RE: [projectvrm] new post on the economy

[Katherine Warman Kern < >]

Drummond,

 

Thanks.  I know you are well along your development plan, but if it’s not too late, here’s something to think about regarding the different degrees of “better quality.”  Hopefully this thinking inspires someone . . .

 

What if Procter&Gamble had made a better bar of Ivory soap for laundering instead of packaging laundry detergent flakes.  For example, Ivory Ultra Power Bar Soap with superior cleaning power.  Better cleaning power doesn’t change my life the way packaged soap flakes creates more discretionary time and prettier hands.  Better cleaning power would have divided my Ivory soap consumption between one product and another instead of increasing consumption of soap.  Separately, since better cleaning power certainly isn’t a stupid idea, I’d bet there were some brands that did this.  And I’ll bet they ended up with all sorts of product problems because the original product’s purpose was not to be that harsh, destroying their core brand’s reputation.  And that’s why we don’t see them on the shelf today. 

 

Net – P&G created the new life-changing category first, then improved upon its performance and efficiency. 

 

I know that Venture Capitalists and public corporations stick with existing categories and consumption.   So you either have to have private money to fund this strategy or find a VC/public corporation who has the cojones to break with the pack.  Both of these are challenging.

 

So how’s this pitch for creating a new category in the media and marketing marketplace. 

 

CRM has a purpose – manage relationship with existing customers.  Even the highest quality tools are inherently  presumptive about the customer’s permission to communicate interactively.  When you re-engineer these tools to seek permission (which is what a better CRM would be by VRM standards, right?), you may shift some CRM spending which was experimenting ineffectively by using CRM tools to connect with non-customers.  But it won’t deliver game-changing benefits to generate new media and marketing dollars.  Separately, when you add the permission seeking step, you are changing the purpose of the CRM tool. The potential unintended consequences and fixes must be mind-blowing and very expensive to fix.

 

The only other way businesses and non-customers have to find out about each other is “advertising.”  Advertising results are generally speaking disappointing, with typical response rates being less than 1%.  This is not because advertising is ineffective.  It is because advertising is used ineffectively.  Advertising’s effectiveness to attract new customers goes up exponentially when the strategy is to create awareness of an irresistible idea which the brand delivers obviously, and visibly better than the competition.  Iconic advertising images like Marlboro’s cowboy are iconic because they could say it all in one visual.  But that is not always possible, especially in a mature marketplace.  Advertising is dramatically less effective when the strategy is to: maintain share, win back lost customers, or introduce a product whose competitive advantage is less visible and obvious, requiring trial or education to be seen and believed.  

 

Therefore using CRM and Advertising tools for business and non-customers to find each other is like using bar soap to do laundry.  No matter what you do to alter them, they still don’t change anyone’s lives enough to create new consumption.  Separately, re-purposing them leads to a complicated mess:

 

 

To finish the pitch I would reveal the visual that replaces the above image.  This is something that this community could work on collaboratively. 

 

P.S. Continuing the premium quality theme, one way to validate this new VRM driven model for investors is to win the endorsement of a premium quality brand – as in “we haven’t risked our reputation in the above marketplace but are ready to learn how to participate in the VRM driven media and marketing model to connect with non-customers.”  There must be brands which fit this description.  And I suspect they have been hopefully following VRM progress.

K---

 

 

   

 

 

 

 

From: [mailto: ] On Behalf Of Drummond Reed
Sent: Friday, September 09, 2011 7:14 PM
To: Katherine Warman Kern
Cc: Doc Searls; ProjectVRM list
Subject: Re: [projectvrm] new post on the economy

 

Great post, Katherine. In fact it follows logically from your post that a shift from CRM to VRM is in fact a shift to higher quality relationships -- which can become a key driver of the larger economic shift you describe.

=Drummond

On Fri, Sep 9, 2011 at 3:58 AM, Katherine Warman Kern < "> > wrote:

Thanks Doc,  Starbucks Trader Joes and Whole Foods are all great examples because they are so visible.  I know of others which aren't so visible but enormously successful.  

 

For example, a company called World Courier started delivering documents overnight before  Fedex or UPS. When these competitors undercut them on price, World Courier shifted its focus to critical priority deliveries, for example, clinical trial blood tests which have to be maintained under controlled environment at every step in the delivery process. The founder takes such pride in the quality of the service that he has turned down unsolicited acquisition offers from bigger competitors because he fears they'll cut corners.

 

It has occurred to me that it would help entrepreneurs to hear the stories of the many unknown, successful premium quality businesses.   

Katherine Warman Kern

www.comradity.com

@comradity

203-918-2617

On Sep 9, 2011, at 5:47 AM, Doc Searls < " target="_blank"> > wrote:

A good one, Katherine.

 

I like "an economy of premium quality," and think VRM will help grow that, for the simple reason that better demand will invite better supply

 

I remember, many years ago, arguing that there did not need to be an inverse relationship between quality and price: that there might actually be a "highest common denominator." The argument fell on deaf ears. Then Starbucks and Peets came along. And Costco, Trader Joe's, Panera Bread and many others.

 

In the audio industry, where I once hung out, even cheap stuff gained distortion readings south of .1% across the audible spectrum, and could produce a hundred watts of power per channel. (Their FM tuners went to hell, but few cared, with good reason.)

 

In laptops, the winners now are Apple and Lenovo, both putting out best-of-breed gear for their respective operating systems. Neither are cheapest, but both are the best, and people pay for quality of build and service.

 

In radio, another of my old hang-outs, the cheapskates robbed the whole field of its soul (and most of its bodies), but what survives and thrives is the quality stuff on public and noncommercial radio, where the listeners actually pay for the goods (though not yet in sufficient numbers). The top stations in North Carolina, Austin and San Francisco are the public ones, rather than the cookie-cutter alternatives. 

 

The list goes on. 

 

Later I'll add a comment to your post and point to it on the blog.

 

Cheers,

 

Doc

 

 

On Sep 8, 2011, at 2:21 PM, Katherine Warman Kern wrote:

http://www.comradity.com/comradity/2011/09/confidence.html

 

Katherine Warman Kern

<image001.png>

www.comradity.com

 

@comradity

(phone) 203-918-2617

(fax) 203-549-9184

 

 

 

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