The View from Harvard Business

More than 7 million legal residents who are eligible to become U.S. citizens each year, essentially green-card holders, choose against doing so.

They decide for whatever reason that the benefits of citizenship (voting rights, potential for government employment, ability to bring their families here) are not worth the costs, starting with the $675 application fee. If you are an expert in marketing, as is Harvard Business School’s John Quelch, this fact presents a unique opportunity to view the issue through the lens of pricing strategy in the public sector.

This is a timely issue because immigration officials are thinking of raising application prices for citizenship from the current $675. The last time prices increased, in 2007, applications dropped 50 percent.

Let’s consider citizenship a U.S. product offered in competition with other countries. This country, made strong by immigrants-become-citizens, has an interest in attracting bright and hard working people to our shores. But 90 percent of our 8 million target customers annually aren’t buying the product. A business facing this same issue of underwhelming demand would consider a range of options to boost sales including price cuts (the idea of a price increase would be laughable), better marketing of benefits, promotions, loans, and, in the case of educational products, scholarships.

What should the U.S. do?

“Should the rest of us care?,” Quelch asks on his Harvard Business Publishing blog.  “Should we, as a nation of immigrants, subsidize the cost of processing applications in an economic recession to motivate more qualified but resource-strapped residents to apply? Would our democracy benefit if more legal residents joined the ranks of voters, became fully engaged in community life, and put down stronger roots? How can we quantify these benefits to justify a price below cost? Or should we leave the price as is but market the benefits of citizenship more effectively?”

If you were decision makers in the government, how would you work through this pricing strategy issue?

(Image by Sean Silverthorne)

On a recent weekend I took a Defriend Hatchet to my Facebook account, lopping out a good 50 people including a fourth grade classmate, a barber from a time when I had hair, and a colleague from a job 17 years ago whom I didn’t like even then.

Apparently I’m not alone in my desire to tame my online social world. David Armano, co-founder of social media marketing firm Dachis Corp., predicts that social networks will actually become less social in 2010. He writes on his Harvard Business Publishing blog:

With groups, lists and niche networks becoming more popular, networks could begin to feel more “exclusive.” Not everyone can fit on someone’s newly created Twitter list and as networks begin to fill with noise, it’s likely that user behavior such as “hiding” the hyperactive updaters that appear in your Facebook news feed may become more common. Perhaps it’s not actually less social, but it might seem that way as we all come to terms with getting value out of our networks — while filtering out the clutter.

That sounds right to me, but the question for BNETers is what does this winnowing mean for Internet marketers and service providers? If people become more selective about who they tether themselves to online, it might be harder for you to grab their attention. On the other hand, smaller lists usually present better defined potential customers.

Does this trend change about how you think of social network marketing?

By the way, read Armano’s entire post, Six Social Media Trends for 2010.

Related Reading:

Social Network Marketing: What Works?

GM’s new ad touting a money-back guarantee features Chairman Edward Whitacre as the spokesman.

Ed, you’re no Lee Iacocca.

I’m sure Mr. Whitacre is a nice guy and a cracker jack executive, but on TV he comes across as the stereotypical middle-aged 69-year-old White Guy Corporate Suit.

Harvard Business School marketing expert John Quelch seems to agree that Whitacre might not be the best, ahem, vehicle for GM’s message.

“Can he connect with the average consumer, female or male? Can he champion small car design? Given the current public antipathy towards business, using the hero chairman as the company spokesperson seems out of sync with the times.”

And I’ll just add GM is trying to reposition itself as a car company for modern times. Ed seems like old times to me.

Writing on Harvard Business Publishing, Quelch runs down an interesting list of the strengths and weaknesses of the new campaign.

The Good: The ad shows that Whitacre, who was appointed by the government, is taking charge; it probably plays well to the sales force; it begins to rebuild customer trust (’Put us up against anyone’); it offers a money-back assurance to customers; and it starts rebuilding the brand umbrella.

The Bad: The money-back guarantee is full of small print; the ads don’t show the product, and, as discussed, Whitacre is not Mr. Charisma.

Read Quelch’s blog post, How GM’s Chairman Aims to Please.

I’m interested in what you think of TV ads that turn the brand over to the personality of the top exec. We’ve got plenty to work with, starting with Col. Saunders and including Dave Thomas for Wendy’s, Dieter Zetsche of Daimler Chrysler, and Orville Redenbacher of popcorn fame. More recently, Walgreen’s Gregory Wasson and Sprint Nextel’s Daniel Hesse have come in front of the camera.

When does the CEO spokesman work, and when not? Who was the best, and who was the worst? Would you want your chief executive going HDTV?

Many companies have customer retention programs, incentives to motivate customers to remain customers. Think of supermarkets that recognize your patronage by giving you a percentage discount on your next purchase.

But a retention program is not the same thing as a loyalty program, a distinction often lost on companies, notes Harvard Business School professor Frances Frei. In fact, she says, “a mislabeled loyalty program can prevent a company from creating a real one.”

In this economy, customer retention is a great objective. But customer loyalty is even better. Why? Retention programs are often built on a financial transaction. Problem is, your value add to the customer is now about lower prices. Competitors can start to pick away your clientele simply by offering a better deal.

Much better is the day when you have loyal customers. These folks have formed an emotional bond with your business that is not going to be broken when the store down the street offers a bigger discount on canned peas.

Frei’s blog post looks into how European grocer Asda is attempting to best the retention programs of competitors by increasing customer loyalty. One example: Asda involves customers in deciding what products to offer and how they should be arranged in the store. Writes Frei:

“I’m intrigued by this idea because of the shared benefits of greater customer involvement — Asda’s customers make the service better, and become more devoted to the brand along the way.  Everybody wins.  And if customers turn out to be very helpful, Asda will compensate them accordingly.”

Frei does an excellent job helping us think about what really keeps customers coming into our stores and using our services. Read her post, Illusions of Customer Loyalty.

Here’s another take on the loyalty vs. retention question from BNET blogger Tim Tonkin, Three Ways to Boost Customer Loyalty.

Do you have ideas on how to increase customer loyalty?

When Entertainment Weekly readers in Los Angeles and New York receive their Sept. 18 issue, they will be participating in print media history. Or maybe that’s video chip history. I’m not sure.

That issue will contain what is being reported as the first video ad to appear in a print publication, delivered by a super-thin, bendable screen via an embedded  video chip. The ad hawks Pepsi Max soda and the CBS network’s Monday prime-time lineup.

According to CNET, the chip can hold up to 40 minutes of video and is powered by a rechargeable battery that lasts 70 minutes. Cool, but does this new form of print advertising save print publishing?

Not likely, says Harvard Business Publishing blogger Michael Davies. In fact, the whole idea misses the point.

“Morphing the physical form from print to video misses the point of why print-based publications are so challenged. It does nothing to facilitate feedback, which is what advertisers want, or to give consumers the control over content they are coming to expect.”

True enough, although I don’t think the video chip’s creator, Americhip, has the intent to save print. Rather I think the idea is to bring video to any number of new media.

And it’s not like magazines haven’t experimented with alternative advertising. Think scratch-and-sniff and compact disc inserts. Probably a sound chip or two has made itself into the pages of publications as well. None have opened lucrative new streams of revenue for publishers.

Does video-in-print excite you? Where should video ads appear next? (My idea: To raise revenue, the postal service should sell stamps with embedded video adverts. Now that would be annoying!)

A confusing, complex form not only irritates customers by wasting their time, it damages your relationship with them. A form that asks the same question three different ways, for example, simply says to the customer: We don’t trust you to answer this correctly.

That’s why time spent on simplifying paper work for your customers or business partners is time incredibly well spent. This point is driven home by Ron Ashkenas in his blog post In Simplicity We Trust, on Harvard Business Publishing.

“Take a fresh look at your customer contact mechanisms,” Ashkenas  writes. “Do they not only make it easy for the customer to do business with you, but do they make the customer want to do business with you?”

Where to start? Ashkenas offers the story of a life insurance CEO who brought his country managers together and gave them 5 minutes to fill out the company’s application for its simplest life insurance product. In the end, the frustrated managers helped simplify the form and sales went up as a result.

Have you looked at your forms lately? Better yet, have you filled them out?

(Paper work image by troismarteaux, CC 2.0)

You are a marketing director for KFC, a company that is test marketing a sandwich called the Double Down. This product is getting universally panned by people in the health industry, by food critics, by the media in general.

Double Down may have its supporters, but they are probably dead after eating one. Why?

The sandwich dispenses with the traditional bread wrapper and substitutes two fried chicken fillets as the bun. Inside the “bun” resides bacon, two types of cheese, and a special sauce.

Search “Double Down KFC” and you will experience the start of a viral buzz like you’ve never seen, including mentions in the LA Times, Fox News, Huffington Post, Epicurious, Kansas City Star, Atlanta Journal Constitution and thisiswhyyourrefat.com, for starters. Somewhat typical in tone is this KC Star reader poll, KFC’s Double Down sandwich turning heads, stomachs

If you are KFC, what do you do? I see two ways this plays out for the Colonel’s team.

One option is to say, hey, this product is targeted at a very specific audience, it’s not labeled health food, and all this free publicity is going to ensure that every potential customer with an adventurous appetite is going to know about it. It’s all just gravy on the cake.

The downside is KFC is made a laughing stock on shows from David Letterman to the News Hour With Jim Lehrer. The Onion publishes a special edition. President Obama calls for a third health care system just to treat Double Down customers. Despite what they say, not all publicity is good publicity.

So you are a KFC big shot. What’s your next step?

(Double Down image courtesy foodgeekery.com)

Cash for Clunkers had three primary goals: Help the auto industry, help the environment, help the poor. It failed on all three, thanks to the U.S. government’s mishandling of the whole affair.

This damning review comes from Harvard Business School marketing expert John Quelch, in a blog post on Harvard Business Publishing.

“The Federal government should not be in the business of initiating and administering short-term incentive programs designed to shape consumer purchase behavior. It has no experience in such initiatives and proved itself incapable of forecasting demand associated with different incentive levels.”

Where did government fail? Quelch says the size of the rebate, up to $4,500, was way too large and resulted in taxpayers subsidizing car deals that would have occurred anyway. And government-imposed bureacuracy means administration costs might reach 10 percent of program costs.

Read Quelch’s entire critique How Cash For Clunkers Failed American Taxpayers. You can also look at my previous post supporting the program. Then come back here to debate this question:

Is Cash for Clunkers an exemplar of the good government can do for its people, or an illustration of why government should stay out of private enterprise? Short on time? Take our poll.

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Is it important for you as a business leader to keep on top of the latest social media technologies?

No. Don’t bother. And that advice comes from Alexandra Samuel, who runs her own social media consulting firm.

Writing on Harvard Business Publishing, Samuel says that following the latest hot thing down the boulevard, like Twitter, is wasting your time and following someone else’s agenda.

“The minute you stop trying to keep up, you open a far more exciting possibility: getting ahead with what matters to you, your team and your business.”

That’s tremendous advice. Identify your strategy first, and then figure out which social technologies, if any, can give you tactical advantages in achieving it.

Read her post, Don’t Keep Up With Social Technology.

Do you agree with Alexandra that we are spending too much chasing technology at the expense of time on getting the core business right?

Each year some 2 million people try to reserve a dinner table at elBulli in Spain. That’s a problem, because chef Ferran Adrià seats only 50 a night, and is open just half the year.

What does Chef Adrià know about marketing that puts his scarce product in such high demand? He understands that what he is serving is only partly about food. Just as Disneyland knows its theme parks are only partly about rides, and Apple knows that the iPod is much more than delivering songs.

Here is what the lucky few elBulli diners receive for their 230 euros.

In a five-hour sitting guests will encounter more than 30 completely original dishes prepared by the chef and  his team of up to 40 cooks. “In addition to engaging a diner’s five senses, Adrià and his team hope to evoke irony, humor, and even childhood memories with their creations,” reports an HBS Alumni Bulletin article.

Says the chef: “We have turned eating into an experience that supersedes eating.”

In other words, what Adrià  is selling is an experience, not just food, says Harvard Business School professor Michael Norton, who prepared a case study on elBulli.

How does the chef decide what will be on the menu? Mostly by not listening to the customer, Norton reports.

“Adrià’s idea is that if you listen to customers, what they tell you they want will be based on something they already know,” Norton observes. “If I like a good steak, you can serve that to me, and I’ll enjoy it. But it will never be a once-in-a-lifetime experience. To create those experiences, you almost can’t listen to the customer.”

So as you think about what makes up the core of your brand, think beyond the product to the overall experience you want customers to experience. Also, don’t throw away customer research — but trust your instincts to deliver to the customer something they didn’t even know they wanted.