An interesting report from comScore and I think some premonitions for retail automotive.

 1. Could FREE shipping break open real eCommerce for automotive? I think it is certainly a big hurdle right now logistically and monetarily. Taking away the monetary factor may go a long way toward opening this up. Of course there are still some logistics involved and there is the tactile factor. The need to touch and feel the vehicle is diminishing slowly and logistics can be overcome… Thoughts?

2. Pricing in the palm of the customers hands. Like it or not that part of eCommerce is upon us, the whole TrueCar mess may have brought it to our attention on a large scale but it was going to get there anyway. It’s not yet main stream but customers walking around your showroom with iPhones in hand comparing your cars, dealership and prices is coming like a freight train. If you try to fight it you’ll just be run over by it. So here are a few ideas to help you embrace it.
                  a. Use SMS short codes on your window stickers. Better than QR code because customers are more used to it and because you get to capture the cell number of the customer and have a possibility to continue the conversation.
                  b. Use QR codes to direct customers to Google places to review your dealership and see your reviews. On your Repair receipts, on your envelope the license plates the customer gets, on posters in your showroom and just about any other correspondence you have with customers. It will pick up reviews. While you’re at it use QR to direct them to a mobile coupon as well, might as well get the service business there’s a little bit of money there.
                  c. Remember people do things with mobile not research so much so help them do those things. If they want to compare on your floor have an SMS short code that gives them a special discount or incentive and links to other prices…Remember they are on your showroom, you’ve got home court advantage and they’re going to do it anyway might as well direct the process to your advantage.

3. The day of the “Big Lot” is coming to an end. I can foresee a day in the not too distant future where there are small retail dealerships in high traffic down town locations where you pick out your vehicle; it is stored in a central much cheaper storage facility outside the city but it goes much deeper than that however. I can see this going to mass customization where you pick the car, and the paint job and the electronics package, the wheels, tires, ground effects etc. and there is an assembly line type factory on the storage facility site that customizes that car for you in a few days then delivers it to your house. I would love to see someone try this on a small scale it would shake up the car world.

These are a few thoughts that come to my head as I watched the video above, let’s here yours.

See the full comScore report below.

 

According to CNW Research New Car Traffic was up 12% in Jan. and closing ratios were up 10.4%. This may explain the high level of optimism at these years NADA. While I really didn’t see a big influx of new technology what I did observe is the dealers were in good spirits and optimistic on the future.

Below is the report from CNW

http://ebiz.netopia.com/cnwmr/cnwresearchstatedition/

This is a great post from Ad Age sent to me by one of our clients Andy Wright. It is the essence of the need to have customer land on a page that is tailored to the offer you are making and that when you do tap into the Human Element by making the respondent feel like you have fulfilled on the promise of your ad, given them the information they want and are a good place to do business you will get more of them to act the way you want.

Ignore the Human

Element of Marketing at Your Own Peril

Forget Product
Positioning, This is the Dawn of the Relationship Era

Published: January 01, 2012

New Year’s resolution: Stop living in the past.

Just jettison some old habits, such as trying to manipulate prospects. Stop
viewing purchasers as conquests. They are members of a community, prepared to
adore (or the opposite) not just your stuff but the inner you. Your essence is
transmitted continually via your relationships with consumers, employees,
suppliers, shareholders, neighbors and the Earth itself.

 
 
 
 
 
 
 
 
 
 
 
 

 

The Human Element is greater than positioning, unique
selling propositions and segmentation.

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Welcome to the Relationship Era. Say goodbye to positioning, preemption and
unique selling position. This is about turning everything you understood about
marketing upside down so that you can land right side up. This is about tapping
into the Human Element.

Begin with a simple experiment. Type “I love Apple“
into your Google search bar. You will get 3.27 million hits. If you type
“I love Starbucks,” 2.7 million hits. Zappos: 1.19 million.

“I love Citibank” gets you 21,100. AT&T
Wireless: 7,890. Exxon: 4,730. Dow Chemical: 3. Out of 7 billion human beings,
three! Just to put that into context, type “I love Satan” and you get
293,000 hits. Now consider that in the past 12 months, Citibank, AT&T
Wireless, Exxon Mobil and Dow have spent $2 billion on advertising. How’s that
working out for them?

The methodology here may not be especially rigorous, but the results
dramatize two immutable facts of contemporary marketing life:

1. Millions of people will, of their own volition, announce to the world
their affection for a brand. Not for a person, an artwork or a dessert but for
a product or service. Congratulations. People care deeply about you.

2. Whether you like it or not, your brand is inextricably entwined in such
relationships. If you were to type in “I hate Exxon,” you’d get 2.16
million hits–not counting the “I hate Exxon Mobil” Facebook page.
Though people are listening less to your messages, it doesn’t stop them from
thinking and talking about you. And each of those expressions of like, dislike,
ardor or disgust has an exponent that reflects the outward ripples of social
interaction.

In short, as you have realized but most likely not come to grips with, you
are being evaluated 24/7 in countless conversations that have zero to do with
your ad slogan. On the contrary, they are about your brand’s essential
self–which behooves you to think very hard about your essential self.

This has ceased to be an option. History has made that decision for you.

End of the Consumer Era

Mass advertising sustained marketers and media for more than 300 years. The
last stage of that epoch — from roughly 1965 to about five minutes ago — was
the Consumer Era. It was characterized by a shift from advertising and
marketing focused on the product (Brylcreem: “A little dab’ll do ya!”
Lucky Strike cigarettes: “It’s toasted!”) to getting into the heads
and hearts of consumers (MasterCard “Priceless.” Nike:
“Just do it.”).

It was a four-step process. 1) Ascertain through research what the public
desired. 2) Offer it. 3) Create advertising designed to seduce, impress,
entertain, frighten or flatter the target audience. 4) Place that advertising
in media favored by the target.

Why not? Where’s the flaw in selling people what they wish to have by
reaching them with messages they relate to in the places they like to be?
Thinking of others … isn’t that what Mommy and Daddy told us to do?

Yet, for three fundamental reasons, those universal marketing practices must
be discarded.

For starters — briefly, because this is no longer controversial — there is
the ongoing chaos scenario: the inexorable collapse of mass media and mass
marketing, and the hyper-fragmentation of their online successors. Meanwhile,
DVR fast-forwarding, spam filters and opt-outs have essentially reduced
audience measurement to a faith-based initiative.

It’s a paradox: a revolution that in one critical aspect moves us backward.
While digital tools have taken the power of the heavily capitalized Few and
distributed it to the Many, they have also nearly obliterated anybody’s
capacity to reach the Many in one fell swoop. The Industrial Revolution was
revolutionary because it created efficiency through scale. The Digital
Revolution, by contrast, has decimated scale.

So, yes, upheaval is violently altering the landscape.

The second reason is ecology. Think of the marketing environment like the planetary
environment. In the Consumer Era, business won customers by burning fuel. That
fuel was advertising. Drill, drill, drill. Burn, burn, burn. Sell, sell, sell.

Colossal reach made advertising and promotion seem efficient, yet their
effects were maddeningly transitory, a vast expense yielding little equity. Buy
advertising and sales went up. Stop advertising and sales went down.
Marketing’s effects, in ecological terms, were unsustainable.

Now, amid the collapse of Mass, the fuel itself is too expensive to produce.
The future requires a sustainable alternative. Resource management and the
disintegration of Mass argue against the status quo.

There is a third — nearly blasphemous reason — that the sun is setting on
the Consumer Era. We’ll get to that shortly. First, let’s meditate on the new
currency of commerce: trust.

According to the 2006 Edelman Trust Barometer, “quality products and
services” was the top response in identifying the standard of trust. By
2010, mere “quality” had dropped to No. 3. “Transparent and
honest practices” was No. 1 (with 83% of respondents citing it).

Core values, that stuff of essential self. Scan the signage at the Occupy
Wall Street encampments. Goldman Sachs takes a drubbing. Apple, very much in
the 1%, gets a pass.

Of course, how people represent themselves in surveys and at rallies doesn’t
necessarily reflect how they really behave. In political polling, for instance,
nobody ever declares himself a racist. Surveys of media diets reflect zero use
of porn.

So how to demonstrate that the public’s stated preference for honesty and
transparency squares with their actual choices in the marketplace? The answer
is the Brand Sustainability Map.

 

Researchers at Imc2 commissioned survey data on trust and plotted it against
market share for leading consumer marketers. The results are striking:

Charting customer “trust” as the Y axis and transactions as the X
axis creates four quadrants. The lower-left quadrant, “Limited,” is
the province of losers: struggling brands with flat or declining sales and
little respect from consumers. American Airlines lurks in the lowest left-hand
position.

To its right is the “Reluctant” quadrant, brands that command
little respect and generate little emotion, but whose price or competitive
advantage trumps a customer’s misgivings.

In the upper-left, “Emotional” is the home of companies that
maintain respect in spite of quality issues, limited distribution, high price
or other competitive disadvantages.

Finally, there is the Valhalla of the upper-right-hand quadrant,
“Sustainable.” This is where you find the likes of Apple, Costco,
Southwest Airlines and, in the upper-most-right-hand corner, Amazon.

In the Relationship Era, the big winners will be in Sustainable, whose
habitues typically spend little on advertising — because they don’t need it.
By contrast, indifference is expensive and hostility unaffordable.

Notice that three retailers in Sustainable — Amazon, Costco and Target
– spend an average 0.52% of sales on measured media. Sears, in the Limited space, spends 1.62% of sales
and loses market share doing it.

The power of brand identification verges on the perverse. A 2011 study in
the “Journal of Consumer Psychology” by Shirley Y.Y.�Cheng, Tiffany
Barnett White and Lan Nguyen Chaplin concluded that consumers tend to take
criticism of their most-admired brands personally, and circle their emotional
wagons around the brand under attack.

Toyota and Snickers enjoy the same reflexive
defensiveness from their devotees as the president of the United States, the
Dallas Cowboys and the state of Israel enjoy from theirs.

Clearly, those whom we trust and adore, we trust and adore a lot. It’s human
nature. Luckily, while the digital revolution was undermining Mass it was also
supercharging human nature.

Social media have taken the stolid, dependable old tortoise — word-of-mouth
– and transformed it into countless hares, multiplying like, well, hares. And
they’re zipping around not just the beauty parlor and the saloon but Facebook,
Twitter and Yelp at the speed of “send.”

 

David Rogers, Columbia Business School

Network effect

To David Rogers, executive director of Columbia Business School’s Center on
Global Brand Leadership, that network effect has changed the shape and the
physics of the traditional purchasing funnel.

“Awareness, opinion, consideration, preference and purchase” have
been supplemented by “loyalty” and “advocacy,” Rogers says.

The new imperative, according to Rogers, is “How do you, as a marketer,
get the subset of the loyal customer who doesn’t just buy your product again
but … writes those positive reviews? They share your links and retweet you on
Twitter and post a photo of themselves with your product on Facebook and
“like’ you on Facebook and generate all these network conversations, which
go back to the top of the funnel and influence other customers in your network
at their own stage of awareness, consideration, preference or action.”

Those echoes influence consumer behavior at every stage and create a sort of
perpetual-motion marketing machine. “I draw it as a funnel with an arrow
that goes from the bottom and feeds back to the top,” Rogers says.
“That’s the efficiency of it, if it works right.”

Oh, it works right. All you have to be is beloved, or at least respected,
for how you conduct yourself as well as what you sell. That truth was
documented by Rajendra S. Sisodia, David B. Wolfe and Jagdish N. Sheth in their
2007 book “Firms of Endearment,” a study of what they call
“stakeholder-relationship management.”

They selected 30 companies that they deemed driven by purpose rather than by
slavish devotion to quarterly earnings. Less paradoxically than it would
appear, in the authors’ view, these businesses built value for shareholders by
not obsessing about them. The companies included Honda,
Trader Joe’s, The Container Store, Southwest Airlines, Wegman’s Food Markets,
Commerce Bank, Best Buy, BMW, CarMax and eBay.

Lo and behold, over a period of 10 years, the Firms of Endearment wildly
outperformed the rest of the corporate universe and continue to do so. We
updated the FOE data to reflect the 15 years between 1996 and 2011. In that
span, during which the benchmark S&P average was 157%, FOE companies grew
an average 1,646%. During the past three economically disastrous years, the
S&P rose 3.3% on an annualized basis. The FOE index was up 21.06%.

Core values can’t be faked

Impressive, no? These kinds of numbers prompted some CEOs to look deep into
their souls for a corporate raison d’etre and many others to summon their PR
people to the C-suite to rewrite the mission statement — the latter approach
being a fool’s errand, of course.

All social efforts must flow from an authentic sense of purpose, not bogus
boilerplate. Core values cannot be faked, at least not indefinitely.

Scott Adams, creator of Dilbert, once devised a Mission Statement Generator,
which could be loaded with familiar buzzwords to automatically formulate
high-toned bullshit. (“Our challenge is to assertively network
economically sound methods of empowerment so that we may continually negotiate
performance-based infrastructures.”) Pretty funny.

But if you want a real laugh, check out the actual “values
statement” for Philip Morris. Item No. 1, as God is our witness:
“Integrity, trust and respect.”

Here’s another, literally etched in stone in the lobby of a corporate
headquarters: “Integrity. Communication. Respect. Excellence.” The
corporation? Enron. The message would have been longer, but the stonemason ran
out of room to chisel “Rapacious Jackals.”

And Dow? The company so loathed worldwide that it cannot muster even four
expressions of online love? You know what its slogan is?

“The Human Element.” It has a lovely ring, and Dow has articulated
ambitious plans. But for the chemical company that bought the chemical company
that gave us Bhopal, the sloganeering is at best cognitively dissonant. Dow’s
reputation is such that its sponsorship of the 2012 Summer Olympics in London
is roiling the games’ organization.

Hyping dubious humanity credentials is like lying to your psychoanalyst, a
pointless exercise. Yet so many marketers dangle one foot in the 21st century
while putting all their weight on the other foot, planted firmly on Rosser
Reeves’ grave. They squander the unprecedented potential of the online feedback
loop by conducting themselves as aloofly in social media as they always have in
paid media. Here is how one struggling fast-food chain has chosen to honor the
individuals who honor the brand by following it on Twitter:

KFC Colonel Everythin’s better with #bacon! Try a #KFC Cheesy Bacon Bowl
for just $3.99 + tax. (Limited time at participating U.S. KFCs)

“You are our fan,” KFC seems to be saying. “You are our
friend! So we’ll interrupt you as we always have with a sales pitch!” It’s
like being invited to your friends’ house for dinner only to realize over
dessert that they’ve suckered you into an Amway solicitation. Ugh. Cross that couple
off the Christmas-card list.

Trust is an asset, not a commodity. It cannot be purchased. It must be
earned. And it can dissolve before your eyes. But brands keep trying to
purchase respect points by, for instance, linking themselves to unassailable
causes, such as treating sick kids, in association with a finite promotion or
as part of a long-term “cause-marketing” strategy. This behavior is
cynical and often sordid, exploiting other people’s tragedy to buy borrowed
interest. Not so different from licensing “Iron Man” for a
co-promotion.

Others pay lip service to corporate social responsibility to inoculate
themselves against charges of venality, environmental rape, off-shoring or
other offenses. This is generally little more than PR window dressing.

Genuine purpose

What companies have available to them at all times, without having to come up
with faux philanthropies, is corporate purpose. If you can identify why your
company exists and what values it embraces, and if you live by those values
across all aspects of your enterprise–from hiring to choosing suppliers to
acting on civic responsibility–then you have the foundation for values-based
relationships that command loyalty and trust.

Do not confuse genuine purpose with other notions of differentiation, such
as positioning or USP, rooted in manipulation or contrivance. They are
“What can we say about our brand that sets us apart?” Marketing from
purpose is no less differentiating but it’s accomplished via a brand’s
demonstrated character. It can be banal or lofty “to make the most
delicious ice cream,” but you have to explain to all comers why you’re in
business.

Here’s how outdoors outfitter Patagonia defines its reason for being:

Build the best product, cause no unnecessary harm, use business to
inspire and implement solutions to the environmental crisis.

This has been the Patagonia way for 40 years, since founder Yvon Chouinard
set up shop to outfit lovers of the outdoors without contributing to the
destruction of the outdoors.

The company donates 1% of its gross sales to environmental causes, recruits
other businesses to follow suit, and engineers every aspect of its operation
toward source reduction and environmental sustainability.

Patagonia has progressive workplace policies, including in-house day care,
paternity leave and paid sabbaticals for environmental volunteerism. It also
enforces identical factory conditions, whether they’re in California or
Vietnam. Years ahead of regulators in committing to reducing toxic discharge in
its supply chain to zero by 2015, the company also made a costly decision in
1996 to use only organic cotton.

CEO Casey Sheehan recalls the corporate thinking at the time: “For a
period of years, our margins will suffer, our prices will be high. But we will
also tell the world that … if we don’t do this and the world continues down
the path of using conventional cotton, we are going to use up all the water and
turn these agricultural areas into pesticide-ridden areas.”

In the early 1960s, Volkswagen changed advertising with its wry,
counterintuitive appeals to inconspicuous consumption.

 

Fifty years later, in its 2011 Black Friday advertising, Patagonia further
mined that paradox and suggested that consumers not purchase even Patagonia
goods. “Don’t Buy This Jacket,” was the headline above copy detailing
the environmental toll of a single piece of Patagonia outerwear.

None of this eco-righteousness has ravaged the bottom line. On the contrary.

“The last three and a half years have been the best years in Patagonia
history,” Sheehan says. “And that’s from revenue growth, operating
income–all the traditional measurements. Our profit … back in the day [was]
2% to 3% annually. Now we’re up in the 9% range. That’s right on par with
public-company metrics.”

Its growth transpired amid the worst economy since the Dust Bowl.
Patagonia’s employee turnover is 5% a year; its share of rejected goods is 1%.

It’s not at all about “sitting around the campfire singing
“Kumbaya,’ ” Sheehan says. “It’s just that everything you say
and do … has the potential to affect everyone around you. The people you work
with, the people you contract with. It’s simple as that a happy CEO or leader
means happy workers, which means happy products, happy customers.”

That is why the Human Element cannot be isolated to the CMO’s office but
must be internalized by all management and must inform every corporate
relationship — from contract workers to securities analysts.

In a recent Harvard Business Review article, visiting professor Modesto
Maidique reimagined leadership by posing a seminal question to his top-level
audience: “Whom do you serve? Yourself? Your group? Society? Wall
Street?” We subsequently asked him what he was getting at. After all,
isn’t keeping the stock price up a CEO’s primary fiduciary responsibility?

“People assess corporate success based on stockholder returns,”
says Maidique, director of the Center for Leadership at Florida International
University. “You look at the [biggest] return, and that’s the best
CEO.”

But in a hyperconnected world, bosses must be stewards of the ecosystem.
Information is everywhere, and “the approach they take to their ecosystem
is going to be widely reported around the world.”

Whereas author and executive Pete Blackshaw has famously asserted that
“customer service is the new media department,” if Maidique is right,
everything you do is the new media department.

Perhaps you’re thinking, “Duh. People in glass houses shouldn’t lounge
around in their underwear.” Or maybe, “Sure, some whole-grained,
tree-hugging Mother Earthlings like Patagonia manage to build a business out of
twigs and bark, but aren’t they profiting from a pre-existing global movement
and have a customer base predisposed to buying in?”

Krispy Kreme

So let’s consider a different sort of enterprise, one that not only sells some
of the most nutritionally incorrect products on Earth, but has spent most of
this millennium as a Wall Street laughingstock.

 

We refer of course to Krispy Kreme Doughnuts. The stock plummeted from $44 a
share in 2003 to $1.15 in 2009 (when overexpansion, accounting irregularities
and investors’ loss of irrational exuberance ended what had been three-plus
years of Krispy Kremania). It has since climbed back into the $6 to $9 range,
on the strength of steadily growing revenue and profit, same-store sales and
enthusiasts’ devotion.

“You look at our fans and no matter what happens, they love us,”
says CMO Dwayne Chambers. “People like to eat doughnuts when they’re
really happy, and people like to eat doughnuts when they’re maybe worried or
… a little melancholy. We have one of those products that really fits a lot
of different needs and a lot of different emotions.” Just like a glazed or
jelly-filled friend.

Krispy Kreme’s resurgence began with the 2009 hiring of CEO Jim Morgan, who
presided over management introspection about purpose. What came out of the
process wasn’t particularly sophisticated but, if anything, resembled old-time
religion: “Touching and enhancing people’s lives through the joy that
is Krispy Kreme.”

The executives distilled the watchword from 75 years in the guilty-pleasure
industry. They decreed only that the joy ethic inform every interaction at
every level of the business, which is a bit like ordering a fish to swim.

Similarly, the idea of cultivating those human relationships ran deep in
Krispy Kreme kulture.

“The brand was always built on word-of-mouth, which was the social
media of decades prior,” Chambers says. “It was the man or woman
going to the barber or beauty shop and chatting about a product or business.
… But when you look at something like social media and the ability to engage
people in conversation … about what they’re interested in, all of a sudden
you are at a much deeper level.”

Well, as long as you know the difference between using social media to send
140-character ads and truly staying connected. Whereas KFC uses Twitter to
sell, sell, sell, Krispy Kreme uses it to engage, engage, engage.

krispykreme #Trivia: What are the names of our three different #coffee
blends on our website? (Hint: Check out ow.ly/7tRWd.) Anyone can play.

“If you are sitting in front of your computer and a friend sends you an
email, no matter what you’re doing, you’re going to stop and click on that
email,” Chambers says. “It’s a friend, and you want to know what’s
going on, because they wouldn’t send you an email unless there’s a reason. We
want to be in that category.”

A tall order. But a congruency between the expressed and observable values
of the brand and those of its constituencies instills a sense of belonging and
sets remarkable dynamics in motion.

The folks at Krispy Kreme not only find it easier to bounce out of bed at 4
a.m. but also require less and less expensive advertising to sell more and more
delicious cardiovascular time bombs. Chambers says that paid media represents
less than 5% of his budget. With 3.8 million Facebook followers, he does not
need big media budgets to engage.

Another outlier, sweet and irresistible? Maybe. But just as you don’t need
to be saving the world to cultivate brand values, so you don’t have to be a
deep-fried indulgence. What about, say, a deodorant? The sidebar here offers a
case history of a wholly unglamorous personal-care product redefining itself
around urging women to be fearless.

Conveniently enough, a recent documentary has its way with a competing,
distinctly less-evolved antiperspirant.

 

Morgan Spurlock

One of the more hilarious moments in our friend Morgan Spurlock’s 2010 film,
“Pom Wonderful Presents the Greatest Movie Ever Sold,” occurs when
the Ban brand management team is asked what the brand is about.

What follows is a long, embarrassing pause. It was not intended as a trick
question, but the silence speaks volumes. Movie theaters fill with growing
laughter. After what seems an eternity, a Ban manager offers, “It’s about
superior technology.”

All right, that’s an answer. Not a great one, but valid.

Spurlock retorts, “Yeah, but that’s not something you really want to
put in your armpit,” and that line brings down the house.

If you polled these audiences on “brand purpose,” many people
would roll their eyes at what seems like the most ludicrously tortured
corporate-speak.

Yet the tension and humor of the Ban-Spurlock exchange don’t flow from any
absurdity in the question “What is your brand about?” Rather, the
joke hinges on the public’s sense that brand stewards should, at a minimum,
know why they are in business. Viewers were laughing not at the notion of brand
ethos but that Ban doesn’t have one.

Which gets us to the third factor in committing to The Human Element. It was
always a superior model, because it is the natural order of things. Vast
libraries of consumer research illustrate that we respond to what we perceive
as authentic–not to the phoniness, sycophancy, contrivance, pandering and
panoply of other negatives associated with “marketing.”

In the words of that Danish marketing guru, Polonius: “To thine own
self be true.”

Counterintuitive as it may seem, a pillar of the Relationship Era is that it
is better to look inward than define your business as the accumulation of your
public’s often fickle, shortsighted tastes.

In 1885, what the public wanted was more-comfortable horse-drawn carriages.
Try as we might, we cannot recall any significant agitation 20 years ago for a
$4 cup of coffee. As Steve Jobs said in explaining why Apple hadn’t conducted
market research in developing products: “It’s not the consumer’s job to
know what he wants.”

Somewhat obnoxious, we’ll grant you that. But would you like to search the
entirety of the web and get a piddling 118 hits?

Type in “I love poseurs.”

 

Doug Levy

 

Bob Garfield

Doug Levy is CEO and founding partner of Imc2, a
purpose-inspired strategic and creative agency based in Dallas. He and Bob
Garfield are collaborating on the forthcoming book ‘The Human Element.’

Bob Garfield is a 26-year Ad Age contributor and
proprietor of a limited consultancy on marketing strategy and execution. He is
the author of four books, including ‘The Chaos Scenario.’