How To Name The World

I am writing a blog about global food marketing http://www.instagram.com/worldfoodunique and find myself troubled how to refer to regions of the world. Almost any terminology is biased, racist, egocentric and just plain wrong.

We speak of a first world but Europe was hardly the first. What’s first then? The economy? Research? Technology? Hardly.

We talk about East Asia but when you are in “The East” everything important is westwards. Towards east is but a huge ocean and a few forlorn islands.

Asians in the UK are Indians. Asians in California are people from East Asia. Inhabitants of “East Asia” hardly think of Indians when they use the term “Asian”. In Latin America, we have a similar situation with “Asiaticos”.

Ah, Latin America. What’s Latin about it? Because their official languages are related to Latin? So are English, German, and many others. Aztec and Mayan are definitely. What’s a “Latino” then?

When the inhabitants of the southern American continent say “America” they mean everything from Tierra del Fuego to Alaska. When Americans say “America” they mean the home of the free, the United States.

We think of “Chinese” as one cultural and racial entity. It is most certainly not. The Han Chinese are the most populous but China has more than 100 other tribes, languages, races and ancestries, from Mongol, Yi, to Manchuria and Viet.

So yes, I have difficulties describing regions in my blogs, not to mention races. If find this problem more pressng than gender issues like He/She/They Cis/Trans etc. Those arejust personal issues. The country and race terminology affects journalism world-wide, disenfranchises minorities, perpetuates stereotype and Euro-American centrism.

I believe we need a new terminology and I a^m trying to come up with one that is less harmful than what we are using now. It’ll be along way.

How a world-class airline missed the bus

Amidst the Coronavirus crisis, when huge airlines like Lufthansa are struggling and others are already close to bankruptcy. Airline and airport rankings are reshuffling.

The local competition for Eva Air are weak; Cathay Pacific whose survival is also in question is struggling. At least with Hong Kong’s identity destroyed by the Chinese Communists, it has lost its former shine.

China Airlines suffers from association with Taiwan’s neighbor and is often confused with Air China. Thai and Singapore Airlines operate from expensive and touristy hubs.

As of the time of this writing, the only hub carriers active are Turkish and Emirates, both Islamic and with ridiculous transit times in Dubai and Istanbul.

Eva Air had an excellent safety record, first class onboard cuisine — see my food blog Instagram.com/worldfoodunique — and locked in cheap oil prices. New planes offer great flexibility short and long haul and it has a neutral name not associated with any country or religion.

And yet, the airline as axing flights and seemingly retreating from profitable routes as well as loss making ones.

Eva Air would be a fantastic hub carrier for East Asia with great connections to US, Europe and Australia. It serves all major cities in Southeast Asia, Japan and China. Due to the time zone, connecting times are short. Cross Pacific routes are profitable due to the big Taiwanese diaspora in cities like Los Angeles, San Francisco and New York.

The tech industry employs thousands of Taiwanese and Taiwanese companies like TSMC or Foxconn are setting up new production sites.

Eva has a profitable cargo network in high demand, integrated maritime connection and a new and partly refurbished airport at its disposal.

So, why is it not expanding like mad and dominating the market like the Middle East carriers do?

The reasons are not entirely obvious but they have to do with Taiwanese risk-avoidance, a conservative management style, lack of government guarantees and most of all a certain lack of confidence in cones own abilities — a core element of Taiwanese business culture and not surprising in a country that has lived under the shadow of its huge neighbor and internal political strive for decades.

Tacos everywhere

Seldom has a food item conquered the world like #tacos. Most food makes it around the world due to the efforts of marketers, emigrants, multinationals, specific products, and more than often it is altered gravely.

The meatballs in Azerbaijan are different from Swedish ones which taste differently than American meatballs or Chinese lion heads.

Sushi have been adopted to local tastes. In California you find avocados in them, in Central Asia lamb and yoghurt, and in Europe sausages.

The taco however remained largely unchanged and apart form a choice of meat or fish and the preferred sauce exists in its country of origin exactly the same as in the rest of the world.

Every effort to industrialize it had failed. Taco sauce from the supermarket is disgusting, taco shells and tortillas easy to make at home, guacamole is fun to make and so most of the associated products and their marketing remain American.

For more visit Instagram.com/worldfoodunique

Changing Habits

Our eating habits are all different. From country to country, region to region, city to city, but also person to person and from decade to decade it seems.

Much of the advice and recipes given on the internet are unsuitable for a large portion of readers. Many ingredients are only available in certain places. Young people can eat much spicer than older folks. Caucasians moving to Asia often have trouble digesting the round corn rice, and Asians moving to Europe tend to miss it. Bread in Germany is dark and hard; in Asia its soft and sweet, and so on.

Then there is age. My habits certainly have changed. I used to wake up hungry and have massive breakfasts. Now at 50+ I need a few hours before I feel well enough to eat. Simple breakfasts or just coffee will do.

Oddly enough my selection of foods changed too. I used to travel the world and enjoy local cuisine, as you can see on http://www.instagram.com/worldfoodunique

Now I tend to take much greater care in selecting ingredients, I have gone vegetarian almost and tend to make the same dishes all over again.

How have your habits changed over time?

Simple Pleasures

In the times of a pandemic I am daily discovering the simple pleasures of life. Many come from my garden.

Ever since I studied in England, I’ve developed a taste for the simplest sandwiches 🥪 in the world. When returning to Austria 🇦🇹 I showed my mom and she was amazed. Although we grow red #radishes #radieschen #onions 🧅 and #cucumber 🥒 in the garden and use them in various recipes, my family never thought of putting them on toast. So here is how I make them.

A) Radish sandwich

Use toast or rye bread #ryebread #pumpernickelbread #vollkornbrot and smother it in #ricottacheese #frischkäse

Salt one side of the radish slices and lay them. Garnish with any herb 🌿 you like.

B) Cucumber sandwich

I use soft toast here in handy strips and put #mango 🥭 #chutney followed by cucumber thinly sliced.

C) Onion Sandwich

This one is the loveliest

Try to find an onion 🧅 the size of the glass will use to #stencil the #toastbread. Cut out a round shape and smother in home-made mayo.

Slice the onion, salt lightly, and top with a second round toast also brushed generously with #mayonnaise. Cover the sides like a cake with mayo and roll in herbs 🌿- or cayenne pepper 🌶: paprika powder or beetroot powder for visual effect

#sandwiches #easyrecipes #homemade #healthyfood #healthyeating #vegetarian

Purple Carrots

The SARS-Cov virus with all its mutations is wreaking havoc on planet Earth. The economic impact for some countries and industries is enormous. Italy spends billions of Euros a month on help for all industries, other countries are helping airlines and hotels. The travel industry is of course most affected with all the lockdowns. Some smaller nations might never fully recover.

I lost my job twice in 2020 and most teaching engagements were cancelled. The I had major surgery from which I won’t fully recover for another 6-8 months. I spend a lost of time in bed resting and writing.

I am writing a book about the effects of colonialism on Asian languages and one on marketing in the food industry which allows me to do a lot of research not just into products but also recipes, traditions and the history of food.

You can find the results for now on Instagram. http://www.Instagram.com/worldfoodunique.

I try to answer questions such as why are carrots orange (The Dutch!), who really invented Pan de Jamón, where do doughnuts come from, but also how industrial processes and products have changed the way we cook (cue Heinz ketchup).

You are welcome to follow me on my journey on all my channels.

How experience trumps brand

The illusion of brand value in hospitality

In the old days, when travelling to foreign lands, with languages one did not speak and food one could not eat, transportation systems one could not navigate and people one could not trust, it was generally safer to stay at a hotel chain property. A name one knew and a brand one could trust.

Unsurprisingly, it was the Americans who invented the concept. Their salespeople and executives now could go anywhere in the vast United States, even the world, and trust the hotel they stayed in would offer the same facilities and quality they already knew.

How times have changed.

Staying at a hotel is no longer about minimum standards and basic expectations, but about one word: experience.

The Internet in particular has changed what is possible. We now have hundreds of pictures and opinions available to guide us. In a world of increasingly differentiated hotel concepts and the tyranny of customer reviews, we can safely select a different property and take the risk of being disappointed. Because we now have a voice: one review on Tripadvisor and the property may be tarnished, even ruined.

Why I Never Use TripAdvisor – Or: The Curse of Reviews

It was the cursed millennials who have created these new rules, booking.com and ubiquitous smartphones which enabled them, Instagram and Tripadvisor which enforced them

Influencers are now more important than brand value. A good brand must be able to influence, inspire, innovate, and tell a story; it should be charismatic and absolutely unique.

Hotel chains began to snap up iconic properties and integrate them into their offering while fully preserving their unique character. All which, as a designer of luxury hotels and designation F&B suits us just fine.

The erosion of brand value also means a redefinition of what a brand is. A motley collection of luxury properties can now be a “brand”. A bar, a restaurant, a spa can now be the reason why someone chooses a particular property.

That is why unique luxurious interiors are now more important than ever. Customers crave novelty, and overall, uniqueness, and only good architecture and design can offer that.

Read more: My Journey Into Interior Design

The author is director of global business development for luxury interior design house AB Concept in Hong Kong, Milan and Taipei. Follow the author on LinkedIn

 

Silent Earthquakes in Hospitality

This is a guest blog written by Richard Adam, Chief Executive OPTIMIST, NED Board Member, Strategist, Developer, High-End Experience Incubator and Digital Advocate. You can connect with him on LinkedIn here.

Since I can remember, there exist these “The future of …..” type of thing conferences, publications and panel discussions. What is the future of hospitality? I don´t know. I am sure there is one, although the commercial forms may be very different. Predictions are generally difficult, especially the ones concerning the future :). I am certain, however, the landscape of hospitality as a business will be different and we will see this happening in big blows. I am bold enough to say, the changes in the next 10 years will be more radical as they were in the last 30 years. This is in regards to the fragmented forms and offerings, we will see on the horizon, and this is regarding the players in the market, some of them sticking to their habits and business as usual for far too long already.

In the history of business and economics, as we know, nothing is for granted and nothing works forever the same way, not even the simple idea of providing shelter for people away from home. Imagine, you were given potatoes to eat all your life and your parents told you, there is not much alternative.

Grown-up, out of the house, when living in the privileged parts of the world, you suddenly discover the markets full of food, you have never seen or tasted. Will you still go for potatoes? That´s what we have in the world of travel and hospitality: more and more people are not happy with just potatoes anymore. We call them mature travelers. Research, reviews, comparisons and options at their fingertips, eyes wide open, an explorer by heart, even questioning where the profits of their purchase might go to or which booking decision rewards the lower carbon footprint.

Read also: My Journey Into Interior Design

Over recent years we have seen a big appetite of some global hotel system providers (HSPs – originally known as hotel chains) dumping their real estate and their own hotel operations for the sake of growth of their brands and services to hotel owners and operators, also swallowing similar competitors to clean the market, the Starwood takeover by Marriott being one of the bigger transactions, but Hilton, IHC, Accor and others also have significant appetite for growth. It is astonishing to see these companies persuading real estate owners, their services are the best that could happen to a hotel property while they have sold most of their own. Today the hotel system providers´ stock price depends on growth rates. Increasing individual expectations and fragmented markets have led to more segmented hotel brands with specific brand promises, run by the same big hotel system giants who see their business model in providing labels called brands, booking technology, loyalty programs and management services.

Yet, I wonder whether any long-standing Ritz-Carlton guest has seen this as a progress in his or her guest experience, whether any Westin guest has seen benefits during the stay since it is under the Marriott umbrella and whether any Waldorf-Astoria or St. Regis is coming close to the original, just to name a few examples. Paste and copy of legendary originals is nothing else than selling an illusion. It is to find out, whether the illusion is meant to be sold to guests, to the hotel owners and investors or to all of them. Now, let´s explore that further.

1. The illusion of brand value

In the old days, when traveling to unknown territory with a less experimental mindset, it seemed to be safer to book a hotel from a known hotel chain. Especially frequent travelers are more concerned about minimum standards than getting the kick out of an overwhelmingly surprising hotel experience. Booking hotel brands are a reasonably safe bet and hotel chains were positioning their respective brands in the relevant segments from 1 to 5 stars and sold these concepts to hotel operators, owners and investors because it was safer for them not to deal with property investment or operational risks and gives more opportunity for growth. This was working well for all stakeholders for many years.

When big heritage brands were first established, they set themselves apart by capitalizing on an area of expertise, like a uniquely refined production method or an unparalleled sense of design. In the global world of multiplying hotel concepts according to standards, these competitive advantages got lost. Social currency is what rules brand choices today. The millennials have created their own rules and preferences. A real brand must be able to influence, inspire, innovate, tell a story, often linked to charismatic and visionary leadership.

I do not know a “sexy” brand with opportunistic streamlined technocratic executives in the lead and most companies hire CVs and “buzz words” instead of personality. A label concept is not an alive brand. A brand is a spirit.

When brands are too stuck in their past heritage, they often lose their influencing role. Tradition also means to keep the fire burning and not protecting the ash. Some iconic hotel legacies became a part of hotel group brands: The Erawan in Bangkok, The Mount Nelson in South Africa, The Carlton in Cannes, The Georges V in Paris, which was already a legend before Four Seasons existed, or The Raffles in Singapore now being part of Accor.

In the automotive sector, the Daimler-Benz corporation merged with Chrysler for a while and Mercedes-Benz cars suddenly had Chrysler parts built-in. The worst decline in sales for Mercedes-Benz cars was the consequence. These traditional legends may hope to have more distribution power in the market, but from a brand perception perspective, it lifts the HSPs brand more than it does for these traditional iconic properties. Some of them, like The Palace in St. Moritz, pulled out again after a few years not materializing the expected benefits. If I would be the owner of these famous properties, I would ask for royalties instead of paying them. Although hotel companies hire from the same source markets everyone else does, there can be some hypothetical benefits for these hotels, in management know-how, yield optimization, and digitalization, etc., but not when it comes to the glory of brands. The market leaders of the future will not necessarily be the bigger brands — they’ll be the ones that have the cultural sensitivity to understand what consumers want at any moment and what they can well do without. They need to center themselves around the customer, provide them with value, and redefine themselves as providers of experiences (not just products).

As I consider my background in strategy and marketing, I am a supporter of brand building. There is a promise, there is value, there are trust and delivery, in a perfect scenario there is even some magic and inspiration to it. It is certainly more than a label and corporate design standards.

Some hotel groups are good brands, they have a soul, a common spirit of doing things and serving their guests. The fame of The Mandarin Hong Kong and The Oriental Bangkok was blended and leveraged well for the Mandarin Oriental Group maintaining credibility. Other companies, mutated to selling trademark labels in the sense of commodity as their core business model with an emphasis on growth, have ceased being a brand in the true sense. Whoever believes money can buy everything also admits to being prepared to do anything for money.

The hotel owners and investors have paid their dues for what we now call the consolidation in hotel system providers, which has led to an inflation of hotel labels with a focus on growth but it seems, these concepts have increasingly overlooked to entertain or positively surprise their end-consumer, named hotel guests. Not surprisingly, Minor Inc. in Thailand has recently launched a court case against Marriott for getting too little in return for their royalties.

I remember when I once checked into a hotel in Orlando, belonging to the brand with the claim “ladies and gentlemen serving ladies and gentlemen” at that time. It was late, I had been traveling for over 20 hours due to some delays, I was also jetlagged and tired. But the receptionist took some time for his scripted greeting formula, he had to get across according to the procedure standards. It just wasn’t what I needed or wanted to hear at that time. Good intentions, unreasonably applied.

Several years ago, I was booked into an Aloft Hotel in South East Asia, still under the Starwood umbrella at that time. I am not a “high maintenance” hotel guest but I was very disappointed when I could not link my smartphone to the sound system in the room because the room’s connection device was outdated. Considering the brand promise of Aloft is to cater to the digital natives, that was an embarrassing delivery. For fairness sake, I grew up in a hotel and later have worked in hotels many years myself. There is no such thing as the perfect world. But these were experiences I still remember, completely contrary to the brand promise.

As a matter of fact, some hotel properties change their branding so swiftly, regular guests don’t even notice, which is not surprising: apart from labeling there is not much difference anyway. I dare to raise the question of whether brand promise in hospitality has become a big soap bubble and whether this brand inflation will come to the same saturation and decline like McDonald’s.

Why? Their marketing power is able to raise brand promise stronger than actual delivery. But when your customers are no longer hotel guests but hotel operators, owners and investors, consequently, your focus and competencies make a shift. You pamper your cash cows but feed hotel guests with potatoes. In good independent boutique hotels with passionate hoteliers, it is the other way around and people still get this special surprise and individual touch which makes the difference, assuming they are decently operated.

Global uniformed hotel branding systems tend to lose the focus on guest experience, especially when facing growth ambitions or fear of takeover or whatever is relating to the stock exchange rate, while traditional hoteliers have that by heart. Frequent travelers are finding this out increasingly.

What was once called “brand loyalty” may still work with running shoes, cars, and smartphones, seeing the immediate value of stringent product definition. In hospitality it has become a synonym for boredom.

All the loyalty programs and CRM technology are trying to compensate for this. I am a member of some of these programs. Not the big spender, but I do have my frequencies and none of these programs ever got me excited. It also becomes obvious, many hands involved squeeze room rates for little in exchange and fair-trade expectations will also play a role. Therefore, the global asset-light hotel system business model might become a dated dinosaur business model soon. Even when getting more and more segmented in their branding concepts, it is most likely rolled out with little substance for individual expectations and hospitality experience. Marriott currently holds 30 labels they call brands in the portfolio, Accor even 32. Can they really reinvent the wheel of hospitality in 30 different areas and roll it out globally as a profiled experience? The big players seem to have spotted this trend against them and are increasingly trying to offer independent boutique hotels a place under their portfolio of brands, not to mention it is another sort of income in terms of royalties for loyalty programs and distribution platforms etc.

Again, they are missing the point in guest expectations and experience. As Albert Einstein once said: “No problem can be solved from the same level of consciousness that created it”.

Smaller, innovative, more individual guest-centric and disruptive hospitality concepts are taking over the word of mouth “must-see” awareness. It is always about the destination experience, the special property and hardly ever about a label. Due to social networks and the power of advocacy, no marketing budget or paid (faked) influencer campaign can compensate when the word-of-mouth isn’t working for you.

2. The illusion of distribution power

In the year 2000, I learned from a McKinsey study, which stated that in about 15 years on from 2000, the majority of booking or shopping transactions in retail and travel will happen online. At that time, I was at the helm of a tourism development authority for a destination with 45 million registered annual visitors creating 50 billion USD in annual revenue and 8% of GDP. So, this was a statement of great relevance calling for action.

Ever since, I kept embracing digital technology and have my track record of success and failure, endless learning and continuous experience, which has helped me sharpening my senses to distinguish between what is technically doable, what is the “flavor of the months”, and what will generate real sustainable value of future relevance.

Today, in retail we have Amazon, Ebay, Alibaba etc. and in travel, we have Priceline (incl. their subbrands Booking, Agoda), Expedia, Trip Advisor, CTrip and so on. Hotel Groups may have their armadas of sales representatives for B2B and they invest in technology as well, but in terms of volume, they rely on the so-called OTAs (Online Travel Agencies).

Their contracting conditions forcing hoteliers to offer the best price options via OTAs played a big role in their growth. In many countries, this practice or contract terms are no longer allowed, but OTAs have their ways of bypassing that.

Booking.com pays 850 million USD per annum to secure a top ranking in Google searches and within the offers for a particular destination, it is about price or tangible added value, less about brands. Apart from making efforts in improving conversion rates, revenue and channel management, HSPs don’t have many competitive advantages in these systems. That’s why they run massive advertising campaigns to book directly to save commission or create some sticky alliance at the cost of the end consumer. In times of intelligent digital marketing automatization, these brand advertising campaigns are needed to keep glossy travel and general interest magazines alive and to boost executives’ egos, less and less for leveraging business. In OTA search listings, individual independent hotels stand next to hotel group branches, with the advantage of not having to pay additional royalties to the hotel system provider. That increases price flexibility or the opportunity to add value and service. Basically, any hotel can build competencies and set up self-sufficient revenue and channel management. It is not rocket science but requires commitment and the alignment of resources.

For the hoteliers of independent hotels, who are interested in improving their online distribution strategy, take advantage of OTAs without getting fatally dependent, you may check out my SlideShare contribution on that issue.

Read also: Salone, Instagram, and AR – the future of hospitality marketing

When companies of all industries (including their executives) start to think they are the best there is, then they become most vulnerable. If you stop improving, you have stopped being good. History shows, every time companies get too much control and dominate markets, some people think of solutions to outsmart them. OTAs also have become dinosaurs to a certain extent and are feeling the heat. New technologies may make them obsolete again or at least make their business model less aggressively dominant. Blockchain technology concepts on flat fee connection may become a better alternative for the hotelier. Companies working on this, like Winding Tree, are not short of investors.

Read also: How Blockchain Will Save the World

In the “old economy”, companies controlling supply (e. g. oil, steel etc.) were called “Aggregators” and made people like Carnegie or Rockefeller very rich. In the “new economy”, aggregators are called Amazon or Alibaba in retail and Expedia, Priceline, TripAdvisor or CTrip in travel. The difference is, they do not control supply, they control demand. Hotel chains or in particular HSPs may have significant market share, but they do control neither demand nor supply, not even their “own” product delivery when the hotel guest is seen as the customer. As we know, their customers are hotel owners, so the focus may be accordingly. In a business model based on economies of scale, that is not an endlessly stable position. All they have is the promise, their brands and services are worth the royalty fees, in a business environment with relatively small margins for hotel operators, increasingly massive fragmented diversification and saturation of their labels as their excitement factor wears out. It may be applicable, that in certain circumstances, a prestigious hotel brand may increase the real estate value. Fair enough, but the owner has paid for that as well.

3. The illusion of economy of scale

Since Adam Smith intellectually introduced the concept of economy of scale, it has changed the world of production, supply chain and doing business. Needless to mention the series of products, which would not exist or would not be affordable. HSPs also benefit from this thinking and adopted the strategy in focussing on selling standardized labels, concepts, distribution technology, and management service to hotel owners and investors. That has led to tremendous global growth and worked well and comfortable for decades. The limits of a sustainable strategy based on an economy of scale are new developments, alternative offerings or change in customer behavior. In the hospitality industry, the assumption of segmented yet standardized target groups of hotel guests expecting standardized hotel experiences all over the world becomes obsolete.

Read also: How the Internet of Things will change the Supply Chain

From a strategy perspective, except the traditional thinking in either focus on price or value-added, there are two directions: a feasible, “safe” strategy aiming for sustainable growth or a disruptive strategy attacking gaps of common business models and doing things with a new approach. As we know from Uber or WeWork, disruptors shake up the market in creating demand or solutions, nobody has seen or tackled before. But it is risky, and immediate profits or ROI better not be the first thing on the agenda. Then again, disruptive strategies can be a promise for the future. Should the vision of shared driverless cars ever become reality, the digital infrastructure of Uber is the plug-and-play operational backbone globally.

The former President and CEO of Starwood, Frits van Paasschen, wrote the book “The Disruptors’ Feast” after his tenure with Starwood. Whether this was coincidence or foresight, the business model of the HSP might become obsolete or needed a strategic shift, is answered in the book only subliminally. I assume he might agree to some of the thesis laid out here.

4. The illusion of guest experience

There is the old William E. Deming formula.

Quality is when delivery is equal to expectancy.

I guess that is still the philosophy of HSPs policy and procedure standards. But isn’t it the “wow” factor that makes guests share their experience in social networks or back home? Isn’t it the repeat customer or the advocate which every hotel needs to have a sustainable business? When delivery equals expectancy you do not create the “wow” factor. People don’t take pillows or stationary back home from a hotel stay (oh well, some do), they take away an experience and that’s what is left to rate the hotel for advocacy or potential return. Experience has to do with individual profile, character, and uniqueness. This requires intellectual property in design and conception, not copy and paste. It is an economy of scope rather than an economy of scale.

I am not talking about the frequent business traveler, who checks in late and leaves early with the only expectation of smooth-running processes and no negative surprises. For them hospitality is a commodity. I talk about the target groups who select hotels or hospitality for having a pleasant experience, those who are tired of “déjà vu”. Customers who compare and make a choice of preference. In a digital world, comparison has never been as effective.

Read also: How to Make Better Marketing Decisions

In less mature countries in terms of tourism, without the learnings of life cycle pattern history and effects, there is still misperception about the business model of HSPs. For ambitious Saudi Arabia, Accor has just announced to have “11.000 rooms” in the pipeline. One of the few remaining gold rush spots on earth for HSPs.

No doubt, Accor is a provider of valuable hospitality concepts and will help for further establishing the industry in the country to have more capacity of the usual and commonly known standards, but it is interesting to see in the feeds, that people think Accor is investing and taking the financial or operational risk. They are just selling their standardized services to Saudi investors. Investors better critically reflect whether today’s inflated concepts will be past glory in a decade, or even not be around any longer. Maybe, the entrepreneurial Saudi or international community (including the mindset of investors) with an ability, drive and dedication to set up hospitality in the country with a real innovative profile and character as a real driving force to visit, still needs time, education, investment and experience to emerge and to mature by learning instead of falling for copycats..

Global market research clearly indicates, authentic yet contemporary hospitality experience are key drivers to visit a country. People go to the supermarket because they know what to get, not because they wanted this specific experience in their shopping, not because they always wanted to be there. The driving force for selecting a destination among other options is a completely different case. Even young people, more often than not, have already traveled the world.

I remember when my kids were little, they often wanted the “same” as their friends, now they are grown and matured, they look for “different” things and experience. Similar to the matured traveler, they “grow up” and change preferences, documented in consumer behavioral shifts and consequences regarding millennials. Doing and having “the same” isn´t the explorer´s mindset of desire. In the world’s biggest and extremely competitive industry, HSPs can help to build trust and establish fundamental structures in the early development stage. However, for gaining international competitive edge beyond the mainstream, beyond satisfying common needs in “me too” fashion, beyond being and having “the same”, you have to think and create ahead. In consumer behavior, people go for the cheapest or for the best, little space for the mainstream.

Currently, Marriott is producing continuous press releases about growth and new properties in Japan. At the same time, an investor has initiated to bring the Ryokan concept, the traditional Japanese guest house experience, to other places internationally. Also, Muji, the Japanese retail and design company, is launching hotels. I leave it to the readers, which seems to be more interesting to explore from an experience perspective.

Apart from the revival of personally operated, individual boutique hotel concepts with charming storytelling, we see plenty of new attempts and concepts interpreting hospitality in a new way. My capacity for reading, observing or traveling is too little, to provide a complete listing of the most international initiatives. There are plenty and there are new competitors coming to the market every week. Although not everyone will survive, they are there because the demand for true out of the box hospitality experience is growing and the approach of HSPs is increasingly saturated. The “standard” is dead, no risk no fun.

I do not have the ultimate proof for that, but the rise of AirBnB and the increasingly different forms of products they offer is a strong indicator. The search for an individual alternative experience was a driving force for the rapid growth of AirBnB or emerging similar platforms, maybe not the intended strategy, but look how they are gaining profile by increasingly providing fancy individual, out of the box hospitality experiences. It is simply because there is demand. There are people not looking for potatoes only. A premium potato is still a potato. While HSPs are fighting to roll out, implement and control their standards, AirBnB (with all the critical issues of quality control) has outsourced creativity and provides the platform for disruptors.

Luxury consumer goods specialist and therefore well-tuned in luxury experience provision, the French LVMH Group has moved into the hospitality market as well. After establishing a small number of Maison Cheval Blanc, they have recently acquired Belmond. One of the few remaining true hotelier companies that still own and operate hotels and other upscale services, real rare iconic beauties among them, instead of another mutated vendor of labels. Belmond’s reputation for providing high-end hospitality experience is one of the best in the market. However, their business model encapsulates capital, is cumbersome and their pipeline of new properties in the making is close to empty. It will be interesting to see, whether they move ahead of the crowd in terms of providing superior experience under the LVMH umbrella and therefore become the luxury provider of choice or they move in the same direction of consolidated asset-light copy and paste for the sake of pure growth and become a “mee too” hotel system provider.

Read also: From Darkness to Light – how city planners are shaping neighborhoods

For the younger, budget-minded and activity-oriented community of digital nomads, Selina is pushing into the market with their own promising version of experiencing the Latin American lifestyle or what will be left of it once “standardized” and exported.

For twenty years by now, different professional assignments in development missions bring me to China on a regular base. I have stayed in numerous hotels, most of so-called international standard. Since I found the Eclat Hotel in Beijing, this is the place for me (of course, people have different tastes, that´s why this article exists). No mainstream developer thinking in terms and standards of the established HSPs could have come up with a property like this. The place is so individual that no hotel brand standard would be adequate. It´s an art and design place equipped with beds and excellent service.

There is a big difference in development between city hotels, which is pure property development, or recreational hotels in remote areas, where the surroundings and environment play a more important role and the experience value is based on other criteria. This is more to be addressed as destination development as it is far more complex. Every contemporary hospitality development is “themed” as they say, more or less successfully. A destination development strategy aims to leverage a carefully curated story to generate a sharp and (almost) unique profile with a competitive edge. It is not about assembling branches and copycats. In my professional assignments in destination development in recreational or vacation areas, I am frequently confronted with the thinking in properties only. You come across satellite properties or “development zones”, but when guests want to leave hotels to get an experience of the place in general, they stand in the middle of nowhere in a dull atmosphere, confronted with views and impressions definitely not suitable for making them advocates or repeat visitors.

Even looking out of the guest room’s window needs to be curated. In recreational destinations thinking, planning and operating in ghettos is a brittle and susceptible approach. Visitors will always assess their entire experience of a geographic place and do not differentiate between the property of their stay and a neglected area when they go in front of the house. Both need care, attention and eventually action keeping the “visitor journey” in mind. Scientific research and findings in destination development are established a little more than 50 years looking into destinations with a long tradition, while science, know-how, and experience in building infrastructure and construction goes back much longer. That’s why in destination development, thinking in bricks and mortar is still dominant, creating so-called “white elephants” still today, leaving even attractive properties empty and investors, planners, architects wondering why?

Experience design requires either talented passionate hoteliers (and I like to point out, they can be found at branded hotels just as well, but might not have the opportunity to live up to the full potential). It can be the one lucky moment to have the idea that turns around your business or it can be systematic structured experience design along the visitor journey and its three dimensions: hardware, social and service, digital. For readers interested in more details, please check out this SlideShare.

It is the investor’s or hotel owner’s decision, whether they want to become a provider of a commodity for a good night’s sleep or an experience provider, which depends on various issues (location, business model, potential, market, investment, operational capabilities etc.).

But it will be the individual unique experience that separates the competitive edge from the commodity.

Finally, it all comes down to return on capital investment and EBIDTA. It is about business. However, the ability and desire of creating outstanding customer experience are restricted, when the pressure of shareholder value generation is haunting you. Consequently, so is the leading edge and trendsetter potential. The visionary creative counterpart of the accountant has to be in the strategic lead to successfully surf with the market and to avoid drowning.

Individual High-End Experience requires intellectual property first of all, service quality and other costly ingredients second, but can leverage sharp profile, competitive advantage, positioning and sustainability with an adequate price tag to it. Someone —  hopefully a regular flow of visitors —  has to pay for that in a price-sensitive environment. But talking about experience, as Benjamin Franklin once said,

"The bitterness of poor quality remains long after the sweetness of low price is forgotten."

© Richard Adam

email: contact@trendtransfer.asia

website: www.trendtransfer.asia

Social Media is Killing Us

No this is not an attention-grabbing headline. This is the result of what I have observed over the past 24 months. Social media is killing our social abilities, our social interaction, our human existence itself.

Last week I dined at a fairly normal restaurant in the heart of Hong Kong, a city fighting at the moment for its survival and basic human rights. Never mind the political kerfuffle, I found myself sitting at the bar, ordering a calamari salad, and watching every single table around me occupied by couples or groups, with every single member on their smartphones, chatting, scrolling, reading, watching, but in no case interacting which each other, except for the occasional “look at this” moment.

I went to the National Library of Taiwan — one of the best resources for pre-revolution literature and Chinese scholarship in the world, and saw banks and banks of presumably students glued to their smartphones rather than perusing the ancient tomes in front of them.

I went to my own class, the one I am teaching on international marketing and branding, and found a roomful of students scrolling through posts of I-don’t-know-what in search of I-don’t-care.  Whether it is at work or in school, at home or in church, public and private spaces alike are now filled with smartphone-addicted adults who have lost all interest in their immediate surroundings.

In short, smartphones have taken over our world, our minds, and especially the minds of younger citizens. Liking, disliking, clicking, and sharing, have become the currency of human lives. Greta Thunberg in her speech at the Vienna Climate Summit said: climate change is an emergency, you can’t just like that on Facebook. She was wrong. One of the replies to her recent posts read: “I’m going to like that on Facebook!

This is the problem with social media: we have a stake (because we have created an account), we have a voice (because we can post, and we feel somewhat entitled (because other people like or even share our posts.) Social media makes us feel important, no matter how irrelevant our opinions may be.

Meanwhile, the number of real friends people regularly see continues to shrink. I myself feel so connected to a handful of people with whom I chat all the number of our real-life meetings continue to decline.

It’s the fault of app designers

Designers of apps have studied for a long time how to get people hooked on their apps. The auto-play of the next episodes on Netflix, the amplification of certain posts on Facebook by randomly showing them to strangers, the limited reaction options on Twitter and the cruel fight for eyeballs on Instagram all contribute to our addiction.

On many apps, it is now impossible to avoid advertising, and unscrupulous companies are raking in millions selling worthless products whose only virtues are the cool video or images produced to sell them.

Social media amplifies marginal, extremist voices and drowns out rational, measured posts and opinions.  The mobile devices we now carry around are so addictive we forget the task at hand and the people around us.

Back in 2018 the Telegraph’s Tim Stanley pointed that out from a slightly different angle. Many researchers have warned against the overuse of social media. Yet our economy already depends on the use of social media. Even the interior design company I work for relies increasingly on social media to source products and get the new out about our own creations. Read more here.

Read also: Word of the Year: Instagrammable

Social media is also killing creativity. I used to sit in endless meetings at advertising agencies where all we had was a piece of paper, a pencil, and our brains. Now, when I look at writers and creators of anything imaginable, they first look at Facebook and Instagram or any other online resource to “get ideas”. People are creating stuff that’s merely a regurgitation of what is already “out there.” Real creativity is dying.

A painter I am acquainted with has a massive following on Instagram and Facebook but hasn’t sold a single painting online. It’s at offline shows, away from social media, that people really make a purchase.

There is no good solution to this dilemma. I take regular digital detox days and weeks where I don’t even carry my phone around. At the firm I have instituted design meetings where no one is allowed to bring a mobile device or show any existing examples. In my marketing classes at uni I regularly ask students to put away their phones and come up with their own creative ideas for a marketing campaign.

There is no other marketing than digital

But it is hard. Ten years ago, I taught digital marketing as something new you had to learn and study. Now, there is no other marketing. In a way it is empowering smaller firms and individuals, but it equally amplifies the power of big companies. You will never compete with a company or individual that has the wherewithal to gain millions of followers. Attractive young people gain a meaningless following for millions with lesser abs or breasts. They make thousands of dollars thinking that their posts, their online presence, their exposure to the digital world has some kind of meaning beyond the immediate click.

A model in Germany with over 400k followers told me that he built that audience through hard work at the gym and frequent posts, made a lot of money from sponsorship, and then, as he approached a certain age, no longer got any gigs because the sponsors he relied on were looking for younger guys. He is no a barista, his “career” in tatters.

Finally, for those lesser fortunate in the looks department, social media can be a curse. They don’t have the self-esteem to post selfies, and no other marketable skills. Youtube stars come and go as quickly as you press Like. Behind the race for approval, meaning for an entire life is lost, the bonds that anchor us in society are broken, self-worth is hard to find, and we ourselves are filled with rage and anger and many even driven to suicide.

Online shaming and bullying has become such a problem that governments and schools are looking into solutions using machine learning, AI and human monitors. Facebook is increasingly in trouble for hate speech cyberbullying, and the posting for offensive content that can destroy someone’s life.

An increasing number of researchers and experts thing that ultimately, cyber health has to become the responsibility of governments. China, which already monitors and censors most online content, may offer a look into our future. The dream of the free and democratic Internet has already naive, but now lies in its dying throws.

From Darkness to Light

How hotels change neighbourhoods and write history

This article was written with Ed Ng and published on his blog earlier.

Hong Kong Island smoulders in the tropical sun: A beautiful, vibrant place, rich and prosperous — the envy of the world, and the cosmopolitan heart of Asia.

Central, the Peak, the Lan Kwai Fong and Soho districts, the southern coast — sprinkled with the villas of the rich and famous throughout the island.

Right across the beautiful Victoria harbour, where the peninsula of Kowloon connects to the mainland, you’ll find the working-class neighbourhoods of Yau Ma Tei, Tsim Sha Tsai and, further north, Mong Kok, known collectively in Cantonese as Yau Tsim Mong, one of the 18 districts of the territory.

For decades, Hong Kong island was the stage where the spotlight was, and Kowloon just a piece of land from where to regard its shining sister with admiration.

Real estate agents say that ”location” is everything, but thankfully, locations too can change and sometimes evolve very dramatically.

Hong Kong’s waterfront  has arguably the highest concentration of wealth per square meter in the world. The redevelopment of Kowloon has turned the peninsula from a gloomy working-class neighbourhood  into a bright spark of culture and luxury, ready to welcome the world.

The area has been turned by visionary city planners and courageous investors into a new and modern center of art, creativity, business and hospitality. When the Festival de Cannes selected a venue for their first Asia event, they chose Kowloon over Hong Kong. They crossed over to the Dark Side.

For AB Concept principal Ed Ng personally, buildings like the Victoria Dockside with the K11 Atelier and ultra-luxurious Rosewood Hotel inside have a special meaning.

It forms a milestone in the revitalisation of southern Kowloon.

“Seeing this vibrant change the we felt it a natural move for us to join this revitalisation by moving our studio into this vibration location. If facts, Terence and I were both born and grew up on the Kowloon side. My mother used to go to the office right by the Star Ferry pier, while I attended design schools just a stone throw away.”

“We founded our company on the Hong Kong side in Star Street 20 years ago, it was a neighbourhood right on the edge of the prosperous Central district. Star Street was a startup hub, where you could enjoy the lifestyle of the budding entrepreneur. As the company grew, we moved into a proper office building with a more corporate setting.

“Yet over time, we learned that creative talent, quality of life, and a beautiful work environment, are not just a matter of interior design, but also about the outside world and your immediate surroundings.

“That’s when I began to think of location as something more than a physical address. It is also a spiritual place, filled with history and emotions. And this is why in June 2019, we became a part of the Victoria Dockside family .

The changes that came with it were at once dramatic and unexpected.

“Our team became proud of the new office. When I walked in through the doors, all my colleagues were there, smiling, even amongst the chaos of moving and hundreds of boxes still unpacked. There was an energy here, a spirit, a new eagerness to be part of something great.

The third generation of the visionary developer got it right. This is not just about business returns and stock market valuations, but about building a cultural hub, enabling artists and creators, and building a platform for others to prosper.

Victoria Dockside quickly became a magnet, attracting just the right crowd with the right energy.  Its clientele, and the beautiful Rosewood Hotel, elevate not just its visitors to a new level of experiential luxury, they change the entire atmosphere of southern Kowloon. They turn the Dark Side into a shining beacon, ready for the future

The author is director of global business development for luxury interior design house AB Concept in Hong Kong, Milan and Taipei. Follow the author on LinkedIn

 

The 7 Deadly Sins of Influencer Marketing

Influencer marketing is on the rise. People believe messages from experts in various fields from blockchain, IoT, to marketing and automation, especially if these experts are not directly affiliated with a particular brand.

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Influencer marketing is growing on all platforms, be it Twitter, LinkedIn, Medium, Reddit, Facebook, or even through individual blogs. Yet brands are stumped how to choose a good influencer. Choose an influencer with no follower engagement and you waste your money; choose a micro-influencer with no significant following and you may be overpaying.

Some have hundreds of thousands of followers yet virtually no engagement; the suspicion is that their followers are fake, or simply regard the content as unimportant. Those may not be the right choice for your brand.

Influencers are not synonymous with celebrities. In fact, influencers in a particular industry, or even micro-influencers with the right following, can produce better results than big celebrities.

Read also: Micro-Influencer Marketing: The Ins and Outs

But there are many pitfalls. Self-proclaimed influencers don’t just inform, they often mislead. Just because someone has a large following doesn’t mean he or she can propel your brand forward. Too many influencers can make the message seem spammy. Reputation is more important than reach in many industries, and so on.

We have identified the seven most common mistakes brands make when embarking on active influencer marketing campaigns.

1) Choosing the wrong influencer

What you are looking for in an influencer are the 4Rs: Reach, Replies, Relevance and Reputation.

  • Reach refers to the number of real people an influencer reaches.
  • Replies refers to the level of engagement between followers and influencer.
  • Relevance is the influence of the person hired for your particular purpose
  • Reputation is just what it says: is this someone with a good reputation amongst your potential clients? Is he or she an industry insider with years of experience? Checking the reputation of an influencer is probably the most important task in evaluating the right partners.

There are no automated tools that can identify the right influencer perfectly. Watch an account carefully before hiring an influencer. Look at the number of replies, shares, retweets, but also if the influencer is actively engaging with others. Are their posts relevant to your business? Do they report from live events?

Cross-check the influencer’s profile across platforms. Someone with a huge Twitter following but an unremarkable LinkedIn profile without career details or very few connections is highly suspicious. Watch out for live videos where you can witness the influencer in the company of others, at big public events, and so on. If in doubt, ask around. Never base your decision on follower numbers alone! And remember: sometimes the best influencers are to be found within your own ranks. Engaged employees are often the best representatives of your particular brand.

Read also: Employee Advocacy: The Key to Digital Marketing Success

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2) Choosing too many influencers

This is a common mistake made by corporations with a somewhat larger marketing budget and risk-averse individuals, yet it is invariably the wrong decision. You do not want to dilute your message by spreading it over too many individually unimportant influencers.

This is a bit like the stock market: you shouldn’t put all your eggs in one basket, but if you buy each stock in the index you haven’t really made a decision at all. It’s not wrong to work with different influencers in different markets or market segments, but don’t lose focus.

For some brands, in technology especially, it may be better to limit themselves to just one influential representative who then actively engages with the rest of the field, rather than managing many small influencers of little or no significance.

Read also: Word-of-Mouth Marketing: The Land that Strategy Forgot

3) Short-term collaboration

This should be an obvious one, but in this fast-paced world, it is not always what brands do. Every time a new CMO comes on board, the whole battalion of influencers gets replaced just for the heck of it. This is not good.

Influencers must be nourished and in turn nourish their followers. They should be able to follow trends, technologies, and transitions over time, and not be abused merely to peddle one particular product.

Influencing consumer opinion is not the same as being a spokesperson for a product. True influencers do not parrot the brand’s marketing message but bring in their own content, experience, and know-how.

Read also: How to Become a Smarter Marketer

4) Treating influencers like an advertising channel

Let me repeat the last sentence in bold: true influencers do not parrot the brand’s marketing message but bring in their own content, experience, and know-how. 

It doesn’t matter if it’s 5G smartphones or fashion accessories: what you want from an influencer as a brand is not just a cold repetition of your marketing message, but an opinion based on facts. The best influencers are those that actually believe in the brand, for whatever reason.

Some of the best influencer examples are users who discover a new product with enthusiasm, recommend it full-heartedly, and continuously discover new features and applications. It does not matter if we are talking food supplements for bodybuilders (“It works!”) or the latest table or notebook. The personal, informed, and convincing opinion of the influencer matters.

Read also: Don’t Build Your House on Rented Land: 6 Basic Content Marketing Rules

5) Not monitoring the campaign

An all-too-common mistake! Just like an advertising campaign, specific influencer campaigns should be monitored, data analyzed, and conclusions drawn for future campaigns.

I’ve worked on hundreds of campaigns, and I can loosely group them in two categories: those where the influencer fails, and those where the message fails. The data will show the difference.

How much engagement vs. actual actions taken, for example, is an easy metric. If the influencer has a lot of engagement but very few people actually download the white paper or join the chat, this is usually indicative of a lack of interest in the product, not a failure by the influencer … and vice-versa.

Read also: KPIs are for losers. Get rid of them!

6) Not having a clear call-to-action

Every social media campaign, be it ads, blog posts, Facebook AMAs, or what have you, should come with a clear call-to-action that is easy to access, free of charge, and meaningful.

Easy to access means don’t lead people to a two-age from with 100 fields to fill in. That campaign will fail not because of the influencer, but because people can’t be bothered to fill in your form.

It should be free-of-charge because as soon as the financial aspect comes into play, the metrics get distorted. You can always make a financial offer in the final document delivered.

Lastly, meaningful because whatever message you are trying to convey, it should have some link to your mission, your bottom line, or your sales target. Influencing just to gain a following is a nice goal, but should not be the main focus of any campaign.

Read also: Inbound Marketing Explained

7) Spamming

Well. I won’t mince words here. Do not abuse the power of an influencer to then spam people on e-mail or social media. E-mail is still great, but seeing the same influencer message too many times is a real turn-off. The same goes for ad campaigns based on influencer messages. The more spammy they appear, the less credibility the influencer is left with.

Read also: Why E-Mail Marketing Is Still A Thing

Sense and Sensibility: Bringing Asian Design Sensitivity To A Global Audience

You haven’t seen nothing yet.

Forgive the double negative but that’s what a tourism consultant from Singapore told me the other day referring to the number of Chinese tourists the world can expect to welcome in the coming decades. Apparently, fewer than 1% of Chinese citizens are currently travelling, and some Western destinations are already panicking. There is no question that in the next two decades we will see a massive increase in hotels, restaurants, and retail facilities catering increasingly to Chinese tastes. 

There is no need to panic. We have been here before: when the Arab world discovered the West, and again when Japan got onto JAL and ANA flights and visited the capitals of Europe and the US. 

Despite the racial stereotypes, Chinese travellers do not necessarily expect traditional Chinese-style restaurants and a Tang dynasty hotel ambience when they go abroad. Many of them are extremely sophisticated and purposely seek out contemporary interpretations of architectural styles and design elements. It is modern China they want to see reflected, a China of international clout and technological prowess.

So, faced with this rapid rise in demand, how do we as designers respond? Do we abandon Western minimalism or any specific style we believed in for so long, and return to classic Chinese elements?

My answer is a resounding no. 

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In fact, we get asked these questions at every press conference: Where does your inspiration come from? What style do you adhere to? Why have you done this design in this specific way? 

The problem is that design is not about the designer. It is not about our vision or our design philosophy. It is about the spirit of the locale, the message we want to send here and now, in this particular location. We are but interpreters of something that is already inherent in the site. We do not force our own vision on a hotel, restaurant, spa, or private residence: we absorb what is there – the character of the place, the city, the country, even the owner or the guests who will patronise a particular establishment. 

Ed and Terence and the entire team at AB Concept believe that the age of nationalistic, style-bound design is well and truly over. Good design should always reflect the spirit of the location, rather than any hypothetical cultural sensibility or personal bias. As designers we do not simply transplant a specific style regardless of the local history or tradition – we aim to create something unique and precious that does more than just please a specific segment of the world population. 

In other words, we will not design for the next wave of Chinese tourists. We will design for a global audience, with a local flair, in a style that reflects our commitment to understated luxury with a universal appeal.   

AB Concept Trinity Square Four Seasons-63.jpg

Let me give you three concrete examples. When we took on the project of Mei Ume, an Asian restaurant at the Four Seasons Ten Trinity Square, London, we tried to take full account of Asian sensibilities in a location that has a long and rich Asian tradition: it was here, in the former home of Her Majesty’s Revenue and Customs that for centuries traders from the Far East unloaded their wares like silk and tea. The style of the restaurant is therefore not just a nod to modern design influenced by Asian elements, but also a reflection of the building’s history. You can see this in the details of the decoration, a mixture of various Asian cultures (the very name “Mei Ume” is Chinese and Japanese for “plum) while the architectural features of the building were left intact. 

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The same is true of our work at the Four Seasons Kuala Lumpur, where we mixed traditional colonial elements with Malaysia’s rich tradition of luxurious outdoor dining in the design of award-winning Yun House and the Bar Trigona — understated elegance that does not only appeal to Chinese tourists, but to locals and visitors from around the world alike. 

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These are but a few examples of the type of culturally sensitive design philosophy we have embraced in the past decade.  We no longer speak of “East meets West” because the time of “meeting” each other is long gone. We are now merging different cultural elements into a global design sensibility that surpasses the boundaries of local concepts of beauty or aesthetics. I truly believe that this form of design is the future: the amalgam of styles into a universal aesthetic of luxury you can feel in every detail. 

In that sense, the future wave of Chinese tourists, by increasing demand for more Asian-style venues, will only underline the appeal of a modern hotel and restaurant design concepts. We are moving away from national ideas and a segmented, exclusive and restrictive realm, onto a global stage where everyone, regardless of their aesthetic background, can experience the subtle beauty of true luxury. 

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Salone, Instagram, and AR

The silent revolution in interior design marketing and the role of AR/VR

Something curious has happened over the last (almost) decade. We call it social media marketing and think of all the platforms that come with it, from Twitter and Reddit to Facebook and LinkedIn. We think of long-form content, e-mail marketing, blog posts and user-generated content. We debate the length of videos and the right composition of headlines to gain more clicks, views, and retweets. We talk about influencers and word-of-mouth and the role of millennials in B2B. Our biggest worry is the customer journey and the role of marketing itself.

All these are valid concerns for most businesses and products.

In one industry however, one platform absolutely dominates the marketing scene and the conversation with end consumers and between firms alike: interior design and Instagram are a match made in heaven.

Leather tube shelf by Giorgetti

I have just returned from the greatest spectacle on Earth, the Salone del Mobile furniture and design show in Milan, Italy. Even if you are not a designer or just about to furnish your multi-million-dollar home, the massive exhibition of everything from lights to living rooms is an experience. If you have the budget for exorbitant hotel prices during the show of course. And patience to wait for a taxi. And have the stamina to walk an average of 15 km a day from booth to booth.

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I digress. What I wanted to write about is the power of Instagram and visual marketing. The platform, owned by Facebook, has eclipsed its parent in terms of engagement and absolute numbers.

Instagram growth. Source: statista

I’ve touched on this phenomenon in my recent blog post Word of the Year, but my visit to Milan really brought home the power and influence of this platform not just for fans, influencers and end consumers, but also in a commercial B2B setting.

We think of Instagram as a platform to share your holiday photos and your food porn, and the place to follow celebrities. But since its humble beginnings and throughout its acquisition by Facebook (for far too much money, people thought back then), Instagram has had a profound impact on how certain industries market themselves, nowhere more so than in interior design.

Since I became head of global business development at AB Concept, one of the world’s leading interior design firms, my outlook on marketing, in particular social media marketing has shifted. I have always been aware of the power of images, but not before this visit to Milan and handshakes with over a hundred of my company’s suppliers and partners did I realize what an important productivity and marketing tool Instagram has become.

It happened at the Poltrona Frau exhibit at Rho Fiera when one of my firm’s designers asked a question about a new bed and the sales representative didn’t answer by fetching a catalogue or showing her an image on the website, but referred to an Instagram post, adding, “of course I can e-mail you the specs”.A bed by Poltrona Frau

The IG Account of Poltrona Frau, with its beautiful and inspiring images of the firm’s stunning designs, has over 151k followers at the time of writing. Designers and architects, furniture enthusiasts and FF&E managers from around the world peruse it to get the latest news about the company’s products.

The same is true for almost every design firm, architect, furniture manufacturer or visual artist in the world. Some don’t even bother with Facebook any longer, not to mention Twitter or LinkedIn or Reddit. While these platforms are strong in other industries (Twitter for technology, social issues, AI and finance for example, see my feed at twitter.com/mhiesboeck), in the world of fashion and design there is no way around Instagram.

My boss likes to speak of instagrammable moments and instagrammable designs. It’s not just about getting images to end customers however, it is also about B2B marketing on a grand scale. Our designers turn to Instagram for inspiration, but also use it like a catalogue to select products and get specs even. For this industry, IG isn’t just a marketing tool – it has become a business tool.

I then checked my own Instagram account. In the two short months since I joined ABConcept, my followers had grown from a few hundred during my time as a tech influencer to over 4K since I began my career in the hospitality and interior design industry.

Read: My Journey into Interior Design

Fabric selection cupboard at the Promemoria showroom

All the big brands use it, from Hermès (8m+ followers) to Gucci (33m+ followers). But also smaller, bespoke forms like Baxter (85k) or Gessi (21k+) for bathroom fixtures can no longer do marketing without the visual power and global reach of Instagram.

Faucet and basin design by Gessi

The fact is, due to the highly visual nature of interior design, what better way than to market yourself on a platform specifically created for images? It’s a no-brainer.

As the platform expands it may even add more functionality for B2B such as the uploading of catalogues, easier use of links in posts, pricing and ordering etc.

Instagrammable moments from Ceccotti Collezioni

The future of design marketing: AR and VR

But this blog is called Futurist and the future is my passion, so it is my duty to look towards the future of marketing – in this case of design marketing.

I see the greatest impact here not from 5G, AI or IoT, or any other of the many emerging technologies, but from virtual reality, in particular Augmented Reality or AR.

Imagine not having to queue or battle the masses to enter a showroom. Imagine saving the cost of air travel and hotels and experiencing the latest designs in a lifelike, interactive VR environments. Such as the Gucci Decor house for example.Gucci Decor showroom

Could it be that in a few years the masses visiting Milan for Salone del Mobile could dwindle due to the realistic representation of spaces in AR and VR? Certainly.

For a large number of designers, FF&E designers, architects, and especially for end customers, the promise of AR offers vast opportunities to engage with brands and experience their creations as if you were there, with product specs, product variants and perhaps pricing information incorporated into the virtual experience. In AR, customization is easy and the cost negligible. Try doing that with your tile samples!

Selecting fabrics and materials may change completely: rather than having cluttered shelves and unwieldy racks of product samples, designers will be able to select from a much larger quantity in virtual reality. Manufacturers will save costs by having to produce fewer samples, and through a virtual presence reach far more customers. (Although there is the problem of feel and touch when it comes to, e.g. textiles.)

End consumers will be able to match products better to existing spaces by selecting them from virtual shelves and placing them into VR representations of their own living room or hotel lobby, created by uploading drawings or photographs which will then be automatically turned into 360′ virtual environments by sophisticated software.

Architects will be able to visualize spaces, and real estate developers showcase more flexible variants of places without having to make physical changes.

Finally, platforms like Instagram will embrace AR on a grand scale, allowing you to create virtual showrooms and whole museums in the form of what is now clumsily called “stories“.

Through remote access to VR visualizations, the market for all things beautiful will further expand and even small businesses in remote locations will be able to reach customers and suppliers.

Lamps made from handblown glass by Lasvit

Collaborative tools will allow designers in different parts of the world to work together seamlessly – not through a videoconference as we do now, but by standing in a virtual room together and discussing changes which are then applied in real-time to the VR simulation.

Perhaps even the top managers of design firms will take advantage of AR-powered design marketing to decluttered their busy schedules.

But they will be missing out on three important things!

Firstly, a personal visit will always be preferable to industry insiders who need to network, visit suppliers, reinforce the personal relationships at the heart of doing business (especially in Italy!); to see and feel real things, and pay homage to the truly great designers and artists who make our homes, our hotels, and our lives more beautiful.

And then, you will also not be able to experience the fantastic food (e.g. at Paper Moon Giardino, a fabulous restaurant not entirely coincidentally designed by my company AB Concept) and the unique flair of this magnificent metropolis, Milan.

The Duomo at sunrise, shot on my way to work at AB Concept Milan. (C) Martin Hiesboeck

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Dining room at the Paper Moon Giardino, designed by ABConcept

The writer is director of business development at ABConcept and a global hospitality and technology influencer.

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My Journey Into Interior Design

Drastic career changes can be very rewarding

Through my 25-year long career, I have worked for tech companies, internet companies, startups, even diplomatic missions, trade offices, two marketing agencies and, for a few exciting months, as a university lecturer. 

In one way or another, all of these positions had to do with marketing: getting the word out, whether it is about a brand, a new enterprise, a country, or teaching the very same to eager students. From storytelling to digital marketing, from branding to brand management – somehow it was always connected. 

I worked primarily in the industrial sector: machinery, semiconductors, nanotechnology, and later on moved into IT, software, artificial intelligence and machine learning. Again, it seem to me like a gradual, organic progression.

When I left my last position at a leading tech marketing agency in Taipei, I was thus for a while looking for a similar job in a related industry. Something hands-on, something technical, something B2B, something in my comfort zone. It was not to be. Earlier this year I received a phone call from a headhunter asking me if I new anything about luxury interior design. 

Not to put too fine a point on it, but I have no clue about design. I don’t know my Gap from my Gucci. I may be able to recognise egregiously bad taste, but that’s about it. And yet, there and then, on the phone I said. “Not really, but I’m interested.” Long story short, I went for an interview. 

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Changing careers is risky but rewarding

And for another interview. And another one. First the HR Director, then the Managing Director, and finally the founder and principal designer of the company. I passed all the tests, completed a writing assignment, and had a long Zoom meeting. And then I thought: what am I doing? I am out of my depth here. I know nothing about this industry. 

Nothing, absolutely nothing, had prepared me for this stint in one of the world’s leading interior design companies.  I am not talking about any designer. We are talking about one of the very big names in luxury design – hospitality, residences, spas, and so on. We are talking – drumroll – about the masters of experiential luxury, the Hong Kong based designer duo Ed Ng and Terence Ngan. If you know anything about luxury design, your jaw has dropped by now. 

You may not have heard of them if you are not a member of the glitterati or a designer yourself, but I can guarantee you will be impressed by their work. In March 2019, they won the prestigious Ahead Award for their work at the Four Seasons Kuala Lumpur: the Yun House restaurant and the even more spectacular Bar Trigona. (https://www.fourseasons.com/kualalumpur/)

ab-concept-four-seasons-kl-yun-house

ab-concept-four-seasons-kl-bar-trigona-1

They also did the absolutely fantastic Mei Ume at the Four Seasons Ten Trinity Square in London (https://www.meiume.com), a spectacular Michelin restaurant. Their design draws on the rich history of the place: the Port of London Authority is a heritage building where traders from the Far East used to unload their wares such as silk and tea.

ab-concept-four-seasons-london-mei-ume-3

ab-concept-four-seasons-london-mei-ume-1

Now, I haven’t suddenly become a designer; I am in charge of global business development, which in the case of such an accomplished design firm means mostly evaluating whether a project is worth pursuing. It’s a lot of work keeping up with a global elite of luxury developers and private clients. 

But whereas before I dealt with purchasing managers, salespeople, the C-suite of humdrum B2B companies, and the odd F&B manager or hotel director, I now suddenly find myself thrown into a world of subtle beauty and fine nuances, of understated elegance and a global world of luxury design. I am talking about experiential luxury and ceiling heights, about rattan and marble textures, about spaces and locality. One of the most inspiring projects AB Concept has completed must be the Paper Moon Giardino in Milan:

ab-concept-paper-moon-giardino-6

The AB Concept (Instagram: https://www.instagram.com/ab_concept, Website: abconcept.net ) teams in Hong Kong, Taipei and Bangkok design luxury hotels, restaurants, residences and commercial properties world-wide. It is an amazing company. It lives and breathes good design. Even the office space looks like straight out of Architectural Digest: spacious, elegant, beautiful. Some evenings I don’t really feel like going home to my own apartment because our office is so beautiful.

Yet at the same time, the people working here are down-to-earth, friendly, and truly passionate about what they are doing. 

Changing industries is a luxury and a privilege 

The new job is a break with my career as a B2B influencer in the machinery, healthcare, and semiconductor markets. My interests in AI, machine learning, blockchain, and the future of work are suddenly taking a backseat to things like resort hotels, 5-star restaurants, and Salone di Milano and Montenapoleone. A new Instagram account (https://www.instagram.com/mhiesboeck) is replacing my 60k+ strong Twitter presence (http://www.twitter.com/mhiesboeck); I no longer teach digital marketing but have become a student of shapes, forms, patterns, and the art of understated elegance.  

If you are ever in Hong Kong, you must stop by the former Central Police Station, now a cultural hub with three stunning restaurants designed by my firm.

ab-concept_tai-kwun-central-police-station_the-dispensary

Few people have the opportunity, nay the luxury, to change industries during their careers. I found the change easy, perhaps because working for my new employer is such a joy – aesthetically, visually, and personally. It took me several weeks to make up my mind and take the plunge, but I don’t regret it. In fact, I highly recommend it. Life is short. Varied experiences over a lifetime can bring a profound sense of accomplishment. 

The reason I ended up taking the job is the profound insight the company founder Ed Ng had during my final video conference with him. “I don’t need another designer – I’ve got enough of those. What I need is a different perspective on the company. Someone who can write, and sell, and negotiate in different languages.”

It was this statement that made it clear to me that I had indeed something to offer in an industry entirely alien to me. It didn’t take me long to acclimatise, and within a few short weeks, I had learned all the lingo interior designers use to describe their design philosophy.

But my life did change.

I dress differently, I eat differently, I work differently. I use British spelling now instead of American (blame the Hong Kong connection). I switched from PCs and Windows to iPads and iMacs. I have a whole bunch of new apps on my phone, and I even changed airlines and loyalty programmes due to different travel patterns. No more ties and dark colours. Out of the Old Navy store and straight into Boggi’s. Almost everything about my life is new and exciting.

And I am hugely excited about the changes. In life, only change can keep us on our toes, only change can keep our brains fit, only change is constant. 

I you are at all inspired by great design, beauty, and luxury, follow me on my journey. I guarantee you will be as excited as I am about my new position. You also find me on LinkedIn. And if you have a design project you want to discuss, you can mail AB Concept here

IoT, Cybersecurity and Manufacturing: War is Coming

The Internet of Things or IoT is being hailed as the next big thing changing our world: our daily lives, the way we shop and consume information, and, finally, manufacturing.

Increasingly however, issues with data security, privacy, and hacking of connected systems, are making it clear that the rollout of a globally interconnected Internet of Things is anything but assured.

Cyber criminals are increasingly focusing on connected devices, hacking anything from Wi-Fi routers to coffee machines. If it is connected to the Internet in any way, it can be hacked. Cloud computing does not offer any consolation: blackouts at cloud service providers due to, say, DDoS attacks, affect millions of customers, supply chains, and production lines. Even edge computing, hailed as the antidote to cloud troubles, does not offer a convincing solution.

Read also: The Future of the Internet of Things

 

The Problem is Asian Manufacturing

From the perspective of manufacturing, there are a few obvious, and some less obvious reasons, why the deployment of IoT may be delayed, or perhaps never happen at all. That is because the vast majority of devices – an estimated 90% or more – are manufactured in Asia, namely in the mega hubs of Shenzhen and Kunshan, and of course in Taiwan. Yet both China and Taiwan are not prepared to offer the cyber security needed to make IoT a success.

Taiwan

Taiwan is suffering from a massive shortage of talent in cyber security, data science, and engineering in general. Falling birth rates and low wages are to blame: many talented young people try their fortunes abroad, where opportunities abound and pay is better. (Just to give you an idea: data scientists earn about 1/10 of American salaries in Taiwan, security specialists even less. And then there is quality of live and overall career prospects.)

Secondly, companies in Taiwan have a tradition of churning out products efficiently and competitively priced, focussing on “cost-down” strategies rather than innovation. That leaves little room for expensive testing or the consultation of experts who could make sure products are really hacker-safe.

After all they get paid to make products primarily. Increasingly they also feel that whether those products can be hacked or not is something out of their control. “It doesn’t matter how safe you build it, hackers will always find a way,” an engineer from one of Taiwan’s leading electronics manufacturers told me.

He may be right, but undoubtedly there is also a culture of laissez-faire, a lack of organizational excellence and oversight that prevents majorly flawed products hitting the shelves.

A few years ago, one of the largest and most successful electronics manufacturers delivered millions of routers with the password “password” hardcoded to US consumers and was promptly fined by the FCC.

Finally, Taiwan has a cultural tradition of engineers leaving jobs around age 40 to start their own business. Thousands of startups making IoT devices are thus underfunded and understaffed; all the money goes to product development, none to marketing or making sure the product meets international standards of safety and cyber security.

So, both large incumbent manufacturers and startups lack the means, the willingness, or even the awareness of the product flaws that endanger the development of the Internet of Things.

China

Taiwanese companies manufacture in China, and China itself is increasingly creating companies that make products for the Internet of Things. Just like in Taiwan, there are excellent and talented engineers at work, inventive and dedicated to their job – yet they do not have the right safety mindset, lack access to international norms and standards, or cyber security training.

Apart from all the problems it shares with manufacturers in Taiwan (including talent shortage, bad organizational oversight, lack of responsibility for plant managers, insufficient testing etc.) China has a trust problem.

Party officials oversee every major company; products are supposedly engineered to send back data without the knowledge of users; intellectual property protection is weak. China has nothing in the way of data protection laws or penalties for products and services that fail to adhere to such regulations; fake products fill the markets and shelves, and when something goes wrong, managers and company owners simply disappear due to lack of legal protection.

Korea and Japan

Korea and Japan may be someone better in terms of guaranteeing safe products for the IoT due to better organizational structures and more rigid SOPs, but many of their companies are manufacturing in China anyway and are thus exposed to the same risks. Even there, manufacturers hardly suffer the consequences of providing consumers with unsafe products – the legal systems and judicial process are simply not prepared for that.

Even those who don’t outsource to China are far behind in terms of digitalization. Only about 5% have a Chief Data Officer; over 40% of CEOs have never even heard the term CDO.

Compared to Europe’s and America’s leading corporations, Asian enterprises are about a decade behind in creating intelligent digital processes, deploy machine learning and artificial intelligence, data science and predictive analytics, and all the other necessary tools to detect fraud, negligence, and deficient products, predict security issues, and improve product safety and quality.

Read also: Digital Transformation: How to Create an Intelligent Company

All in all, Asian manufacturers are not in position to deliver safe products for the IoT.

IIoT is the Exception

There are exceptions, in particular companies producing for the Industrial Internet of Things. These companies cannot afford to ignore cybersecurity issues because potential losses from data breaches or cyber attacks are monumental. A single factory hacked could lead to bankruptcy, the affects could trickle down the supply chain and affect hundreds of suppliers and customers.

Yet the Industrial Internet of Things is not immune to hacking, mostly because the products are usually installed, connected, and maintained by service providers or “integrator” which suffer from the same organizational problems of inadequate SOPs, lack of oversight and accountability.

What’s more, Asian manufacturers have a tradition of skimping on maintenance contracts and try to do upgrades, repairs, and modifications to existing installations in-house by engineers who often lack awareness of cybersecurity and data privacy issues. They may know how to install an extra sensor or modify parameters on an existing machine, but they usually don’t see the big picture. A major hacking accident at local manufacturer is only waiting to happen. The smaller incidents – and there are over 1000 each year, according to industry sources – are usually hushed up.

Trade Wars, Industry 4.0 and Lawyers

I have outlined the major effects of the technologies surrounding Industry 4.0 in this article: The True Meaning of Industry 4.0 for Manufacturers

From a security perspective, the lack of awareness, talent, and trust outlined in this article means that many brands who buy products manufactured in Asia will sooner or later  opt for repatriation of their operations. As penalties for delivering unsafe products or violating data protection laws get stiffer in Europe and America, the risks involved with buying from Asian companies will only increase.

There is of course political will behind that too. Made in America, Made in Germany – everyone from electronics to car parts and shoe manufacturers – are trying to bring back manufacturing to their own countries and their own jurisdictions.

Thanks to automation, robotics, 3D printing etc. that is now possible. Labor cost is no longer a major factor. Supply chain issues will resolve themselves over time.

Why risk security issues, copycats, insufficient IPR protection, allegations of child labor or horrid working conditions in Asia, when you can bring everything back to almost completely automated high-tech plants fully under the brands control; with no cultural or language barriers. Why did Tesla build the Gigafactory in America, and why is Adidas building robotic sneaker factories back in Germany? Why is Foxconn starting manufacturing in Wisconsin? (hint: it’s not just the perks and tax cuts)

Because as of now, outsourcing to Asia is no longer advantageous in the long term. Companies do it mainly because old supply chains are still too rigid, and talent pools in certain locations too shallow. Automation, ad-hoc manufacturing, robotic processes etc. will overcome these hurdles.

The risks involved with creating defective IoT products, the threat of law suits or protests by customer over work practices of environmental protection issues, far outweigh the advantages Taiwan and China have in terms of lower labor costs. So don’t be surprised if Apple starts building its own Gigafactory in America soon.

The end of the trend is in sight. Sophisticated manufacturing, smart manufacturing, robots and additive manufacturing – and whatever comes next – mean that brands no longer have to take the risk of having a third-party in control of the quality and safety of their products.

For only if everyone is on board with the same level of safety and cybersecurity concerns, the same SOPs and preventative measures, can we rollout a globally interconnected Internet of Things. Otherwise there will be war.

 

How the Internet of Things will change the Supply Chain

Despite advances in manufacturing that will move the bulk of product production away from mega-factories in developing countries back to Europe and America, logistics will always play a big role in a world of global trade.

Read also: The True Meaning of Industry 4.0 for Manufacturers

The industry employs millions of people worldwide, and even robots will struggle to make a big impact in the short-term. That is because logistics is inherently a complicated industry, with hundreds and thousands of variables, complex system, interconnectivity problems and standards varying from country to country, even port to port.

If you have ever tracked a parcel through a delivery service, you know that at present we only have information when a package transit from one system to another, from one data point to another. We know very little about what happens to shipments in transit.

That is important. Drugs, food, livestock, and many other things should be constantly monitored to ensure quality and product safety. Most of these items should be tracked from the source all the way to the receiver, 24/7.

(This is where blockchain may come in: How Blockchain Will Save the World

The Advent of 5G and IoT

5G networks with their big throughput rates, safety features, and low latency will not only enable industry 4.0 and better automation, they are also the key to a successful deployment of the Internet of Things. We will finally have information systems and bandwidth that allow us to track anything we like from source to end-user.

This will not be an immediate transition, due to the complexity of systems. It will take the better part of the next decade to make the transition meaningful. Some companies will go ahead and build their own proprietary systems, but interconnectivity and cybersecurity will delay adoption in the short term.

Real-time insights will allow for greater efficiency in tracking not just the physical route of a package, but also its condition, e.g. temperature, humidity, etc. Integration with traffic information systems will allow flexible re-routing; data analysis and machine-learning algorithms will allow new and existing logistics providers to offer far more flexibility, and thus cost and energy savings.

What Supply Chain Managers Are Looking For

Delays and problems during shipment account for the majority of complaints in international business. What CIOs and supply chain managers really want for their business is customer satisfaction.

  • Enhancing customer satisfaction
  • Increasing efficiency and faster shipments
  • Cost savings (including human resources)
  • Compliance with international rules
  • New delivery and distribution methods

All of these are components of Customer Success, the key to successful value propositions for customers.

Read more: How to Design Value Propositions in B2B Marketing

Once the proper systems are in place, companies will be able to offer just-in-time deliveries with speed and flexibility, unlike anything we have now. Combined with robots and drones, these new logistics systems will be completely unrecognizable.

New IoT devices will have far better connectivity. Visual positioning systems (VPS) will replace or augment GPS, allowing for tracking in enclosed spaces like warehouses, basements, or remote areas.

The key technologies to make IoT devices efficient are energy conservation or independence from traditional energy sources like batteries, and interconnectivity with sophisticated control systems in factories and logistics control centers.

Read also: The Future of the Internet of Things

AI is the final ingredient

The transportation systems described will be incredibly complex, perhaps too complex for humans to control. Integration with sophisticated artificial intelligence and machine learning system is the final ingredient to make them successful.

There is a clear connection between AI and IoT: it’s called data. IoT devices will produce so much data, it can only be leveraged by machines.

The use of 5G and IoT will speed up transportation of goods air, waterways, rail, and road. Vehicles, conveyor belts, drones, and storage systems have to be linked with open,  interconnective protocols on a global scale. Only AI will be able to manage larger systems.

Read also: The Difference Between Artificial Intelligence, Machine Learning, and Deep Learning

Regulation Must Catch Up

One of the biggest obstacles to 5G and IoT adoption in supply chain management is regulation. Even if some countries are keeping ahead of the curve, in the majority of trading nations custom clearance and regulatory approval of shipments (like food or drugs for example) are still years behind.

Companies may end up with fantastically advanced internal systems that have to interface with government agencies through antiquated paper records. Every time such an interface opens, you have a problem with data entry and human interference: the latter being the biggest source of error and wrong data. Machine learning and AI can only be accurate and useful if the data they work with is accurate.

The Security Issue

Interconnectivity is alright, but it also opens these complex systems to hackers and criminals with nefarious intent. The more interconnected, the greater the danger of major damage to global IoT systems, in particular in logistics. One hacker could paralyze the supply chain of a single company or an entire country.

5G promises the implementation of security problems that will tackle these issues. But as a cybersecurity expert and friend keeps telling: everything that can be hacked will be hacked. In particular, DDoS or denial of service attacks may become far more powerful than ever, as they block access not to PCs but actual integrated systems. And in an integrated supply chain, if one part fails, the entire process may collapse.

Because they are connected, hackers have a million opportunities to enter the system. There will always be weak points. If, for example, in a factory, someone hooks up ancillary systems like air conditioning to the main node, there is a way to hack into the system. WiFi routers, robots, access control, and anything else connected that is not under the direct control of the supply chain security team, are especially dangerous.

Neither cloud services by large companies like Amazon, Google, Microsoft or SAP, nor proprietary systems by individual suppliers are immune from such attacks. Startups like Cloud Logistics will offer new challenges: as they experiment with new approaches, things could go terribly wrong.

The biggest threat does not come from the security threats we are aware of, but from new developments. Every time we change systems on a large scale, we cannot be sure that we have covered all the bases.

Is Blockchain the Solution?

Some experts predict that the security features of the distributed ledger or blockchain technology are the key to making these supply chains safe. Others bet on quantum computing. One thing is sure: a lot of it will happen in the cloud, controlled by a handful of large technology companies that implement and manage cloud and edge computing solutions. And as I said, those are vulnerable too.

What 5G and IoT promise to do, however, is far more important and beneficial than the danger of cyber attacks. Not only could the IoT make supply chains make more efficient; it will also solve problems like pollution, recycling, fighting corruption, food and drug safety, and help developing countries catch up with the rest of the world far more quickly. And that is why nothing will stop the IoT, no matter how serious the security issues.

Read: How Blockchain Will Save the World

How to Design Value Propositions in B2B Marketing

This article has been adapted from a two-part post by @claudiomkd which you can find here:  Part1 and here: Part2  

Reducing the sales cycle with laser-focused value propositions

If one thing I learned about B2B markets during my career is that business-to-business models, although very monetarily rewarding, can pose two huge challenges for sales & marketing organizations:

  1. Sales cycles can be very long, taking months or even years to close a deal
  2. Typically, the customer lifetime value (LTV) is relatively short due to high competition and pricing wars

There is a conflict here between the sales cycle and LTV, which can only be mitigated by minimizing the sales cycle and establishing a long-term customer lifetime value.

Beyond all product features and benefits, you always have to design your value proposition in a way that minimizes the sales cycle and establishes a long-term customer LTV.

Designing value propositions is one of the most interesting and rewarding tasks that are rarely performed within marketing organizations. Using the Business Model Canvas (BMC), you can lay out a simple business plan without having to write a lot.

The BMC focuses on the nine key components of a business model, including the two most important ones of all: what is your offering (Value Proposition), and for whom (Customer Segments).

Here is  the Business Model Canvas by Alex Osterwalder:

BMC

When filling in a BMC, you always start from the target customer: Customer Segments, or “for whom it is”. Then you move onto the Value Proposition and explain what you offer to your target customers.

For example, you could formulate your value proposition like this: we provide small businesses with an HR management tool to reduce job application processing times.

2Value Proposition Design — Mapping value to customer problems and goals

The job of your value proposition is to present a benefit to your customers so appealing, that they will pay as much as possible, as soon as possible.

When designing your value proposition, you will typically do root-cause analysis (RCA) in numerous iterations until you find the biggest pain point of your target customer and, based on that, build a product or service to palliate that pain.

Therefore, when in B2B, your question before designing a value proposition should always be: what’s the biggest pain point for businesses so that they pay me as much as possible, as soon as possible?

There happens to be a very common “problem” among every business organization, which is to maximize the shareholder value. That means all businesses, with no distinction, see everything in the light of return on investment (ROI). Every hire, every decision, every tool they purchase, is measured in terms of how much will it maximize the gross margin.

This is great news for you as a value proposition designer, because it simplifies your job to just presenting your value proposition in terms of ROI for your customer, which to them it means either:

  • They are going to make more money thanks to your product
  • They are going to save costs thanks to your product

Example #1

A virtual reality (VR) company is developing a new headset to be launched at the next CES, in Las Vegas. They need to develop a software component that will make the VR headset secure before they release it to the market. However, they would need to hire 10 highly paid engineers to develop (and test) the component in time. On the other hand, your company offers a similar component which would need just a few modifications before it can be integrated into their headset.

In this example, your value proposition would be worked around cost difference. So, you can calculate how much would the VR company spend in building the software internally, and then offer them your component for a lower price. Let’s suppose the total cost for your customer is 10 engineers X $10k/month X 8 months of development = $800K. Therefore, your pricing strategy has to allow to sell that software component way under $800K, in order to justify their investment.

Example #2

Google will launch a new phone that has built-in functionality for backing up the user data onto Google Drive, Google’s paid cloud service. On the other hand, your company has backup software for Android phones that is way more capable than Google’s built-in one. It can backup high-resolution photos, videos, and even social media content, which is a great deal for users.In this case, instead of focusing your value proposition around “features”, which is basically telling Google “your product sucks, ours is better, please replace it”, you will focus on how much more money Google is going to make.

Let’s say your backup tool will generate, e.g., 3.5 times more data which will be stored in the cloud. At the same time, Google Drive prices go in tiers ($1,99/month for 100GB, $9,99/month for 1TB, and $99,99/month for 10TB) and they only make growth when they get new users or existing users to exceed their capacity and need to buy the next tier.

Here, your technology can make Google convert users to the next tier 3.5x faster than they currently do. So, let’s say Google was making $3.4 billion with the current strategy and grows $560 million every year from Google Drive conversions. If you can make Google grow e.g., $780 million per year, that’s a $220 million difference. You can now use that calculation to base your pricing, be it a one-time license, a year license or a shared-revenue business model.

Using ROI to Justify Shorter Sales Cycles

Using return on investment (ROI) as a justification, it is possible to shorten the sales cycle and ensure decisions come faster from within the buying organization.

ROI is the #1 thing that matters for B2B customers when making a purchasing decision. This means that, after they have signed the contract with you, they’ll keep exploring future alternative solutions that are cheaper. Remember: their goal is to increase ROI, which in turn means they won’t settle with your solution if they can find something that is more cost-efficient. In other words:

ROI as a sales justification (a.k.a. “value for money”) will work when closing a new customer, but it won’t cut it in the long term.

Once the closing is done, the next challenge begins: how do you keep your customers buying from you, year after year? Enter Customer Lifetime Value.

What is Customer Lifetime Value?

Customer Lifetime Value is the total amount of revenue that a customer can bring during the whole history of the company. It is often shortened as CLV, CLTV or just LTV. It is extremely important to know how much money a customer will generate to the company, in order to plan your customer acquisition strategy. This will help you calculate how much investment you can put into customer acquisition and customer retention.

Customer Lifetime Value distribution — Neil Patel

The main math behind the Customer Lifetime Value is that, typically, the closing itself is not the biggest source of revenue from a customer. Instead, a customer will generate the majority of the total LTV revenue for the company through retention.

That is why customer retention is extremely important for the company’s long-term revenue. When talking about B2B models, the two main reasons why customers typically leave are (in order of frequency):

  • They find a similar solution that is cheaper
  • The customer satisfaction is very low

Obviously, the long-term revenue and net profit from customers is not coming from the closing itself, but rather from fruitful customer relationships that last many years. And the only way to assure this is through a customer retention program.

It’s All About Customer Success

Although Wikipedia often has a very traditional way of defining things, I personally think the one for Customer Success is quite spot on:

“Customer Success is the function at a company responsible for managing the relationship between the vendor and its customers. The goal of customer success is to make the customer as successful as possible, which in turn, improves customer lifetime value (LTV) for the company.”

In other words, Customer Success’ purpose is to make sure your customers will get the necessary help from you to grow their own business. The assumption here is that, if your customers succeed and grow their business, they will have more reasons to keep investing in your solutions. That is, if you help your customers grow, they’ll help you grow with them. Sounds easy, right?

However…

Customer Success (CS) is still very poorly implemented in the majority of companies today. Most of the CS teams in the tech industry are actually working on “customer support”, which is a reactive way of doing customer success by fixing stuff that is already broken. Instead, true customer success should focus on being proactive and making sure the customer is constantly elevated with great service, new features, and even unexpected good news.

The secret to great Customer Success is to have a strategy that will help you grow your customers’ business and strengthen your existing relationship. Here’s my suggestion for creating your first simplified Customer Success strategy:

1 — Have a team dedicated to Customer Success

First and foremost, you must have a dedicated team to help your customer. This implies you will have to separate customer support from customer success, preferably into different teams.

The job of the customer success team is to represent the voice of your customers’ shareholders within your company. That will make sure that your customers are always heard and taken into account within your organization’s priorities. Moreover, this will enable your customers to continue growing and improving their market position thanks to your organization’s unconditional support.

2 — Build a feedback loop

Feedback loops are simply bi-directional communication channels to ensure mutual understanding:

Choose a channel that your customer loves, to communicate with you. Some customers prefer face-to-face meetings, some prefer WhatsApp and some may prefer email. Use what feels the easiest for each customer.

Establish a 2-way feedback loop: don’t use the channel to push news to your customer. Instead, use it for asking questions and listening to their problems.

Document every message, request or complaint your customer is communicating over the feedback loop. Bring this information to product planning meetings.

Periodically check that the feedback loop is still working and being used by the customer. If not, then rebuild it so that the communication keeps flowing.

Remember this: no news is bad news. — A silent customer could be a customer looking for an alternative solution.

3 — Understand their business

In order to have a deeper understanding of your customers’ business and what makes them grow, it is vital to understand the entire value chain, all the way down to the end consumer. This will help you design a plan for your product to empower your customer to deliver higher value and, in turn, make more money and grow. Here’s an oversimplified example:

Customer value chain — How does your company deliver value beyond your customers

This figure shows an oversimplified example of the B2B value chain. Your company provides value to the B2B customer which, in turn, delivers value to the end consumers. It is important to notice that, no matter how many B2B layers are in between, in the end, the money paying back to the whole value chain will come from consumers. So it is really important to understand how your product affects the entire chain, in order to improve your value proposition for your direct customers.

4— Make product management embrace Customer Success

Now it’s time to improve your product or service to make sure you can support your customers’ business growth. It is the product manager’s job to make sure the product roadmap is built to enable and support your customers’ growth (= success).

Therefore, make sure your product managers have as a top priority to understand your customers’ business, their main issues reported in the feedback loop, and where their growth comes from. Then, they should use these three inputs to build the next features of your product.

Read also: The Importance of Customer Feedback

Conclusion

When it comes to B2B markets, there is only one thing that sells: money. Either you make your customers make more money or save costs (ROI). However, it is not only about just closing a deal. If you want to keep your customers around and increase their lifetime value (LTV), you’ll need to design your value proposition around Customer Success.

Customer Success helps you plan your product development to enable your customers’ products in new ways that will bring growth. This, in turn, will also make your customer stick around and therefore increase their LTV and your company’s long-term revenue. That’s why true Customer Success is becoming central to modern organizations that seek sustainable growth.

 

How to Make Better Marketing Decisions

For many companies, coming up with a marketing plan is mainly about evaluating past results, tweaking them, and perhaps get inspiration from competitors, i.e. doing exactly what others do and thus ending up with mediocre results at best.

Likewise, many marketing plans revolve purely around deciding on an agency or ad frequency and then wait for others to come up with ideas – ideas constrained by budgets and bad decision-making by top management.

But at the end of the day, marketing is all about creativity, and creativity is in short supply. Bringing creativity into the planning process is difficult, mainly because you probably have exactly the same people as last year sitting around the table, steeped in group-think and stifled by the decades of experience the CMO or CEO, or worse, company owner, use to justify shooting down any idea that is in any way risky or simply different.

Read also: The Right Role for Marketing

The reason most in-house teams are not creative

As a marketing team, you have exactly three choices when planning ahead:

  • (a) beating the same drum and doing what you have done so far
  • (b) making incremental changes (based on random choice or actual data) and
  • (c) trying something completely new

The reasons why 90% of companies end up with (b) is primarily psychological. If you choose (a), the boss will ask “what am I paying you for, that’s what we did last year”; and if you choose (c) the boss will ask “are you out of your mind? how is this going to work?” Hence most companies never advance in their marketing.

The second reason why companies end up with (b), incremental changes, is that budgets are usually decided before any creative marketing session, leaving little wiggle room to come up with radically new concepts. Managerial roles are constrained, meaning that the same people in the same positions expect to go on with their work in more or less the same manner.

Let’s say you have a small graphic design team, a copywriter, and a digital ad specialist, you are most likely to continue in the new year with something that involves text, graphics, and ads on various platforms. Because if you were to opt for (c), say, video production, you would suddenly need a whole bunch of new talent.

Thus we always end up with tactics rather than a solid strategy. And tactics is no way to do marketing.

Read also: The 4 Key Success Factors of Content Marketing

 

We need new ideas!

At every planning meeting, there is a clamor for new ideas which then end up not being implemented.

Let’s take e-mail marketing for example. Do we continue in exactly the same format, do we make small changes (perhaps through A/B testing) to the format of the newsletter, or do we try something radically different, like chatbots?

No matter how long the discussion, the default is always to stick with what we have and try to make incremental changes. Whether they are based on random trial-and-error or actual data analysis, they will probably have a small impact on the bottom line; they will not break the bank, and they won’t jeopardize the job of the e-mail marketing guy. Thus creativity is always left behind.

Read also: Why E-Mail Marketing Is Still A Thing

The key here is the mostly wrong attitude of top management. The CEO-owner wants marketing experts, who can tell him the outcome before we even get started. But marketers are not experts, they cannot predict the outcome of a campaign; they are adventurers and tour guides, storytellers and experimenters.

If top management doesn’t understand this, better marketing decisions are an impossibility.

The New Frontier: Improving Customer Experience through AI

What doesn’t work

There are a number of “tactics” espoused by leading thinkers, marketers, and management consultants that simply do not bring the desired results in this age of information overload and massive competition for eyeballs and wallets. Let’s look at the most egregious mistakes.

Conventional wisdom: in marketing, i.e. “everybody else does it, so we do it” never works. It’s the default option, the group-think option, and thus the weak option.

That’s because “best practice” is never the best practice. Best practice can at most work as a peripheral inspiration, but should never form the core of your strategy. What works for others doesn’t necessarily work for you. Every situation is different, every team different, every execution of a marketing plan different. Following “best practice”examples hardly ever leads to stellar results.

Thinking out of the box: This is another expression that riles me. It’s great to think out of the box but at the end of the day, we have to work inside the box. We cannot suddenly hire a bunch of people with a completely new skill-set, just because we came up with an idea “outside the box.” We are limited by talent, the budget, time, and everything else that makes up “the box”.

The latest trend: This is also a very dangerous option. Just because something became the latest trend in a similar or even the same industry is no guarantee that it will work for your situation, your country, your language, or your corporation. Think of chatbots, for example: they are a great success in some industries, like airlines, and definitely the latest trend, but for many businesses completely irrelevant.

Read also: What Chatbots Can Currently Do For Your Business

A few years back everybody hailed the era of video for Facebook marketers … until Facebook changed their algorithm and penalized video because it didn’t lead to meaningful engagement. Out of the blue, Facebook decided that it didn’t want passive viewing of videos – perhaps as part of the effort to combat fake news. Right now we are in the era of voice … I wonder how long that will last.

Read also: The Era of Voice and Image Cloning: Can You Believe What You Hear and See?

Numbers: Another no-go. Managers love numbers because they sound convincing, but most figures you read about marketing are simply made up. “If you do this or that, you will get x % more traffic” is a phrase beloved of digital advertising gurus, but it is seldom transferable from one industry to another, or from one company to another, e.g. from multinationals to small businesses.

Managers come up with KPIs such as, “15% more followers on Facebook for this year”, as if purely by making more or better posts one could guarantee such a number. That, incidentally is why I hate KPIs.

The growth of followers depends on the ever-changing price of ads, the amount of posts by the competition, the reputation of the brand, the overall economic situation, trends in social media platform popularity, and many more factors. Trying to meet a KPI is simply pointless, as is chasing after ROI data points: these are all marketing tactics rather than strategies.

Read also: KPIs are for losers. Get rid of them!

How to make better decisions, after all

The key to making better decisions is to understand the exact situation of yourself as a brand and your clients. It means throwing overboard all traditional measures of success and starting with the experience users have with the brand, understanding how that experience changes, and how it is related to purchases.

Again, a real-life example: I once took on a client in the machinery industry who wanted 20% more sales in the coming year, in an industry that was declining, a macroeconomic climate that was stagnating, and strong new competition in the form of two foreign multinationals who had just the year before entered the market. A far better plan would have been to take a close look at the competitor’s machines, talking to customers about their preferences, and examining closely the marketing strategies of the new entrants.

Understanding your situation means data, facts, but also anecdotes and wild guesses. Thus instead of starting with the planning meeting, start with an investigation. Go to where the client is, spend time with the customer, and actually use the product you are trying to sell.

Asking the right questions

Instead of blindly following the advice of experts or chasing meaningless numbers, we should ask the right questions. Those involve questions like

  1. Where and how do customers come in touch with our product?
  2. Why do customers show interest in our brand?
  3. How will customers interact with our brand tomorrow?
  4. Where does the customer journey break off, and why?

The answer to these questions depends entirely on your situation and the answer is not always to try something radically new. It can be either a) more of the same b) incremental change or c) a completely new approach.

I consulted for a long time for a manufacturer of veterinary supplies who relied for years on the same strategy: a team of salespeople and some television ads. Every marketing meeting revolved on HR decisions (which salesperson to fire, how many to hire), and the planning of this year’s television ad. Sales continued to slide.

Then we asked the right questions:

  1. Where and how do customers come in touch with the product? Answer: At the vet. They largely ignore the TV ads.
  2. Why do customers show interest in our brand? – Because a pet is sick or the vet recommended preventative measures.
  3. How will customers interact with the brand tomorrow? Turns out that was Instagram, where photos of cute cats and dogs are simply everywhere. Until then, the marketing team of that pharma company had never considered a platform like Instagram.
  4. Why don’t they buy our product? After a number of interviews with pet owners and vets, we found that the buckle on the medical collar was somewhat harder to close than that of a competitor’s product. Since many pet owners are elderly, or children, redesigning the buckle (an easy fix in this case) was far more important than deciding how much money to spend on the TV ad.

This is a very clear example based on hard facts easily deducible from market studies and interviews. During my long career, I invariably found that most marketing teams never bother to ask the right questions, because their bosses are always demanding answers.

What is the customer really after that everyone is overlooking?

This is the most important questions only the most successful companies dare to ask. What it means is looking at your product offering through the eyes of the customer, and not through the narrow vision of your own marketing, R&D or management team.

Which brings us to the most important question we need to ask as marketers: Who truly believes in my brand?

A small number of people who really believe in my product or brand can give the most valuable feedback of all. In other words resonance, not reach, is important. Why do they love the brand with so much passion? Is there a consistent theme why this small group is so supportive? Do they all buy the product because of one particular feature? What is their loyalty based on?

The answers to this question – easily obtained in focus groups or through social media product feedback – will guide you in your marketing planning. If all your key supporters value the design of your products, this is where your marketing has to go. If they rave about a particular feature, then think about how to promote product features over design aspects, and so on.

 

Why do we do what we do?

Ultimately, we also have to ask ourselves why we do something the way we do it. Why do we do marketing the way we do it? Do we have solid reasons for our approach, or are we just emulating other companies or are we blindly following trends?

Is it because that’s the type of people we have at our office and we can’t change that? Do we use print ads because they work, or because our agency partner keeps selling us on ads because they don’t have a film team? Are we doing Facebook ads because they are effective, or because we read somewhere they are the latest fad? Or because our ad manager only knows Facebook and not Google, etc.

Instead of simply setting a KPI like 15% more followers on Facebook, ask the question “what do we need to increase the attractiveness of our account”, “why are people following our page in the first place” etc.

Understanding why customers do what they do, and why we as a marketing team do what we do, is far more important than any other decision making I have outlined above.

And finally, better marketing decisions come from a greater willingness to experiment. Spending a certain amount on small trials will lead to significantly better outcomes than following best practice or copying competitors. Tactics don’t work in marketing; only strategy does; a strategy that allows for curiosity and creativity throughout the process.

Read also:

Inbound Marketing Explained

10 Common Misconceptions About Inbound Marketing

Why E-Mail Marketing Is Still A Thing

Email may be dying a slow death as a communication tool (at least in Asia) but it is still a great marketing tool for brands. Eight out of ten people who sign up for brand emails make a purchase based on the email content, according to the influential podcast Marketing over Coffee. That’s some serious conversion.

I am, please remember, talking about opt-in newsletters, not unsolicited spam. So why is email still a thing?

E-Mail Filters Through the Noise

In a world of constant surfing, swiping, snapping, and liking, e-mail newsletters somehow manage to filter through the social noise. Reading your e-mail is private time, undisturbed by social media. You pay more attention. You are focused.

Unlike Facebook, the inbox might also contain a job offer, a message from a loved one, or instructions from your boss, so your brain is on high alert when you are going over the inbox.

Also, you most likely opted in to receive the newsletter in the first place, therefore you are by definition interested in the content. Psychologically, that primes you to be more receptive to offers. 

Marketers need to remember though that e-mails do vie for attention: some stand out, others are ignored. Some experts insist that e-mails with a personalized subject line such as “Hey John, we’ve got this fantastic new nose hair clipper on sale now!” work better than a standard subject like “Amazon Weekly Newsletter”.

I have found no evidence of that. On the contrary, having a standard boring subject line will keep your mailing list shorter, because you’ll retain the people who are really interested in your brand while getting rid of the click-bait-clickers who never buy anything anyway. And Mailchimp & Co. can get pretty expensive as your list grows.

There are good times and bad times to send an email, for example: don’t do it on the weekend, because come Monday morning your overworked recipient will have to sift through hundreds of other emails.

I discovered that sending a newsletter around 4:30 pm local time, results in the most opens. That’s because there are very likely fewer meetings scheduled, the day’s work is mostly done, and recipients are on there way out. However, because it is the end of the working day, they are much less likely to pick up the phone and call. So sending in the morning may get fewer opens, but more actual leads. You’ll have to figure out what schedule works best for you. A/B testing is a good way to do that.

All in all, consumers are looking for e-mail content that is personalizeddirect, and not too pushy. It should also address clients interests, i.e. be customer-centric, not brand-centric. So not “Siemens Weekly Briefing” but “Transportation Technology News”. You get the drift.

Other things to consider for your e-mail marketing:

  • Make sure the e-mail looks good on mobile. We now get 75% of opens on mobile. Many e-mail marketing tools allow you to preview your newsletter on all kinds of devices.
  • Include mobile action buttons. If someone really wants to click that Buy button, they should reach a mobile-friendly landing page also.
  • E-mails with special offers do convert better. Just announcing a new product doesn’t cut it. You want to offer that 20% discount (only available till Friday).
  • Funny enough, last-minute emails work, especially with men. They do tend to do their shopping at the last minute.
  • Email offers with free shipping are popular.
  • Most conversions are abandoned if users land on a page where they have to fill in more than 3 fields in a form. Make the purchase process as fast and easy as possible or don’t bother at all.
  • Consider retargeting with the Facebook Pixel to reach more relevant audiences and to reach people who didn’t complete a purchase. But remember: don’t be pushy. Five reminders in two days that I didn’t buy your sofa is enough to piss off anyone.
  • Video content, as long as it loads quickly and delivers value. Don’t include it just because; it has to offer valuable information.
  • Use e-mail to communicate with the brand. Allow consumers to vent or reach help desks, for example. Offering that channel of communication makes emails intrinsically more valuable.
  • Finally, we found that e-mails which address problems rather than promote products are more successful. Rather than include a spec sheet, for example, show the product in specific scenarios showcasing its utility. Rethink your newsletter from the recipient’s perspective.

Brands with e-commerce solutions with informative newsletters – i.e. which aren’t just boring product listings – convert up to three times better than brands without newsletters.

B2B brands which use emails to give their brand a human face are remembered longer and more favorably by potential clients.

Even with ever more sophisticated spam filters, e-mail is still an important marketing tool

Read also: Inbound Marketing Explained

KPIs are for losers. Get rid of them!

One of the most misused corporate management inventions ever, KPIs are hurting businesses in many ways. They paralyze cooperation procedures and plant the seeds of mistrust. They are easy to manipulate and hardly ever represent the real interests of either party in a transaction. More importantly, they are often very arbitrary, hardly ever based on data, and chasing them leads to a colossal waste of resources. Therefore, they should go the way of “balanced scorecard” and end up on the scrapheap of consulting.

It’s easy to see why KPIs were invented

Key Performance Indicators make sense from the point of the manager. On first glance, they offer a simplification, a measure of performance, a “handle on things”. In marketing, however, and in particular in digital marketing, they are complete and utter nonsense. They distract from creating what counts. i.e. engaging, original content and tangible results, and they destroy the flexibility advantage digital media offer.

Let me give you an example. Your marketing team or consulting agency is in charge of social media strategy. Your KPI is “number of inquiries received through our website”. You have had this KPI for years because this is where the sales team gets their leads from. An entire marketing team is now busy trying to move prospects from social media to your website just to satisfy your KPI.

While you were busy chasing a meaningless measure, you missed the transition away from website traffic to social media. You missed the opportunity to put the content on new platforms and engage with leads on those platforms. You missed the opportunity to transfer your salespeople into digital media savvy sales-marketers. All your potential customers are now on social media and expect their questions answered there. Perhaps your website inquiry form is so outdated or cumbersome that people don’t like to use it. Yet hampered by your hallowed KPI, you keep staring at your CRM inbox for those pesky “inquiries” from your website. A website fewer and fewer people visit.

By instituting a meaningless KPI, you have kept Sales from evolving and made Marketing fail. Everyone is unhappy with the outcome.

Read also: Busy Like a Bee: 3 Simple Ways to Improve Conversion Rates

Even the best KPIs are dubious

Digital marketing experts work with a plethora of KPIs. Some outright fantastical like ROI – return on investment, virtually impossible to quantify in a real-life business setting, or CLV – customer lifetime value, a highly questionable and mostly made-up number.

Others are more tangible, like YOY or year-on-year growth, CR or conversion rate or CAR cart abandonment rate, but while they can be used to make incremental improvements, they should not be used to guide an overall strategic direction for the marketing team. Real insights come from customer interviews, market studies, A/B testing etc., not from the KPI analysis.

KPIs like VSI – visitor satisfaction index or CSI – customer satisfaction index offer great insights but again should not be used to constrain the team’s marketing efforts or evaluate employees. There are simply too many factors outside the control of marketing influencing the KPI values.

KPIs are the surest way to miss emerging trends and opportunities for change

Marketing managers often insist on KPIs like “number of likes or shares after x months”. There’s no extra budget to create engaging content, no flexibility to react to new trends, just a blind focus on the single KPI.

Because of contract terms or internal evaluation procedures, marketers have to meet that KPI, so they invariably find ways to do so. Unscrupulous marketers always will. You will see the contract terms fulfilled. Managers will be happy: KPI met. Check. Contract terms fulfilled. Check. Shame that nobody bought your product.

You see where I am going with this.

The simplification of KPIs means that they can either be manipulated without offering a real benefit to your bottom line, or they become the holy grail that makes you miss the boat altogether. Like the balanced scorecard of yore, they don’t really solve the real problems of motivation and meaning. In almost all situations connected to marketing activities, KPIs are therefore misplaced.

Read also: 6 Fairy Tales About Digital Marketing

So what do we use instead of KPIs?

One way to get rid of KPIs is to replace them with smart benchmarking. I always try to encourage my team to beat a certain competitor or achieve a benchmark of a similar brand in a similar market. Benchmark doesn’t mean a simplistic number, but a whole subset of criteria, from overall brand image to engagements to actual sales numbers perhaps.

Benchmarking yourself against competitors also means you have to watch what they are doing on a day-to-day basis. It allows you to learn about your own and the competition’s offering, sometimes so much that you can give feedback to R&D and tweak the product, making marketing departments even more valuable to the enterprise.

Benchmarking allows you to keep a focus on emerging trends and new developments, which means you are actually learning as you go, and become inspired. It also creates a competitive atmosphere inside the marketing team which prompts managers to come up with more creative concepts than any KPI ever will.

With your eyes on the competition, you learn about what type of content and strategies get the most traction, what gaps you have in your own marketing concepts, where your competitors’ strength and weaknesses lie, and how to spot the opportunities or threats the broader market offers.

Of course, benchmarking is not for everyone and has its drawbacks. Most companies and organizations don’t have direct competitors they can compare themselves to 1:1. I have covered the broader question of how to make better marketing decisions, with a list of possible substitutes for KPIs, in this article:

Read also: How to Make Better Marketing Decisions

Recouping investment as motivation

Removing KPIs from the equation allows for experimentation and supports the creative process. It creates valuable feedback loops For a new client last year we replaced KPIs with a simple measure of trying to sales that allowed them to recoup their investment in marketing within 8 months. That really put a fire under our marketing team. I’ve never seen them more engaged in a project. Of course, agencies will only do this with clients and products they believe in. Which are the best clients to have in the first place.

So the next time you try to motivate your team, try an integrated benchmarking approach or give them a stake in the overall success. Leave the deadbeat KPIs to the losers.

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