Marketing with the Placebo Effect

Placebos are a fascinating and incredible phenomenon that demonstrates the power of our minds to shape how we perceive reality. A patient who is given a sugar pill instead of an actual pain reliever can feel the same decrease in pain as if they were to receive a medication with chemicals that block the pain receptors at the cellular level. One explanation of the placebo effect is that we tend to experience what we expect. If you expect to hate a new restaurant, you probably will. If a friend hints that the movie you are about to enter received great reviews, you will probably enjoy it. Our expectations can be so strong, they can create feelings that contradict the actual reality.

An example of this contradiction occurred during a study performed by MIT professor Dan Ariely, author of Predictably Irrational. He asked people to rate how they liked two beers, one was a Sam Adams and the other was a Sam Adams with balsamic vinegar. Most people preferred the Sam Adams with the balsamic vinegar. However when he told people beforehand that one contained balsamic vinegar, most people hated it.

Marketers can take this knowledge and use it to improve the real experiences of consumers by creating an environment of positive expectations. This can be visually appealing packaging- high quality wine glasses or an aesthetically designed box. Or by helping raving customers share their satisfaction through social channels like web forums or Twitter. It can be hinting to a prospect that your company was awarded for great customer satisfaction.

Now that you know the power of expectations to shape perceptions of customer’s experience, what will you do to improve customer experience?

Articles about Placebos

The Placebo Affect Seth’s Blog

Marketing and the Placebo Effect Nueromarketing

How the Placebo Effect Works HowStuffWorks

The Disruptive Online Loss Leader

by Jonathan Gilliam, Interim Marketing Executive

A slow business environment tends to highlight novel and effective marketing. Among interesting techniques retail outfits are adopting is the co-optation of low-cost, high-margin internet business models as “loss leaders” to get people in the stores and spending money.

Case in point: My wife spent about an hour on Shutterfly, one of the highest-traffic photos sites, attempting to get photo cards printed on the cheap. After a few technical glitches she gave up, and then remembered a friend describing a good experience on Costco’s site.

Costco? for online photos? Turns out the Costco experience was quicker, easier and about 50% cheaper. Being the marketing wonk I am, I thought about what Costco did that Shutterfly couldn’t.

Here’s the breakdown:

1. Wife has superior experience getting the card done and sends them to the store to print.
2. Wife goes to Costco to collect her prints, takes a detour through the store.
3. Costco adds logo on backs of the cards, which are then mailed to family and friends.
4. Husband wonders how $21 photos became $250 in bulk groceries.
5. Costco wins a big purchase, free viral advertising and a happy customer in worst economic recession in decades.

Now try this with other businesses that are supposedly exclusive to innovative online companies. Netflix? Try a video kiosk at McDonald’s for a buck, and grab a burger while you’re there.

Jonathan Gilliam is a interim marketing executive for OneAccord and is based in the Austin area. Jonathan has a deep background in business development, market analysis, opportunity development, relationship management and C-level sales. Mr. Gilliam welcomes questions at 512.775.7566 or Jonathan.Gilliam(at)OneAccordCorp.com. Jonathan also blogs at Business Developments.

Photo credit.

The Correlation with Customer Experience and Profit

by Anna Farmery

Peer Insight did a 3 year study of 40 Fortune 500 companies – the results show that companies that focused upon customer experience design outperformed the S&P 500 by a 10-1 margin from 2000 to 2005.

The test would be whether these companies are STILL focused on customer experience. For instance, I love Amazon…they took the pain out of much of my shopping for me….last night I tried to order some stuff ready for Xmas. Order process great…but delivery for products in stock, ordered now…Dec15? What??…if they are in stock why would the delivery be so long…large order canceled as the delivery date is far too near Xmas. This is now the 3rd time I have canceled orders based on the delivery dates they have given me in the last 3 months. Amazon was the ultimate experience for me…but over the last months the delivery element is falling way behind my expectations.

My customer experience is on the decline and it reminds me of something my maverick Uncle used to say…my Uncle was a multi-millionaire several times….bankrupt several times!!!…he said “Anna, it is easy making a million, hard part is holding on to it”

When a brand connects with their customer, that in some ways is the easy part, the hard part is keeping the customer at the centre after the success/profits comes flooding in. Success can breed complacency, success can breed arrogance.

I was once in a meeting with a marketing person who said “The customer feedback is irrelevant, they don’t understand marketing”

I would argue …that marketer is irrelevant, as they don’t understand customers!

This article was originally posted on The Engaging Brand and is licensed under the Creative Commons 3.0 license.

More Magic, Fewer Tricks

by Gaston Legorburu

In doing a search on CMO, looking for some information about chief marketing officers, up popped a story about Disney’s nationwide contest for its first ever Disney Parks CMO – a chief magic official.

The CMO job responsibilities: traveling to Disneyland and Walt Disney resorts to help create magical experiences for guests, participate in events and be a behind-the-scenes wizard with the Walt Disney Imagineers.

More than 1,300 people entered the contest. Peter Yu, one of the finalists, got high marks for his infomercial promoting a fictional CMO College called the Magical Institute & Center for Knowledge, Education & literacY (MICKEY, sort of.) Classes included “How to Whistle While You Work,” and “How to Fastpass Your Way to the Top.” Not bad ideas for we marketers. But it was high school teacher Justin Muchoney who won based on his ideas on how to connect people with the Disney Magic.

His wining idea came down to five concepts that he believes can be shared with people in many ways, big and small:

1. Exuberance.
2. Optimism.
3. Vision.
4. Passion.
5. Innovative Magic.

Explaining why he’s the man for the job, Justin wrote, “It is my supreme goal in life to create unforgettable experiences that draw people closer together. I aspire to build deep and meaningful relationships and to help people experience the awesome wonders life has to offer. I constantly dream up new events experiences or even moments when the people I encounter can join together and share in a memorable adventure.”

Justin may be more experienced in leading the high school marching band, but his concepts are as relevant for today’s chief marketing officer as Disney’s chief magic official. Create experiences for people that are memorable. That they rave about with other people. That they keep coming back to in order to buy more of.

Justin also may be onto something about the potential value of the five concepts to how we think of ourselves as marketing leaders, in shaping marketing strategy, and in creating focus for your people and agencies.

• Be passionate and exuberant about the value your brand is providing to your customers. (If you can’t be – is it you or do you need to improve the brand?)

• Be innovative and visionary about constantly improving the current offering and customer experience. (Blockbuster brought a more innovative approach to traditional video rental stores, but then go eclipsed by Netflix.)

• Above all, be optimistic in believing what’s possible. People follow optimists, get energy from them, want to buy from them and work with and for them.

Many today say that technology has transformed marketing. Personalization. Search. Behavioral analytics. Social media co-innovation. Rebates. Cookies. Mobile marketing. Profiling. It’s amazing what’s possible with technology – and more so every day. So much so that too many of us have gotten caught up in the technology tricks and forgotten about the magic.

Magic is what sets two relatively similar companies apart, and there is always an angle to do this. Marketing magic doesn’t just happen. As Justin knows, someone has to create the magic. I’ve seen the same offers and the same ads and the same placements for two retailers and they performed completely different. One had the magic, the other had none. If you are the brand with magic your cost per customer acquisition cost will be lower than your competition. If you are the brand with magic, people will find you – vs. you having to spend so much to find them.

We can do a lot of tricks with technology today. But technology without the magic – creating the “that was great” customer experience – is just another trick in the big marketing bag of tricks that often weighs us down.

Magic comes before the technology; technology helps deliver the magic.

This article was originally posted at CMO Rants and is licensed under the Creative Commons 3.0 license.

Photo credit

Learning From Your Customers

by John Moore

Mark Hurst over at the Good Experience blog posted his 10 steps for becoming the VP of Customer Experience at your company.

He speaks of forming stakeholder groups and offshoot ad-hoc teams, implementing “skunk work” projects, and championing the cause throughout the organization.

Good stuff … but his 10-step process could use an extra step … a step zero.

For anyone wanting to be a VP of Customer Experience, especially at an offline retailing business, start at STEP ZERO and immerse yourself fully in the role of the front-line employee and treat every interaction with customers and fellow employees as a learning experience.

Experience your business as employees and customers do by GETTING OUT OF THE OFFICE and GETTING INTO THE STORE!!!!

Learn first-hand the nuances of the customer experience from the employee perspective.

Learn the challenges front-line employees experience in delivering consistently good experiences to customers.

Learn how front-line employees can be better equipped with tools, resources, motivation, and training to deliver consistently great experiences.

Learn how to better design store layouts and improve merchandising sets from watching and helping customers navigate through the retail environment.

Learn how to improve upon products/services offered by hearing first-hand feedback from customers and by seeing how customers interact with products on the selling floor.

And when you return to the office to form teams of stakeholders charged with improving the Customer Experience, don’t forget to include the most important stakeholder – THE CUSTOMER.

It’s just as much a necessity, and maybe more of an imperative, to include the Customer perspective in Customer Experience projects just as you include the perspectives of marketers, product developers, and operators.

This article was orginally posted at Brand Autopsy and is licensed under the Creative Commons 2.5 license.