George Silverman's Word-of-Mouth Marketing Blog

This blog has moved

I have expanded and moved this blog to my home Web site, where I can bring you a broader range of content: “Live Books” and articles on great products, marketing, life, magic, and surprising issues.

More, more easily

Each post on the blog will then appear in its appropriate place in one of the books or articles I’m writing. You can participate by asking questions or making comments — even contributing your own stories or thoughts.

You can view various issues in a variety of ways: in blog form, in the books and articles they are forming, and by category and tags. So, for instance, you will be able to click on “Word-of-Mouth Examples” and see the examples collected into one place, or “tricks and tips” to see practical suggestions, or “theory” to read about broader thoughts and principles.

I’ve long found this “Word-of-mouth Marketing” blog to be too constricting, both in its scope and in its structure. I’ve found myself asking myself too often, “How do I justify putting this in a self-described ‘Word-of-Mouth Marketing’ blog?” Too often, I’ve decided I couldn’t, and didn’t.

Beyond Word of Mouth

Word of Mouth is a subcategory of something much more important: making decisions easier, or “Decision EZification.” As I’ve said, “Marketing is not something you do to customers; it’s a service you do for customers — the service of helping them make better decisions more easily.” Word of mouth is simply one way —the most powerful way — to make decisions easier.

On this blog, I keep bumping my elbows and head against my self-imposed Word-of-Mouth limitation.

I also realized that not only my blog, but my entire home web site was too limiting, while its structure was becoming increasingly confusing as I added content. My problems were reflective of the problems that we’re all dealing with: how do we deal with increasing amounts of information without collapsing into chaos, weighed down by the increasing complexity of our structures and the exponentially increasing amounts of content?

The Solution(s):

I needed a way to bring you a wide variety of interrelated information in a a useful, easy, simple and elegant way, while encouraging, feedback, cooperation and contribution.

Once I defined the vision, I discovered that solutions are readily available. Content Management Systems (CMSs), created by the Mass Cooperation and word of mouth movements, had now matured to a point that I could actually use them directly without hiring a team of programmers.

As we experience the amazing Information Revolution together, I hope to be able to bring you unique perspectives and insights into what is going on and how to deal with it more effectively.

What would books be like if they were invented now?

What would books look like if we were to invent them today?

“Modern” books, in the form we know them, are relics of the 15th Century. It doesn’t make sense to publish static, paper, typeset documents that are revised, at best, every few years — any more than it made sense to publish hand-scribed or wood-cut books once Gutenberg invented the printing press around 1450.

After thinking about improvisation (see previous post) and the risks of putting things out in the world that are spontaneous and unfinished, I’ve decided that I want to do more of it. So, I’m going to try something new:

Instead of writing books one chapter at a time, sequentially, I’m going to try writing the whole thing first as a summary, then an article, then, guided by reader reaction, I’ll expand those that people find most valuable, gradually providing more detail for those who are interested in a more comprehensive version.

I’ll publish those that reach the size of a “book” and charge for them in e-book or other electronic form,,while continuing to make the shorter article available as a sample.

This is the tried and true software model: a beta test version, followed by a free Lite version followed by a Pro version, each with updates as warranted.

This wasn’t possible a few years ago. But now the tools for continual, live documents are emerging. The old book model is dead, even the old e-book model, as we know it. To get an idea of where things are going, take a look at Google Wave:

Google Wave: What Might Email Look Like If It Were Invented Today? - O'Reilly Radar - an excellent third-party article.

Google Wave Preview - Extraordinary presentation from the developers. They are unpolished presenters, but their enthusiasm and knowledge more than trumps any lack of presentation skills. They are the real deal, totally charming in their enthusiasm and completely trustworthy.

Google says, "We set out to answer the question: What would email look like if we set out to invent it today?"

I’m asking, “What would books look like if were to invent them today?”

I think they would be some sort of live documents, continually revised and automatically updated, with almost real time input from readers: questions, reader examples, experiences from implementing the ideas in the document. In other word — as Google say — a cross between a conversation and a document.

With or without Google’s Wave, I have long thought that the time has come for living documents. I certainly plan to implement them in some form starting right now, even if they are a crude improvisation of their eventual evolution.

What I’m looking for now is a publishing platform to host “live” documents, plus a way to indicate in a very simple, convenient way, the changes that have been made since the last revision. “Tracking Changes” of the sort in word processor documents doesn’t even begin to do it.

There is an explosion of group collaboration software, but nothing that I’ve seen fills the bill. I think it could be the NEXT BIG THING.

I hope that Google Wave will soon provide that platform. Does anyone know an interim solution?

Stay tuned.

Musings

Taking Risks

I’d like to share with you some important life and business lessons from an unexpected source. I just saw an extraordinary group of musicians in an unusual format. They each gave a short summary of their life story before performing a prepared piece. During the course of the evening, they also did some amazing improvisation. It was followed by audience participation and a question period.

I’m always looking for subtexts, themes, hidden meanings and underlying principles. Theirs were unmistakable. Each one talked about overcoming the personal risk of trying new things in front of other people who might see their shortcomings.

One talked about his first performance as a kid facing a neighborhood audience when he had realized seconds before that he really hadn’t prepared sufficiently.

An opera singer talked about thinking of herself as a pianist only to have the dean of her college and her teachers discover that she was a much better singer, a mode that she felt uncomfortable with.

Another talked about coming to America from Hungary because this is the land where risks are appreciated rather than punished. She also talked about the importance of intense studying of technique, then having the willingness to let it go and try new things, trusting that her technique could be relied upon.

Another talked about his mother and other performers exhorting him to put his real self out there with gusto.

I asked them to expand upon this theme of courage in the face of risk during the question period and they said some interesting things worth passing along.  

• They said that life is improvisation and you have to be willing to act when you don’t know what’s going to happen, knowing that you can make adjustments along the way.

• One — who was obviously struggling with the complexities of being a painter, filmmaker, singer and flute-player — identified with Josephine Baker’s lifelong struggle with trying to be appreciated for being different and said that she had to think outside the box and trust that it would all somehow come together.

• Another asked for a chord from the pianist and improvised from it. But, when he asked for another chord, the pianist gave him an impossibly complex one. Rather than making an excuse, or failing an impossibly hard feat, he simply and humorously asked for another chord, to which another musicians said, “In life, you can always get another chord.”

It was obvious that they all seemed to enjoy their improvisational risk-taking much more then their rehearsed performances. We did too.

I was struck by these tales and demonstrations of real-life courage. I gained a new appreciation for the risk-taking that all real artists have to take, even when they were children. Most of all, I was inspired to think about ways to improvise instead of always presenting a finished product.

Artists are, after all, entrepreneurs: people who put an extension of themselves out in the world for other people to accept or reject, willing to assume greater than normal financial and psychological risk, fueled by their passion for their product, their precious baby. The artistic product is perhaps a little more noble than other products, but it’s a product nonetheless; and the artist is a very special entrepreneur.

My next post will be about what they have inspired me to do.

marketing, Musings, risks, word-of-mouth marketing

April Fools Day Marketing

April Fools’ Day is once more upon us, causing my annual reflection on human gullibility.

I still continue to get the usual large number of e-mail hoaxes passed along by otherwise intelligent friends who seem to be willing to believe almost anything, without taking the minute or two that it takes to check them out on an Internet rumor site.

I was interviewed yesterday by Fast Company about companies using April Fools’ Day pranks to generate word of mouth. I’m quoted in the article, but I thought it would be worth expanding my thoughts slightly here.

I see nothing wrong with a company like Google demonstrating their extraordinary inventiveness and company ethos with pranks. The principle here is that as long as the prank illustrates and enhances the brand, it’s fine. So, for instance, if you are trying to get across how inventive, funny and informal you are, it's perfectly appropriate. If you were, for instance, Snopes.com, the Internet rumor site, or museumofhoaxes.com and you were trying to demonstrate how gullible people are, again you would be on the right track.

in other words, you want to use word of mouth to enhance, demonstrate and amplify what is good about you, your product, company or service.

But here is another kind of word of mouth that is very popular these days that I want to discourage: doing things that encourage word of mouth just to get people to talk about your company or product, without it being linked to product benefits, or – better – superiority. For instance, when Microsoft introduced Vista, they had a contest for a seat on the first rocket to the moon. While this might have gotten them a lot of buzz, it did nothing to illustrate why Vista was superior, or to give anybody any reason to use it. At the same time they were doing this, Apple is introducing spectacular new features into their operating system that got people to talk about their operating system, not about extrinsic and irrelevant nonsense.

Encarta R.I.P. and good riddance

The story is told — probably apocryphally — of the child who pointed to a large set of very dusty books in the library and asked her what they were. The mother said they were a set of encyclopedias. He asked, incredulously, “They printed out the whole web site?!”

Microsoft has just announced that it will be ceasing publication of its encyclopedia, Encarta. Britannica is now becoming more participatory, accepting “suggestions” from its readers and allowing “Web publishers,” such as bloggers, free access to its pages.

Of course, all of this is due to the incredible word-of-mouth phenomenon known as Wikipedia. Some interesting insights into the Wikipedia phenomenon can be found here.

I found one paragraph in the above cited article particularly interesting and relevant to the current financial crisis:

Jimbo Wales, the founder of Wikipedia, first conceived of the notion of a free, user-content-driven encyclopedia after [reading] an essay on "The Use of Knowledge in Society" by Nobel Prize-winning Austrian economist F.A. Hayek. [Comment: The essay is brilliant. Hayek is one of the greatest economic thinkers of all time and is largely neglected today.] Hayek too was a proponent of "democracy," in the "power to the people" sense, but his prize-winning economic views were not in favor of monolithic, bureaucratic, social democratic systems. Rather, Hayek's work showed the superior efficiency of resource allocation by decentralized information analysis among many voluntary actors in the marketplace, each acting to bring about his or her own self-interested ends. Centrally planned bureaucracies cannot do what the market does because, "[t]he 'data' from which the economic calculus starts are never for the whole society 'given' to a single mind which could work out the implications and can never be so given." No one can know everything that is potentially relevant to everything else, and since no one can know everything, no one mind can rightfully be charged with efficiently allocating all scarce resources. It is only through the distributed information processing of the market, rather than the linear processing of any one entity, that an optimal result can be reached.

I wish the principles of Wikipedia were applied to our society. Oh, wait a minute, that would be laissez-faire capitalism and would mean an end to our current corporatism (democratic socialism). Look them up in Wikipedia!

In my opinion, the importance of Wikipedia and of the whole wiki phenomenon has been severely underestimated and underappreciated. It is a true division of labor and a meritocracy of clarity.

A Must-See Video from Dick Cavett's Slydini Broadcast

Thought you'd want to see this article and accompanying video from Friday's NY Times. It's by Dick Cavett about Quintino Marucci, aka Slydini, his and my magic mentor.

This particular broadcast has a great deal of personal meaning for me. I had given up magic for a long time because I didn't like the "gotcha," challenge, wise guy, trivial way that everyone — myself included — was performing. I had a vision that there was a more artistic way to perform, but I couldn't pull it off. This broadcast, on Monday, November 7, 1977, was life-changing for me — particularly "Coins Through the Table" at 7 minutes 35 seconds into the video, and the subsequent one coin routine and rope routine. In a few minutes, I saw what magic could be in the hands of an artist. By the end of the next routine, the ropes, I had decided to take up magic again. I called Slydini the next morning, a Tuesday, ready to plead my case for him to take me on as a student. I told him that I had seen magic as it could be for the first time last night, and that I wanted to study with him. As I started to persuade him to take me on, he interrupted. "You can-a make-a this Thursday at-a 2 o'clock?" "Yes!," I answered, forgetting to ask him what he charged.

Thus began over a year of studying nothing but "Coins Though the Table," which I soon realized wasn't about coins though the table at all. It was about mastery, a sort of Zen journey, involving re-learning magic, multiple aspects of psychology, movement, timing, wording, and many other aspects of magic that take it from the puzzling trick level to the inspiring art of allowing people to directly experience the "impossible," thereby pushing the boundaries of possibility. It was about experiencing how to approach the mundane and transform it into something transcendent and uplifting. Only then was I ready for the other effects, which I studied for another year. Just about everything else I ever did in life was influenced by those lessons, started by this broadcast. I'm delighted to be able to share it with you.

Enjoy!

http://cavett.blogs.nytimes.com/2009/03/27/conjuring-slydini/

Hopefully, Dick will release the other broadcast soon.

Word Of Mouth — Good for Products & Services, Bad for Ideas

Word of mouth is probably the best method for evaluating products and services. But it is dangerous for evaluating ideas. In fact, it poses such a grave danger to us in the present economic crisis that feel I need to sound another warning and take active steps to try to counteract the almost certain disaster that word of mouth is about to cause. [See previous posting here]

While word of mouth is usually a powerful and positive force, it also has its toxic forms — rumor and gossip. In its extreme forms, WOM can be so dangerous that it is no exaggeration to call it a weapon of mass destruction.

I’m talking about Groupthink and Herd Mentality

As an expert in word of mouth, I have to say that I'm stunned by the amount of groupthink and herd mentality that's rampant right now during our present financial crisis. While I was optimistic that the WOM of the Internet can be a constructive force, I'm getting more and more pessimistic. The situation is getting worse, and I see no signs of a turnaround.

I think we’re seeing only the tip of the iceberg. We have the classic ingredients of panic and mob rule: frustration, anger, the urgency for action that a crisis seems to demand, outraged people blindly repeating widely held myths, strong peer pressure not to raise certain questions, and many more. When you add dashed hopes, shattered dreams, moral outrage and populist indignation at unfair treatment, you have an explosive mixture. This mixture will be ignited when people realize that they are the victims of a Ponzi scheme that makes Bernie Madoff look like an amateur: that their money was hijacked in 1913 by the Federal Reserve, then decoupled from gold in 1933 and 1971, and gradually turned into worthless paper by a cleverly engineered inflation calculated to create the illusion of prosperity by making more dollars looks like more money.

Most Republicans and Democrats are on the same side of the major economics issues, having adopted Keynesian economics many decades ago. They’re only dickering over the details of how we can spend stimulus money and how much to spend.

We are going down the path that, on some level, almost everyone realizes cannot work and will make things worse.Yet, most people, including most lawmakers, believe that economics is so complicated that they cannot possibly figure out what is going on. So, they are left to repeat plausible sounding bromides. This is very dangerous if the prevailing opinion happens to be wrong. In such a case, people just dig themselves in deeper, while comforting themselves by the false sense of certainty that comes from phrases like “we all need to work together,” “we need bipartisan agreement” and “everyone agrees that…”

When you are trying to decide on whether or not to purchase a product, word of mouth is a very good strategy because people can reliably report their direct experiences with it. Instead of spending huge amounts of energy sifting through mountains of information, how far wrong can you go with “I’ll have what he’s having”?

But, “I’ll have what he’s having” in the realm of ideas is a disaster. Here, Follow the Leader is a dangerous game. Instead, “20 Questions” is much more appropriate, even if much more unsettling.

I am not upset that people don’t have answers. I am not upset that people don’t have my answers. I am very upset that fear and uncertainty — and the deadly form of word of mouth called Groupthink — are preventing people from asking the tough questions and thinking for themselves.

In subsequent posts, I’ll have some suggestions about what’s needed to turn the situation around.

Can the US Car companies be saved?

Continued from yesterday, with some overlap...

Can the US Car Industry be saved?

It is painful to watch the current attempts to save the American automobile industry through bridge loans, restructuring, lower wages and an auto Czar. (I thought the Czars were ruthless dictators who routinely disregarded what was best for the people—who made the Communists look good by comparison.)

To change things, people need to look at root causes, rather than symptoms: decades of failure to be responsive to the needs of customers, particularly the failure to address quality problems adequately has resulted in horrible WOM. It would take decades to fix it, far beyond bridge loans.

What needs to be fixed is an attitude that takes a long time to change:

The American automobile industry is one of the few that is still running on the old-fashioned attitude that they know better than the customer, an industry that doesn’t realize that the customer has hijacked marketing and taken charge.

The root attitude that's missing is that a well-earned reputation (WOM) resulting in willingness to recommend their car to friends determines sales. And managing WOM is not a marketing technique, it's a way of life.

Restructuring, better marketing, lower labor costs, selling the corporate jets, reducing executive salaries and government oversight are naïve attempts to fix symptoms. None of them will get people to recommend and buy inferior American cars.

What should be done?

Anything will be painful. If we prop up the American industry, they will still fail to turn around attitudes and design in time. Also, it will take at leant hundreds of billions of dollars, and bankrupt us in the process by printing money, thereby devaluing the dollar.

Instead, we should do something counterintuitive: we need to let them go into bankruptcy and leave them to sink or swim, since governmental "supervision" will make things worse. We should repeal the regulations that make it almost impossible for newer car companies to do business without selling to large companies. I've heard that there are many such struggling companies.

There is plenty of room for one or two innovative American car companies that are genuinely responsive to the customer. The decline and/or demise of the present US car companies will create plenty of room for companies that understand customer collaboration, ease of repair, customer support, and other concepts of modern marketing.

Word of mouth kills US auto industry

Once again, I take no pleasure in watching another of my predictions come true: The collapse of the American automobile industry.

Word of mouth built the foreign auto makers, and now WOM has finally destroyed the American car companies. It's very instructive to see how.

What reversed the WOM for the foreign auto makers?

Imagine a situation where almost everyone believes that the products made by a particular country are vastly inferior. Obviously, people wouldn’t buy those products from that country if they had an alternative source of supply, unless the price was significantly lower, or unless the lower quality products had something more valuable than quality.

Prior to the early 1970s, German and Japanese cars were of poor quality. Their sales were low and remained so despite increases in quality that eventually surpassed American cars. The word of mouth went solidly against them. What turned it around? The 1973 Arab Oil Embargo.

The Arabs stopped selling us oil because we supported the Israelis in the 6 Day War. Prices soared. The government imposed price controls, causing scarcity and rationing, as price controls always do. There were long — sometimes miles-long — lines at gas stations. People suddenly needed fuel-efficient cars.

Detroit failed to respond adequately. The Japanese and German cars didn’t need to respond, because their cars were much smaller and, therefore, more fuel-efficient. Many people, particularly students, switched out of necessity and were pleasantly surprised. “Made in Japan” ceased to be a derisive phrase and came to mean “quality." The WOM changed, almost overnight.

The American manufacturers were saved eventually by the 1980s oil glut, economic prosperity and the resulting growth of larger cars and SUVs. But the WOM remained solidly against them on quality.

Show me a WOM Gap and I'll show you a big change that's about to happen

When you see a large Word-of-Mouth Gap, you have an unstable situation and you can usually bet on word-of-mouth winning, except when the WOM is flat-out wrong, in which case it can change quickly.

By Word-of-Mouth Gap, I mean a situation where people’s actions are currently running counter to a prevailing word-of-mouth trend. For instance, the overwhelming majority of Windows users wish they were on a Mac. Spot a company that people hate and make a lot on short-selling. Spot a company that people love but has low sales and you've spotted a potential winner (if they can manage their growth).

The US car industry has similar gap between action and WOM. In recent years, the American manufacturers accounted for about half the car sales in the United States. However, despite recent quality improvements, at this point almost everyone believes that American cars are of lower quality than foreign cars. The "Top Ten Quality" lists (a form of WOM) have only one or two American cars. Despite this, there are various reasons for buying American, including patriotism, perceived availability of parts, social pressures, familiarity, dealer loyalty, resistance to change, etc. These reasons tend to apply more to older people. As younger people who have never owned an American car displace them, foreign car sales will rise.

It’s hard to remember that most people used to trade their cars in every two years. "Planned Obsolescence" was Detroit's primary marketing strategy. As people started keeping their cars longer, frequency of repair, the prime measure of quality, became more important to many than loyalty to American cars. So did comfort, innovation, luxury and technological advances.

This word-of-mouth gap is an unstable situation. The perception of quality is intangible and highly subjective. In the automobile industry, it takes years, usually a generation or two, to turn around quality perceptions.

That's why I've been predicting (Since 1973. See my more recent August 2005 and April 2006 posts) the decline and eventual demise of the American Automobile Industry as we know it. It took longer than I thought, and I was wrong about what would displace them. I thought it would be Caterpillar Tractor and John Deere, not the Japanese. Imagine a Caterpillar or Deere car!

Can the US Car Industry be saved?

It is painful to watch the current attempts to save the American automobile industry through bridge loans, restructuring, lower wages and an auto Czar. (I thought the Czars were ruthless dictators who routinely disregarded what was best for the people—who made the Communists look good by comparison.)

To change things, people need to look at root causes, rather than symptoms: decades of failure to be responsive to the needs of customers, particularly the failure to address quality problems adequately has resulted in horrible WOM. It would take decades to fix it, far beyond bridge loans.

Continued tomorrow...

car industry, Marketing, marketing, WOM, WOMworthy products, word of mouth, word of mouth marketing

What Should Marketing Be All About These Days?

Marketing isn’t about the product anymore (actually, it never was).

In the current Information Age, marketing’s former role of giving customers information and persuading them to buy products is diminishing. They get info and recommendations on independent web sites. The days of controlling information are long gone.

The current cliché says it’s about the customer (too vague), or about the “customer experience” (still vague), or about the “relationship” (even closer).

So, what then is the central function of marketing these days?

The ultimate purpose of marketing is to get people to buy more of your product. That’s obvious. Not so obvious: this is best achieved in this overloaded environment by helping customers make better decisions more easily.

The Central Function of Marketing

Making the whole experience of the decision process easy, simple and time-saving

How customers first hear about the product and get interested.

How they experience learning about the product. (Hard, easy, makes me feel smart, dumb, confused.)

How they experience choosing between the products. (Am I being pushed or helped?)

The trial experiences

The purchase experiences

The initial usage experiences

The “learning to master” experiences

The rewards

The teaching to others

The support

The continuing relationship

How they feel about themselves using the product

How they feel about telling others about it.

It is not the “best” product that wins in the marketplace. It is the product that makes it easiest for the customer to get through the entire process fastest to arrive at:

The Ultimate Decision

“Do I feel enthusiastic about actively recommending this product to others?”

The marketer who makes the path to this ultimate decision easier, simpler, faster and more fun wins.