KNZB News feed

Ex-mortgage broker trumps airline 12-to-1 in PR stakes

Tue, 01 Dec 2009 00:00:00 -0800

The 30th anniversary of the Erebus disaster will be remembered as much for Air New Zealand's public relations misjudgement as for its culpability in the original tragedy.

The airline arranged and paid for six seats for victims' immediate family members on a United States Air Force cargo plane to Antarctica.

The charter flight organisers had asked former mortgage broker Mike Pero to front their proposal, something he did with finesse and some forethought, running the idea not only past the airline but also John Key.

The Prime Minister's well-honed intuition for his constituents' reaction was confirmed when his reported response to Pero's text message was: "Hi Mike. In principle that might work. Would be great if it did."

Air New Zealand also indicated it had no problem with seats on the planned charter flight being sold to victim's families. But later it reversed its stance, accusing the charter flight organisers of "commercial opportunism of the lowest kind and deeply disrespectful".

The airline's response was apparently determined by the views of some of the relatives of the 257 people who lost their lives 30 years ago.

Air New Zealand said it had been "inundated with correspondence from Erebus families expressing extreme disappointment in Mr Pero". A company media release offered a selection of comments it said it had received from families:

"Disgusting is not even a strong enough word"

"It is appalling"

"The dignity of this anniversary is being compromised"

"This is a crass and opportunistic stunt"

"His timing is ambush marketing of the worst variety"

With this kind of reaction, widely reported by the media, you might expect public opinion to swing against Mike Pero and for Air New Zealand. However, exactly the opposite occurred.

When a newspaper invited comments on its website with the question "Was the proposed Erebus charter flight 'disrespectful'?" it too was inundated, not with criticism, but with support for the proposal.

Comments are still flowing as I write this, with those backing Mike Pero outnumbering Air New Zealand supporters 12 to 1. Talk-back radio and letters-to-the-editor have shown similar trends.

So why did Pero pull back from the idea and say publicly "I don't want to do this any more", even though a charter flight may yet go ahead?

He probably misread the environment (as did Air New Zealand) - mistaking negative media coverage and the criticisms of a few as indicative of wider public opinion.

In any circumstance where strategy may need to be reconsidered in light of response, it is important to read the situation correctly. It is a lesson all businesses should learn.

Assessments of public opinion by those closest to or most affected by an issue are likely to emphasise the negative aspects of what they see and hear. Add the fact that small or selective samples do not necessarily reflect a wider audience, and there is potential for a significant misreading of public opinion.

Whatever the assessment of opinion, in most public relations challenges there are usually the twin questions of whether to respond, and if so, how.

Will a delay in response make matters worse? Will "fronting up" only prolong the scrutiny? Is it better to take a stand or refrain from comment?

The answers depend on the circumstances, and of course, on an accurate assessment of all audiences' initial and likely views.

What to say when your boss says there's no budget for research

Wed, 04 Nov 2009 00:00:00 -0800

"Sorry, there's no budget for market research. We will just have to go ahead without it."

You may hear that and wonder if the tight purse strings will in fact result in savings.

Perhaps you are the boss and you are considering scrapping a proposed research investment.

Maybe you're in a similar situation to a potential client who called me recently.

In that case, we had arranged to discuss research requirements in detail, but the meeting was cancelled "because the boss says there's no budget for research".

The company, a medium-sized operation whose market is corporates, was considering extending its offering to small-medium businesses.

Before doing so, it wanted advance information about SME owners' awareness of what was available, how they perceived the company's value proposition, how they compared competing brands, and their likely uptake at various price points. All that sounded to me like essential intelligence with which to plan marketing.

But without that essential intelligence, how do you proceed? What do you say when the boss says there's no budget for market research?

In my view, the first thing to be addressed is the boss' assumption that trial-and-error is a cheapest and most effective form of research.

In simple situations it can be. Split-run tests are used daily by marketing managers to fine-tune campaigns.

But in more complex situations there are too many variables for test-and-measure to be useful. It takes too long and costs too much to get the mix right.

With trial-and-error, the market can only respond (or not) to what is pitched to it. The issues involved in entering a different and untested market segment are more complex than a single question with yes/no answer options.

Trial-and-error is also a very public process. If you are looking for first-mover advantage, you will quickly lose it as competitors see what you are doing.

Generally with the trial-and-error approach (some call it test-and-measure) only one element can be tested at one time. To try the next possibility - say, different pricing - means another test.

While all the tests are being tried, revenue is not covering costs.

Murphy's Law says "There's never time to do it right, but there's always time to do it over."

A more specific version for these situations would say "There's no budget to do market research, but we're happy to pay extra to find out the hard way."

Entering a new market segment without vital information to guide marketing strategy risks reputation and profitability.

Just because a business is successful in one market is no guarantee the same will apply in another.

With trial-and-error, the worst-case outcome is not immediate failure, but partial success.

Testing a new market and facing marketing costs and diversion of focus for nil profit is bad enough. However, you can cut your losses and re-focus.

Partial success is worse. It shows there is room for improvement but with trial-and-error you can't know what to try next. A lot of time and money can be spent testing the wrong changes.

Research can probe deeper than any trial-and-error method, gaining insights and identifying key considerations without wasting marketing budget, alerting competitors or risking a business' reputation.

Yes, there is an investment. But usually this is much less than the cost of multiple test marketing exercises.

More importantly, market research often finds why there's no budget for market research - i.e. marketing which has minimal or no effect - areas where budget can saved to be better applied elsewhere.

Businesses face Super City questions

Thu, 01 Oct 2009 00:00:00 -0700

You may think the move to incorporate the Auckland region's seven local bodies into a single super city is solely an issue of local democracy and governance that doesn't affect your business.

If you do, you'd be wrong.

Businesses will either be directly affected by the super city or by other changes to come.

While the birth of the new city is some way off, it's not too soon to develop strategies to anticipate threats and take advantage of opportunities.

You may need to consider changing the scope of your business to include the looming reality of a larger Auckland.
Some organisations, like the Auckland Chamber of Commerce, already have a region-wide focus. Others, such as the region's economic development agencies, face major change.

Auckland's EDAs are partially funded by city and district councils which will soon no longer exist. I can't see how the new super city can justify backing multiple organisations performing similar roles.

I predict the future of Auckland's enterprise agencies and economic development trusts will follow the same path as their funding councils: forced rationalisation.

The outcome of that process has the potential to impact on every business in the region.

While I'm talking rationalisation: With the move to a single city to run an area more or less the size of the entire region, why do we need to retain a regional council?

Maybe that question is next on the government's agenda, perhaps after the promised RMA reforms are bedded in.

There is a pattern that can be followed. Several decades ago local government reforms spawned larger district councils where boroughs and counties previously ruled.

Communities-of-interest changed too over time, leading to business amalgamations and new boundary definitions for operations as diverse as carriers and local newspapers.

Something similar can be expected in the wake of the new Auckland City.

If your business has "Auckland" in its name, customer perception is your area of operation covers Auckland City Council's territory. But a perception will soon develop that "Auckland" means the entire region.

Do you want to take advantage and expand your business across the region? If not, what will you communicate to customers and how will you manage their expectations?

Another option is to impose some arbitrary boundaries of your own. If you do, how can you anticipate customers' reactions?
For the likes of Telecom, the super city may mean expanding the Auckland free-calling area or justifying retention of the old boundaries (hard to do when they don't relate to the cost of providing the service).

If you do wish to expand, how will you define and price your service? Think about how the phrase "free delivery Auckland-wide" could take on a whole new meaning.

For the likes of courier companies, this may mean super-sizing same-day delivery areas.

Clearly, if your product or service distribution is currently set according to territorial local authority areas, you have some rethinking to do.

You may no longer be able to remember the reason your business followed TLA boundaries in the first place (it probably seemed logical at the time).

Even if your business does not have geographical definitions, it is possible your suppliers or customers will change their's. How will you respond?

Auckland region businesses need to ponder: Do we stay as we are to retain customer confidence in the familiar? Or do we reconfigure along super city lines to gain an advantage over competitors and position ourselves as changing with the times?

You can’t rely on your own perceptions

Mon, 14 Sep 2009 00:00:00 -0700

Perceptions often seem like a moving target, especially when you need to gauge them accurately for business purposes.

Sadly, many business people rely on their own perceptions when they are the least relevant and reliable.

The latest indicator of this was research conducted on both sides of the Tasman for recruitment specialists Hudson. It found employers consistently think employee sentiment is twice as good as it is in reality.

Hudson New Zealand executive general manager Marc Burrage put it this way:

"In every aspect of current workplace sentiment, whether it is job satisfaction, motivation, morale, perceived stress levels or job security, employers are clearly unaware of their employees' frame of mind."

"For example, nearly half of the 2394 employees surveyed indicated worker morale has plummeted. In contrast, only 26% of the 247 employers interviewed acknowledge workplace morale has dropped."

He warned employers of the danger of a mass exodus when the job market improves. The survey showed employee disaffection was already having an effect, with more seeking new roles than before the downturn.

Commenting on the research, Engineering, Printing and Manufacturing Union national secretary Andrew Little said the differences in outlook between workers and bosses were obvious.

"I talk to members and then I talk to their employer and it's as if you're in two parallel universes."

He said in a recession, managers often took the attitude staff should be happy to have a job at all. This was evident in the survey results, with 32 per cent of respondents agreeing "management thinks it doesn't have to reward and recognise our work because we should feel lucky to have a job now".

Employers and Manufacturers' Association chief executive Alisdair Thompson described the survey results as "a wake-up to leaders", who had to be honest, transparent and trustworthy.

As a researcher, the difference between employer and employee perceptions comes as no surprise.

It is not because I think most employers are out of touch with employee perception (although the Hudson research shows they are).

The same dichotomy can be found in retailers' views of customers' experiences, how professional firm partners see client perceptions, or what association executives think of their members' opinions.

What you believe they think is not necessarily the case. You may have asked them directly. You may even believe you have obtained their real opinions.

But as researchers know, the answer depends not only on who's asked and how, but also on who does the asking.

As a retailer, would you prefer to know which poor in-store experiences are driving customers into the arms of competitors - or do you want to continue running your operation believing all is well?

As a partner of a professional services firm, would you prefer to know what clients really think about the way you operate - or do you want to continue on the basis none have complained to you directly?

As an executive of a membership organisation, would you prefer to know which services members really value (or not) - or do you want to continue on the basis of what you think?

The Hudson research shows the dangers in relying on your own perceptions.

Trust issue just won't go away

Mon, 10 Aug 2009 00:00:00 -0700

It seems the issue of trust just won't go away.

It is such a huge consideration for users and consumers of all kinds of products and services that no business can afford to ignore it.

A couple of months ago I highlighted how Rotorua's Leo Gao became a poster boy for the banking industry's poor reputation when he skipped the country with $10 million wrongly credited to his Westpac account.

I asked then:

How would you feel if 20% of your customers had so much antipathy toward you and the sector your business operates in that, given the chance, they would abandon their usual honesty and ethics just to get back at you?

Would you feel you, your business, and the rest of the sector had failed miserably to establish and maintain a good name in the marketplace?

That drew an angry Letter to the Editor of Business to Business (where this column also appears) accusing me of encouraging theft and misappropriation. I refuted that and reiterated the column's main point - the fact one-in-five people said in a NZ Herald poll they would also take the money, showed a huge reputation deficit for the banking sector.

Now the issue of trust has surfaced again in a Sunday Star-Times survey revealing rock bottom ratings for almost all occupations dealing with money.

Most distrusted were fund managers - rated only one or two on a five-point trust scale by 75% of respondents.

That's not surprising given the actions of fund managers such as ANZ-owned ING. ANZ marketed ING's Diversified Yield and Regular Income funds as safe when they were in fact invested in risky collateralised debt obligations.

The Banking Ombudsman also has little trust in ANZ/ING, upholding 80 per cent of the complaints she has investigated so far.

More damage to the reputation of the bank and its fund manager subsidiary may be on the way. If a belated Commerce Commission investigation results in a successful case against ING or ANZ, investors may be unable to accept compensation - thanks to a waiver the bank insisted they sign to get 60 per cent of their frozen funds returned.

While fund managers were at the bottom of the Star-Times survey, financial advisers and insurance people did not fare much better, rated one or two by 71% and 70% respectively.

These figures figures represent a grim picture not just for the sectors concerned, but for New Zealand as a whole. New Zealand has low rates of retirement investment and high rates of non-insurance and under-insurance.

The funds management, investment advisory and insurance industries will need to address the trust issue if those rates are to be reversed.

If proof was needed of the connection between trust and the bottom line, it came earlier this year in a survey for Auckland company Sustainable Advantage.

It reported 55 per cent of consumers had stopped buying in the last six months from businesses they did not trust. Of those who took their business elsewhere, 61 per cent then urged family and friends to do the same.

People do business with those they know and trust.

All business people, not just those in financial services, should remember that.

How to tell you’re asking the wrong question

Mon, 13 Jul 2009 00:00:00 -0700

As you read this, you will be preparing to vote in one of the most skewed referenda this country has ever seen.

Perhaps more likely, you have decided not to vote because the question itself makes the whole exercise a farce (quite apart from the fact it is a non-binding referendum).

Regardless of your views about the so-called anti-smacking legislation, the referendum being conducted from 31 July to 7 August is a very public example of how leading questions make responses worthless:

"Should a smack as part of good parental correction be a criminal offence in New Zealand?"

We might as well spend $9 million asking:

"Should lobby group petition organisers be allowed to define the wording of referenda questions with the intention of yielding a particular answer?"

Before letter-writers on either side of the debate begin generating a head of steam, my point is this - if the purpose of a referendum is to accurately gauge views on an issue and preferences for a course of action (e.g. changing a law or leaving it as-is), then questions such as this fail to achieve those objectives.

It is not an issue of clarity. The question is clear. It is simply that it is leading (i.e. designed to yield a particular answer).

For an example of an unclear question, see the NZ Herald online poll which asked:

"Do you support the referendum on child discipline laws?"

What does that mean? If I was to "support the referendum", how exactly would I do so?

Is it in fact a referendum on child discipline laws? Some might disagree. If it is, what options am I being asked to support or oppose?

The UK's Mail Online news website provided a good (or should that be bad?) example of a leading question, with a poll asking:

"Should the NHS (the UK's National Health Service) allow gypsies to jump the queue?"

The question attracted ridicule amongst Twitter users who banded together to swamp the site's servers with unexpected 'Yes' votes in a bid to draw attention to the question's lack of neutrality.

Faced with 96 per cent support for the idea (contrasting with an editorial line opposing anything it considers liberal) the Mail Online quickly removed the poll.

Which leads us (pun intended) to the relevance to business.

Business needs a constant flow of reliable intelligence - about customer perceptions and preferences, price and value comparisons, and purchasing intentions.

In a bid to get to the heart of an issue, businesses (and the occasional market researcher) sometimes pose questions which fail to yield reliable information. How can you avoid falling into the same trap?

How can you tell you're asking the wrong question, or asking the right question in a way that's biased towards yielding a particular response?

The first indicator of bias is an obvious (no-brainer) answer, coupled with a highly-unlikely opposite response.

The second is wording which does not clearly define an issue, or offer a full range of response options. Even "don't know" and "don't care" are usually reasonable options.

A wrong question is a little harder to spot. But a sure giveaway is that a leap of assumption is required between the research and its practical application.

At first glance, an assumption may appear reasonable or even accurate, but needs to be challenged.

Why was an assumption necessary? Could reliable information be obtained from a direct question?

This is one area where there is no substitute for experience and professional detachment. Unless of course, you want a particular answer . . .

$10m fugitive reveals bank's reputation deficit

Mon, 08 Jun 2009 00:00:00 -0700

How would you feel if 20% of your customers had so much antipathy toward you and the sector your business operates in that, given the chance, they would abandon their usual honesty and ethics just to get back at you?

Would you feel you, your business, and the rest of the sector had failed miserably to establish and maintain a good name in the marketplace?

Would you feel all the talk about corporate reputation management was just that?

This is the situation in which Westpac and the banking industry finds itself, in the wake of Leo Gao's attempt to skip the country with $10 million wrongly credited to his account.

One-in-five people voting in an online poll said they would keep the cash if Westpac put the money in their account instead crediting it to the now-fugitive former Rotorua service station owner.

Of course, the poll result doesn't mean banks face a 20% chance funds will be misappropriated if they are credited in error. That's only what people said. An individual might not actually do so if the opportunity occurred.

However, the number of people saying they would is indisputably large.

If the banking industry needs a gauge of its reputation, there can be no more compelling measure.

Except perhaps for the number of online comments such as "stuff the banks!" and "I do not have sympathy for the banks, they rip us off anyway" when the NZ Herald put the Lotto-style question to its online readers "what would you do?".

Responses did not discriminate between banks, demonstrating a widespread perception all banks are rip-off merchants - bad news for executives and marketing advisers hoping to establish a point-of-difference for individual brands.

Some of those providing online feedback on the Westpac case saw an opportunity to comment on the ethics of other banks:

"Shame it wasn't the ANZ given their stance on the ING products they promoted as 'low risk' investments to many retirees who are facing a miserable retirement given their money is now essentially gone. ANZ acted like a bunch of low-life drug pushers."

Other responses drew parallels between banks and power companies which overcharged customers:

"The bank gifts a most esteemed customer 10 mil then calls it theft. The power companies rip the public off for 4.3 bil and it's called good fortune."

"Leo has to give back his 10 mil gifted to him but the power companies can keep the rorted 4.3 bil because ripping off the punters is considered perfectly acceptable."

"It is not okay to rip off the banks because they are all about one-way traffic. They can rip you but you're not allowed to return the favour."

You could see the 20% who said they would keep the money as a Herald leader-writer did - as people who had "reached the point where honesty is overpowered by temptation".

You could also see it as a clear demonstration the banking industry is in reputation deficit.

If it was your business, would you be thinking about what you could do to reverse the poor perception of your business and your industry?

And would you be questioning the gap between this damning gauge of reputation and the reassuring measures of brand repute regularly presented in market research?