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Iain,

Makes sense, but it's setting up what Taleb calls a Black Swan situation.  Things work great as each successive CEO squeezes a bit more from the system.  Then it all ends up in a smoking pile of rubble on the watch of the nth CEO.  Of course, his predecessors don't care...

Chris S.


On 2/18/2013 11:15 AM, Iain Henderson wrote:

Hi Chris,

I don't see it as an accounting problem; at least not until number/ 'quality' of customer's becomes a balance sheet / analyst tracked metric. There have been attempts at that over the years, but none have made it.

The scenarios i've referred to involved revenue reduction, although there would obviously be costs alongside any new initiative as well. The point being made by the CEO's I refer to is that they make lots of money by having their product teams sell products/ services irrespective of whether that is the best option for the customer. Revenue reduction through full migration to genuine customer-centricity would be down to reduced sales of product.

Make sense?

Cheers

Iain


On 18 Feb 2013, at 15:48, Chris Savage < "> > wrote:

Iain,

Is this an accounting problem?  Seriously: when you buy a new machine or new factory, your available cash goes down, but it gets recorded on your books as an asset, so everybody understands what's going on.

If the short-term accounting effect of doing customer-centric things is to increase costs without increasing revenue, that is an accounting problem.

On the other hand, if the short-term effect of doing customer-centric things is to reduce revenues, that's scary to CEOs and CFOs everywhere.

So, did you mean "cost them money" in the sense of "increase recorded expenses and hence decrease reported profits"?  Or in the sense of "lower revenues"?

Thanks,

Chris S.


On 2/18/2013 9:59 AM, Iain Henderson wrote:

And a couple more metrics.

Average tenure of a marketing person in the same role - 2 years

That is to say, long term customer satisfaction/ value is someone else's problem.

Average tenure of a CEO in a large B2C organisation - 3 years.

I've had several consulting projects about customer-centricity that hit road-blocks at CEO level; the simple and openly stated issue being that whilst they recognise the logic, they know that to make radical changes (from typically a product-centric strategy to a genuine customer-centric) will cost them money and competitive positioning in the short term. There are ways to get a good blend of customer and product-centricity, but most organisations don't have the data, the top-level buy-in or the patience to pull that off.

Iain


On 18 Feb 2013, at 14:04, Doc Searls < "> > wrote:

One additional point: most of the time we aren't buying anything, or even considering it. That also narrows the windows of "now."

But there are times we are shopping or buying — or dealing with issues of ownership. Then what? Well, VRM should be there to help with that.

Doc

On Feb 17, 2013, at 11:01 PM, Chris Savage < "> > wrote:

Well, a couple of things that build on this.

1.  I read of a psychological study that found that the subjective experience of "now" lasts about 3 seconds.  That is, if you ask people about whether some stimulus or whatever the researchers were looking at was happening "now," the general response was "yes" as long as the thing occurred plus or minus 1.5 seconds or so of the time of the asking.

2.  This actually can be converted to a measure of how much attention people have in a day.  If at each quantum of "now"-ness a person can only effectively be attending to one thing, then in a 24-hour day, if we assume 16 are conscious and available, that's roughly 19,200 "moments" of "now" a person has each day.

3.  Advertisers well know how to command (literally, as in, what we are hard-wired for) our attention: loud noises, quick movements, flashes of light, attractive women (to get male attention) etc.  So, on the "tragedy of the attention commons" I was postulating earlier, what we have is a large but non-infinite number of opportunities for folks who want our attention, to grab it.  By going from traditional print to the Internet, we have created a lot more opportunities for that.  There are 19,200 "nows" per day per person, that can input either signal or noise.  Increasing ads (including directed ads) means more noise and less signal, net.  Key point: The pool of available attention is very limited.  (Note: if it's really 3.2 hours per week, that's only about 3,840 moments-of-attention available.)  That very limited pool is what more and more advertisers are trying to colonize.  So it's no wonder, it seems to me, that people are both building taller defenses and getting more exhausted in maintaining them.

4.  There are some behavioral economic studies being done by a guy at MIT that analogies the lives of people in poverty that indicates that their choices are harder to make than non-poor folks, in an analogy to what is called the "suitcase problem."  Suppose you are packing for a weekend trip, and you have a very large suitcase.  Packing is easy: you put in stuff you know you'll need and stuff you might need.  Very little mental effort.  Now imagine going on a one-week trip and all you are allowed is one carry-on-size bag.  Now you have a hard problem: you have to decide what is essential and what isn't, what has to go in first in order to make sure everything will fit, etc.  It's a harder mental task (which various studies have shown truly use up biological energy).  The MIT guy points out that the entire task of facing the economy is, for a poor person, like trying to pack for a week-long trip with too small a suitcase: the suitcase is their money, and the clothes, etc., to go in, are their needs.  Every day is mentally exhausting for poor people, because poor people actually have to do a lot more mental work to get through a day than does a middle-class or rich person.

5.  A similar phenomenon occurs with the issue of allocating our attention.  Figuring out what is signal and what is noise takes work, and it takes more and more work the more noise there is -- like listening to your favorite radio station as you drive further and further away on the long-distance highway.  It gets scratchier and fuller with static, but if you keep listening harder (interesting     idiom there...) you can still hear what they are saying.  With more and more informational static being thrown at us for our 19,200 "nows" per day, it takes lots of mental work just to try to keep focused on what actually matters in a life (kids ... job ... spouse ... spiritual practice ... hobbies/interests).  Fitting all of that into the mental time suitcase can be really hard.  Adding all the noise makes it harder.

Do advertisers ever think in terms of their effects on a limited, shared resource, aka, my brain cycles?

Chris S.



2/17/2013 5:07 PM, Iain Henderson wrote:

Thanks Katherine, your point re number of hours in the day reminded me of a key quote sent to the list a few months back (by Richard Bates, Consumer Focus, UK).

“Consumers are however pressed for time and spend on average only 3.2 hours a week on all consumer tasks. To ensure that consumers remain empowered in the face of the growing information overload and increasing lack of time for shopping, new shortcuts and comparison tools need to be found.”

That quote came from a research study across more than 55,000 individuals, so pretty robust. European Commission Staff Working Paper (2011): Consumer Empowerment in the EU (SEC [2011] 469 final), Brussels: European Commission –  http://bit.ly/J45aRl

Add to that, one of the main effects of The Internet on the individual being that they typically have an awful lot more supplier/ service provider relationships to manage than they did before, and you therefore have a huge volume of 'permissioned' advertising being squeezed into what amounts to a very small amount of time.

In that respect, our job is to build tools that help get a better return out of those 28 minutes, and maybe even one day increasing the time spent because the return on it is much improved.

Iain
    3.2 hours a week is 192 minutes, or almost 28 mins per day.


On 17 Feb 2013, at 15:28, Katherine Warman Kern < "> > wrote:

Sylvan and Chris,

As a practicing planner who takes pride in being a trusted advisor, I'd like to share some insights from the perspective of my clients.

The reality the consumer has an overabundance of choices and a marketer has an overabundance of tools to choose from.

But the number of hours in a day to make those choices has remained exactly the same.

As the number of choices have increased, the odds that bad choices are made increases.

Share of Voice, as many measuring sticks, is flawed from the start because there is no truly accurate way to measure or project it.  One marketer can spend the same amount of dollars much more effectively than another.  And since few marketers publish their mistakes, no one really knows what really happened. In fact most published accounts of marketing case studies have very little resemblance to what really happened.

I continue to be shocked that no new entry capitalizes on digital technology and social media to offer an improvement over Nielsen to monitor integrated marketing in real time.

K-

Katherine Warman Kern
www.comradity.com
@comradity
203-918-2617

On Feb 17, 2013, at 9:37 AM, sylvain willart < "> > wrote:

This "tragedy of the commons" made me think when you first posted about it.
The sheep example you mention is well-studied in economic game theory,
and there are some writings as well in Public Economics sudies dealing
with scarce resources,
But I very rarely read this kind of thinking in advertising/marketing.
Only perhaps in "Store Wars" (Corstjens & Corstjens , 90's). Actually,
the hypothesis of the consumer brain being a scarce resource is
sometimes discussed, but never measured. And media planning relying
heavily on measures and metrics, this hypothesis does not well fit in
traditional approaches.
Moreover, you can expect people to protect scarce natural resources
(even if they loose direct advantage) for the sake of a "bigger cause"
involving altruism (a long studied effect in game theory); but who
really cares about the exhaustion of conusmer brain? there is nothing
here a good night of sleep can't fix... (the consumer himself may be
the only one to care, hence the importance of VRM tools IMHO).
Media planning is also competitive by nature, and while planning you
have to care more about your competitors' expenses than your
consumers' ability to process all those ads. An important metric in
media planning is for example the "share of voice" (your expenses
divided by the market expenses), perhaps the dumbest metric ever
invented, as it is known from long it is not robust at all (meaning it
can lead you to make stupid planning choices)
The entropy hypothesis however may be quite appealing, and this metric
is often used in other field of marketing (for measuring variety of
assortments for example). I'll try to dig into it to see wether it has
been used in advertising/intrusiveness research.

Sylvain


2013/2/17 Chris Savage < "> >:

Sylvain,

Thank you, this is very helpful.  I will ponder a bit more.

I have mentioned, perhaps on this list, my sense that there is a "tragedy of
the commons" effect going on among those who would sell me stuff.  Just like
in the Garrett Hardin story where each shepherd looks at the common field
and thinks, "Oh, letting one or two extra sheep from my flock graze won't

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