Mass Affluence: A book review by Bob Morris

Mass Affluence: Seven New Rules of Marketing to Today’s Consumer
Paul Nunes and Brian Johnson
Harvard Business Review Press (2004)

Lead, Follow, or Get Out of the Customer’s Way

Nunes and Johnson help to increase our understanding of an especially powerful trend in contemporary marketing: creating or increasing demand for customized products or services that have been mass-produced primarily for affluent consumers. This is a complicated subject in that, as recent research clearly indicates, many of these same products and services also appeal to less affluent consumers. This is precisely what Michael Silverstein and Neil Fiske discuss in Trading Up: The New American Luxury in which they refer to “products and services which possess higher levels of quality, taste, and [key word] aspiration than [other] goods in the [same] category but are not so expensive as to be out of reach…[trading up to products and services which] sell at much higher prices than conventional goods and in much higher volumes than traditional luxury goods and, as a result, have soared into previously uncharted territory high above the familiar price-volume demand curve.”

According to Nunes and Johnson, what is needed is “an approach that considers the facts about mass affluence and delivers a comprehensive view of how companies can change their marketing strategies to capture the value created from greater consumer affluence. That is why we wrote this book; that’s what we’re attempting to provide.”

Indeed they do, and with discipline and eloquence. Their material is carefully organized within four Parts: The New Rules of Positioning, The New Rules of Designing Offerings, The New Rules of Customer Reach, and then a final section which responds to the question “What’s Next?” Then in their Epilogue, Nunes and Johnson share their observations and suggestions with regard to “Reenvisioning an Industry” (i.e. the jewelry and watch business), applying to it the “seven new rules of mass marketing” previously introduced and discussed in the first chapter.

Long ago, Warren Buffett suggested that price is what we charge and value is what the buyer thinks it’s worth. I was reminded of that as I read Part One in which Nunes and Johnson explain “The New Rules of Marketing.” These are not their rules nor are they even rules per se. Rather, they are strategies that the competitive marketplace has already determined are more appropriate to new realties. For example:

Old Rule: Avoid middle-market positions between low-cost and premium.
New Rule: Seize the new-middle-ground position, above the rest of the conventional offerings and below the ultrapremium solutions. (Please see Figure 2-1 on page 33.)

Old Rule: Produce less-expensive versions of luxuries to sell to the masses.
New Rule: Introduce new models of ownership that make a wealthy lifestyle, and even real luxuries, affordable to the masses.

According to Nunes and Johnson, traditional mass marketers can “play by the new rules” (i.e. can capture the spending of the moneyed masses) without sacrificing the former core mass market. How? Give customers the chance to spend more by offering new premium versions, adding on product upgrades and differentiated service levels to existing offerings. Also, honor customers with the recognition they desire by creating status levels that richly reward willing-to-spend customers in all of the ways they wish to be recognized. Also, offer the right price to each customer by using effective pricing to achieve differential margins based on qualities that aren’t intrinsic to the offering. Customers may not always be right but, ultimately, their perceptions ARE market realities.

They are asking different kinds of questions now. For example, “What does this [watch, handbag, dress, set of golf clubs, etc.] say about me?” Moreover, they are less concerned about a luxury item’s purchase price than they are about ROI that includes enhanced self-esteem in their own eyes as well as in others’. New realities do indeed require different (if not “new”) strategies by which to respond to them. Nunes and Johnson offer several in this book, anchoring each within a context of relevant information and appropriate examples. Well-done!

Those who share my high regard for this book are urged to check out James H. Gilmore and B. Joseph Pine’s Markets of One: Creating Customer-Unique Value through Mass Customization, the aforementioned Trading Up, James B. Twitchell’s Living It Up: America’s Love Affair with Luxury, Virginia Postrel’s The Substance of Style: How the Rise of Aesthetic Value Is Remaking Commerce, Culture, and Consciousness, Gerald Zaltman’s How Customers Think: Essential Insights into the Mind of the Market, Joseph Epstein’s Snobbery: The American Version, and Bill Stinnett’s Think Like Your Customer: A Winning Strategy to Maximize Sales By Understanding and Influencing How and Why Your Customers Buy.

 

Creating A World-Class Customer Experience – the Key Word is “Experience” (lessons from UCLA Health System, from Joseph Michelli)

It’s in the sub-title:  Prescription for Excellence:  Leadership Lessons for Creating a World-Class Customer Experience from UCLA Health System by Joseph Michelli.  Ponder the phrase, mull over the concept:  “customer experience.”  I am increasingly convinced that this phrase, “customer experience” is the best phrase to use to talk about customer service.

Think about the depth behind this statement:  ”It’s been my experience…”  When a person utters those words, it communicates a whole lot.  Each person passes judgment on a company within each and every experience.

In discussing this concept, Michelli refers to the book The Experience Economy: Work is Theatre and Every Business a Stage, published back in 1999 (this is a book I presented at the First Friday Book Synopsis over 11 years ago; Spring, 2000):

- from Gilmore and Pine, 1999, The Experience Economy:
• Even in difficult times, 50 percent of consumers will pay more for a better service experience.
• A full 68 percent will sever a customer relationship because they were treated poorly by a staff member.
• Companies that are successful in creating both functional and emotional bonding with customers have higher retention rates (84 percent vs. 30 percent) and greater cross-selling ratios (82 percent vs. 16 percent) compared to companies that are not.

And UCLA has developed a true customer-centric/customer-experience approach to their core business – taking care of patients.  Principle 1 of their 5 core principles is this:  Commit To Care — Care Takes Vision, Clarity, And Consistency.  And the UCLA Health System requires each and every employee to sign the CICARE promise:

• “CICARE” – (pronounced “See-I-Care”) — the “short version”:
Connect with the patient or family member using Mr./Ms., or their preferred name.
Introduce yourself and your role.
Communicate what you are going to do, how it will affect the patient, and other needed information.
Ask for and anticipate patient and or family needs, questions, or concerns.
Respond to patient and/or family questions and requests with immediacy.
Exit, courteously explaining what will come next or when you will return.
(the longer version, teaches…   elements of Courtesy; Professionalism; Respect)

I thought of all this as I had three different customer service experiences this week.  I use these three “services” each and every month.  They include Constant Contact, and two others.  Here’s what I have experienced:  whenever I call Constant Contact, the person I reach is easily understandable; is fully knowledgeable; is always polite – almost pleasant.  And I always get what I need, with no hassle, and no feelings of frustration.

The second company (notice I am not naming the other two) is hit-and-miss.  One time, I have a terrific customer experience.  The next, maybe not.  Every person I have ever called at Constant Contact seems fully ready to meet my need.  This second company, I either get lucky, or I end up slightly to more-than-slightly frustrated.

The third company, well…  don’t even get me started.  With practically every call, the person is not all that pleasant – it’s as though I am interrupting his or her day with my question/need.  They are not knowledgeable.  They do not have answers.  And though they are not rude, they are nowhere near pleasant.

Let’s think of these as three different spots on the customer experience spectrum.  One, I would gladly recommend to you. (That’s Constant Contact).  The second, I would recommend, because the service is really, really good.  But don’t expect the same level of experience.  The third, I’m about to drop – even though I like their “service,” and dropping it will mean more work for me.  I’m simply tired of dealing with them, and I’m looking for an alternative.

Or, to put it another way — I don’t mind it when I have to call Constant Contact.  I sort of mind it when I have to call the second compnay.  I practically dread calling the third company.

Think about your customers, your clients.  Do they walk away from every encounter with you having experienced a genuinely, hassle-free, fully liked, experience?  Or — not?

By the way, there are no short cuts to providing such a true good experience culture.  It takes constant attention, over the long haul.  You can never let it slide!

Every customer encounter is taken personally by that customer.  Every experience is judged.  Every time.  And each bad experience can lead to the loss of that customer (A full 68 percent will sever a customer relationship because they were treated poorly by a staff member).  You don’t want that, do you?

The Entertainment Economy: A book review by Bob Morris

The Entertainment Economy: How Mega-Media Forces Are Transforming Our Lives
Michael J. Wolf
Crown Business (1999)

Note: I read this book when it was first published and recently re-read it, curious to know how well its core concepts have held up since then. My conclusion is that they have held up very well. If anything, Wolf’s insights are more valuable now than they were then.

According to Michael J. Wolf, “Locally, globally, internationally, we are living in an entertainment economy.” In fact, that is the title of his new book that consists of ten chapters that proceed from an introduction to the “entertainment zone” to a “view from tomorrow.” In between, Wolf carefully examines a full-range of business situations in which entertainment plays an increasingly more important role. For example, he focuses on the fun-focused customer, the e-factor (“there’s no business without show business”), the battle for attention, the struggle for world domination, the genesis of a phenomenon (i.e. whatever redefines “success”), what he calls “enteractivity”, brand empires, and the role of sponsors.

Wolf observes, “Within its home turf…entertainment is in many parts of the world the fastest-growing sector of the economy. This is as true of developing countries as it is of mature ones. But of even wider impact is the way entertainment content has become a key differentiator in virtually every aspect of the broader consumer economy.” Moreover, “…where America’s entertainment economy goes, the rest of the world is not far behind.” Although he does not state it explicitly, Wolf views “entertainment” from two quite separate perspectives: entertainment as a commodity (films, videos, radio and television, concerts, athletic events, etc.) and entertainment as a strategy (e.g. to create a sense of being “entertained”). As Wolf explains, not all commodities are inherently entertaining but it is possible to nourish the appeal of virtually all commodities by use of appropriate entertainment principles.

In this respect, Wolf seems to agree with Bernd Schmitt and Alex Simonson, co-authors of Marketing Aesthetics. Consider Williams-Sonoma which attracts customers to its upscale stores with the aromas of fresh-baked bread and fresh-brewed coffee, produced on-site by appliances it sells. Schmitt and Simonson assert that marketing is most effective when it appeals to most (if not all) of the five senses. Wolf would no doubt confirm that the nature and extent of that appeal will usually determine the nature and extent of a consumer’s sense of being “entertained.”

Every retail merchandiser should ask, “Who buys what we sell? Which images will be most appealing? Window displays, posters, counter-top promotions? Which aromas will be most appealing? Gourmet coffee, popcorn, chestnuts roasting on an open fire? Which sounds will be most appealing? Bach, Hole, Dwight Yoakam, Celine Dion?”

Wolf characterizes Ted Turner, Michael Eisner, Sumner Redstone, and Rupert Murdoch as “the conquistadors of modern business.” Why? Because they and their associates understand so well that entertainment (both as a commodity and as an influence) has an almost unlimited global audience. To Wolf’s credit, everything he says is directly relevant to almost any organization, regardless of size of nature. If an organization does not understand The Entertainment Economy, it probably doesn’t have much of a chance of survival. Those interested in this book are urged to consider, also, B. Joseph Pine and James H. Gilmore’s The Experience Economy and Schmidt’s Experiential Marketing.

What Experience Do You Provide Your Customers?

You’ve got two challenges.  Keep you current customers very, very happy.  And, find your next customer.

But customers are not like they used to be.  They get to choose – everything!  And most of all, they get to choose whether or not to be your customer.

I was re-reading my handout from the intriguing book, Waiting for Your Cat to Bark? – Persuading Customers When They Ignore Marketing by Bryan and Jeffrey Eisenberg and Lisa Davis, and read this:

The experience economy…  signifies the final blow to the notion of mass marketing.  Today, the experience of the product or service – the experience of the exchange itself – defines delight and ultimately spells success or failure for the business and the brand.  Experience is not objective.  And it is your customer’s perception of the experience that you must strive to improve…  The increased intimacy of that experience is what allows customers to ascribe a deeper connection and more value to products and services.  The structuring of that intimacy is the goal of Persuasion Architecture.

At the heart of the experience economy is this.  Was the customer’s experience memorable (in a good way)?  Here is a quote from The Experience Economy: Work is Theatre and Every Business a Stage by B. Joseph Pine and James Gilmore:

Companies stage an experience when they engage customers in a memorable way.

Customers remember two kinds of experiences.  The really good ones.  And the bad ones.  You don’t want the bad, and you don’t want the “neutral.”  You want your customers to have good, memorable experiences.  Those are the only kind that will keep them coming back, and spreading the word, in this era.  Why?  Because they simply have too many choices…
(By the way, they will also spread the word re. the bad experiences – whether you want them to or not).)

So, ask this – over and over again:

are my customers experiencing good positive experiences when they come to my event or buy my product or service?

If not, you’ve got some better experiences to create.

(By the way, the one guarantee of a bad experience is an experience filled with “hassles.”  Aim for hassle free experiences!)

Book Review: Selling the Invisible

Selling the Invisible: A Field Guide to Modern Marketing
Harry Beckwith
Business Plus (1997)

This is one of the few books I have read that focuses almost entirely on the marketing and sales of services that are, paradoxically, both “invisible” and experiential. (Bernd Schmitt also has much of great value to say about this in Experiential Marketing as do B. Joseph Pine and James H. Gilmore in The Experience Economy and Michael Wolf in The Entertainment Economy.) Beckwith shares an abundance of information and advice, duly acknowledging various sources from which he has obtained some of the material. I do not damn him with faint praise. His own contributions are first-rate. In “Summing Up”, he provides a brief but precise discussion of various sources that he commends to his reader. This has much greater value than does the standard bibliography. And there is a value-added benefit, his sense of humor, which is indicated by some of the section titles such as “Anchors, Warts, and American Express”, “Ugly Cats, Boat Shoes, and Overpriced Jewelry: Pricing,” and “Monogram Your Shirts, Not Your Company.” Throughout the book, he includes more than 100 of what I characterize as “business nuggets,” all of which are directly relevant (indeed illuminating) within the context in which he inserts them.

Beckwith reveals himself to be an astute observer of human nature. What he suggests can be of substantial value to any organization in which business relationships, including those that are internal, are less than desirable. Everything he suggests combines common sense with a sensitivity to others’ needs and interests. Indeed, almost everyone in almost any organization (regardless of size or nature) must constantly be “selling” various services to others within and beyond that organization. First, they must establish credibility, then trust, and finally obtain agreement to cooperate, if not collaborate. Almost all relationships succeed or fail because of intangibles. Beckwith examines them within a business context but, in process, suggests wide and deep implications relevant to all other areas of human experience. This is an immensely practical as well as thoughtful book.