awareness, but they do not deliver repeat usage, loyalty and advocacy, the very building blocks of social media success.

If most freebies and sweepstakes are a mismatch for social media, why do social media marketers use them so much? The argument seems to be that providing an incentive to Facebook users to try your fan page is a first step toward building Facebook relationships, but that sort of thinking ignores how Facebook works. Thanks to Facebook's Edgerank, adding a bunch of disinterested "fans" who hide or ignore your posts does not help but rather hurts your brand's chances for success on Facebook. Running a real-world sweepstakes so that 3% of the participants become customers may or may not be a smart marketing investment, but running a Facebook sweepstakes so that 3% of the participants become engaged members of your fan page is a brand-killing play every time.

Is it possible to succeed with a freebie or sweepstakes in social media? Yes, if you focus on two things--the thing you offer has to encourage people to engage with the brand in a meaningful way and the audience on which you focus must be not the largest but the right audience. For most brands, offering an in-game freebie to Cityville's 43 million users makes as much sense as offering a new chess piece that devastates opponents' pieces in an entire rank of the board. Chess players of the world will take it; they will use it to enhance their chess game; but does it make them consider or buy your insurance or peanut butter brand? No, because it fails to provide meaningful brand engagement to the right audience.

I mentioned Starbucks earlier, so let's explore how this "firm of endearment" succeeds with freebies, ads and sweepstakes. It gives away free Wi-Fi in stores and offers free content for customers--meaningful brand interactions to the right customers. Starbucks used Promoted Tweets to serve ads to people who search for "coffee" and "Starbucks" to let them know about the free drinks available for those who use reusable cups--meaningful brand interactions to the right customers. And Starbucks has given away samples of a new coffee available in the aisles of grocery stores, not just to anyone but only to Twitterers who influence others and who tweet frequently about coffee--meaningful brand interactions to the right customers.

If I see one more headline about a brand that adds 100,000 new fans in a day because of a sweepstakes or freebie, I am going to throw my laptop out a window. I'm just tired of it. Not only is it frustrating to see so much attention lavished on poor social media marketing, it also is time consuming to constantly explain to others why there is no easy (and truly beneficial) way to add hundreds of thousands of fans to our own fan page, despite evidence to the contrary.

It is time social media marketers abandon the easy metrics and focus on the ones that matter. It's the NFL postseason and I'm a Packer fan, so I cannot resist the analogy: In the 2010 season, six quarterbacks threw for more yards than Aaron Rodgers did. Nine completed more passes than Aaron Rodgers did. Five threw for more touchdowns than Aaron Rodgers did. Seven even won more games. But Aaron Rodgers led his team to a Super Bowl victory.

Stop counting yards and start focusing on how your brand truly wins in social media. If most social media marketers shifted their attention to metrics and strategies that matter more, social media marketing would matter more.

Sunday, January 1, 2012

How To Raise Prices and Avoid a Social Media Backlash from Your Empowered Customers

The equation for business in 2012 is unmistakable and sobering: Trust in brands is eroding, consumer economic confidence is low, and the ability of frustrated consumers to fight back through social media continues to grow. This past year saw a number of high profile brands attempt to implement fees or raise prices, only to backpedal and grovel after facing a scathing flood of angry and vocal customers.

A lot of time and money is wasted planning, executing and reversing a large-scale business policy, but many of the companies who reversed course lost more than time and money--they lost customers and market share. Bank of America attempted to implement a fee for debit card users, contributing to an exodus of 650,000 bank customers to credit unions in just four weeks--more than the 600,000 customers who joined credit unions during the entirety of 2010--and that was before the Bank Transfer Day organized in social networks. Netflix tried to raise prices by separating their streaming and DVD rental business, resulting in a loss of 800,000 customers in a single quarter.

These two companies didn't just lose some reputation--they lost financial value. Both companies "listened to their customers" and rescinded their derided policies, but that failed to prevent a significant loss of market value. BOA shares are down 10% since it announced its debit card fee and Netflix shares have lost 55% of their value since the company's September 19 announcement. In the old days, angry consumers faced with price increases merely switched brands; today they can organize, attack, broadcast, influence, switch en masse, and adversely affect the value investors place on the brand's future.

It is vital that business leaders realize the trends we are seeing as we move into 2012 are not new or temporary. Trust in brands has been eroding for more than a decade--according to the Young and Rubicam BrandAsset Valuator, consumers in 2008 voted just over one-fifth of brands as trustworthy, less than half the 52% of brands considered trustworthy in 1997. Meanwhile, consumers are cautious to spend due to an economy that no one--particularly not Fed Chairman Ben Bernanke--expects to improve any time soon. And, as consumer adoption of social media grows, so does the number of social media crises faced by business, according to Altimeter.

In 2012, the potent combination of consumer frustration, economic woes and social media empowerment may not simply affect individual brands; these forces could reshape entire industries this year. One consulting firm surveyed 5600 consumers about the brand vulnerability of retail banks in the US and predicted growing customer anger could result in the 10 largest banks losing $185 billion in deposits during the next 12 months--nine percent of total retail deposits at those banks.

Verizon's one-day reversal this past week only underscores the seriousness of the business environment entering 2012. Verizon announced plans to charge a fee for single bill payments online or by telephone. The uproar was so great that in just a single day, Verizon rescinded its plans. Not only were consumers contacting Verizon to complain, but they were broadcasting their frustration in social media. Hundreds of consumers turned an unrelated Verizon Facebook post into an impromptu forum for venting frustration and 160,000 consumers signed an online petition at Change.org (created by the same young woman whose  online petition contributed to Bank of America's woes.)

So, does this mean companies cannot charge more for their products or institute new fees? Of course not, but there is no longer any excuse for an organization to be surprised and suffer losses due to these sorts of consumer reactions. Consumers are feeling more empowered and are seeing results from their coordinated actions in social media, so 2012 is going to be rocky for businesses that do not embrace new ways to engage, appease and enlist the empowered consumer. As Edelman Digital's Michael Brito and I discussed on Twitter, the steps to avoid a social media disaster are not difficult:

CONSIDER ALTERNATIVES: Is raising a fee or a price the only possible business decision given the circumstances? Can consumers see this as essential and fair, or will they only view your decision as a way to extract more money for shareholders?

For instance, rather than implementing a $2 fee for customers making single bill payments, could a reasonable alternative be a $2 discount for people who switch to automated bill pay? In the intermediate- to long-term, the result is the same--a two-tier pricing system that encourages consumers to embrace cost-saving methods. At a time when consumers are seeking any way to save money, offer the carrot and not the stick to motivate consumers.

Another way to avoid social media disasters is to focus fees and price increases on the few that are raising costs rather than your brand's entire customer population. TD Bank has faced little backlash to their recent fee increase, and the difference may be that the bank targeted the new fees to those few customers--just one percent--who make excessive savings account transfers and thus increase costs. TD Bank has seen little social media backlash--on the same site where Bank of America and Verizon have faced large-scale petitions, the one created to complain about TD Bank's new fees has the support of just the individual who launched the petition.

Another thing to consider is how consumers will react. Consumers never like price increases, but many of 2012's social media reactions weren't just gripes about higher prices. Much like politicking candidates, consumers often seek to frame company decisions into a sound bite. Customers were incensed that Bank of America would charge "me to access my own money in my own checking account." Verizon customers thought they were "helping the company and the environment" by paying online rather than sending physical payments through the postal mail. The substantive negative reactions had as much to do with the perceived context as with the fees themselves.

EXPLAIN: Consumers are not unreasonable, stupid or powerless. They can support a price increase if it is explained in a way that respects their knowledge of the world and power in the brand relationship. If you find you are unable to craft a reasonable, consumer-facing justification for a new fee or price increase, that should be a big, blinking "danger ahead" sign.

Bloggers hammered Netflix for not explaining the reason behind their price increase to customers using both the streaming and DVD services. It certainly defied any logic that with inflation running under 4% a company would need to increase prices 60% in one fell swoop. Did Netflix underprice their services in the first place? Did the streaming or DVD rental business models change due to some unexplained market change? We don't know because Netflix didn't explain it.

The reasons behind Verizon's fee remained a mystery to its customers, mentioned but not explained in a single sentence in the company's press release: "The fee will help allow us to continue to support these single bill payment options in these channels and is designed to address costs incurred by us for only those customers who choose to make single bill payments in alternate payment channels." Why are costs higher for single bill payers? Are costs really higher for people who make single bill payments online versus showing up at a Verizon store with cash in hand? We don't know because Verizon didn't explain it.

The days of implementing a price or fee increase with little to no explanation and then weathering a tiny customer tempest in a teapot are pretty much over. It's not that that approach cannot work, but it is risky and unnecessary. The B2B world, where single customers have always had greater power, has known this for some time, but B2C brands are not use to worrying about empowered consumers. B2C brands would be wise to learn best practices from those B2B brands that have always had to explain price increases and put them into a context that customers can accept. For brands hoping to charge more to customers in 2012, explaining more and testing the message has never been more important.

ASK AND ENGAGE: Consumers may not be excited to help you figure out ways to charge them more money, but they will help brands solve business problems and reward brands for treating them as partners. For example, which sounds better to you: "We're raising fees for people who pay by credit card" or "We incur fees when customers pay by credit card and this increases costs for all customers, which may not be fair. How can we encourage our customers to help us keep prices low?" When you ask customers to help save you money, they may answer "tough luck" and suggest you eat the costs, but wouldn't you rather know this before you announce a new pricing policy that consumers reject?

Starbucks saw the cost of coffee increase and successfully implemented price increases in 2011. Of course, some complained when their "Venti" price jumped a couple of dimes, but the company avoided damage through its use of social media to ask and engage. It maintains a site asking customers for suggestions and has the 32nd most popular page on Facebook where they engage 26.5 million fans. This permitted Starbucks to surf through the year in fine form--with the Dow up 5.5% in 2011, Starbucks shares rose over 40%.

RESPECT: Consumers may react as much to the lack of respect businesses show when increasing fees as to the fees themselves. Language matters, and turning to "marketing speak" rather than candor can make an already difficult communication challenge even greater. Verizon called their new very inconvenient fee a "convenience fee" and Netflix's blog post announcing a 60% price increase included the phrase, "lowest price(s) ever" three times.

Consumers are perceptive and well informed, and they will react when brands fail to speak with them in an honest and forthright manner. A price or fee increase is a risky proposition in this business environment, so don't add fuel to the fire with language better suited for press releases of the past than for a conversation with the empowered consumer in 2012.

TRANSPARENCY: Finally, it is high time in 2012 to understand what that overused but seldom understood term, transparency, means in the social era. Some companies seem to define transparency as "When the customer base erupts and overruns our social channels, we'll have a discussion with them." That sort of reactive transparency is better than none, but avoiding reputation and business problems requires proactive transparency in 2012.

When you ask a newlywed why they chose their spouse, they will answer, "s/he makes me laugh" or "s/he brightens my life," and not, "Because s/he will tell me bad news so we can have a discussion of how to solve problems." The same thing is true when consumers "marry" brands in social media--they will not say that they connect with brands in order to "To hear bad news and have a discussion about price increases," but as with any relationship, consumers do not want to be lied to or managed by their favorite brands.

Your Facebook and Twitter feeds are not just a means to broadcast advertising in a different form. Just as people react when they find their spouses have been spoon feeding them happy lies while hiding growing financial problems, your customers will be offended and incensed if you engage with them on Facebook about marketing programs while sneaking a price increase into your PR newsroom. Transparency in 2012 means having the guts to announce your price increase on Facebook and Twitter just as you would your latest promotion.

If that sounds risky, then you need to reread the preceding paragraphs. If you have considered alternatives, explained, asked, engaged and respected your consumer, then discussing your business environment and the reasons why a price increase is necessary should not be threatening. Consumers may decline your proposal in a strong and unified fashion, but unlike the customer-sapping stock-depressing embarrassments seen in 2011, your brand can walk away from that discussion with customers having a stronger relationship with the brand. Today's "no price increase" may be tomorrow's higher margins powered by loyal advocates. Handled right, customers won't divorce your brand but instead renew their vows.

A brand has always been a relationship, but too often it has seemed that relationship is defined by what happens at a cash register. That never was the case--the relationship between brand and consumer is consummated well before the purchase, when consumers associate themselves with brands they respect, are proud of and say something about themselves. Communication is the key to any relationship, and in 2012 it has never been more vital for brands.

While the consumer mindset is sobering this year, that does not mean the relationship with your brand cannot be stronger than ever. The difference between a headline-grabbing social media backlash and a successful implementation of a price increase or new fee depends more on how you do it rather than what you do, and how you do it depends more on what your brand stands for than what its prices and fees are.