October 7, 2016

Creating a Digital Marketing education ecosystem in (east of) The Netherlands

The strugle of businesses and advertising agencies who are active in online marketing to find personnel with knowledge and skills on areas related to digital marketing is well known. Under pressure from the field more and more technology companies like Google, Microsoft or IBM are creating educational environments for fast-track education in various domains.
Google for example launched in the summer of this year an initiative called Google Talent Factory
targeting college students who wish to make a career in digital marketing.

The program not only offers the possibility to students to get in touch with AdWords but also brings in touch students with agencies interested to hire them. As one of the universities participating with more than 10 groups every year in the Google Online Marketing Challenge we were also approached to bring this opportunity under the attention of our students.
Google is not the only technology giant active in the education of future marketers. IBM is behind the initiative Big Data University that offers a variety of online courses. In our Master course
Advanced Topics in Digital Marketing we have included two of the courses offered namely the IBM Watson Analytics and the Big Data Introduction courses as part of the course curriculum. I could mention more such initiatives reflecting the increasing anxiety of the field about the inability of the higher education institutions to adapt their programs in Business Administration and Marketing in particular to the new market and social reality, namely that the online world has become a platform where commercial, educational, social and transaction activities are increasingly taking place.
Here in the Netherlands and also in the east of the Netherlands where out University is located we observe an increasing interest by local businesses active in digital marketing domains to get involved and assist us in our efforts to educate and provide skills to future marketers. Companies like Team Nijhuis (top Google Partner in the Netherlands), AdWise (a very successful agency in online Marketing) are companies actively participate in our Digital Marketing courses providing guest lecturers and case studies. This week I attended with some of my students an open house event by a company in Enschede (Lime Square) specialized in Neuromarketing techniques. I was very pleased to see that the CEO of this company was welcoming visits and use of their labs by our students.
Another initiative taking place in the Netherlands is that teachers / professors of Digital marketing from the country will have a first meeting in October to discuss the state of affairs of the digital Marketing in The Netherlands. Possibly a yearly symposium of Digital Marketing in Education will be the outcome of this event.
All these facts signal the creation of a digital Marketing ecosystem in this country. We as University of Twente want to be in the forefront of this effort. After all the moto of this university is High Tech - Human Touch.

Does it make sense to study Business Administration in a Technical University?

This is a question for many students interested in Business Administration. I was asked by the Facebook Portal for Greek students in the University of Twente to explain what are the advantages of our program. Among other things we offer a unique possibility to students to enter the world of Digital Marketing both in the Bachelor and in the Master programs with two electives:

The 15 EC module Digital Marketing for Networked Businesses in the Bachelor

The 5 EC course Advanced Topics in digital Marketing

The interview is available in the following link

https://www.facebook.com/notes/university-of-twente-in-holland-greece-portal/interview-of-dr-efthymios-constantinides-assistant-professor-in-digital-marketin/1202289659844736


September 10, 2016

New warning to Web Designers: 200 milliseconds is enough to make it or brake it

In 2006 a group of Canadian researchers (Lindgaard, Fernandes, Dudek, and Brown) published an article in the Business & Information Technology Journal called Attention web designers: You have 50 milliseconds to make a good first impression*. In this study the researchers tested whether a very short exposure (50 milliseconds or 1/20 of a second ) is enough to create a quality perception about a web site that is consistent with the quality perception about the site if people examine the same web site for a longer time. They found indeed that 50 milliseconds are enough for internet users to form a positive or negative impression about a web site.

I thought this is a good example to use in order make clear to my students of the Master Advanced Topics in Digital Marketing today how important is the web site design for the quality perception of people about web sites and how short time is needed in order to form an opinion about a site’s aesthetic quality.

I started my lecture today with a short experiment where all present students took part: I presented them 2 web sites (that in my view could be examples of good and bad design) on the screen. They were exposed to a screenshot of each web site twice, the first time for 200 milliseconds (it was not possible to make a 50 milliseconds exposure in this setting) and the second time for 10 seconds which is close to the average time that Internet users look to new sites when browsing the web searching for something online before deciding to stay in the site or move on.
Forty-seven students took part in the experiment and although it is not a really scientific one the results confirm the findings of the Lindgaard et.al. study from 10 years ago: The consistency of quality perception between the very short and the long exposure is impressive. In the case of the “nice” web site 78% of the participants said that they liked in after the short exposure (200 milliseconds) versus 93% who liked the site after a more thorough examination during the 10 second exposure. In the case of the “not nice” web site the results were even more impressive: 100% did not like the site in the short exposure and 98% also did not like it after the second long exposure.
Can this mean that bad designed web sites have a stronger negative effect on us than the good designed web sites if we are exposed to them online? This is possible but what is sure is that the statement of the Canadian colleagues in their article 10 years ago is still valid. 

There can be maybe more conclusions from our not scientific test but maybe it will be a good idea to replicate the Canadian study to get a good impression of the effect of web design on quality perceptions today when Internet users are much more experienced and sophisticated than 10 years ago.
In the picture you can see the results of the test, Web site A is the "nice" and Web site B is the "not nice" one.

*Lindgaard, G., G. Fernandes, C. Dudek, and J. Brown. 2006. Attention web designers: You have 50 milliseconds to make a good first impression. Business & Information Technology 25 (2): 115–126.

June 23, 2016

Digital Transformation in Action: Cognitive Computing (IBM WATSON) + Robotics + Internet of Things + 3D Printing + Sustainability = Olli

IBM in cooperation with Local Motors developed an autonomous shuttle bus named 
Olli. I found particularly interesting that many of the technologies used to bring about this product like IBM Watson / Cognitive Computing and IoT are part of our Digital Marketing curricula in the University of Twente. This is a fine example of the Digital Transformation concept that forms the basis of our courses and will revolutionize the vehicle industry not only because of the profound effect of driverless technology on mobility and human activities but also because of the emergence of car manufacturers who have very little to do with car manufacturing but rather with software. 

June 19, 2016

The University of Twente is among the 150 top universities in 2016

Great news for the University of Twente, more than 50 positions higher in the rankings this year vs last year, now nr 149 in the World University Rankings. The biggest improvement: Citations

June 11, 2016

Big Data in the service of Healthcare: Early detection of aggressive cancer form search data analysis

There are strong indications that (Big) data mining can yield clues about future customer behavior or events. A well-known anecdote is about a young woman who received a promotional present at home for the baby she was expecting without knowing that she was pregnant; the pregnancy was detected by analyzing search behavior in combination with analysis of social media activity.
A recent article published by a team of Microsoft researchers Ryen W. White, Eric Horvitz, and John Paparrizos, a Columbia Univrsity graduate student presents the results of a study on early detection of cancer based on online activity. The researchers performed analysis of anonymized queries of people having been diagnosed with pancreatic adenocarcinoma and data of search queries related to symptoms of the decease. Their findings indicate that "..Signals in search logs show the possibilities of predicting a forthcoming diagnosis of pancreatic adenocarcinoma from combinations of subtle temporal signals revealed in the queries of searchers”. This is a quite encouraging result for the early detection that is critical for this form of aggressive cancer. possible victims could be advised to visit a physician much earlier increasing the chances foe efficient treatment

June 7, 2016

Digital transformation is not only about adopting digital technologies; developing a digital organizational culture is equally important



Digital Transformation is one of the central topics of this Smart Marketing group. However and contrary to the popular wisdom that Digital Transformation is only about efficiently engaging new technologies the practice indicates that organization transformation (regarding leadership, communication, co-operation, culture etc.) is the real issue: How managers and employees grown up in "analog" and often top-down business environments can embrace and implement the organizational transformation needed in order to allow the adoption and implementation of new technologies. The HBR article by Jane McConnel "The Company cultures That Help (or Hinder) Digital Transformation" is texplaining this important issue https://hbr.org/2015/08/the-company-cultures-that-help-or-hinder-digital-transformation 
Picture: Gerd Leonhard
http://www.futuristgerd.com/

November 13, 2015

Although the driverless car is an example of incredible engineering of ambient technologies I still wonder what the target market of this product is. Blind people or people who hate driving can be possible customers. I am afraid this will be maybe another example of a product developed without any concern of potential market (product orientation in marketing terminology). I see though more potential in this technology used in replacing train or metro drivers maybe city bus drivers or even airline pilots. Not that this type of cars will be unsafe but rather because I cannot imagine that people who like driving will ever buy a product like this. 
The marketing history indicates that many products that were developed with technology only in mind failed the market test or ended up as something different than they meant to be. This is the destiny of the driverless car I am afraid. After all people who hate driving have other alternatives for travelling.
In any case the driverless car almost got its first traffic ticket

October 29, 2015

A short video lecture on using the Social Media as Marketing tools


Many marketers consider the Social Media as a headache rather as an opportunity; Social Media give much power to their customers, make traditional marketing communication less effective and it is not always clear what are the options of businesses as to using these as Marketing tools.

How could the Social Media be used as part of the marketing strategy? This is the topic of a short online lecture of mine that you can follow in this link.

October 21, 2015

How to avoid a social media disaster after a big blunder: The Volkswagen case

It will probably cost a lot of effort and money to Volkswagen to regain its position as leading and reliable top class automaker in the world markets. The diesel emissions manipulation scandal will probably forever be a dark page in the company’s history. But amid the doom and gloom, the resignations of top executives, the lawsuits, the recalls of millions of cars and the congress hearings Volkswagen has brilliantly managed to avoid a social media disaster: A “shitstorm” as they call in Germany a social media customer or public attack. Such public attacks have been quite common the last years and companies like P&G, Nike, Primarkt, McDonnalds, Uniter Ailines, Gap, IKEA, Nestle’, Cryptonite and many others have experienced firsthand how powerful the new consumer is, armed with the social media. All these companies were attacked by blog swarms or negative posts in social media for all kinds of reasons.
While bad publicity is nothing new in the world, businesses in the past could contain reputation problems using PR in combination with mass publicity in various media channels under their control. But with social media customer attacks things are different, not only because of the fast dispersion of such attacks, sometimes in global scale and the ferocity of such attacks but because of the fact that containment is notoriously difficult.

While in the past companies have suffered serious reputation damage trying to deal with social media attacks the old fashion way, things seem to rapidly  change. Social media customer attacks have forced many businesses to develop contingency plans for online reputation damage and professionalize their community management methods. Reputation or Community Manager, a management function that did not even exist five years ago is today a common place in most large and medium size businesses. Volkswagen must have very good social media damage control plans or reputation managers if we look to the facts: The business disaster of emission level manipulation di not become a social media disaster, something very obvious if we look to the picture above illustrating the volume and the sentiment of the social media posts around the case (data based on COOSTO data monitoring). A sharp increase in posts and high negative sentiment in social media posts from the date the scandal was revealed (around 21 of September) followed by a sharp decrease after the US Volkwagen boss Michael Hom offered his public apologies without any efforts to hide or undermine the case and even admitting that Volkswagen “totally screwed up” while the VW chief executive Martin Winterkorn issued an apology saying he was "endlessly sorry" for the "manipulation". (http://www.bbc.com/news/business-34322668 ). With such statements VW removed all ammunition from customers who would take their frustrations to online comments that would probably have a snowball effect in the social space, causing a difficult to reverse reputation damage. Transparency and honest apologies help therefore more than old fashion professional publicity and denial of wrongdoing, something many of the earlier mentioned victims of customer attacks did. 

September 8, 2015

Digital Marketing as educational topic in the University of Twente

It is some time ago that this blog was updated but last year has been a rally busy one. New courses, new challenges and new research lines together with my colleagues in the University of Twente and abroad. I will try to update the readers on the activities of the last year and keep them up-to-date on the future developments.
This year we offered for the first time to our 2nd year undergraduates of International Business Administration (IBA) the possibility to follow the elective module (15 ECs) Digital Marketing for Networked Businesses. The module proved to be very popular among students, we got 100 students, double number than we had hoped for. The module was including  a wide range of topics: "traditional" E-Marketing topics, Social Media Marketing, Big-Data and Big Data driven Marketing, Social Monitoring tools, online reputation management but also rather unique topics for a university curriculum like Internet of Things and Neuromarketing.
Sanne Heerink of Social Inc during her guest lecture
An important innovative element of the module was one of the group assignments, namely participation in the Google Online Marketing Challenge. This unique project of Google where around 3.000 groups of students from all over the world take part gets the students in touch with the practice of SEM / SEA: They have to develop a real AdWords campaign for a real business or non-profit organization with a budget of US $ 250 made available by Google. This is to my knowledge the first time that students from a Dutch research university took part in the project. The project ended with a Symposium (photo below) in the Classroom of the Future of the University of Twente where our groups presented the results of their work. The final evaluation of the campaigns was done by Google.


The Module has been quite successful if I judge from the student evaluations and the comments we received. A very big part of this success is because of all the efforts of my colleagues in the faculty and our student assistants but also due to the great presentations and help of our guest lecturers. I would like to thank all of companies who contributed lectures for their great and inspiring presentations: Team Nijhuis, Social Inc, Greenberry and Noldus.
In the meantime the results of the Google Online Marketing Challenge are known: Our groups have performed particularly well. Six groups received the STRONG and seven the GOOD ratings, not bad for a first time participation by the school.
The plans for next year are also interesting for those interested in education in Digital Marketing on Master level. Next to the existing undergraduate module Digital Marketing for Networked Business, for the first time we will offer the elective (Advanced Topics of) Digital Marketing as part of our Business Administration MSc profile Marketing and Strategy. With these courses and some more developments that are under way (I will talk about these in another post) we hope to realize our ambition to make the University of Twente the place to be for those interested for a career in Digital Marketing. We already cover with these two educational units most digital marketing skills in demand, as these are identified in a recent report of Marketing Profs.  

January 4, 2015

Airline tickets price discrimination: A new study from Northweastern University

One of the most popular articles in my blog is the one about the outcomes of a study that we conducted in the University of Twente (NL) about the suspected price discrimination of airlines in online sales using cookies. 
 In this sense a study of the colleagues from Northeastern University (Hannak et.al, 2014) published in the IMC 2014 proceedings is a very much welcome  contribution to a topic that keeps most air travelers busy", namely whether airlines (or online travel agents) discriminate when they price their services to different customers. The study called Measuring Price Discrimination and Steering on E-commerce Web Sites" looks to price discrimination from a different perspective than ours with very interesting results. The study is available here.
Despite the immense interest though, the academic journals (even those specialized in air travel) do not seem particularly interested in this kind of studies since they are conflicting with many academic reviewers' mindsets. Some academics do not seem also to understand what are the real topics of their study domain. The paper we wrote following the study was accepted by the EMAC conference last year but rejected by two journals as irrelevant.
In that respect I wish to congratulate the colleagues from Northeastern for their very interesting article and wish them more success than us with the publication of the study. 

For those interested our EMAC Conference the paper is available (email me at e.constantindes@utwente.nl)
Diercks R., Constantinides E., 2014, Airline price discrimination: a practice of yield management or 

November 29, 2014

Predatory Publishers and open access scientific work: new online gold rush?

I don't know about you but I receive regularly emails with such texts:

Dear Efthymios Constantinides;Stefan J Fountain,

After countless hours toiling over your dissertation, you’ve finally reached the finish line. Is it possible to expand your readership, to share your ideas with other scholars, to join in the academic conversation regarding your topic, and possibly even to advance your career? The answer: Yes. But how to do?
You can refine the ideas presented in your dissertation and generate a new journal paper or compose several journals papers on the basis of the different views introduced in your dissertation. To attract more readers, you’d better add some new researches or views to your existed work.

As ##################### has the honor to read your paper titled Web 2.0: Conceptual foundations and marketing issues which was published in Journal of Direct, Data and Digital Marketing Practice and thinks that your paper is of value to read. So ############ sincerely welcomes you to generate new papers on the topic of Web 2.0, social media, internet marketing, online marketing, online consumer behaviour, direct marketing, marketing strategy and submit them to ############## journals or special issues. 

(I liked especially the "countless hours toiling over your dissertation" thing)

This text referring to one of my articles is the approach many of us have witnessed lately as a way used by new born and usually dubious open access scientific publishers. Doing a little background research I discovered that the name of the ########### publisher  who was so enthusiastically invite me to publish is one of the mushrooming dubious open access online publishers and prominent among the List of Predatory Publishers I found in the Scholarly Open Access blog.
What I found amazing is the fast growth of such publishers indicating another online gold rush developing in the Open Access publishing (see table)

 Any experiences with such practices are welcome.

November 27, 2014

Two great Harvard Business Review Articles

Evidence-Based Management from Jeffrey Pfeffer and Robert I. Sutton January 2006 issue. Underlines the need that managers change their attitudes



What Managers really need from academics from Michael G. Jacobides November 26, 2014. Underlines the need that academics change their attitudes




July 31, 2014

Customer motives as online co-creation partners: a research paper

The discussion about innovation engaging the customer as co-creator (often described by terms like co-innovation, crowdsourcing, peer production customer, crowd-based outsourcing etc) is not new to many of us. One of the new and interesting aspects of co-creation is engaging customers in co-creation process using online tools (and social media in particular) as interaction platforms. There are several issues to be addressed here, one of them is finding the best persons / customers and get them on board. Motivations of customers to engaged in such processes are of vital importance. This was the topic of our latest research paper (co-authored by Carlota Lorenzo-Romero and Leonine Brünink) titled "Customer Motives and Benefits for Participating in Online Co-Creation Activities". The article that was accepted and will be published soon in the International Journal of Internet Marketing and advertising  attempts to give an answer to this issue. Based on a survey conducted among 239 young Internet users in Holland and Germany the factors described in the Uses and Gratifications Theory (and tested earlier by Nambisan, S., & Baron, R. A. (2009) for "traditional co-creation). We tested whether the benefits described int the Uses and Gratifications Theory (i.e. Personal Integrative Benefits, Hedonic Benefits, Social Integrative Benefits and Learning Benefits) are motivators for online co-creation and this seems to be the case. We  found out that about 28% of the participants have taken part in co-creation activities with businesses online, something in line with findings of our previous research.  We also identified two profiles of online co-innovators and found that males and Dutch are in general more motivated than females and Germans to participate in such activities. The differences based on ethnicity might have to do with the fact (and this is a personal observation) that in the Netherlands there are more opportunities for online co-creation activities than in Germany. With some caution for generalizations due to the sampling method we think that this study provides some
For those interested the abstract of the paper below:

Abstract
The widespread adoption of Web 2.0 applications, commonly known as Social Media, has brought about a new generation of empowered customers. Empowered customers are well-informed, knowledgeable and certain about their specific product and service needs; they are often willing to share their experiences, product knowledge and innovative ideas with producers, providing input for new product designs and enhancements. Such customer attitudes often labelled as co-creation, are forcing many companies to step away from the traditional firm-centric view of innovation and take a more customer-centric view by actively integrating customers’ ideas and knowledge in their new product and service development processes. Co-creation presents businesses with an interesting challenge: how to identify and recruit the innovative customers who willing to cooperate and share their knowledge as the basis for successful online co-creation activities.
This study identifies the various motivators for customers to participate in online co-creation. Based on the uses and gratification approach a pilot questionnaire is employed and its practical applicability is tested. The results indicate that customer participation in co-creation projects is motivated by four distinct types of benefits and  that co-creators differ in their motivational level. Finally, recommendations on how to adapt the questionnaire for future research and suggestions for further research issues are provided. 

References

Nambisan, S., & Baron, R. A. (2009). Virtual customer environments: Testing a model of voluntary participation in value co-creation activities, Journal of Product Innovation Management, 26(4), 388–406.

Constantinides E., Brünink L., Lorenzo-Romero C., 2014, Customers Motives and Benefits for Participating in Online Co-Creation Activities, International Journal of Internet Marketing and Advertising (forthcoming).

April 15, 2014

Is it time for a Stupidity Filter help preventing Social Media blunders and dramas?

This week two airlines got again involved in social media related controversies, the latest in an endless series of social media issues/dissasters related to customer attacks, blunders and human stupidity:
The US Airways attached an "inappropriate" (see pornographic) picture to a tweet written by its customer service department as answer to a customer tweet. The damage control is difficult in such cases since the picture was more than half hour online, enough time to create a cloud of jokes, irony and angry reactions (search for example with the term "US Airways Tweet" to get an idea). The airline was quick to apologise but some reputation damage has already happened. The sad thing is that the airline (or every other business for that matter) has nothing to do with this which again was an action of an individual; we do not know yet what the motives or reasons for such a thing are but there are a lot of explanations from self-proclaimed psychologists in Twitter posts.
The second case was the twitter post of a 14-year old girl in Rotterdam with a threat to American Airlines. Again the action of an irresponsible (who expect so much responsibility from a 14-years old?) in combination with stupidity. The airline was of course not amused with the (irresponsible) joke and contacted the FBI; this resulted in the arrest of the girl by the police.

I wonder if it is time for a "Stupidity Filter" for Twitter or other Social Media where irresponsible or anti-social persons are exposing their stupidity and complexes to the whole world putting even themselves in danger. No new technology is necessary for such a filter, we have already text analysis software available; algorithms detecting sentiment are getting better and better and it is not a big deal to check words used against a list of "sensitive" terms and block the text. In the case of pictures there are also solutions, the other days I came across picture analysis software that can be used to identify our behavior on the basis of pictures we publish in our social networks.
How such a "stupidity filter"should work? Blocking content is of course against the free (online) speech and expression but in analogy to the physical word, which we tend to forget in such ethical discussions, people can do things online that bring them in troubles as you see in an old example of such a case involving Dominos Pizza. I think a simple solution id the filter observes something "inappropriate" that is about to be posted in social Media a pop-up with a warning can appear and inform the user that the content he intends to post will bring him/her maybe in troubles.
The idea is simple yet not easy to implement because of several ethical and free speech aspects: such filters would be also interesting for various dictators or leaders allergic to ideas different than their own, eager to block the voices of their people exposing their crimes or illegal actions. So such filters must be exclusively under the control of the social media operator (Twitter, Facebook, YouTube etc) and beyond the reach of the varous modern sensors.
We must come back to this some time, for the time being good luck to all trying to repair reputation damages.
 

February 26, 2014

Potential and problems with Big and Smart Data

An interesting post in the MIT Sloan web site about the problems around Big Data. Needed: a new generation of executives who can work with Big Data and extract relevance from it. http://sloanreview.mit.edu/article/better-decisions-with-smarter-data/?utm_source=WhatCounts+Publicaster+Edition&utm_medium=email&utm_campaign=DA+Enews+Feb+25+2014&utm_content=Read+more

February 21, 2014

Forecasting innovation success and the O(ther) Information


I came across a recent article of professor Itamar Simonson and Emanuel Rosen titled “Market research can no longer predict what consumers will like”. 
An interesting remark in the article, not unfamiliar to many of us who follow the developments in the increasingly “social” marketplace: The changing consumer behavior and the increasing complexity of the decision making process due to the influence of Social Media content on consumers have changed dramatically the marketing landscape. This is something I keep repeating to my students and everyone else who follows my lectures on social media Marketing.  I usually explain the new situation in this domain using a well known and simple buyer's decision making model, something we find in every standard marketing textbook.   
My additions to the standard textbook model (see figure) are the elements C and D representing two new market information inputs that affect the customer decision: The information from the “broadcasting” web i.e. information about products, services or businesses poster in corporate web sites and the information from the “interactive” i.e. user generated content (UGC) in social media. What I underline always is the importance of this last element and its impact on customer decision making today. By all means this is a major influence factor of this process today. 

The article of Simonson and Rosen touches on a very important point that seems to confirm the view that the customer feedback in the form of social media voice is the most important part of this equation. They write the following trying to find an explanation for the inability of market research to predict the success (or failure) of an innovation like the iPhone when it was about to be launched:
“It’s easy to blame the market research firm for this, but this is not our point. We are trying to explain the inherent difficulties in assessing consumers’ reaction in this new era. First, more decisions today are impacted by what we call O sources of information—“Other” information sources, such as user reviews, friend and expert opinions, price comparison tools, and emerging technologies or sources—whereas market research measures P sources—“Prior” preferences, beliefs and experiences”.
The O sources are therefore a factor bringing instability and disrupts a well-grounded  method of producing information  needing in decision making namely the traditional market research.
What now? All hope is gone? I wouldn't say that, it is simply a question of adopting a new thinking and approaches to the marketing research issue. Together with my colleagues in the University of Twente and other colleagues abroad we are for some time now brainstorming on this specific issue: What is the way to create or predict successful innovations today. We set out to searching for other sources of customer information and sources of behavioral clues that can provide  much better input for predictions and guidelines for innovation than the traditional market research.  You can guess that we consider the social media as a major source of such information but this is not the only source we look to.  Since this discussion and our research design is still in progress I will not expand on this at the moment but I will keep you informed as our research progresses.

November 11, 2013

Changing technology and market context: Theoretical (and Practical) Issues for further research

As someone trying to follow the developments in the field I often wonder whether some of the old wisdom and time honored theories are still valid today and whether it is responsible nowadays to teach some of these theories to our students. In my domain, the Marketing, I clearly see (together with others)  the dramatic shift in marketing power that makes the old and trusted traditional approaches less and less effective. Marketing is in an identity crisis at the moment as already many ofus realize that the customer empowerment has drastically and for ever changed the rules of the game.

There are however other management domains that there is less attention and criticism. Take for example the area of Industry structure where the 5-forces theory of M. Porter dominates the thought and practice since the 70’s. Looking a bit closer to this classic management holy grail one can wonder how relevant are the 5 forces today for defining the industry attractiveness and structure: In many of the globalised, online and 24/7 industries most analysts would have a great difficulty to identify who are the customers exactly let alone assess their relative strength to the business. Most industries, mainly (but not exclusively) in the information-based domain, are not any more able to keep track of competitive threats and even follow substitute products that can be produced and offered online outside any established and controlled channels. Next to inability to effectively protect products and intellectual property in some industries it is very difficult if not impossible to predict new entrants or identify even strategies that secure competitive advantages. In the era of the social media and customer empowerment only very clear mono-strategies like low price are giving a (temporary) competitive advantage before a cheaper competitor appears. All other claims and operations of businesses are under continuous scrutiny and review by customers who do not accept any more anything that they perceive as unethical, secret or push.
Another area that conventional academic wisdom seems to ignore is the area of innovation. The good old theory of Evert Rogers (first proposed in 1962) on innovation diffusion is still a standard element of every marketing management handbooks. But is in 2013 innovation following this curve in its diffusion? The increasing customer participation in the innovation process (often described as co-creation or crowdsourcing) and the often hyped adoption of innovations have substantially disrupted the innovation diffusion, making it a short and intensive process rather than a S-shaped process that reaches various segments in different time intervals. Innovation adoption depends to a great extend today on (social media ) influencers and user networks: Having the right influencers talking (not pitching) your product to the right networks or social media communicators will produce quick and low cost results in introducing a new product or service.
There can be more areas where a critical review of the theory is necessary offering quite a few opportunities for open-minded researchers. Hopefully we will hear about them more in the future.

November 4, 2013

How to deal with the empowered customers when they misuse their power


I usually start my talks on Social Media marketing with showing to the audience a list of questions marketing practitioners have on the impact of technology on their business, markets and marketing practice.
One question of my list is "How to deal with the empowered consumer". I am especially interested for this question because customer empowerment is one of the most important (side-) effects of the internet and social media boom, a phenomenon that will shape the marketing thought and practice in the coming years: as academics and practitioners already realize the market power migration will change not only the rules of the marketing (from pushing to collaborating, from broadcasting to engaging, from talking to listening to name some important ones) but also the focus of it. One of the new focus areas will be reputation management and preventing customer  attacks. If you want to know more about this I suggest the book of Gillin and Gianforte "Attack of the Customers".
During my talk last week in the E-Travel Summit I had again the opportunity to talk about such issues. After the speech I was approached by the management group of a hotel who wanted to have my opinion on how to deal with customers who make a (discounted) non-refundable booking in the hotel and do not show up or cancel the booking and ask their money back because there was a "serious" reason that they cancelled their booking.
While some of these customers are persuaded by talking that what they ask is not possible some insist to have their money back otherwise they will wreck  the reputation of the hotel in the social media.
Of course no business that has invest to good service and reputation is happy about such a possibility; the people I spoke were really concerned about the  issue and eager to have some advice.
What is the right strategy in such cases? Should the business give up to threats to protect its reputation or keep a firm position and face the possibility of a reputation damage?

I told them that there are different levels where one should deal with such practices in this particular case.
The first level is during the booking process: In this stage it is important to be absolutely open and transparent with the customer.
How can you do that? Be sure for example that the customers before pressing the button for closing the deal see a last screen or pop-up reminding  them that they buy a non-refundable ticket and mentioning their options: To accept that there is no possibility to have the booking refunded for any reason, to buy a travel insurance covering refund in case of unexpected events or buy a refundable booking. If the customer clicks that he is aware of these facts and still prefers the non-refundable option, be sure to inform them with a confirmation email about their option again and possibly offer the possibility to change the booking within 24 hours to a refundable one.
Such an open yet water-proof attitude and deprives customers from much ammunition when they change their mind.
But what should you do with customers who despite such clear and binding agreements still threaten with reputation damage? The next step is to engage in a direct discussion with the customer outside the social media space: by phone, email or personally if necessary. Most customers will give up in this stage if you show that you are interested and take the customers seriously but also remind them their own commitments.
For the few that despite all this will insist and threaten I have another piece of advice: Ignore them if they are irrelevant or invisible in the social media: you do not need to worry about someone without any presence at all in the social media or someone with 20 Facebook followers. If the person has a serious social media presence then you have two options: either try to make him/her forget the issue by offering something as compensations (like a discount in the following booking) or follow closely their posts on the social media and respond professionally, being prepared at the same time to spend some time on the case. I do not think that giving up to threats is an option, maybe another option is to scrap the discounted non-refundable options altogether.
Is there, despite all these measures, any guarantee of avoiding such problems completely? I am afraid  the answer is no. Consumers are now aware of their power and some of them will be eager to misuse it. We must not be surprised by this, this is in human nature and businesses have done this often in the past (and still do it in some cases). The issue is that reputation management will be a topic in the next years, not only for large multinationals but also for any business big or small.