February 09, 2006

When Consumers Call the Shots

A study by the Yale Center for Customer Insights at the Yale School of Management indicates that consumer reviews on and had a potent effect on sales of the products reviewed.

Interestingly, the study's authors, Judith Chevalier and Dina Mayzlin, found that a 1-star review depressed sales more than a 5-star review boosted sales. It seems that negative packs more punch than positive in word-of-mouth.

This report contributes to a growing body of research demonstrating the impact of consumer-generated content -- whether in blogs, product reviews, or other new media -- on brand image, sales and even share price. I'll be posting more on this research in the future.

In the meantime, consider this little factoid from another study by the Yale center, which found that the new price and feature comparison capabilities enabled by the Internet is forcing a transfer of riches from auto companies to consumers amounting to at least $240 million per year for those who shop at alone, or about 2.2 percent of the cost of the average car. That's $770 saved on the price of a $35,000 vehicle.

And again, that's the savings just at alone.

More evidence that the Web-fueled power of consumers is increasingly being felt in the marketplace.

February 06, 2006

Nvidia's Invaders Shoot Themselves in Foot

Ah, the eternal search for buzz! The latest example of a company attempting to use the blogosphere to create buzz for its products has ironically produced a buzz-saw of negative reaction for Nvidia, which apparently hired a bunch of shills to invade gaming forums and post "helpful" mentions of its products.

Check out this and this and this and this, and of course, this, too.

The lesson here? You cannot fool the blogosphere. Sooner or later you're going to get busted.

So if any other companies are thinking of surreptitiously hiring secret word-of-mouth "buzz agents" to shill for them, please bear in mind an axiom that politicians have known for years: the ability to keep a secret is inversely proporional to the number of people involved in your conspiracy.

So if you want to secretly hire one or two shills to plug your products, go ahead. You'll probably get away with it, at least for a while, for all the good those one or two shills will do you.

But hiring 10 or 20?

It's like picking up a gun only to shoot yourself in the foot.

January 25, 2006

Marketing is Dead ... Long Live Marketing!

Responding to my post on "What's Holding Back Corporate Blogging?", Stowe Boyd offers some valuable insight into the myopia of most business executives who see blogging solely as a new marketing vehicle:

"Corporate types steadfastedly refuse to believe that the post-marketing world is better ... blogging is considered an adjunct to marketing, 'just another channel' to carry messages, slightly recast perhaps, to one 'segment' of the 'market.'"

This tendency to define blogging as merely a new-fangled marketing vehicle -- and the business media are just as guilty of this -- has always bugged me, too. Indeed, 3-5 years from now, blogging's value in marketing may be seen as the least of its many benefits to business. Product development, enterprise management, the creation of new businesses -- these functions may turn out to be be the chief beneficiaries of corporate blogging initiatives.

What then, is the role of the marketer in the blog-fueled new commercial epoch in which customers increasingly call the shots in business?

I have some ideas ... chiefly revolving around marketers becoming facilitators of the customer insight and initiative that will increasingly become the fountainhead of enterprise success.

But does Boyd have other ideas? Does anyone?

Or are we truly moving into uncharted territory here?

January 23, 2006

What's Holding Back Corporate Blogging?

Why did the much-predicted 2005 stampede by corporate America into the blogosphere fail to materialize?

The number of Fortune 500 companies with strategic public blogging initiatives, after all, is still quite small -- somewhere between 3-4%, depending on how you figure it. Many of those firms are what you might call "the usual suspects" -- i.e., technology firms such as IBM, Sun and Microsoft that are enmeshed in network culture. And basically none of them are the sort of brand-name consumer powerhouses that could really push blogging and related customer-contact media into the mainstream of everyday business.

By itself, this delay is not surprising, especially when you look at the history of early corporate involvement with the Web a decade ago. When the World Wide Web first emerged in 1994, some pundits predicted the "imminent demise of the shopping mall" as name-brand consumer product firms rushed to set up online stores. In point of fact, it took four years for the dollar volume of online shopping to even hit the $1 billion mark -- in other words, to even reach half the size of the real-world market in blow dryers.

Change, it turns out, usually takes longer than the pundits predict. Especially change in the business world.

But it does beg the question: What are the factors or conditions that will drive mainstream American firms to truly embrace external public blogging -- whether for marketing, product development or other purposes?

I asked two authors of business blogging books -- Jeremy Wright and Debbie Weil -- for their thoughts on this question:

Jeremy Wright, a corporate blogging consultant and the author of Blog Marketing, named three factors holding back a stronger corporate embrace of blogging:

"First, these things take time. It never happens as fast as we imagine. Second, the software tools are in many cases still too immature for enterprise use. And third, a clear ROI (return on investment) from blogging remains to be demonstrated."

As for Debbie Weil, also a blog consultant and the author of the forthcoming The Corporate Blogging Book, she stressed the psychological roadblocks to corporate blogging:

"Fear is the single most important thing holding corporate America back from embracing blogging. Fear of being open, fear of a two-way conversation, fear of not being able to control the message, fear of the time commitment."

Wright and Weil make good points, to which I would add one more:

Blogging really is not for the faint of heart or the control freak -- two personality types usually thought to be well-represented in the ranks of management.

That's because, first of all, there really are dangers involved in tearing down the traditional barriers to direct customer interaction with the firm. There are a lot of angry consumers out there -- their anger fed by decades of having to deal with shoddy products, indifferent service, and the lack of corporate transparency and accountability -- and now, thanks to blogging, for the first time in history they can finally hit back. Just ask Dell, Sony, Kryptonite, Circuit City, and others whose brands, if not also their revenues, have taken a beating from the blog-fueled revolts of angry customers.

But just as important, blogging will ultimately force companies to abandon many of the traditional ways they have always managed not only their public affairs but their marketing and product development functions as well -- not least by giving customers a far more powerful and direct voice in enterprise decision-making than has ever been the case before.

In short, blogging requires firms to turn many of their operations inside out -- or, more accurately, to reverse the polarity of corporate thinking and practice from inside out to outside in.

Think about it: With notable exceptions, most large companies have always operated on a push-driven model, creating everything from their products to their marketing messages in-house and delivering them to what has always been (until now) a passive consumer marketplace. Now, thanks to blogging and other new developments, the transmission belt to the consumer is reversing direction, and marketing and new product insights will increasingly flow from the customer to the company.

That's a huge, epic change -- the sort of change that will require a lot of "tough love" for executives to embrace.

As Weil noted:

"If you put blogging in the basket of corporate communications it runs absolutely antithetical to so-called current best practices."

Ain't that the truth.