Archive for March, 2006

GM revises 2005 loss to $10.6 bln after charges – Mar. 16, 2006

GM revises 2005 loss to $10.6 bln after charges – Mar. 16, 2006:

GM revises ’05 loss $2 billion higher

The automaker says actual losses were $10.6 billion; company also says it will delay its annual report due to an accounting error.

March 16, 2006: 7:27 PM EST

DETROIT (Reuters) – General Motors Corp. on Thursday revised its loss for 2005 to $10.6 billion, $2 billion more than initially reported, due to charges associated with its restructuring, the bankruptcy of its former subsidiary Delphi Corp. and its finance arm GMAC.

Over 10 Billion dollar loss last year! See what happens when you: don’t thrill the customer, engage in hype marketing and lose the WOM battle? See what happens when your top executives get a new car every few months and never have to get regular maintenance — let alone repairs — at a regular dealer? See what happens when what you experience is totally different from what your customer experiences?

See what happens when you follow Jack Trout’s advice and rely on advertising to tell your positioning story? You know, the one that no one listens to, or that no one believes?

George Silverman

Word-of-Mouth Marketing Speaker and Consultant

Author, The Secrets of Word-of-Mouth Marketing

www.mnav.com

wordofmouth.typepad.com

Windows will now boot on a Mac

The contest for putting Windows on a Mac that I posted about here has been won. Details here.

The implications are enormous, on many levels. First of all, it shows that a desirable outcome can be encouraged by a very interesting kind of word of mouth: user, customer, consumer initiated contests or incentives.

Also, it shows that products will get modified, even if the customers don’t know how to do it themselves.

As I’ve written about before, and spoken about at the WOMMA Orlando conference, this is a very big step for Apple. Now that Windows can be run on the Mac, there is little reason for people not to switch to Macs, the clearly superior machine and operating system. They can now do so gradually, and have Windows for any custom programs (or games) they may have to run.

I hope Apple doesn’t fight this development. It’s the best thing that has happened to them since the return of Steve Jobs and the launch of the iPod & iTunes.

I will we awaiting further developments before switching. I’ll wait for some software to catch up to run natively on the MacIntel machines. Also, the Windows installation has to be simple and seamless, preferably without a re-boot. Most importantly, I have to make sure that Dragon Dictate Naturally Speaking will work on the WinMac. Since it makes calls to the chip, it is not obvious that it will work. I use Dragon to do my more lengthy writing of long articles and books. There is nothing remotely close on the Mac. Everything else is better on a Mac.

George Silverman

Word-of-Mouth Marketing Speaker and Consultant

Author, The Secrets of Word-of-Mouth Marketing

www.mnav.com wordofmouth.typepad.com

Told You So

Told You So
I hate arrogant titles like this one, but I have been shouting about the coming implosion of Big Pharma for several years. Well, it’s here. Consider these three factoids from, again, Forbes: In the last 3 years big pharma have laid off 70,000 folks. Pfizer, Merck, Bristol-Myers Squibb, and Schering Plough have lost $394 billion in market cap in the last 5 years. And, as biotech adds muscle, Amgen and Genentech are on a trajectory to pass Merck in sales by about 2009.

(More on ‘told you so.’ As the industry began to stagger, the defense mounted by most of the ‘premier’ players was … you guessed it … major mergers.)

Posted by Tom Peters | Comments?
The Tom Peters Weblog 3/9/06 12:00 PM”

(Via The Tom Peters Weblog.)

They would tell you that this is because of the pipeline drying up somewhat. It is really due to the companies spending more and more on marketing that works less and less. They need to do even more with physician-to-physician marketing. See my Open letter to Pharmaceutical CEOs.

 

Brand Autopsy: George Knocks Trout Out of the Water

Brand Autopsy

Here’s part of what John Moore had to say about the Jack Trout Forbes.com article attacking word-of-mouth marketing. Read the whole thing, here.

Jack … it’s not about you. It’s not about how you, or any one marketer or one company for that matter, can control consumers with marketing missives. It is about how consumers can help marketers spread marketing messages.

In today’s multi-channel, multi-dimensional environment, marketers cannot begin to place marketing messages everywhere consumers are. The costs do so are way too prohibitive. WE NEED HELP. WE NEED TO ENLIST THE HELP OF CONSUMERS TO HELP US. The game has changed from when and where marketing messages are delivered to HOW and WHY marketing messages are delivered. Some companies get this (Apple, YouTube, Google, Scion, Skype) and some companies don’t (AT&T).

Trout has been touting the marketing concept of positioning for over three decades now. I’ve studied his writings on the topic and I’m a firm believer in this positioning concept. But I believe that if a marketer has properly designed a positioning strategy for a product/service, WOM will not only get people mentioning the product’s name … WOM will also get people mentioning why that product/service matters. Dig?

Ya know … when it comes to meaningful words on Word-of-Mouth Marketing, Trout is a fish out of water.

Right on, John.

Technorati Tags:
Word-of-mouth marketing, , WOMMA, , WOMM

Jack Trout Attacks WOM marketing – We’ve made it!

Jack Trout attacks Word-of-Mouth Marketing

Is Word Of Mouth All It’s Cracked Up To Be?

(Via WoM Watch)

In a dazzlingly out-of-touch article for forbes.com, Jack Trout has attacked word-of-mouth marketing. This probably means that word-of-mouth marketing is now a big enough threat to the establishment that it is worthy of attack. It’s rather sad to see such a venerable old-line marketer so out of touch. It’s also sad to think that a lot of old-line companies are going to listen to him.

I usually don’t get involved in public battles and I usually let silly assertions lie, I feel compelled to answer this one because Jack is deservedly well respected and is very influential. His remarks are likely to cause many marketers who are seeking sanctuary in the comfort of the past to rally around his assertions and make some big mistakes. As the person who is often called “The Father of Word-of-Mouth Marketing” and the author of what is widely viewed as the definitive book on WOMM and as a member of the Board of Advisors of WOMMA (not speaking in any official capacity here), I anticipate many inquires about what I think. So I might as well post it right away.

I’ll try to make my reply a reminder of WOM principles, rather than a polemic.

Read his articulate column here.

I’m reminded of the oft-quoted (I wish I knew who originated it) methods for attacking innovations.

Ignore it. Say it’s trivial. Say it’s not new. Say it’s what we’ve believed and practiced all along.

In bare-bones summary, he writes:

Things are out of hand. WOM is nothing new. The only thing new is digital communications with much more noise (he says that’s good news, for some reason). People don’t really want to “chatter” about products. WOM is sometimes negative, destroying the product. Wom can’t be controlled. It’s just another tool in your arsenal. You’re going to have to continue to use advertising because you can’t buy mouths. People stop talking about you once the next big thing comes along.

You can tell things are out of hand when there is an association and highly-attended conferences all over the world.I guess advertising is really out of hand with all of the conferences it has.

We have a new dictionary of terms to learn. From the guy who coined the most overused and misused term in marketing, positioning. (I didn’t say “unimportant,” just overused and misused.) Since when is making several important distinctions and giving them precisely defined terminology a bad thing?

He goes on to say: World-of-mouth isn’t new much less “the next big thing” that WOMMA declares. A third-party endorsement of your product has always been the Holy Grail. It’s more believable. In prior days, we used to try and find the “early adapters” for a product. We figured they had big mouths and loved to tell their friends and neighbors about their new widget.

 

(Actually, it’s early “Adopters,” not “Adapters.”) What he misses is a profound difference in the modern marketplace: you don’t find them (at great expense), they find you. Then you earn their trust and permission to talk with (not at) them. You don’t bring them to your products, you bring products to your customers. Also, “third-party endorsement” as the Holy Grail defeats his point. If it’s the Holy Grail, hasn’t he just made our point? Of course, it’s the Holy Grail. That’s what we’re saying!

He goes on to cite many products that got a lot of buzz: the Segway, King Kong, the Pontiac G6. “Unfortunately, the buzz was negative.” Here, he is supporting several principles of WOMM: It’s the most powerful force in the marketplace by far, no amount of conventional marketing will overcome negative WOM, you better pay attention to negative WOM and fix it, or your product will die. His message should be: Don’t engage in gratuitous hype because in this age of empowered customers, you will be found out fast and you won’t survive the negative WOM.

“Now for the really bad news,” he writes. “There’s no way to control that word-of-mouth. Do I want to give up control and let consumers take over my campaign? No way. They aren’t getting paid based on how many widgets get sold. If I go to all this trouble developing a positioning strategy for my product, I want to see that message delivered. Buzz can get your name mentioned but you can’t depend on much else. Not too many mouths will do a stand-up commercial about your product vs. its competitor. Nor will they check with you in advance on what to say.”

This is so colossally naive and out of touch that it’s difficult to know where to start. Of course there is no way to control WOM. That’s mostly what gives it it’s credibility and power. People know that their friends and trusted advisors aren’t going to lie to them, so they believe both the truth and relevance of that they are saying.

He doesn’t want to give up control and let consumers take over his campaign? Guess what? They already have. (See my Disturbing Memo to Marketers.)

He wants to see his message delivered. In this age of fragmented media, amid the noise he laments. Good luck. Buzz (as if that’s the essence of WOM marketing; it’s not) can get your name mentioned, but you can’t depend on much else. He’s right, if you have a mediocre product for average people.

People won’t do a stand-up commercial for you? Tell that to Apple, Sony, and the countless other products that have made it on WOM, who have evangelists coming out of everywhere. Of course you can count and count on these people.

This all brings me to my word-of-mouth on word-of-mouth marketing. It’s not the next big thing. It’s just another tool in your arsenal. If you have a way to get your strategy or point of difference talked about by your customers and prospects, that’s terrific. It will help, but you’re going to have to surround it with a lot of other effort, including, if you’ll pardon the expression, advertising. You just can’t buy mouths the way you can buy media. And mouths can stop talking about you in a heartbeat once something else comes along to talk about. I certainly would never tell a CEO, “B.J., I just put a big chunk of our budget into word-of-mouth.” If you did, all I would say is “good luck”.

The overall theme here is “Marketing Warfare.” (After all, he wrote the book Marketing Warfare). He wants command and control. His sees marketing through the lens of tools in an “arsenal.” (thanks, that’s one I’d missed. I’ll add it to my old-marketing-as-warfare slides.) He wants to buy mouths like he wants to buy eyeballs, and deploy them in a strategically positioned campaign.

He’s right about several things: WOM is not the next big thing. Neither is WOMM. Not if “thing” means tool in an arsenal. WOMM is a whole different orientation. Its growing, yes overriding, importance is a consequence of the Age of Overload, where people need to cut through the crap that advertisers produce because they don’t have time to listen to self-serving “positioning” statements.

That being said, conventional marketing is not — and never will be — dead. It DOES have to be part of a careful mix. But since WOM is thousands of times more powerful than conventional marketing and spreads for free at explosive speed, everything has to be organized around wom.

No, the next big thing is not WOM. It is Decision Simplification in the Age of Overload: Making it easy for the customer to find a solution to a problem (or desire or need), sort through the BS, try successfully and use your product pleasurably. WOM contributes to Decision Simplification more than anything else. That’s why it will continue to be — as it always has been — the most powerful force in the marketplace.

Jack, I also would say to your hypothetical CEO who is dissuaded by you from committing resources to WOM, “Good Luck.”

George Silverman

Word-of-Mouth Marketing Speaker and Consultant

Author, The Secrets of Word-of-Mouth Marketing

www.mnav.com

Update: See John Moore’s very cogent comments here. P.S. The last line was very funny, John. You just couldn’t resist.

 

A new word-of-mouth phenomenon that could shake the world

I’ve been following an interesting contest, but realized
that it has wider, Earth-shaking implications.

Here’s the contest, posted by a guy named Colin.
See if you can see its wider consequences:

“My new Apple MacBook is shipping …. I told
my boss that this would replace my IBM desktop and
I could boot Windows XP on it. I am still confident
it can be done. I am giving $100 of my own money
and offering anyone else who would like the instructions
on how to Dual boot these two operating systems the
ability to give some of their money into the pot
as a prize for the person / group that can make dual-booting
Mac OS X and Windows XP happen on an Intel Mac. Good
Luck, Colin” (Rules and other details follow) Boot
Windows XP on an Intel Duo Core Mac and Make Money

This is an example of a ‘solution contest.’ There
have been several very famous ones in the past:

  • The Wright Brothers’ first flight was
    actually part of a worldwide contest for powered
    flight (there were 3 rules: powered, controlled,
    landing the same altitude or higher). Everyone
    knew it was about to happen, and about when it
    was going to happen. It was a worldwide race.
  • During WWII, there was an “inventions needed” list
    of over 300 crucial things that we needed. Most
    of them were invented.
  • There was a Friday meeting at
    the Manhattan Project. People would get up and say
    what they needed. If anyone else knew how to do it,
    or who was likely to be able to do it, they got up
    and volunteered the information. If the solution
    was outside the project, people were flown to find
    the inventor and bring the “volunteer” back
    to Los Alamos under military escort.

Do you see the new implications of the “Windows
on an Intel Mac” contest?

It’s a “Consumer Generated
Contest.”
CGC (You
heard it here first — I’m looking for
a better name). Its implications can be HUGE. A customer
has stepped up and put up $100 into a PayPal account,
inviting others to join in and contribute. Within
a few weeks, it climbed to over $12,000, and got
worldwide coverage in the blogs and technology press.
Also, someone stands to make a lot of money from
marketing the solution itself. As I’ve written
before
, it would cause sales of Macs to multiply.

But the point is: here’s a customer who has
no vested interest other than a desire for the product,
stepping up and starting a fund for something he
wants.

I think it’s only the first and that it will
start a major trend.

This got me wondering: what would you gladly contribute
$100 or more to encourage the invention of? Don’t
be too fast to say things like, “cure for Cancer,
Diabetes, etc., solution to Global Warming, alternative
to Oil, etc.” These BIG PROBLEMS would require
almost impossible-to-define rules, the incentives
are already up and running, a PayPal pot is unlikely
to increase the motivation of people already motivated
by a variety of incentives, throwing more money of
any kind is not likely to increase the probability
of a solution. Anyone solving these problems would
get the Nobel Prize, plus plenty of others.

CGCs are for a certain type of problem:

  • Middle-level
  • Clearly definable
  • Clearly “in the sights.” Something
    we know is inevitable, imminent. We can taste it.
    Our mouths are watering. We would pre-order it
    right now on Amazon (a metaphor).
  • Something where the additional incentive pot is likely to motivate people to invest their resources in developing a solution
  • Something for which adding to the incentive
    IN ADVANCE would be attractive to a large number
    of people

They may be hacks to existing products. I would
have paid in advance for a way to defeat Verizon’s
removal of Bluetooth Dial Up Networking to my Treo
(already developed), how to defeat the inability
to program the Prius’ navigation system while
the car is moving (already posted), and many
others.

They may be accessories, new products, utilities,
etc.

Are there a lot of these? Is it worth building
a web site to encourage them?

Think about it:

What would you eagerly contribute $100
in advance to a PayPal pot to see developed?

Just to make it real, make it something that you
would actually put up the money for, right now, if
I set up the contest.

George Silverman
Word-of-Mouth Marketing Speaker and
Consultant
Author, The Secrets of Word-of-Mouth
Marketing

www.mnav.com””’ wordofmouth.typepad.com

Technorati Tags:
Word-of-mouth marketing, , , WOMM

How to reach the world, in six easy steps

March 1, 2006 |  by  |  General  |  , ,  |  No Comments

Word of Mouth is Nuclear Marketing, not Viral Marketing.

Word of mouth can spread at explosive rates,
not the usual “viral” rates that most
people think in terms of.

Yes, sometimes, the word spreads slowly at a very
small “infection” rate, spread by many
contacts, until it reaches a “tipping point” (see
the explanation in the endnotes of The Tipping
Point
). This is the viral model, and it can
infect an entire population pretty fast. If every
person only infects one person, there is no growth.
But if one person infects an average of 1.01 persons,
the whole world will get infected pretty fast, as
long as there is a lot of contact.

That’s the model that most word-of-mouth marketers
are stuck on.

But it’s the wrong model most of the time.
When an idea spreads initially so slowly, it’s
usually because it’s not exciting, extraordinary,
unusual, remarkable — WOMworthy. People don’t
talk about such things very much. You don’t
get spread. The idea fizzles out.

The real model is not the geometric progression
that Gladwell talks about, but the explosive model
of the nuclear “chain reaction.”

You can’t begin to understand the explosive spread
of word of mouth until you get it. This may help.
As you follow along, first remember
the Power of WOM:

  • You are exposed to thousands of
    commercial messages a week and only act on one
    or two.
  • You are likely to act on about one in 3 recommendations
    from friends, colleagues and trusted advisors.
  • Therefore,
    WOM is hundreds to thousands of
    times as powerful as conventional messages from
    advertising and salespeople.

WOM spreads at a rate that is almost unimaginable,
but let’s try:

Let’s say that 25 people tell 25 other
people about a new product.

1. That’s ONE cycle of 625 people — that’s
the Neighborhood. Now,
everyone in the neighborhood tells 25 more people.

2: 15,625 — that’s
he average Town. My town
of Nanuet, NY is about that size. So now, the whole town knows.
They each email or call 25 other new people.

3. That’s 390,625 people,
the size of a medium-sized city like
Minneapolis or Oakland. Now the whole city knows.
(Also, that’s half of all the doctors in
the country. So, it only takes three cycles to
reach all of
the doctors who write substantial amounts of prescriptions!)
Now, the whole city emails their 25 friends in
other cities.

4: Now we have 9,765,625, the
size of a Megalopolis like
New York. Now, everyone emails 25 more people.

5: That reaches 244,140,625 people, roughly the
adult population of the United States.

6: That’s 6,103,515,625, the
population of the entire WORLD

So, to market to all doctors, or to an entire city,
you only need three cycles
of 25 people telling 25 people! In the pharmaceutical
industry, all you would need is 25 clinical investigators
telling 25 super-specialists, telling 25 specialists
or generalists, and you’ve got it covered,
with multiple hits from trusted colleagues instead
of distrusted salespeople. That’s why I wrote
the letter to Pharmaceutical CEOs that’s getting sent
around and why that letter will make a major impact.

To reach everyone in the US, all you need is five
cycles. Actually, 3 or 4 cycles are all you really
need to reach everyone who is worth reaching, multiple
times. Realize that these aren’t the usual “hits” from
advertising. These are meaningful conversations among
trusted friends, who have no reason to lie to each
other.

Now, I realize that in real life there are many
duplicates, creating the impression that “everyone
is talking about it,” — which they are —’ making
action even more likely.

So, rather than a mathematical table, think in terms
of the Silverman Six Easy Steps to Reach
the World
:

25 X 25…

Neighborhood’ > Town > City > Megalopolis > Country > World.

For the mathematically inclined:

  1. 25 2 = 625 ——————– Neighborhood
  2. 253 = 15,625——————Small
    town — Pearl River, NY
  3. 25 4 = 390,625—————Medium
    City — Minneapolis
  4. 255 = 9,765,625————-Megalopolis
    — NYC
  5. 256 = 244,140,625———-US Population
  6. 257 = 6,103,515,625——- World
    Population

This is pretty astounding, and worth passing on: So, can I get 25 of you to pass this on to 25 people? 😉

George Silverman
Word-of-Mouth Marketing Speaker and
Consultant
Author, The Secrets of Word-of-Mouth
Marketing

www.mnav.com””’ wordofmouth.typepad.com

Technorati Tags:
Word-of-mouth marketing, , WOMM