A Tale of Two Businessmen: The Shopkeeper and the Tycoon, Or Why Organizations Should Do Better Than Know The Price of Everything and the Value of Nothing

 

Business isn’t simply about spreadsheets and dividends. Business is about people and what drives them. Every business has a story behind it that offers us valuable lessons if we consider it carefully enough. In that spirit, I want to tell you the stories of two very different businessmen, the shopkeeper and the tycoon. Join me to find out about them, and what I learned from both.

The shopkeeper: My father

When I was a kid, my dear late father, John, had a shop in east London from the 1980s to the early noughties. He sold curtains (drapes), linens, bedding, lace and gift items. He left school aged 15 with no formal qualifications and fell into this line of business after numerous attempts at other professions. He was self-taught and he remained an avid auto-didact throughout his life. His was a small, modest family business. Nevertheless, it was successful enough to support his staff and his family, and we had a comfortable way of life, thanks to his honesty, hard work, and respectful approach to everyone he worked with — suppliers, customers, and most of all, staff.

He ran his business with these old-fashioned values. He was a kind and gentle man. A gentleman, in fact.

Lessons from my father. 1. Understand the value of what you’re offering

Like any business, everything in the shop had a price, from the cheapest dishcloth (less than one pound) to the most expensive custom-made, lined curtains (drapes). Everything was priced fairly, but notably, the pricing of any item, even the smallest and cheapest, needed to consider the following before a profit was to be made:

·        Wholesale cost of the item

·        Value-added tax (sales tax)

·        Local municipality business tax

·        Utility costs (water, electricity, gas)

·        Staff salaries and benefits

·        Ancillary costs: staff bonuses, incidental treats for the team, contingency costs, and so on

Most customers saw the prices marked on the items and were happy to pay when they found what they wanted, but every so often, someone would try to haggle. This would irritate Dad, and he’d be quite firm with these customers. It’s clear to me now that what irritated him was that he was offering goods at a fair price. He felt that these people were trying to lowball him and assumed he was taking them for a ride. That’s something he simply wouldn’t do. Furthermore, he had to cover his costs. It upset him that someone would seek to undermine a modest, hardworking business for the sake of a few pence or a couple of pounds.

And here’s the first lesson. Dad was offering high-quality goods with a personalised service. He simply expected the acknowledgment in payment that he was doing so fairly and honestly. Customers could go to the chain stores or the street markets and get inferior products with no personalised service, but you get what you pay for. You should know the value as well as the cost.

Lesson 2. Acknowledge the value of people

The second lesson is about his staff.

Dad had a close-knit staff who he looked after in a fatherly fashion. He knew that he couldn’t run his business without them. So, he paid them fairly and treated them with bonuses and gifts when he felt it was appropriate. Plus, when they had health or family issues, he understood and supported them, and gave them the time and space to address these issues, even if it meant working longer himself or calling in me or my mum to cover for absent staff. Remember, it was a small business, and there weren’t a lot of staff at any given time.

He gave a job to his friend, Harry, who was skilled and knowledgeable in the business but was older and couldn’t find work elsewhere. He gave jobs to two employees who had left school with no qualifications. He trained and nurtured them and they proved to be excellent members of his team, who worked with him to the end. When a young employee, Annette, got pregnant, he supported her and kept her job open for her to return to, way before companies were compelled to by law. Again, this wasn’t easy to do as a small business, but he wanted to do the right thing. Annette eventually decided to become a full-time mum. Still, she stayed in touch with the company, and sometimes did seasonal work for Dad, to cover holidays or busy times, like pre-Christmas. Dad trusted her. He respected her work and the knowledge he had imparted to her and knew it was valuable.

He advised and supported his manageress, Brenda, to buy her council house after her mother died, when the government was selling off municipal housing stock to the tenants. She was scared to make what she felt was such a big commitment, but he assured her that her job was safe and that she would be capable of paying off the mortgage. Brenda bought the house and Dad encouraged her to take this step that set up her family for life. They had never before owned their own home.

Dad treated all of his staff with respect. What he got in return was loyalty, commitment, and longevity of service. Some of them stayed with him until they retired. Others until he closed the business and retired himself. Retention was so high that his recruitment needs and costs were next to nothing. Customers benefited too. They were greeted by staff who were content, knowledgeable, and genuinely helpful. And customers knew they were getting expert service, so they returned to Dad’s shop time and again. What was good for the staff and the customers — Dad’s commitment of time, training, and resources to his team — was also good for the business.

The lesson here is to pay people what they’re worth, not what you can get away with. Go above and beyond, both financially and in other ways, and you will reap rewards. Invest time and resources in them, show faith in them, and the returns you receive will be worthwhile. Don’t expect rich rewards when you skimp on your staff. Lowball them, neglect them, or treat them poorly, and you can expect much less in return. Ultimately that will detrimentally affect your bottom line.

The tycoon: The hot-shot entrepreneur

My other big lesson came when I worked at one of London’s leading public relations agencies. The lesson came from a client who couldn’t be more different as a business leader than my dad. The agency was a young, hectic, and often chaotic working environment, but we worked with some stellar brands like PepsiCo, Nestlé, Warner Music, BAFTA, Nike, and many others. We were at the top of our game, and the agency remains so decades later.

One year, I returned from my summer holiday to learn that we had won a pitch to look after a new business that was launching in the UK. Not only was the business and the brand completely new, but the particular kind of business was unknown in the UK and European markets. As the Account Director, I was to be the principal point of contact on the account, alongside my boss.

This exposed me to the CEO and founder of the client company. And, oh boy, was that a shock to my system! He was a brash American, hyper-intelligent, with a degree and an MBA from two Ivy League universities. And he was a seriously shrewd businessman. He had previously set up a similar business in the USA while at college but left it after a disagreement with his co-founder. Nevertheless, he still owned part of the business, so when it was sold for a few hundred million dollars, he woke up one morning in London a multi-millionaire.

When he came to London to establish a European competitor to his previous business, he already had the track record to show he knew what he was doing, he secured significant investment and rapidly cemented partnerships with some of the world’s leading sporting brands and entertainment figures. His momentum was huge and his rise was unstoppable, so much so that some years later, he even took over his old company, his brainchild.

Now, this guy was nothing like my dad. Instead, he was loud, aggressive, irascible, with a hair-trigger temper. His self-belief was so strong that he was dismissive of anybody whose opinion differed from his own. This became clear when he was incredulous that the UK Parliament wanted to question him about his business and whether it could run legitimately. At one point, he contemplated not showing up to give evidence to a Parliamentary Select Committee because it simply astonished him that members of parliament couldn’t understand the benefits of his business and yet could potentially legislate against him. My incredibly calm boss talked him down, I’m happy to say. And this was right for the business.

In short, he was daunting to work for, and to be honest; it wasn’t much fun. It exhausted me and eventually, I left the agency after nearly eight good years because I didn’t want to be exposed to his aggressive style anymore.

So, what could I possibly learn from this guy?

The lesson: you get what you pay for

When I was told about this new client, I learned what he would be paying in monthly retainer fees. It was my turn to be astonished. They were huge. Far bigger than the fees paid by some of the multinational brands I previously mentioned.

It turned out that during preliminary discussions with the client, our chairman wasn’t sure if he would be a long-term client, or even if he could be, so he quoted a high price for our services, for an initial three months. The client agreed, without a blink. We all thought we’d earn a nice bit of money through the autumn until Christmas, and then we’d part ways. What actually happened was that the business launched with a boom, aided by our work, and grew rapidly, with more and more deals announced, so the agency’s relationship was extended, and ultimately continued for a few years.

Initially, we couldn’t believe our luck. What this businessman was paying us per month was almost unheard of.  We wondered whether he hadn’t realised what he’d committed his business to. But we soon began to understand why he’d agreed.

As I said, this guy was super intelligent and super shrewd. He’d done his due diligence and had approached us because the agency was the big name in town. He wanted the best, and he was willing to pay top dollar for it. He was under no illusion that he was paying big money for our services. He also seemed to understand that he was paying bigger money than any of our other clients.

Whether he knew that for certain is a moot point. What’s certain is he knew he had serious leverage. When he wanted to speak to us, we had to drop everything. When he said “Jump,” we had to say, “How high?” If he felt we weren’t performing, or prioritising his account, he’d let us know in strident terms that he wanted more from us, because he knew he was the goose that was laying the golden egg on our team’s profit and loss. Consequently, he got first-class treatment. We sweated bullets for him. And we got results over and above our expectations for a brand that initially had absolutely no equity and a company that had no previous foothold in the UK or anywhere in Europe. We literally turned ourselves inside out for him.

What he knew from the get-go was that if you pay for the best, you can demand the best. He demonstrated that he valued the agency’s reputation, capabilities, and what we said we could achieve by paying us highly. Some of his attitudes and interpersonal skills belied this, but we couldn’t argue with the value he bestowed on our services. So, we responded accordingly, gave him that value, and delivered a healthy return on his investment in us.

Initially, we thought he was crazy when he agreed to pay our fee, but he was as sane and as clear-sighted as could be. He showed he valued us. Then we had to show that we were worth it. The lesson, put simply: you get what you pay for.

Conclusion: Get value by showing value

These two very different men taught me significant lessons about business, which boil down to a crucial consideration for ensuring any business is successful.

In different ways and on different scales, both men acknowledged and rewarded the value their teams brought to their businesses. As a result, they drove high performance from them, which in turn converted into success and profit. Neither of them skimped because they knew that saving a few pounds here could cost a Hell of a lot more later. They understood the value of investing in people to get the best from them.

We are living in tumultuous times for business, and it might seem to many a good idea to cut costs by offering lower salaries, fewer benefits, less flexible working practices, and poorer terms and conditions.  I’ve recently experienced situations where strongly backed and highly valued organizations want to do things cheaply. In the short term, it might look good for the balance sheet, but what they’re really doing is showing that they know the price of everything and the value of nothing. I predict that eventually, with this philosophy, they will lose out. It’s not the best for businesses, employees, and customers. What’s best is maximising the value you get from your people by showing how much you value them. The investment, in all sorts of ways, is worth it.

Why measurement mania kills creative marketing content, and why non-sense makes more sense to differentiate your products and your brand

Too many marketers rely too much on metrics and logical, rational thinking, at the expense of the mercurial genius of emotional, irrational stimuli. The result: a multitude of me-too marketing campaigns and content that do the opposite of their intended purpose. They resemble each other instead of differentiating your products and your brand. Here’s why, and what you can do about it.

I’ve worked in B2B tech marketing for the last few years. It has been a real education, and a great challenge for a right-brained bloke like me to work in a predominantly left-brained environment. Having a PhD in English Literature means I appreciate the quicksilver of artistic inspiration that often defies rationality. The problem is that this doesn’t often fly in the logical world of technology, coding, software and analytics. Consequently, it becomes bloody hard to persuade people in this world to do something different, something counter-intuitive, or just plain nuts, because they want metrics to prove everything. Instead, they become slaves to ROI, KPIs, SEO, PPC and other such inelegant acronyms.

Nevertheless, I’ve never relinquished my nagging suspicion that great marketing, and great marketing content, defies all this measurement, because it’s just as much of an art, as it is a science.  At times, I’ve even come to loggerheads with tech marketing leaders about this, but I can’t simply discard my principles. I’ve always felt that trying to accurately measure effectiveness of some content and campaigns is like trying to catch water in a net, but at times I’ve felt like a lonely swimmer against the tide. Until now.

I’ve just discovered a powerful ally. I recommend you read his work and watch his talks online. They might change what you want and expect from marketing and content. They explain why you should be more open-minded about it, and why you should do more than just rely on metrics to create your campaigns. Here’s a bit about him.

Alchemy: the magic of original thinking

My new ally is Rory Sutherland, and his thought-provoking book, Alchemy: The Surprising Power of Ideas That Don’t Make Sense.

Now, Rory’s a man who knows what he’s talking about. He’s the UK Vice Chairman of the global advertising powerhouse Ogilvy. During his career he has been President of the Institute of Practitioners in Advertising (IPA). He’s been in the advertising game since 1988 (bloody ages, in other words), and most importantly, he’s the founding father of Ogilvy Change, his agency’s behavioural science practice, which investigates and applies principles from cognitive psychology, social psychology to marketing and advertising.

I’m not going to go into great detail here about what he says. You can read the book to find out. Trust me, it’s really engaging, entertaining, intellectually robust and persuasive. Plus, this is meant to be just a blog. My purpose here is to introduce him to you and encourage you, in the words of Apple’s legendary advertising campaign, to “Think Different.”

Understanding alchemy

Wikipedia nicely sums up what Sutherland highlights in Alchemy, that great marketing ideas are often built around a core that is profoundly irrational.

He argues that we behave in ways that are both logical and what he calls psycho-logical, rational and irrational. Some of the things that we do, say and decide are the result of conscious and clear decision-making process, based on the premise of experience, knowledge and understanding that can be plotted and measured in a straight line from cause to effect. This plays to what I’ll crudely call, scientific, or logical thinking: X causes Y, so we should do Z to amplify and expedite X. It’s tidy, and it’s measurable.

However, Sutherland says that many of our actions and decisions are governed by unconscious responses and anticipations. A lot of the choices we make don’t result from what we think but what we feel. These responses aren’t logical or rational. They are driven by what we might identify as gut instinct, or reflexes that are so innate or natural that we aren’t even consciously aware of them. In these cases, it’s not always easy or possible to identify a clear line from cause to effect. Instead, it’s a kind of magic, or alchemy.

So, why this is important for content and marketing? It’s important for two reasons. Widening differentiation and increasing engagement.

Alchemy widens differentiation

Firstly, it opens up the possibility of doing things differently. Organisations find logic and measurement very comforting. CMOs can justify their activity and budgets to the rest of the C-suite by showing that their choices work, based on metrics gleaned from what’s happening or what’s previously happened. The problem with this is that measurement is, by its nature, retrospective and logical. It examines what’s gone before and extrapolates from that what will work again, so the default response to it is to follow what it identifies as successful. In short, this means replicating good campaigns and doing more of the same. That’s fine, but it most likely means you’ll follow best practice, and best practice means doing nothing new or provocative. It’s conservative. It neglects or suppresses innovation and imagination in marketing, advertising and communications, and it risks leading to dull, uninspired campaigns that lack differentiation.

I’ve lost count of the number of times I’ve sat in meetings and people have said, “Let’s see what our competitors are doing, so we can do them better.” And I’ve thought to myself, “I don’t care how they do things. Our identity and how customers feel about us should come from how we want them to feel and think, and our unique voice and standpoint.” My gut feeling has always been that if you spend too much energy identifying and aping what your competitors do well, you’ll simply sound, look and feel just like them. And what’s the point in that? You end up as one of an undifferentiated mass of options that the customer has, making their choice more difficult. 

Surely, if you do something different, counter-intuitive or even plain bonkers, they’ll at least sit up and take notice, and they might just say, “Hey, these guys are doing something interesting,” even if that something is more costly, or functionally more limited than competitors. Sutherland himself contends that history is littered with great products and services that died a death because they didn’t stand out. Similarly, there are other things that should never have got out of the starting blocks, but for illogical or irrational reasons, they did, and do.

One example he uses is the automobile. He says that initially, it was a hugely costly, quite mad innovation that was barely more powerful than the horses it sought to supplant. It was complicated to maintain and functionally its advantages were small to none. Logically and rationally, there was little to recommend it. Yet it was a mark of status, both in terms of wealth and in terms of being ahead of the pack, that led to its early adoption. Only once Henry Ford got his head around his revolutionary manufacturing techniques, did the product become better, simpler and cheaper, thereby spearheading the success of what could so easily have been a white elephant.

Magic increases engagement opportunities

Secondly, if we’re too logical, we’re missing a lot of potent opportunities to communicate, engage and connect with audiences in more meaningful and impactful ways. Ironically, this stands to reason. And by embracing alchemy, magic, ineffable qualities, call them what you will, you’re tapping into a huge reservoir of possibilities that are neither obvious to the naked eye nor highlighted by logical analysis.

Sutherland uses numerous examples to illustrate his point, most of which focus on how things make people feel rather than what they do or whether they are cost-effective or efficient. Functionality and cost are persuasive considerations, for sure, but they aren’t everything. On the face of it, a highly portable multi-functional tool like a Swiss Army knife is a perfect proposition, and it’s certainly useful, but it doesn’t supplant individual single function tools that either do specific jobs better, or make customers think they do them better. 

To raise an example of my own, what’s better: an Apple Watch or a 1968 Paul Newman Rolex Daytona? The former is a modern multifunctional technological marvel. 

The latter was in its time, but compared to the Apple Watch it’s prehistoric. It’s probably less accurate and has far less functionality than Apple’s offering. Yet it’s a highly desirable piece.

People are prepared to spend eye-watering amounts to own one. In fact, its value continues to rise. It’s a symbol of status, of success. It makes a statement to others and makes the owner feel different to their peers. That’s far from logical, and far from rational, but it’s a fact nonetheless.

Another consideration is reassurance. Sutherland gives examples of how changing the framing or experience of a product or service can alter customer perception. For instance, Transport for London (TfL) improved how commuters feel about using the London Underground not by making trains faster, cleaner or more frequent, but by installing digitized information boards at stations that tell commuters how long before the next train arrives. 

The trains don’t arrive any quicker. They aren’t any better. But TfL got rid of customer uncertainty. Sutherland says waiting four minutes without knowing when the next train will come causes more dissatisfaction than knowing you have an eight-minute wait. Extraordinary, isn’t it? But it’s the way people feel that matters. To Hell with the logic.

So, what should marketers and content creators do about this?

On the face of it, it’s quite simple, although it’s much more difficult in practice. And it’s this: Be less logical. Be more psycho-logical. Take more risks. Go nuts.

If you want to create content and marketing campaigns that really stand out, take your head out of the spreadsheets and the metrics and let your gut do the talking. It’s much tougher to rationalize than best-practice <yawn> and it’s a shit-load more random. There’s a lot of trial and a ton of error involved, but if you get it right from time to time, your product and your brand just might set the world on fire.

A little caveat

As you can tell, I’m quite excited by reading Alchemy, because it resonated strongly with me, and really articulated how I feel about this subject. Like Sutherland, I recognize that metrics and measurement, logical and scientific approaches to our disciplines, are significant and necessary parts of what we do, but I simply want to stress that they shouldn’t be the be-all and end-all of the thinking behind every bit of marketing and advertising. Alchemy and magic are qualities that are too valuable to ignore.

I hope I have done justice to Sutherland’s book and his line of argument. That has been my intention. Don’t take my word for it. Get yourself a copy of Alchemy and decide for yourself.

Thanks

Adam

PS. I have no personal or professional links to Rory Sutherland, his publishers or to Ogilvy. My blog post is merely the ramblings of a fanboy.

Has Google resurrected the humble press release?

How has a tweak in its search results saved the ailing tool of public relations?

What exactly has Google done? Why? And what implications does it have for public relations?

The death of the press release has been exaggerated because Google has resurrected it.

Just a few days ago, Google revealed that it made a small but significant change to the way it selects search results. It has widened the range of sources that appear in the “in the news” section of its search results page.*

 

This means that now, company statements top the list of news links shown when users search for information about them. Previously, only links to stories on news sites (newspaper and TV station sites, for example) appeared in this section.

Google’s decision breathes new life into the good old company statement, news announcement or press release (call it what you will), because company press releases will automatically top the list of company news on Google each time they are released.

The people at Google say that users want the most up-to-date / right answers from a search as quickly as possible, which may mean showing an article not only from established media sources, but also from niche sources and from press releases themselves.

 The news has concerned traditional news media. They are already embattled by the proliferation of online sources and see another of their competitive advantages being chipped away. Conversely, it should please other companies and the public relations industry because it revives their primacy as the sources of news about themselves and their clients.

As news media are increasingly under pressure to compile stories rapidly, this could prove to be very useful for raising the profile of corporate and B2B companies, because reporters will pluck the lowest-hanging, fastest-to-reach fruit, which will now be the company statement.

Perhaps paradoxically, it means that press releases, which many had suspected were fast becoming redundant, will once more be a vital tool in companies’ PR and marketing communications arsenal. 

And, as other reports have noted, some companies may see this as an opportunity to “game” the system in their favour by using search engine optimization techniques in their company announcements, to force their press releases into the “news” section and pump up their visibility.**

All the more reason for the old-fashioned skills of writing clear, concise media announcements to be honed and encouraged in corporate communications departments, PR agencies and courses. After all, this skill remains the foundation of the creation of solid content, sound communication and robust brand and corporate positioning.

The key is to do it well, so that what you write is easy to read, simple to understand , interesting and impactful for audiences. That’s the real trick.

It’s ironic that one of the most dominant forces of the digital information age has made a move that is a shot in the arm for one of the most traditional PR tools. Proof, if proof were needed, that sometimes it’s the old techniques that are still the winning ways of communicating. If, as many proclaimed, the press release was dead, then long live the press release.

What do you think?

How to monetise your mobile application

So, you’ve developed a great app, and you’re convinced that your new idea can be the next big thing. Congratulations! But will it earn you any money? And if so, how can it make big bucks for you?

The old saying goes, “the road to Hell is paved with good intentions.” In the app development world, the road to failure is littered with great ideas that don’t make it. Consider this: just 2% of app developers claim about 54% of all app revenues. Furthermore, last year, analysts Gartner predicted that 94.5% of downloads will be free apps by 2017.

In addition, if you factor in that your app will be up against 1.3 million others in the Apple App Store and over 1.5 million Android apps on Google Play, just for starters, then you’ve got to be clever to make yours a winner.

Nevertheless, there is money to be made. After all, Apple CEO Tim Cook said that there were 75 billion app downloads to date, and there are 300 million visits to the App Store per week. Those enormous figures mean that even though such a small percentage of developers are taking most of the money, there’ll still be a hell of a lot of dough for you if you can join them. So what’s the secret?

Don’t be so obvious. Be savvy instead.

Yes, it helps to have a killer app, although last summer’s multi-million Dollar phenomenon, the “Yo” app, could hardly be praised for providing genius content. Yes, you could charge for your app, but it needs to be head and shoulders better than a multitude of free competitors. And yes, if your user numbers are already good, you could sell your valuable code, content or data, if you don’t mind risking your reputation tumbling, and watching your user numbers follow, as they leave your app to protect their personal information.

No. That’s all too obvious and as I said, you’ve got to be clever. This means being savvy with your outreach and your marketing. However great your app is, without good marketing, it ‘ll fall flat, so here are your top three tips to help you get it right:

1. Be analytical. Use precision targeting.

To monetise, you need audiences that will use your app. So you need to laser-target who your audiences are, and then advertise and tell them about it. Again, don’t be obvious. You could advertise in mass-market arenas such as Google, Microsoft and Facebook. After all, their user numbers are huge, they can offer multiple advertising solutions and cross-platform solutions, but they’re far less specialised and their ability to target your key markets is limited.

Think about it. Let’s take an example from the offline world. If you were in the business of selling precision optical components to microscope manufacturers, would you be better appearing in USA Today, or in Laser Focus World? Sure, way more people read USA Today, but they’re not guaranteed to be the right people.  Those reading Laser Focus World are far fewer, but they’re much more likely to have an interest in your product and to talk about it among their industry peers. It’s a far more targeted and nuanced approach.

So instead of reaching for the default mass-market solution, look for specialised markets to spread the word about your app. Use analytics to target your campaigns. Tools like Flurry Analytics and Yahoo App Marketing on the Yahoo Mobile Developer Suite will help you identify the platforms that your target audiences use, and will enable you to measure how effective your marketing and advertising is. This approach and a host of other tools will enable you to reach specific crowds. For instance, ad-powered recommendation engines deliver relevant ads to users looking for something specific and InMobi, is a platform used specifically by gaming apps as a monetisation solution. Furthermore, specialised and niche networks may be nimbler than the mass-market giants, so they may be quicker, more creative and responsive to new techniques or avenues for outreach.

2. Remember: content is king. Encourage users to buy more of what they love

Build your app with your audiences’ preferences in mind, but with opportunities for you to capitalise on them. So, if Gartner’s prediction is right, then don’t charge for your app. Let users download it for free. Obviously, more people are likely to investigate what you have to offer if it costs them nothing. Make your content really good, and make it what your audience loves so that they’re crying out for more. Then, once you’ve got their attention, encourage them to become a paying customer in order to get extra. Three key ways to achieve this are:

i) Live data feed.

Popular with the online and mobile versions of magazines, newspapers and stock ticker data, subscribers receive up to the minute, live content and extra content not available to free users.

ii) Pay per data use.

This is a recurring fee that is dependent on how much somebody uses your app.

iii) Software as a Service (SaaS).

A “pay-as-you-go” model for use of the software. You can see this even offline with cable TV offerings. Either you pay a subscription for a package of channels, or you can use pay per view to watch certain movies or channels for certain periods of time or on certain occasions, such as specific sporting events

3. Use in-app marketing devices. Unlock the profit potential of your app

Of course, it stands to reason that the best audience for monetisation is your existing users. They know your app. They like it, and they return to it. So give them with incentives to interact and spend money inside your app.

Incentivisation for recommendations to new users is also a good way of increasing your potential customer base. Another way to increase your moneymaking potential is to enable existing users to do more inside your app and receive more from it by paying and increasing their use. Good customers can receive additional content and services in return for payments or deposits of real or virtual currency, and they can unlock premium features and ‘member-only’ promotions as rewards.

And don’t forget merchandising. This won’t work for everyone of course, but when it does it could make your app go stratospheric. Just think about the merchandising and the ecommerce opportunities exploited by the Angry Birds phenomenon. Plush toys and T-shirts are now available, as the original product has created opportunities that were unimaginable at the outset. They have even embraced affiliate and brand partnerships with their Star Wars and Transformer toys, and they work alongside Amazon and ToysRUs for e-tail and distribution.

It just goes to show that with flair, imagination and precision, there’s real money to be made in your app.

Why Hershey’s treatment of Cadbury doesn’t look so sweet.

 How strongly should companies protect themselves from competition?

Can they over-step the mark at the cost of their profile and good public relations?

Does the behaviour of a giant like Hershey’s damage its own brand equity, despite being legally justifiable?

This week, BlackLab’s blog is going to get passionate. That’s because I’m talking about chocolate. Aside from my wife and my dog, the black lab himself, there’s nothing else I love more. I’m also a proud British ex-pat, and this is about British brands. So don’t expect my usual even-handedness. This post is biased. I make no apologies for it.

Over the last few days, news has emerged from the USA that confectionery giant Hershey’s has struck a legal settlement with Let’s Buy British Exports (LBB) to stop importing all Cadbury’s chocolate made overseas. It has also agreed to stop importing some UK Nestlé brands such as KitKat bars, Yorkie bars, Toffee Crisp, and also Maltesers, manufactured by Mars confectionery.

This has caused outrage amongst ex-pat Brits who will miss their favourite treats. Some of you might consider this to be nothing more than a storm in a Creme Egg-cup, but it has made enough waves to reach TimeMagazine. Furthermore, it speaks volumes about Hershey’s, and in my opinion, this could be a gaffe that the company might live to regret, when considered in PR and branding terms.

Uncle Sam and John Bull are slugging it out over . . . chocolate . . . kind of . . .

The case for the defence

I’ll keep this brief, because frankly, I’m not impressed by it.

According to the NewYork Times, a Hershey’s representative explained that these products had been imported when they were not intended for sale in the USA, and that this was infringing on its trademark and trade licencing. Hershey’s does indeed have a licencing agreement to make Cadbury’s chocolate in the USA, with similar packaging but with a different recipe. Plus, as the NYT notes, the ban on Toffee Crisps is owing to its packaging, which too closely resembles Reese’s Peanut Butter Cups, and Yorkie bars infringe on the York peppermint patty, apparently.

So, Hershey’s is protecting the brands for which it is responsible in its market, from products that seem identical but aren’t. The NYT quoted Jeff Beckman of Hershey’s, who wrote in an email:

“It is important for Hershey to protect its trademark rights and to prevent consumers from being confused or misled when they see a product name or product package that is confusingly similar to a Hershey name or trade dress.”

Why Hershey’s recipe for brand-protection leaves a sour taste?

Thanks so much for that clarification, Mr. Beckman. Now let’s examine it.

As regards the licencing, strictly speaking and from a legal standpoint, Hershey’s is correct. It would be foolish to argue with it.

However, this seems to me to be one hell of a heavy-handed, some would say bullying move on Hershey’s part to . . . wait for it . . . stop the import of products that consumers like more.

Yes, the recipe for the licenced US Cadbury products has more sugar, less milk and different emulsifiers than the UK originals, giving it a different taste, texture and a longer shelf-life. Did I say different taste? Sorry, I meant a WORSE taste.

There, I’ve said it, and lovers of the real stuff feel the same way, judging by the media reports. So what we have here is a corporate giant stamping its heavy boots on the importing of a relatively small number of rival products, which are, frankly, better than its own, in my humble opinion.

British chocolate. Yum! Delicious, according to discerning ex-pat Brits

To put it in non-technical terms, the recipe of American chocolate is crap. Some years ago, I was lucky enough to watch the food scientists and sensory analysts at work in one of Nestlé’s European confectionery R&D centres. What I learned from my visit was that chocolate can be given a kind of geographical profile, depending on its flavour and viscosity.

These factors are based on the recipe. So a darker, purer, more bitter chocolate, with a higher proportion of cocoa solid and lower milk and sugar, levels, is more suited to the continental European market. Europeans have a very sophisticated palate when it comes to chocolate. A more milky, sugary variety is preferred by the Brits, but compared to American chocolate, it’s nearly as pure as the driven snow, because their stuff is packed to the brim with crappy sugars and ingredients that give it a sickly sweetness. It’s literally kids’ stuff compared to the others, designed for an infantile and unsophisticated palate.

 

American chocolate. Yeuch! Rubbish, according to those same discerning consumers

Doubtless Hershey’s knows this, and I suspect it feels that increasingly, US consumers know this too. And they want something different . . . better. So it saw a threat to its core product range, the traditional American favourites like Hershey’s Kisses and Reese’s Pieces. But rather than improve their recipes, which, Heaven forbid, would involve the risk of expensive time, effort and investment, the company unleashed its legal eagles and let them crap their litigious guano all over consumers’ choice.

Do I sound mad about this? Good. Because I am. There’s a number of things wrong with this decision on a variety of levels. Here’s the list:

1.     It’s a disproportionate response that makes Hershey’s look like a bully, in my opinion.

2.   It will be perceived by some to be a blunt and brutal restriction of trade, ironically in the country that is the cradle of the free market. Whether this is a fair and accurate reading of the situation is irrelevant. That’s how it looks, and in PR and branding terms, perception is everything.

3.   It’s driven by the lawyers and the corporate “suits”, with little thought to the impact on brand reputation.

4.     It ‘s poorly thought-through, with little consideration for how consumers feel. That’s always a bad idea.

5.  It actually sheds light on what else is available and why it’s better than Hershey’s own products. Ooops! Surely the company really didn’t want to publicise that?

6.  It patronises consumers, the very people who buy these products. Just take a look at Mr.Beckman’s comment, above. Apparently the good people at Hershey’s are deeply concerned that poor Joe and Joanne Public won’t be able to distinguish one product from another when they look similar. Really? I imagine that the vast majority of these consumers can read and think, all without help from the paternalistic people at Hershey. I’m sure their heads won’t burst into flames. Leave them to make their own decisions. After all, using this rationale, Skodas shouldn’t be sold in the same markets as VWs because they come from the same ‘stable’ and it could confuse people. Oh no. That doesn’t happen, does it?

In short, give it up, Hershey’s

By applying the letter of contract, trademark and licencing law, Hershey’s has violated the sanctity of consumer choice, has patronised customers, bullied competitors, and implied that the quality of its own products could be called into question. Well done Hershey’s. What a potentially massive own-goal. This is a blunder that you may well rue. I will watch with interest.