Archive for February 2008

Why Reckitt get it and what we can learn

An article in this week’s Economist reports on how for the last eight years Reckitt Benckiser, a household products maker, has bucked the trend both in its own industry (with average year-on-year sales growth of 7% when others’ sales are declining or stagnant) and on the stock market (its share price rising by 356% when the FTSE has dipped by 13%). Such performance cannot be put down just to Barry Scott in the Cillit Bang adverts. Rather Reckitt’s success is due to something that sounds easy but is incredibly difficult for larger companies and brands to do effectively: listening to customers.

Reckitt listens to what customers say and understands their habits; this lets them innovate. And innovation is important to companies like Reckitt: over 40% of their sales come from products that are less than three years old. The new is important.

New products at Reckitt are tested with customers; positioning is tested with customers; ideas are tested with customers. In fact, customers are involved at every stage in the innovation funnel something that is not commonly found but has clearly helped Reckitt. Their R&D spend is lower than their competitors and less than 20% of their brand innovations fail - a figure that may sound high, but actually isn’t! Their CEO, Bart Becht, may have said this week in a Guardian interview that they “make some stupid products”, but they’re clearly products that customers want.

So what can we learn from Reckitt.

1) Involving customers at every stage in the innovation funnel can have real benefits. These are the people who use your product in the end and so getting them to help with ideas, development and testing can be really powerful. This is different from just market research and testing as you can get customers to be inventive and creative, coming up with ‘crazy’ ideas of new products. Some of these crazy ideas will turn out to be quite sensible.

2) You can over-develop products. Sometimes it’s best to get a product out to market and see what the reaction is rather than endless testing and development. You will quickly see what happens; whether a product is a success or not.

3) But it’s worth testing sooner rather than later. Even though you can just put products straight to market it is good to test. A way to expedite this is to involve consumer testing at the earliest possible stage. Get them involved at ideation; use them to help eliminate ideas they don’t think would work or to spot problems early on.

4) If you ask them, listen to them. Involving customers so closely in product development means you have to listen to what they say and use their opinions to inform your decisions. This isn’t an add-on or a tick-box exercise; you’re involving them and mean it.

5) If you ask them, tell them what you think too. The best information from customers will come if you are involving them in a two-way conversation. Asking them for feedback and then responding to it - telling them what you think back and letting them know what actions you have taken on their feedback.

Using customers in your innovation isn’t something to get into lightly. It takes commitment across the business and is a longer term engagement. But the outputs of such close insight and research can be incredible!

A new era for qualitative market research?

Some people think that the the internet and qualitative research make unlikely bedfellows. But at FreshNetworks, we think that qualitative methods are set to exploit the way we use the internet, and specifically online communities, to share opinions and information. Though later to the table than their quantitative counterparts, applying qualitative principals online opens up exciting possibilities, with benefits for brands and consumers alike. We’re exploring these issues in a new white paper that is out later this month, Online Customer Communities: a new era in qualitative market research. We’ll be posting the white paper on here in a few weeks, but an taster of our thoughts is below and if you want to read the full thing drop me an email.

The recent explosion in public online communities – MySpace and Facebook being prime examples – has been widely documented with a quarter of all Britons visiting social networking sites. Facebook alone has 25 million users and acquires 100,000 new users per day. Surfing, reading buyer reviews, blogging and so on are no longer just for geeks. Recent research conducted for Google reveals that the average Briton now spends around 164 minutes online every day, compared with 148 minutes watching TV. That is equivalent to 41 days a year surfing the web and more than any other activity after sleeping and walking.

Alongside the mass public communities sit an increasing number of niche networks where members focus on shared opinions or interests: they are communities of like-minded people, rather than people with pre-existing relationships. These people identify themselves primarily by their interests, making online networks a natural step forward in the researcher’s repertoire – and a much-needed one given that many research methodologies we use today date from the 1950s.

Both public and private online communities offer opportunities, but many brands are wary of sharing company information openly. Invitation-only, private online communities centred on a single brand or customer segment may be the solution. These private communities can also engage customer groups or target consumers who might be difficult to reach using traditional off-line methodologies. Consumers enjoy this new, more participative research approach and the interaction with other users re-introduces the social context often missing from other research approaches that conceive of the consumer as an isolated individual.

Brands also benefit from online communities by having them on-hand to answer questions, test hypothoses, and observe. Online technology can adapt to almost any research need, be it showing creative stimulus material, gathering ideas for innovation or simply an instant ‘go/no go’ when you need it. The continuity built through online networks brings new possibilities for supporting ideation processes. With a group of people on board, research can keep pace with internal development processes, providing a consumer feedback loop to check new ideas, such as product development, from inception to launch.

Ultimately, however, it is up to the company on whose behalf the private online research community is set up to reassure consumers that they are genuinely interested in hearing customers’ views and closing the feedback loop. As ever, the first rule of engagement is to do it for the right reason, which means listening to the result. If this principle is embraced, and the qualitative research framework understood, then online customer communities not only deliver different and deeper insights than were previously possible, but actually provide clients with the opportunity to enhance loyalty and promote a positive disposition to their brand.

Obama is winning the web campaign

To some, the US primaries, if not the presidential election itself, look like a done deal. The numbers speak for themselves: Clinton trails Obama 101,758 supporters to 428,899; McCain on the other hand has just 50,480 supporters and Huckabee doesn’t have a single one.

I’m not talking about delegates, votes last Super Tuesday or even predictions for this weekend’s ballots. Instead I’m talking about Facebook - the number of people who have said that they are ‘supporters’ of each candidate’s page on the social networking site. It’s not that these are particularly large numbers for Facebook (over 143,000 have joined a group about panic-buying carrots in May for instance) but that these ‘supporter pages’ are particularly active with high participation rates, moreover thay are a way to tap into a particulaly important demographic for candidates. A report by the Pew Research Center in January showed that 24% of the US public learns about the presidential campaign from the Internet; for those aged between 18 and 29, this figure rises to 42%. In a campaign where every vote really will count, the Internet is as much a battlground as the townhalls of New Hampshire have been and the cable channels and national TV debates will be.

That the Internet is a campaigning tool and source of information for voters is not new and not particularly surprising. What is interesting is to look at how the candidates are using their presence online and where they are going. Rather than just using their own websites to broadcast information in the hope that people will visit, the campaigns are being taken to places where voters hang out online - most notably Facebook and YouTube. Candidates are identifying supporters or potential supporters in these places and then harnessing them in groups or networks. This is a great example of the oft-cited shift in marketing theory from an age of ‘interruption’ (think traditional TV advertising) to onw of ‘engagement’ (think tailored ads online or word of mouth campaigns). The candidates are proving to be very good at using new tools; better in some cases than large brands are.

So what is the benefit of using Facebook or YouTube in the way that Clinton and Obama, McCain and Huckabee are? Well natural preexisting communities of people are easier to tap into and easier to seed with information and ideas than are communities of people you have to build yourself. You can use these communities as a place to share all your information - no need to have seen a particular campaign ad when it aired as you can watch it in your own time on YouTube. But what is more exciting is the opportunity to use groups such as those on Facebook to test new ideas - get feedback on campaign slogans and positioning with a sample of a few thousand people before you release it on the whole country. This is more people than you could reach with traditional methods such as Focus Groups, and because you are tapping into a community with social bonds and networks you are able to watch how a community (rather than set of individuals) respond. You can see how the influencers in the group react, and how they pass your message onto others. If you use it properly, you have created a microcosm; a test lab for your ideas and messages. And all for relative little outlay.

The candidates in the US primaries appear to be ahead of the game in terms of marketing and using online communities for innovation. They could teach brands a lot, but have a significant advantage in being able to easily identify where their target audience hangs out and are happy to engage them publicly for all to see. Brands often need some help with this.

Customers have really good ideas: let’s harness them!

I’m at the Retail Business Show today, meeting people and attending talks and presentations on social media and online branding. I love events like this - they are great sources of inspiration and new ideas and also help to reinforce things you think yourself. Today has helped with the latter - Matthew Yeomans from Custom Communication said something that we truly believe at FreshNetworks: that customers have really good ideas.

His talk on social media and brand reputation online showed ways that brands can interact online and also some successful (and less successful) uses of social media and other new ways of doing things. Two great examples that show good and bad use of the online space by brands come from different sectors and different countries: Nokia and Sony. Both thought it would be great to increase their presence online and thought that it would be powerful if they could leverage their brand advocates to help with this. In fact they both had a very similar idea - get their brand advocates to use blogs and diaries to show positive interactions with their product. The problem is one did it well and another less so.

Nokia’s idea was to find the most active Nokia bloggers online, give them the newest Nokia phone and send them on a round-the-world trip on condition that they blog daily and send back photos and videos sent with the phone. The site (Urbanista Diaries) has the blogs and photos and is using these in marketing - running ‘where was this photo taken’ competitions as a second wave word of mouth campaign. It works - Nokia is upfront about what they’re doing. They use real customers to blog and produce content and have an engagement strategy that continues the campaign.

Sony was less successful. The launch of the PSP was accompanied by a blog that purported to be from users of the product. It wasn’t; the blog was actually being run by journalists who were blogging as if they were the PSP’s target consumer group. This was discovered and spread rapidly online. To their credit Sony took down the site and after just a day and all they were doing was running what could have been a powerful word of mouth marketing campaign. Perhaps they were nervous of letting their actual customers do the blogging and so they wanted to control what was said, and how their brand was portrayed online.

These examples show both that customers have good ideas but that firms can sometimes be nervous about harnessing customers online. The Nokia blog enabled Nokia and other consumers to see how an expert interacted with their product, the kind of photos and videos they could take and other advantages of the product that may not have been discovered without this. The Sony experience shows that firms can be reluctant to actively harness their own consumers online; perhaps nervous about what they might say (remember: customer opinions can be bad as well as good) and about launching something they had little or no control over.

There is a need to provide a means by which customers can share their ideas but also in a way that’s harnessed by the brand. Some are happy to let their customer ideas feed directly into marketing campaigns and activities online (as in the Nokia example) whereas others might want to keep the ideas private, in a way that the brands can control and harness but without the risk that their image may be tarnished externally. This is where private social networks are powerful - the ability to create an innovations lab that is invitation only and that firms can use to test their ideas, getting and responding to feedback (good or bad!). These can be strong communities - you recruit your most active online commentators from a broad or specific consumer segment and tell them that what they are saying and commenting on is feeding directly into your brand’s innovation process. The results are incredible!

We’re actually talking about private social networks later this afternoon at the Retail Business Show and I’ll be posting the slides here another time.