Category Archives: advertising

This Brand Ambassador Program Goes Against the Grain

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Update Nov. 21: Social Rebate’s PR agency took issue with my opinions below, stating:

For a journalist of your caliber, I would have expected you to do more than just ‘scour the website pretty thoroughly.’  If you were interested in a story—even a story critical of Social Rebate—I would have expected you to reach out, interview a Social Rebate representative, and perhaps even interview some of the company’s small business clients. Perhaps your perspective would have changed, perhaps not. But, at the very least, you would have fairly, accurately, and properly REPORTED the story.”

The company’s founder and CEO submitted a response, which I have appended, in its entirety, to the end of this post. 

Social Rebate logo

The PR agency for a startup called Social Rebate has been asking bloggers to comment on the company’s somewhat novel approach to brand ambassadorship. I have some strong feelings about this topic, so I’ll oblige.

Social Rebate is a service that creates brand ambassadors by offering cash and rebates to people who share recommendations of products and services in their social networks. According to the company’s website:

Upon check-out, consumers are given the option to earn a pre-determined percentage back from their current purchase when they share your marketing on their favorite social network. They can immediately earn cash back just for posting — and then earn even more when THEIR friends click you YOUR posted link.

Social Rebate cites some well-known statistics to support its concept, such as the fact that recommendations from friends and peers are the most credible form of buying advice and that people are much more likely to buy a product or service if someone they know recommends it. It also claims to have more than 200 retail customers, including Sprinkles Cupcakes and SitnSleep, although I couldn’t find any mention of Social Rebate on either of their websites. To be fair, I may have to make a purchase in order to do so.

I’m sure the folks at Social Rebate researched their concept exhaustively. If they concluded that this is a good idea, then their findings contradict nearly everything I know about brand ambassadorship.

Dave BalterBoston-based BzzAgent is a word-of-mouth marketing agency whose customer list would turn any ad agency executive green. Founder Dave Balter (right) has worked on hundreds of brand ambassador program since 2001. He told me that one of the secrets of success of such programs is not to compensate people, at least not with money.

BzzAgent has a database of hundreds of thousands of consumers whom it activates to spread the word about products from the company’s clients. The only compensation brand advocates receive is free samples and perhaps an advance look at a new product. For most people, Dave says, that’s payment enough.

He adds that once you start paying people, credibility goes out the window, and that’s where I have trouble with the Social Rebate concept. I can’t imagine a scenario in which I would recommend a product or company because someone paid me to do so. Credibility with my network is one of the most valuable assets I have, and it simply isn’t for sale. I imagine most people feel the same way. People who don’t are probably not folks I want to get to know in the first place.

Does full disclosure resolve the issue? Not really. Think of it: If someone recommends a product or company on your Facebook timeline and adds that they were paid to do so, what does that do to the credibility of that recommendation? In my view, such a disclosure effectively invalidates the recommendation. And I might think less highly of that individual as well.

In a harsh review on VentureBeat, John Koetsier wrote, “The problem [with Social Rebate] is that it threatens to turn a social space into a space just about commerce.” I agree, but I don’t think there’s much chance the Social Rebate concept will catch on. Human beings just don’t work that way.

Social Rebate responds:

Paul,

My name is Tom Larkin, and I’m the CEO of Share Magnet, and one of the creators of Social Rebate. I’d like to begin by thanking you for taking the time to comment on our product. Favorable or not, it’s good to get feedback from industry thought leaders so we can continue to make our product better.

That being said, there are some important points that your article doesn’t directly address. I hope that this response will serve to bring them into the conversation, and hopefully open a productive dialogue.

I appreciate Dave’s stance on product based compensation. I agree that the use of a product and subsequent review are a valid and positive form of brand ambassadorship. What your analysis fails to recognize is that the “payment” you’re referencing isn’t a payment, it’s a purchase price reduction.

The IRS, FTC and their legally affiliated entities all agree that a rebate is not income. So do we. We’re allowing businesses to engage in a transparent post-purchase agreement to engage people who are fans of their product or service to share them and get their money back.

The key here being that it is post-purchase. The person receiving the rebate has already spent their discretionary income at that particular business.  They are then given the opportunity to share that independent action with their friends.

When ask your readership to “think” about how their recommendation would be affected by getting paid, you fail to address the most important piece of the credibility establishment puzzle: DID THEY BUY THE PRODUCT WITH THEIR OWN MONEY? If yes, then they do. If not, then they do not.

I’d be happy to talk further about the issues you raise, and the lengths we as a company have gone to address them. I’d be happy to talk about our plans to harness the positive power of earning social rebates to charity. If you’d like to speak with some of our customers, we’d be happy to help facilitate that as well.

Best,

Tom Larkin
CEO and Co-Founder
www.sharemagnet.com

 

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Interesting Threads in Dell’s 2013 Social Media Predictions

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I happen to be one of the 14 people quoted in this Dell e-book, Social Media Predictions for 2013, but that’s not why I’m pointing out to you. I have great respect for every one quoted in this book, but what’s interesting is the common themes that emerge. For example:

  • Several of these experts see a strong year for Google+, while most believe Facebook is in for slow growth or even decline. I agree completely. The more I use G+, the more I like it. In contrast, I think Facebook is increasingly a place for backslapping and trash talking without the means to sustain meaningful conversations. In other words, I think the novelty of Facebook is wearing off. BTW, Pinterest and Tumblr also draw a lot of praise.
  • There’s a strong subtext of the need to make interactions more meaningful and personal and for brands to unleash their people to speak as themselves. Stop using social media as another kind of fire hose and start using it for listening, which is its most basic value.
  • There are some good quotes on context and sourcing. Basically, stop throwing content against the wall and start making it more meaningful. Geoff Livingston’s comments on creating trusted content are particularly good.
  • A couple of the interviewees call for more civility online, which is something I think we can all support. I like the way Shel Israel phrased it: “It seems to me that that people on social networks were adversely influenced by the…recent presidential campaign. They feel the best way to be right is to demean people who disagree with them.”
  • Lee Odden’s passage on hash tags is a riot: “#lets #just #stop #with #the #hashtagging #of #every #word #in #a #tweet #OK? #You #keyword #spammer #you.” Completely agree.

Here’s the embed, which links to the document on SlideShare.

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Wisdom on the Future of Advertising

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Max Kalehoff is one smart cookie, and this post about the future of advertising hits the nail on the head.

Some of his conclusions are obvious (Social Media Marketing Will Cease To Exist) but others require a leap of faith (Legal & Privacy Issues, As We Debate Them Today, Will Go Away). I agree with every single one of his 11 conclusions, however.

In particular, he notes that purpose will be more important than strategy and that trust will be absolutely essential.  In a world awash with choice, trusted intermediaries will be the most important brokers of influence.

What are you doing to build trust with your customers?

 

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Did Coke Respond Effectively to Former Marketer’s Attack?

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Coca-Cola is dealing with a minor crisis this week because of comments by a former marketing executive expressing remorse over his contributions to America’s obesity problem.

Todd Putnam, who was a top marketing executive at Coca-Cola from 1997 to mid-2000, told an audience at the National Soda Summit last week about a Coke strategy to replace all beverages in the American diet with its own products, a campaign the company called “share of stomach.”

New York City anti-obesity ad

New York City anti-obesity ad

Putnam said he now regrets his role in the campaign because it contributed to the nation’s obesity problem. “It took me 10 years to figure out that I have a large karmic debt to pay for the number of Coke’s I sold across this country,” he told the group. In a subsequent interview with the Washington Post, Putnam said that while Coke had a policy of never advertising to children younger than 12, “Magically, when they would turn 12, we would suddenly attack them like a bunch of wolves.”

Coke’s response to Putnam’s comments was a statement that share of stomach is no longer “part of our company strategy” and that the business has “changed dramatically” since Putnam left 12 years ago. A spokesman said 41% of Coca-Cola trademark products in North America are now low- or no-calorie, up from 32% in 1999.

I wonder if the spokesman’s response was as good as it could have been? Specifically:

  • Admitting that share of stomach is no longer part of the strategy is also an admission that it once was. The idea that Coke sought to replace staples like milk and fruit juice at any point seems damning to me.
  • Putnam said that share of stomach was an active policy when he was with the company. While the percentage of low-calorie drinks Coke sells today is higher than in 1999, it isn’t much higher. This could be interpreted as a sign that Coke has not done much to advance the sales of low-calorie drinks over the last 13 years. Or that it is following, rather than leading the market.

Give Coke credit, however, for not pointing out that Putnam’s new company is focused on marketing healthy food and beverages. If you want to keep ma healthy lifestyle then stop drinking coke and start reading the OVP review to see the benefits you can get from it. Putnam unquestionably got some nice exposure for his new venture by trashing his former employer. Coke could have engaged in a war of character assassination but chose not to.

What’s your opinion? Did Coca-Cola articulate the best possible response to this problem?

Transforming P&G

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When Stan Joosten first contacted me about joining Procter & Gamble’s Digital Advisory Board, I initially hesitated. The volunteer position would demand a few days of my time every year just as I was beginning to transition my focus to B2B and away from P&G’s consumer markets. But this was P&G, after all, and Stan, who is Innovation Manager for Holistic Consumer Communications, is a persuasive guy who had already signed up several people I respect. I said what the heck.

It was the best decision I’ve made in the last five years.

This week I sat in an auditorium at P&G headquarters in Cincinnati and heard CEO Bob McDonald talk about the centrality of one-to-one relationships to the company’s future and declare “We want to be the most digitized company in the world.”

Mark Pritchard, who heads global marketing, echoed the one-to-one theme, noting “Digital marketing is past. Brand building in the digital world is the future.” That’s an impressive statement coming from one of the world’s largest TV and print advertisers.

The fact that this week’s event was even going on was notable in itself. Organized in just seven weeks and spearheaded by John Battelle’s Federated Media Group, Signal P&G brought top executives from Google, Facebook, Yahoo, AOL, Microsoft, Coca-Cola and many other digital and consumer brands to talk about the future of marketing. About 300 P&Gers crowded the John G. Smale Tower Auditorium in Cincinnati and another 1,300 watched online. Most people in the room stayed till the very end.

From my conversations with employees and the discussions I overheard in the hallway, I came away convinced that this is a company that is successfully transforming both its culture and its approach to market. When you consider that P&G has nearly 130,000 employees spread across the world and marketing practices that have made it an icon of excellence for a century, that’s no small achievement.

New Measures of Success

P&G has been called the world greatest marketing company. Success can be a curse, though, and the maker of Crest, Tide and about 25 other billion-dollar brands has struggled to wean itself from a traditional focus on coupons and samples in favor of a culture of engagement.

It’s not that P&G doesn’t understand its markets. The company’s almost obsessive approach to research has marketers and engineers routinely visiting customers’ homes to spend hours watch people doing laundry, diapering their babies and brushing their teeth. P&Gers understand that the reason moms buy Tide goes far beyond clean clothes and gets to issues like self-esteem and peer acceptance. Its brand marketers are some of the savviest marketing pros I’ve ever met.

This deep understanding of customers was evident even in the Advisory Board’s earliest meetings with brand managers. What was missing was a sense of how to engage. P&G marketers create brilliant campaigns, but their success milestones have been defined by traditional metrics like impressions, coupons and trials.

Assumptions are breaking down, however, thanks to a willingness to change and the success of campaigns like last year’s Old Spice “The Man Your Man Could Smell Like,” which combined traditional TV advertising with a brilliant series of companion videos on YouTube. This week Federated Media showed off StyleUnited, a new P&G community for “want it all women” that logged one million page views in its first three months and is already driving new sales.

Support From the Top

More important, though, is the support shown by top executives like McDonald and Pritchard. They’re obviously keenly aware of the Innovator’s Dilemma, Clayton Christensen’s theory of how successful businesses destroy themselves by being unable to discard the tactics that made them successful. P&G’s revenues continue to be strong, but its traditional retail channels are under intense pressure, warehouse clubs are squeezing margins and Amazon wants to trump its brands. Consumer packaged goods companies today face the risk of being marginalized as commodities. Digital channels are the lifeline that can establish long-term connections with their customers. It appears to me that the key people at P&G understand that, and once a company of this caliber gets on board, entire industries change.

I’m not sure there’s much I can tell P&G marketers that they don’t already know at this point. While P&G has never paid me a fee, they have enabled me to connect with people I would never otherwise meet and to get the briefest of glances into how a great company stays on top of its game. It is been an amazing experience and I’m grateful to Stan, Tonia Elrod, Daniel Epstein and the others who have permitted me to be a part of it. If I can ever be of service, don’t hesitate to call.

Facebook Tips for Midsize Businesses

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With Facebook presenting a tempting target of 800 million potential customers, small businesses are flocking to social network as a fast and easy way to generate business. But many SMB’s don’t take full advantage of the Facebook platform because they’re intimidated by the learning curve and the technical knowledge that Facebook applications demand.

Against the GrainThis is one in a series of posts that explore people and technologies that are enabling small companies to innovate. The series is underwritten by IBM Midsize Business, but the content is entirely my own.

That doesn’t have to be the case, says David Brody, Managing Partner at North Social, a software as a service company that specializes in serving small and medium businesses (SMBs) with a suite of Facebook apps that they can quickly integrate into their Facebook presence. I talked to Brody about tips for SMBs that want to optimize their Facebook presence.

It’s not about the likes. Research has shown that few people who “like” a Facebook page ever return to it. That means that getting a like is a means to an end, but not a goal.

“This is a test-measure-modify world,” Brody says. In other words, experiment with different offers and incentives to build fans and then measure those that deliver engagement and return visits. Remember, this isn’t direct mail, and your cost of trying something new is basically zero. On the flipside, simply getting someone to click a button is not enough. “‘Excite, Educate, Motivate’ has replaced ‘Awareness, Trial, Purchase,'” Brody says.

Match the offer to the business. Those ubiquitous iPad giveaways may not be doing much more than delivering business to Apple. Brody tells of one business owner in Atlanta whose offer of a flat-screen TV as contest prize yielded only 60 new likes. Maybe the problem was that the company is in the heating/ventilation/air conditioning business. An offer of offer of free or discounted air conditioning equipment might have played pretty well in Atlanta during the summer.

Moosejaw Mountaineering on FacebookCapture and communicate. Facebook pages and apps offer easy ways to collect e-mail addresses. This creates a permission-based vehicle to continue a conversation. E-mail and news feeds can be used to deliver an ongoing stream of information that reminds people of who you are. Clif Bar asks first-time visitors to like its page in order to sign up for a newsletter, while Moosejaw Mountaineering touts giveaways, rewards points and tips..

This doesn’t mean e-mail is obsolete, but with inboxes mail clogged and people spending an hour a day on Facebook, the newsfeed has become an attractive alternative channel.

Use Facebook for sampling. Conventional wisdom holds that product samples need to be distributed on the street or unsolicited to the mail. It turns out Facebook can be an even better channel. One North Social customer that makes pretzels distributed 10,000 samples in less than 24 hours by sending them to people who liked its page. People who have opted in for a sample are more likely to be buyers than passersby in a supermarket. Audience quality more than compensates for the higher cost of distribution.

Animal Print ShopBe creative with promotions. You don’t have to incur manufacturing or mailing costs to distribute incentives with value. Think of a digital asset you can create that has zero marginal expense. Dentoola consulting gives away reports on how to apply social media in the dentistry profession. The Animal Print Shop gives away desktop wallpaper. You can exchange a like for a customized press release at Hunter PR.

Having healthy teeth and a great-looking smile takes some effort, but the results are well worth it. And having a dentist on your side every step of the way is an important part of that journey. Visit San Diego cosmetic dentist for more information.

Buy ads against pages of competitors or similar products. The great appeal of Facebook ads is their narrow targeting. Davids can ride on the backs of Goliaths by targeting ads to fans of much bigger brands. “If your product is candy, buy ads on the Skittles page,” Brody says. It’s the fastest way to find candy lovers online.

Keep the message simple and change it often. Don’t flatter yourself by thinking people will spend a minute on your page trying to figure out your message or offer. “Facebook is the equivalent of an out-of-home billboard,” Brody says. “You only have a few seconds to make an impression. Keep your message to a few words and make it compelling.” Remember the earlier point: You can always change the offer and test something new.

Get people involved. Brody is no fan of the automated tools that enable page owners to auto-post content across multiple social platforms. “No one wants to be friends with a robot,” he says. “Motivate your alpha evangelists.” Games, quizzes and giveaways work well, particularly if they challenge the audience to be creative.

One midsize business that Brody thinks does a lot of things well on Facebook is footwear maker Sanuk. From its provocative “like” message to its offbeat video to an online store that juxtaposes user comments with product shots, it provokes conversation at every turn. North Social’s examples page has plenty more.

Direct Marketing Doesn’t Have to Suck

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Direct marketing promotionsIn the weeks leading up to the Direct Marketing Association annual conference in Boston this week, exhibitors were out strutting their best stuff. Last week I got two letters in the mail that appeared to be personally addressed to me in a feminine hand (right). Both turned out to be promotions for companies exhibiting at the conference. One employs people to hand-address envelopes so that they appear to come from a friend. The other has an automated signature device that does much same thing.

I opened both envelopes without realizing what was inside and had to chuckle at how I was taken in. They fooled me good. And then I thought about what that says about the state of direct marketing today. Have we sunk so low that we need to trick people into reading our messages? Is it any surprise that forecasters expect direct-mail marketing to decline nearly 40% over the next two years?

Dump the Junk

Like many people, I’m less interested in reading mass marketing material today than I’ve ever been. There’s far too much good stuff out there. More than 90% of the material that enters my mailbox goes straight to the recycling bin. I unsubscribe from any e-mails that don’t offer clear value to me. Unsolicited e-mail simply gets blocked. Fooling me doesn’t make me a prospect; it makes me mad.

There are some marketing messages, though, that are so valuable to me that I actually look forward to their arrival. Here are a few that I welcome into my inbox:

Bulldog Reporter’s Daily ‘Dog –  This e-mail arrives every morning packed with news and insight about the latest happenings in media and corporate communications. It’s so useful that I make it a point to read every issue, even if that means saving them for a few days until I have time.

Marketing Charts – This is an invaluable daily digest of the latest market research in media and consumer behavior. I bookmark many of its summaries for later use and frequently tweet two or three items out of an issue.

HubSpot reports – The maker of “inbound marketing” software regularly sends alerts about new white papers, tip sheets and e-books that highlight best practices in social marketing. I downloaded and read most of them. I tweet almost all of them.

Someecards – They make devilishly funny and marginally offensive greeting cards, and I love their stuff. The weekly newsletter is always good for a laugh. I’ve bought several branded items from their store.

Editor & Publisher Daily – This newsletter is little more than a curation of articles from other sources, but the fact that E&P puts it together in a compact, scannable format makes it one of my most useful daily reads. It’s a prime source for my Newspaper Death Watch blog.

Gizmo’s Freeware – Why pay for commercial software when products of equal or greater value are available for free? Each of these daily newsletters spotlights a different category of goodies I can get for nothing.

Other than a general media and marketing theme, these communiques have little in common other than the fact that they enlighten or entertain. With the exception of Gizmo, all the companies have something to sell. I may not buy from them, but I sure do help promote their wares. With 9,400 Twitter followers, 1,200 LinkedIn connections and regular columns in BtoB magazine and The CMO Site, I can extend their reach at very little cost to them. And I do, nearly every day.

Think Like the Customer

This is direct marketing that doesn’t suck because it delivers value that I can share to enhance my own value to others. When you think in terms of what your customer wants, rather than what you need to sell, you create new channels of word-of-mouth awareness.

Lots of direct marketers still haven’t bought into this idea. In the weeks leading up to DMA, vendors contacted me with offers of movie tickets, gift cards and a chance to win an iPad. These are the same corny come-ons I’ve heard from tradeshow exhibitors for nearly 30 years. Does this stuff really work anymore? Are serious buyers really willing to endure a half-hour sales pitch to get a crummy pair of movie tickets? And if so, were they serious buyers in the first place?

If you want access to my inbox and to my network, help me build my professional profile by making it easier for me to help my friends and contacts. Make me look smart, because I’ll return the favor.

But please, save the postage stamp.

My presentation to this week’s DMA conference is below.

10 Things Direct Marketers Can Do to Take Advantage of Social Media

View more presentations from Paul Gillin

Measuring the Immeasurable

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My post last week about the shortcomings of Klout got several thousand views and generated quite a bit of discussion. it also got me several e-mails from companies that claim to have built a better mousetrap than Klout. I haven’t reviewed these tools in detail just yet, but it appears that influence is a red-hot topic in PR and marketing circles right now.

Influence measurement is a natural evolution of conversation monitoring, a discipline that’s personified by Salesforce.com’s Radian6 tool and dozens of competitors. Monitoring is a solid practice that can keep you in touch with the topics and brands people are discussing online. Most tools now also provide some degree of sentiment analysis, which attempts to derive attitudes from comments. Sentiment analysis is devilishly difficult to get right, however. If a teenager calls something “sick,” it’s a compliment. Coming from a 50-year-old, it’s an insult. Most experts I’ve spoken to on this topic say that sentiment analysis tools are at best 70% accurate.

Circle of Influence

Topaz Partners has developed the "Circle of Influence" to depict the different factors that go into decision-making (Click to enlarge). TopazPartners.com

This isn’t stopping vendors from tackling the even more complex issue of Influence analysis. This goes beyond sentiment analysis to attempt to determine a person’s ability to drive action. The problem is that there are lots of variables and intangibles to influence that resist being boiled down to a single number. For example:

  • What is action? A “like” or retweet is a form of action, but not necessarily one that leads to a decision.
  • Online actions have different gravity depending upon the stakes and the effort involved. Writing a comment takes more effort than clicking a “like” button. Posting a blog entry referencing someone else’s words is more involved than writing a comment.
  • Which actions really matter? I have yet to see a tool that can correlate influence with purchases or donations with any degree of certainty. We assume that conversation about a topic influences decisions, but are they the decisions we want? A lot of people have been talking about Hewlett-Packard lately, but I doubt it’s driving profitable sales of HP products.
  • Influence is contextual. If I’m considering buying a Yamaha stereo and find a blog entry from someone who exhibits deep knowledge of the model I’m considering, that person may have a disproportionate influence on my decision, regardless of the number of followers or subscribers he has. The weakness of most influence analysis tools is that they abstract broadly, looking at things like reach and amplification. However, decisions are more likely to be influenced at a micro, rather than a macro level.

One of the most illuminating books I’ve read on this topic is Influencer Marketing by Duncan Brown and Nick Hayes. The authors argue that the influence of media in general, and social media in particular, is greatly overrated. They count no less than 50 kinds of influencers, ranging from resellers to academicians to government officials. Most of them have little or no online visibility, but their knowledge, leverage and/or connections make them enormously influential. What’s more, the larger the purchase, the greater their influence tends to be.

I don’t agree with everything Brown and Hayes say, but I commend them for resisting the urge to oversimplify. Their basic message is that influence and audience are two different things. Celebrities can have huge audiences but little power to affect decisions. Conversely, people with very deep knowledge can have small audiences and great influence. Seth Godin said it well: Small Is the New Big.

In the mainstream media world, audience was associated with influence because we had few tools to understand the true dynamics of decision-making. Our natural tendency is to apply this same metric to online conversations. The danger of this approach is that social media is more about quality than quantity. In the same way that early automobiles had steering mechanisms that mimicked reins, we are applying old assumptions to a new medium. I’m not saying that influence measurement tools are inherently unreliable, but they are attempting to measure what may be immeasurable. Just be skeptical.

What a Hotel Manager Taught Me About the Future of Business

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Wyndham Wingate Erlanger, KYScott Wright is the general manager of the Wyndham Wingate Hotel in Erlanger, KY, and in a 15-minute ride to the airport yesterday morning he taught me something about the future of business.

The fact that the manager of the hotel was driving me to the airport was unusual in the first place, but Wright makes it part of his routine. “I try to get out of the office at least a couple of times a week and connect with the customers,” he said. “I don’t ever want to be stuck in a back room shuffling papers.”

Wright’s attitude is one of the reasons the Wyndham Wingate has a 91% positive rating on TripAdvisor. He ticks of the two factors that most influence customer loyalty: “Cleanliness is number one by far. Customer service is number two. But you’d be surprised how forgiving people can be about customer service if the room is clean,” he says.

Scott Wright has no choice but to know what makes customers happy. Ratings on TripAdvisor and dozens of other evaluation sites have transformed the hospitality industry. The impact of open, online customer feedback on his business “is huge,” Wright says over his shoulder. The hotel’s policy is to contact online critics directly within 72 hours to address their complaints.

Many times those problems are more a matter of misunderstanding than mistake. One traveler recently posted a scathing review of the Wyndham because charges had appeared on her credit card despite the fact that she paid cash for her stay. Wright patiently explained that the practice was standard operating procedure for cash customers in the hospitality industry and that the charges were routinely reversed within a few hours. Another complained that the hotel wouldn’t let him cancel a reservation. Wright had to explain that the discount deal the customer had booked was clearly marked as nonrefundable.

These outreach sessions don’t fix the damage done by a negative rating. Few consumer feedback sites permit bad reviews to be reversed by anyone, so hotel managers are limited to posting responses, which Wright dutifully does. More importantly, though, the constant feedback cycle is driving he and others like him to become laser-focused on the customer experience. The terms of competition in that already brutally competitive industry have come down to one factor: quality.

Cincinnati hotels - best & worstLook at the ratings of these two Cincinnati hotels on TripAdvisor. Scan the excerpted customer comments. If you’re the owner of the Howard Johnson Inn, how do you solve this problem? Certainly not with advertising. No, there are three options the owner of the Howard Johnson Inn has:

  • Cut prices and compete for low-margin budget travelers;
  • Invest what it takes to fix the problem;
  • Hang out a sign that says, “Under new management.”

None is very appealing, but a customer-driven market doesn’t permit the luxury of spending your way out of trouble.

Conversely, the owner of the Best Western Premier Marlemont can cut the advertising and direct mail budget because customers are doing a better job of promoting the hotel than any marketing could do. The owner can also raise prices because business travelers are less sensitive to cost than they are to a pleasant place to stay.

Fifteen years ago, America’s most-admired brands were those with the biggest marketing budgets: GE, Coca-Cola, General Motors, Microsoft. Today, the brands everyone wants to emulate are Apple, BMW, Southwest Airlines and Harley-Davidson. There are two things these brands all have in common: Neither has dominant market share and all are fanatically devoted to delivering delightful customer experiences. In the future, every successful brand will have to operate the same way.

For Scott Wright and others like him, the rules have changed, but his industry isn’t alone. It’s just a leading indicator of forces that will sweep through nearly every market as customers learn to organize and apply the new powers of influence. These forces will affect B2B and B2C businesses, nonprofits and government agencies. Businesses will have to serve customers better because there will be no choice. All our managers will drive the shuttle to the airport.

I’ve been telling audiences about how customer ratings are reshaping the hospitality industry for more than a year, but no one made that impact more real to me than Scott Wright. As I stepped out of the shuttle, I reached into my wallet and handed him a few dollars.

“Oh, not necessary,” he said, waving his hand.

“Take it,” I said. “It’s a consulting fee.”

Groupon Relents

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Four days after its offensive ad campaign began, Groupon did the right thing and pulled the plug. CEO Andrew Mason posted an apology on the company blog that was a vast improvement over the explanation he had posted two days earlier. The controversy was an expensive lesson for Groupon; in accepting full responsibility for running the campaign, Mason presumably absolved the agency of any blame. On the other hand, it may ultimately work out to be a worthwhile investment.

Some cynics (including on this blog) have suggested that this whole controversy was scripted for the purpose of creating awareness of the Groupon brand, which it certainly did. I personally don’t buy that the public outrage was anticipated or planned. I don’t think Groupon could have enlisted so many celebrities to lend their names to a program that was designed to offend. This was a mistake, and the company ultimately did the right thing in apologizing and walking away. It gets credit for credibility, humility and fallibility, which are all endearing traits. Groupon may actually get more goodwill lift out of this whole controversy than if it had run tasteful ads in the first place.