Voices: the CMB Blog

This blog is first in a series, from CMB's Meg Gerbasi and Scott Motyka, exploring the latest in market research methods.

Imagine that you are given a glass of merlot at a wine tasting. You swirl the glass and breathe in the aroma, immediately picking up oak and then hints of cherry and dark fruits. Now tasting it, you detect cherry, blueberries, and blackberries mixed in with a blackpepper tone. Later the sommelier tells you that the wine was produced in India. Would you be surprised if we told you that you’d be more likely to buy a bottle of this Indian wine than if it was from Italy? Today we discuss a forthcoming paper in the Journal of Consumer Research by researchers Keith Wilcox, Anne Roggeveen, and Dhruv Grewal of Babson College.The Big Idea

Have you figured out why learning the Merlot was from India (instead of Italy) after tasting it would make you like it more? Wilcox and his team say they have the answer, but it’s a little complicated. When given product information prior to tasting, favorable information leads to more enjoyment of the product, but when product information is provided after sampling, favorable product information will lead to less enjoyment of the product.

This is counterintuitive, so let’s unpack it carefully. When given information about a product before you sample it, the information colors your experience of the product. When you taste something you expect to be enjoyable, for example, an expensive Italian wine, you actually enjoy the product more than if it were something you would expect to be less enjoyable, say, an inexpensive Indian wine. These findings aren’t new, several studies have shown similar results – Coke tastes better from a cup with a Coca-Cola logo, people enjoy movies more if they know they have good reviews, and drinks taste better when they’re purchased at full price.

What got us excited here at CMB were the results of what happens if you give a consumer product information after they’ve sampled your product – the results reverse!  That rich, fruity red with the silky smooth finish somehow doesn’t seem so great when you find out it’s $200 a bottle, does it? But it tastes even better when you find out that it is a Trader Joe’s “Two Buck Chuck.”  Wilcox explains that when we sample an experiential product that excites our senses causing an emotional reaction (think food, movies, music) it forms an immediate impression. The product information provided after sampling is used as a measuring stick of our initial impressions, causing favorable information to actually diminish our enjoyment of the product (“I expected a $200 bottle of wine to taste better”).

A 21^st Century Marketing Strategy?

What does this mean to market researchers out in the real world? As opportunities to demo video games, listen to music samples, and watch movie previews before purchase increases through internet, mobile, and OTT TV (e.g., Hulu) channels, this research has exciting potential to inform our digital marketing methodology. Through careful examination of both the impact and timing of the product information we communicate, we can maximize the digital experiences of our customers.  Should you provide your brand image, product name, or price at the beginning or end of a video game ad, before or after a person listens to a 30 second music clip? It depends. If you’re marketing a well-known brand or band, such as Call of Duty or the Beatles, you’d be better to let your customer know right off instead of leaving them hanging. If you’re trying to break into a new market, establish your brand, or present a relatively low-cost product, let the ad convert your potential customers first. In summary, this study reinforces the critical importance of companies to “hear” the voice of their customers through market research.

Posted by CMB researchers Meg Gerbasi and Scott Motyka. Meg holds a Ph.D. in social psychology from Princeton and specializes in the study of self-interest, psychometric validation, intergroup conflict, and decision making.  She has a passion for the color pink and the musical stylings of Lady Gaga. Scott is doctoral candidate in psychology at Brandeis University, his affinity for Lady Gaga is unknown.

On a recent 5-hour drive with my son Pete, his iPhone’s GPS-app suddenly started “cha-chinging” up points.  He didn’t know why the points were rolling in, nor did he have any idea how – or for what – or if he would ever redeem these points, but we both agreed:  “Points are good.”   

Nearly everyone, not just Pete and me, is hardwired to enjoy games.  "Gamification," the use of game mechanics in nongame settings, takes advantage of our psychological predisposition to enjoy games, and encourages people to engage in tasks that, but for the game, they might not feel compelled to do.  Traditional customer loyalty programs leverage game mechanics:  we earn points, achieve status/levels, display badges of honors and chase bonus points.  And, clearly, these mechanics help to increase consumers’ motivations and positively shape their behavior, leading to positive revenue impact for the associated brands.

Lately it seems that game concepts are cropping up in more – and some unexpected - places.  Part of the reason for the recent popularity is the growth in social media, a channel that was born to be gamified.  Twitter has been game-like from the beginning, with the main score being the number of followers.  Foursquare, with its hundreds of badges to win, is basically a game….it isn’t used, it’s played. 

But after reading about social loyalty programs, where members earn reward points for promoting brands on social networks, I’m wondering if marketers are taking things a bit too far.  Does rewarding customers for forwarding a brand-related tweet water down the strength of true loyalty?

If this term is new to you, let me tell you what I’ve been seeing:  Social loyalty programs are promoted as taking the concept of traditional loyalty programs to the next level by enabling companies to track and reward their fans, followers and customers for a wide variety of online and social activities -- from tweeting a message to checking in to a location or liking a post on Facebook.  Companies like CrowdTwist, a New York start-up (that recently received $6 million in venture funding) tracks and rewards customer behavior across social, mobile and online platforms. 

Maybe social loyalty programs are the future – but before building a social loyalty and/or changing your current loyalty program, I’d suggest you consider these questions: 

• Where’s the beef?  Traditional loyalty programs are built on the principle of rewarding customers for behavior of value.  The programs we work with can articulate the value of their members and of their program—the incremental sales, flights, stays, or bookings that they may not have generated otherwise.  What economic value will a social loyalty program provide to a brand?  What behaviors will you look to encourage?  Will a program encouraging social behaviors deliver desired outcomes?  The value of the activities must be calculated – in terms that the CFO will understand and believe. 

• What other (non-economic) value can a socially loyal member provide? What benefit to your brand is more fans or higher klout?  Can your increased social-WOM, be connected to increased sales?  Or insulate your brand from negative reviews?  The CFO might have a harder time articulating the value of these activities – but they’re important to consider.

• Finally, to whom would a social loyalty program appeal?  Segmentation research we ran a few years ago found that in a traditional loyalty program, the portion of members whose primary motivation was to “play the game” (e.g., seek out bonus points, enter contests) represented a fairly small portion of members.  But these Game Players – or Social Loyalty members - may be a desired demographic with untapped potential for your brand.

So, before spinning the dial, understand your different customer groups and their associated motivations. Explore, for which segments, a social loyalty program would be beneficial in shaping customer behavior to yield positive business results. As with all things “social,” gamification and social loyalty are tools in the toolbox to build customer engagement. Understanding if, when, where and how they fit into your current loyalty programs and strategies is the most exciting part.

Posted by Judy Melanson. Judy leads the Travel & Entertainment practice and loves collaborating with clients on driving customer loyalty.  She's the mom of two teens and the wife of an oyster farmer. Follow Judy on Twitter at @Judy_LC

CMB at TMRE: We would love to see you at The Market Research Event. Be sure to stop by booth 406 to say hi and enter to win a New England Calmbake for two!

Join us at the 2011 Market Research Event in sunny Orlando November 7^th to the 9^th. Lots of CMBers will be in attendance and presenting, including Jim Garrity who will be discussing increasing customer loyalty with GE CareCredit’s Sheila Dreyer. And  Rich Schreuer will be presenting: Unleashing the Power of Discrete Choice, with Kelly Servedio and Missy Wood from Aflac.  Still need a ticket to the event? Enter the code: TMRE11CMB when you register for 25% off the ticket price.

Don't miss these presentations:

Turning Customers into Advocates: GE CareCredit Increases Customer Loyalty with their Advisory Panel

Date and Time: 8:45 Monday, November 7, 2011

Speakers: Jim Garrity, Vice President of Financial Services, Chadwick Martin Bailey; Sheila Dreyer, Consumer VOC Leader, GE CareCredit

Summary: Learn how GE CareCredit redesigned their online customer advocacy panel, creating a community with high engagement and even greater value. This online community of cardholders has become a group of trusted advisors and strong advocates for the brand. Learn how:

•GE CareCredit uses their community to enhance the customer profile for future segmentation

•GE CareCredit is using their online panel for a multitude of business decisions throughout their organization

• Engaging with their advisory panel breeds loyalty and greater returns

Aflac Unleashes the Power of Discrete Choice, Positioning their Brand for the Future

Date and Time: 10:30 Wednesday, November 9, 2011

Speakers: Rich Schreuer, Senior Vice President, Chadwick Martin Bailey and Kelly Servedio, Manager of Market Research Insights & Missy Wood, 2nd Vice President, Market Research Insights, Aflac

Summary: Learn how Aflac and Chadwick Martin Bailey took an innovative approach using discrete choice to help Aflac focus and enhance their brand for the future. A technique typically reserved for product development, discrete choice overcame many of the obstacles associated with brand positioning studies delivering Aflac a roadmap to increase demand and educate consumers on all "The Duck” has to offer. See how this brand used research to prepare for the future:

• A new approach to an age old technique, using discrete choice for brand development

• How the teams crafted a design that yielded precise recommendations for multiple dimensions of the brand

• Moving from results to action, see how Aflac used this research to drive their marketing communications and messaging to better connect to its value proposition

And stop by our booth #406 to say hello, and for a chance to win a New England Clambake for two.

Posted by Megan McManaman, Megan is CMB's Content Marketing Manager. She is headed straight to TMRE from her honeymoon, she wouldn't miss Jim Garrity's presentation for the world.

I’m always looking for some angle that allows me to marry my love of sports with some at least tangentially-related topic from marketing research.  This one I think is actually pretty good.   Tebow is a media lodestone right now, and segmentation… well, that’s about my favorite topic (outside of sports and food).

Without further ado…

There is no shortage of skeptics when it comes to either segmentation, or Tebow.  Segmentation studies (not mine) are notorious for providing “interesting” but ultimately useless information.   Similarly, Tebow has been dissected and criticized by a myriad of experts, including draft gurus Mel Kiper Junior and Todd McShay.

Neither segmentation nor Tebow are about perfection, but about increasing your odds of winning.   Given each individual is unique, the only “perfect” segmentation scheme would have one segment per member of the population.  So given perfection is impossible, segmentation becomes an exercise in finding a scheme that dramatically increases your chances of “winning” with individuals through differentiated treatment of the groups (e.g.,  better products and/or marketing messaging and/or targeting).  Similarly, Tebow is far from anyone’s epitome of NFL QB perfection.  He’s too short, too stocky, and has lousy mechanics.  But he’s a proven winner at the NCAA level, and Denver is 6-21 in Kyle Orton’s last 27 starts.

Both Segmentation and Tebow are about leadership and both can change cultures.  Strategic segmentation (when done well) can change organizational cultures by defining which segment(s) a business will “live for.”  Better understanding your most important segments of customers and prospects helps define what their North Star is, and can result in dramatic changes to everything from product offerings to how your company is organized.  It provides a foundational roadmap for where a business needs to go and why.  Similarly, Tebow’s greatest strength is his leadership.  His quiet and humble confidence is infectious, as witnessed by how universally (with the notable exception of Brandon Lloyd) both sides of the ball rallied around him before and during last Sunday’s game.  In the matter of a week, the Broncos went from a team mired in failure to one with a lot of hope.  (Yes, I know, we can thank the Dolphins for that too… but cut me some slack here).

Segmentation and Tebow will both take time and dedication to succeed.  Segmentation is foundational, and therefore should not be rushed.  It takes time to create the instrument that will allow you to uncover and profile the most actionable segments, and time and effort analyze and evaluate the data too.  Similarly, Tebow is a work in progress.  For 50+ minutes on Sunday, Tebow looked like he had no business playing QB in the NFL.  He was woefully inaccurate, and he was uncomfortable reading the defense.  It’s possible that his mechanics will never improve, but Tebow will never stop trying to get better.

Segmentation and Tebow are both partially defined by faith and abstinence.   Unlike some market research studies where the results can be very clear and prescriptive (e.g., the most profitable product configuration and price from a conjoint-based study, or choosing the right product positioning from a monadic concept test), segmentation is usually the beginning of a journey rather than the end.  Action either requires more research on the most important segments, or some leap of faith to decide to (for instance) create new messaging based on their motivational profile.  It also requires abstinence in that segmentation is almost always about who you don’t (proactively) focus on as who you do focus on.  No company can be all things to all people (or businesses), and the decision to walk away from some audiences is hard.  Like Tim (who credits his faith for the strength to resist temptations that have kept others in his position from reaching their potential)—it’s important to focus on your goal, and avoid distractions that might sidetrack you along the way.

In a nutshell, both strategic segmentation and Tim Tebow are potential sea-changing initiatives that can have major impacts on the organizations that undertake them.  Risk free?  Absolutely not.  But with the right time, effort and coaching they can both pay off big time. 

Posted by Brant Cruz. Brant is CMB’s self-proclaimed Segmentation Prophet.  And, he’ll be rooting hard for Tebow to succeed (except when he plays either of Brant’s fantasy football teams or his beloved Chicago Bears).

Despite some debate over the value of Enterprise Social Software tools, their use has taken off.  In 2010, Gartner, Inc. went as far as predicting the near term replacement of email by social networking services.  The lure of a tool that is low cost, simple to use, and that taps into the explosion of mobile devices promises to be collaboration on steroids.   

In our recent Tech Pulse survey of over 200 IT professionals, nearly one-third are currently using some type of enterprise social networking tools already, and an additional one-fifth plan to start soon.   Not surprisingly, usage is highest at larger companies, where the actual need is greatest.   

IT Departments, which are starting to catch up to this employee-led train and take ownership of it, typically  prefer social networking features integrated into core software applications already in use at the organization, as opposed to horizontal, purpose-built enterprise social networking platforms (three-quarters of IT departments prefer this). IT departments are dealing with application sprawl already.  Any time a trusted incumbent vendor gives them a way to meet their employee needs without adding an entirely different application (and vendor) to their environment that may not have well-developed APIs with their existing applications: they’ll take it.    

Which applications have the most demand for integration of enterprise social networking tools?

Some of the biggest users of these tools—not surprisingly—will be from Marketing and Sales.  This group of enterprise users will likely benefit from integration of social networking tools for CRM, SFA, and other marketing-related applications. Customer Service departments are also high on this list: large companies striving for greater customer-centricity have a clear need to get all parts of the company dealing with customer touch-points more effectively collaborating with one another.     

Internal IT management and IT help desk functions were also high on the list of departments that would benefit from enterprise social networking.  IT departments are not only catching up to this trend; they’re using it themselves as Gen Y and Millenials increasingly start to populate the profession.    

Which enterprise social networking tools are IT Professionals using/considering?

IT departments generally prefer company names from large application providers they already use. The top mentions for social networking tools currently being used include Microsoft’s Office Talk, Cisco’s Pulse/Quad, and IBM’s Connections.   These same tools are top mentions for tools they are planning to use in the near future.     

Things for Enterprise Social Networking Pure-Plays to Consider:

1. Don’t Skimp on APIs: Having tight, well architected integration with major enterprise applications already in use is absolutely essential to getting companies to bring on a new vendor…especially the larger companies that are the earlier adopters of these systems. Jive is already attacking this barrier by increasing the degree of integration its tool has with applications like SharePoint.  If these firms invest in tighter integration with applications that matter to these IT Professionals in a social networking context,   (e.g., Customer Service, IT help desk, and Internal IT), they are likely to gain greater attention.

2. IT Departments Need Some Convincing: Not having the benefit of incumbency and inertia, pure-play enterprise social networking companies must be amply prepared to counter objections they are going to face from IT departments that—while this might not be the place they initially target their sales efforts—they will ultimately need to gain the central IT stamp of approval in order to close the deal.

  Things for Other Enterprise Application Vendors to Consider:

1. Consider developing integrated social networking capabilities into the next release of your software: especially if you sell to larger companies and/or to departments within companies that are most open to using enterprise social networking. IT Departments, for one, will be compelled to pay a little bit more for these extra integrated functionalities and be done with it rather than overlaying a completely separate third-party solution that may bring its own set of integration and IT management headaches.

2. Play nice with other enterprise social networking vendors: especially if you do not have the resources or decide not to develop your own social networking capabilities—the ease with which your product integrates with some of the major enterprise social networking tools may soon become a check-list item in the evaluation process for your category. Helping develop easier integration with other social networking platforms is a defensive move that could prevent some future churn of existing accounts when it comes time to renew agreements.

Download our TechPulse on Cloud Computing Trends here.

Posted by Chris Neal. Chris leads CMB’s Tech Practice. He enjoys spending time with his two kids and rock climbing.