What will the future bring? Nobody knows but we want to be part of it.

Blockchain has become the buzzword of the year 2018.
Apparently, simply adding it to a start-up elevator pitch helps convince more people that they should invest.
But do investors understand what blockchain technology is about?

This is the first blog entry of a series of posts regarding Technology, Innovation and Management #ccTIM.
The main question is, why should I use blockchain in marketing or sales of a Fast Moving Consumer Product (FMCP)?

The fact that people are not always sure what it means is illustrated by Absatzwirtschaft, a monthly publication. Its October 2018 issue carries a special section on blockchains. While it explains a few things and lists important facts, some portions remain confusing to the uninitiated.

This blog entry will clarify some facts about blockchain for you.

Understand what matters

Blockchain allows a transaction to be permanently recorded on a database shared between computers, without relying on a third party to authenticate or process it.

What makes it attractive for consumers as well as companies is that immutability and security are written into blockchain. As well, because no single authority is in charge of the ledger, no one may remove entries or fiddle with them.

Here are three examples:

  • Bitcoin, a cryptocurrency that wants to eliminate the middleman in finance, such as banks.
    It runs on a blockchain that has been used since 2009 to underpin the working of the currency.
    Bitcoin offers one particular application of blockchain technology, a peer to peer electronic cash system that enables online Bitcoin payments.
  • Ethereum aims to bypass online giants such as Amazon, eBay and Facebook.
    It wants to achieve this laudable objective by allowing automated agreements to guarantee users a service.
  • Vaultsecurity.io aims to help those who suffer a break-in or a fire in their home.
    Vaultsecurity creates a permanent, trusted database of valuables that anyone may access with a secure key. In turn, selling lost or stolen goods becomes very difficult, if not impossible.

Bitcoin blockchain is used to track ownership of digital currency (bitcoins). In contrast, Ethereum blockchain focuses on running the programming code of any decentralized application. Other open source systems include Hyperledger, which has five projects.

In contrast to Ethereum, Hyperledger Fabric (one of the five projects mentioned above) provides different roles to the participants within the network. Examples are Peers (e.g., customers), Endorsers (e.g., a jewellery store), and Orderers (e.g., a manufacturer).

The internet is to email what a blockchain is to Bitcoin or Vaultsecurity. A big electronic system, on top of which you can build applications. Currencies, such as bitcoin, are just one possible application.


Blockchain depends on distributed computing and cryptography.

Blockchain depends on distributed computing and cryptography.

Key questions for designing a blockchain are listed below. We need to figure out what we are trying to do, the value we want to capture, and for whom this is useful.

What are we trying to do? What value do we want to capture? For whom is this of use?
Record transaction Information and knowledge about what changed hands Clients
Track transaction Attribution and who is responsible Suppliers
Verify transaction Access or permission to records Manufacturer of goods
Aggregate transaction Ownership Creditors or investors
Reputation and trust Public agencies
Contracts Employees
Transaction ledger

Table. Adapted and expanded upon from Felin, Teppo and Lakhani, Karim (Fall 2018). What problems will you solve with blockchain. MIT Sloan Management Review, p. 36. Retrieved 2018-10-20 from http://sloanreview.mit.edu/x/6015 see also https://blog.drkpi.com/show-me-the-facts-1/


Besides the more general questions above we feel it is necessary to answer the seven questions below.

Answering these questions is critical

Before you start considering working with a blockchain, it is advisable to answer seven questions that will help you decide whether a blockchain is the best way to go (listed below).

[su_box title=”7 questions to be answered before developing a blockchain” box_color=”#86bac5″ radius=”9″ class=”aligncenter max-width: 700px”]

  1. Do multiple parties share data?
    Example: Manufacturer, distributor, and retail customer.
  2. Do multiple parties update data?
    Example: Customer updates sale to another collector, both inform distributor and manufacturer.
  3. Is there a requirement for verification?
    Example: Manufacturer doing repairs wants to know if person claiming ownership of an asset does rightfully own the asset.
  4. Can intermediaries be removed and thereby reduce cost and complexity?
    Example: Can Amazon, eBay or others be avoided to possibly save costs, and keep customer data to ourselves.
  5. Does a blockchain possibly help comply with, if not exceed, General Data Protection Regulation (GDPR) (2018-05-25) and the California Consumer Privacy Act – Assembly Bill No. 375, CHAPTER 55 (2018-06-27) requirements?
    Example: Can a wealthy client protect their assets while being assured their identity is protected from general public knowledge (e.g., public figure or movie star).
  6. Does the blockchain help reduce trade in stolen goods and fake luxury items?
    Example: How can a potential buyer be sure that jewellery, antiques, or a luxury product are not stolen or fakes?
    Recording, tracking, verifying, and aggregating of information about an asset can further reduce the risks as outlined here.


Resources: Microsoft, DrKPI, #MCLago White Paper about the GDPR (Tools) Data Protection

With blockchains, no single one-size-fits-all approach is useful.

Cyberspace and Security: Blockchain

Cyberspace and Security: Blockchain

Initial Coin Offering (ICO): One way to use a blockchain

The scalability and user-friendliness of some applications may not be satisfactory. For instance:

  • Ethereum can currently process fifteen transactions per second, while
  • Visa can handle 45,000 transactions per second.

The main benefit of using blockchain is for recording, tracking, verifying, and aggregating of information.

For instance, Initial Coin Offering (ICO) requires a transaction ledger to allow a company and an investor to take advantage of an alternative fundraising mechanism. With an ICO, a start-up can issue their own crypto tokens and get needed capital.

One main difference between an Initial Public Offering (IPO) and an ICO is that the latter is similar to crowdfunding with two differences:

  1. No fee has to be paid to a platform like Kickstarter for the amount being raised, and
  2. token holders do not own any equity in the company but may get the product faster or be paid with product. The company has no real obligation to the contributor to deliver on their promises (ICO example, Lake Diamond CNN video – YouTube).
Lake Diamond uses an Initial Coin Offering (ICO) to raise capital without forcing the founders to give up equity.

Lake Diamond uses an Initial Coin Offering (ICO) to raise capital without forcing the founders to give up equity.

What is your opinion?

Distributed ledger technologies are collectively known as blockchain. While they offer great opportunities, we have to separate the wheat from the chaff of hype. We hope this blog entry helps you in this process.

Have these explanations helped you so far? Feel free to leave a comment below.

  • Do you have experience with crypto tokens?
  • Is your company trying to use blockchain technology to make its processes faster, more efficient or transparent for its customers or suppliers?
  • Are you planning to use a blockchain as a customer soon?
  • What do you like or dislike about blockchains?

Please share this entry on social media using this link: https://blog.drkpi.com/?p=4689

Making a movie for your blog: the best social media marketing strategy, youtube video marketing

In Brief: In the first blog entry of this series about Marketing Videos we talked about: Why a movie? Plus, thoughts about our target audience, our goal, and what is the best content.
The second part of our series covers more production tricks and examples.

How can you avoid common problems in video shoots and preparing for them?

We can provide details, because our own past experiences were a process of trail and error. To reflect on our projects allows us to optimise our working process in the future. Learning never ends and we are motivated.

This time we came up with a variety of answers to these five questions (click and read the answer immediately):

  1. 1. Which equipment do we need?
  2. 2. Who is involved and who is responsible for what?
  3. 3. What are the legalities?
  4. 4. What is the best location?
  5. 5. What is your opinion?

For more information read the following articles:

[su_box title=”How to Prepare Your Marketing Video?” box_color=”#86bac5″ radius=”9″ class=”alignlcenter max-width: 700px”]

Video marketing: 4 tips for creating relevant content
Video marketing: 4 tips to avoid trouble (you are here)
Video marketing: 4 secrets experts won’t share


Read this blog entry in German here.

To stay tuned and get the latest updates on successful video marketing, sign up for our newsletter here.

1. Which equipment do we need?

The technology

Everyone would probably list the same item first: a camera. But keep in mind, lighting and sound are equally important. These two components are almost always underestimated, especially by beginners.

I would say, if you provide for professional lighting and sound you don’t even need to have a big professional movie camera. A good video nowadays can easily be shot with your iPhone. The image quality is more than sufficient. That is, under certain circumstances (outdoor shooting on a bright and sunny day).

However, without a high-quality microphone, your marketing video will seem amateurish no matter how good the image quality is. Synchronisation in a recording studio is possible but requires a lot more technical know-how and an experienced voice behind the mic.

If your shoot takes place indoors, you can almost never expect the natural light (from the windows) or the installed lighting in the room (usually only from above – another disadvantage) to be enough.

If you want to guarantee a professional-looking outcome, consider good-quality spotlights a must for every shoot.

And, to be honest, we from DrKPI do not make the marketing videos with our iPhones. We use camera-like camcorders like the P2HD solutions offered by Panasonic. Of course, you need a lot of accessories as well: memory cards and devices for transfer data compatibility, the tripod, and so on…

Without sufficient know-how in camera technology, you might be lost. And the same goes for the cutting. The Windows Movie Maker cannot compete with a professional video editing software like Final Cut Pro X. But this program calls for an expert, too.

In short, everything calls for one thing – and that is professionalism.

[su_note note_color=”#86bac5″]


A highly authentic marketing video can be shot with an iPhone and some headlights.
Start collecting short videos (pictures only) from products that are made, hands that work on something, a walk through your company (for stabilization consider using an Osmo that fits your Smartphone), etc.
Film everything that comes to your mind.
Then contact an expert and discuss the value of your material and what can be done with your clips.[/su_note]

More equipment needed

If you work with a production team, you can leave these questions to the experts. That gives you time to think about other things you need, such as:

  • props,
  • clothes (also known as costumes), and
  • catering.

For LomMedical (more information here), we made a video about how they integrated the smart retractable syringe for single use.

By the way, this is one of our first videos. It illustrates, what can happen, if you do not have the opportunity to test the location prior to the actual shoot. Therefore, we had no time to conduct light and sound tests.

It turned out that the long and narrow conference room was poorly lit, with windows at only one end. Even with the three spotlights on (at the best positions we could manage) the lighting for this project was not the best…

What clothes should our speaker or actors wear? The director and camera operator (responsible for visuals) can help you. Start with thinking about the Corporate Design first. This should form part of any marketing video.

And then, if your project will take a lot of time, you should provide for your team. Prepare some food and drinks. Or, at least, inform them that there will be no lunch at the set, but there is a restaurant and a supermarket nearby.

[su_note note_color=”#86bac5″]


Show your process on Facebook, Instagram and other platforms!
Take pictures from behind the scenes (Smartphones are perfect for a cool little making-of).
But keep in mind, everything that’s in the room – cups, plates, bottles, food, notebooks, pens – will become props. It’s worth thinking about how these things look on moving (and unmoving) digital film, and how they will be perceived.[/su_note]

2. Who is involved and who is responsible for what?

Participants can be divided into two groups:

  1. those working in front of the camera, and
  2. those working behind the camera.

Choose the face on screen: should it be an influencer, CEO or an employee “like you and me”? A poor choice can ruin the whole project.

All persons involved are present at the shoot (left to right): Peter Johann (CEO, Lumendi Ltd.); Corina Rieflin (Investor Relations, Lumendi Ltd.); Patrizia Sinistra (camera operator and editor, DrKPI); Urs E. Gattiker (producer and director, DrKPI).

The next question is, who is responsible for what? Expertise is needed in every area. That is why it’s almost impossible to make a movie on your own.

For instance, the head of a company can instruct a manager to take on the organisational tasks of a producer, but they will not necessarily have the technical know-how to operate the camera and lights, or the eye to arrange a scene.

It would be frustrating to realise that the material just does not look good once you’re in the editing room. Or an editor from a contracted company tells you, there’s nothing to be done with material this bad.

And you will still have the production costs to deal with.

It’s helpful to include everyone from the beginning:

  • actors, speakers, extras – everyone who is expected to be in front of the camera,
  • producer,
  • director,
  • camera operator,
  • lighting and sound experts,
  • someone responsible for legal issues
  • financial officer,
  • editor, and
  • the marketing people.

There has to be an active exchange of important information and the communication must be totally reliable to avoid misunderstandings.

[su_note note_color=”#86bac5″]


Include everyone from the beginning before taking any step in any direction. (Sometimes you will not need everyone, but it is good to have someone for everything – just in case.)[/su_note]

3. What are the legalities?

Do we need consents, contracts, insurance?

For everyone’s sake, any agreements should be done in writing. Especially when it comes to personal rights there should be signed consent forms. Prepare the paperwork with your legal expert and collect the signatures.

That goes not only for your actors or anyone else on camera, but also for anyone in the background, who may not want to be filmed. This is of particular importance if your shoot takes place outdoors. For shooting in public, you almost always need to obtain a permit. For privately-owned places, you might need permission to access the facilities.

Ensure that you have insurance to cover the work you’re doing – just in case. It would be terrible if you suddenly could not publish your marketing video because you unwittingly infringed on someone’s personal rights…

[su_note note_color=”#86bac5″]


Start the paperwork by making a list of every consent you will probably need.[/su_note]

4. What is the best location

You have an idea that suits your marketing video? A location with the perfect atmosphere or one that is able to reflect your company’s philosophy? Be sure to do light and sound tests before the shoot.

If necessary, you may need to increase your equipment, e.g. more spotlights, a wind-attenuating cover for the microphone, etc. Sometimes you need to reconsider your choice in order to prevent budget overruns.

Keep an eye on the weather forecast and plan ahead. There should be an alternative date for the shoot. The publication can be delayed by weeks or months if you start organising a new shoot date too late.

[su_note note_color=”#86bac5″]


Be specific. The location has to be perfect.[/su_note]

5. What is your opinion?

Have these tips helped you so far? Feel free to leave a comment below. Or proceed with the third part of this series (coming soon) to get more answers to important questions regarding the preparation of your successful marketing video.

During production we often experience sudden insights we want to share with you as our secret tips in filmmaking. We hope to support you in optimising your own marketing video production.

  • Do you have experience in video marketing? What would you improve next time?
  • What interesting insights do you want to share? Tell us about your “Eureka!” moment.
  • Are you planning to make a little movie for your company, for an event or produce a short video for some of your blog entries? Tell us about it in the comments. We answer as quickly as possible.

In brief: This is the first of three blog entries about marketing videos.
In this post, we show you what it takes to create a successful video.
Careful preparation is the first and biggest step.

Keep reading to see a full post and how you can implement these tips for your next video.

Almost five billion videos are watched every single day on YouTube alone.

Another interesting fact about video marketing ROI (return on investment) is that 92 percent of mobile video consumers share content with others.

We are convinced that good preparation is half the job. Conversely, a lot of time and money will be lost if we realise during production or – even worse during post-production – that our project was not thought through properly…

That is why we made this series of twelve questions with tips, tricks and examples you should know before you dive head-first into shooting.

Below are four questions that need to be answered carefully during the preparation phase. Please address these issues before you do the video shoot (click to get straight to the answer):

  1. 1. Why a video?
  2. 2. Who is our target audience?
  3. 3. What is our goal?
  4. 4. What will the content be?
  5. 5. What is your opinion?

For more information, read the following articles:

[su_box title=”How to Prepare Your Marketing Video” box_color=”#86bac5″ radius=”9″ class=”aligncenter max-width: 700px”]

Video marketing: 4 tips for relevant content (you are here)
Video marketing: 4 tips to avoid trouble
Video marketing: 4 secrets experts won’t share


Read this blog entry in German here.

To stay tuned and get the latest updates on successful video marketing, sign up for our newsletter here.

1. Why a video?

Making a movie or simple video is easier said than done. Why not a white paper, blog post or press release, instead?

First and foremost, we need to clarify our intentions. Otherwise we will get lost during the process of shooting the video. This helps bring everything into focus.

For example, why should we make a video instead of, or in combination with, a blog entry?

Of course, a video will be more easily remembered, and over all, people love to watch videos on the internet, even more so than reading a blog entry. A video might be easier to understand as well, because it generally demands a lower level of concentration than text.

In particular, we have to think about what we want to show. If we provide our costumers with audio-visual material, we need to give them something particular to see.

For instance, if we are going to talk about a lot of information, our audience be better off with text. An interested user is able to read through important sections of a text again and again. He or she doesn’t have to search for the very second where the important part begins. In a text, there are headlines that structure the information so that one can easily find a sentence or word again.

Then again, there might be a very complex issue that requires a more precise explanation. Why not make a video about this very matter to accompany the text? In the video, we explain the issue and visualise it with an exemplary demonstration.

[su_note note_color=”#86bac5″]

Tip 1

Making a marketing video just for the sake of having some video might not be beneficial, but it is always useful to have a short video a blog entry to supplement a text with visual content.[/su_note]

2. Who is our target audience?

Who are we trying to reach with this content? Existing customers, key accounts, or employees? Or are we trying to get new audiences on board, and reach even more people?

Does our target audience consist of pupils and those looking for a job or training, or of companies that could become affiliates? Or do we want to get closer to the end-user?

Children? Artists? Sportsmen? Dog lovers? You know what I mean…

[su_note note_color=”#86bac5″]

Tip 2

It is helpful to look for the kind of videos your target audience is watching, but keep in mind, your audience might be interested in completely different videos when it comes to your business.[/su_note]

Most adolescents love to watch vines (7-sec-videos) by their favorite YouTube star, but if you want to air those, the situation gets more complex. If we want to produce a video that will go viral, we had best also include an influencer (note the irony).

This inauthentic video might deter the student. She wants to be taken seriously by her future employer, who has to show they understand her situation, probably characterised by her uncertain future.

In this case, we had best focus on our qualities as trainer and an employer that provides our trainees with security, learning support, and other important qualities.

We made a video (in German, see below) about Hadya Khalil from Syria.

This DrKPI production shows what it takes to make an authentic video. Hadya herself is not an influencer, but she is authentic in speaking about her personal situation. As a refugee, she was looking for an apprenticeship in Switzerland. After a lot of hard work, which she talks about in the video, she secured a position.

For Hadya, Alpiq InTec in Zurich is the best employer / trainer she can imagine. That comes across as authentic and truthful, based on her experience.


Obviously the video’s tone (factual, emotional, etc.) arises from the objective, which was to reach a younger target audience.

Understanding your target audience’s preferences, needs and wishes is a first important step. As we show below, defining what you intend to accomplish comes next.

3. What is our goal?

The next step is to ask:

Do we want to produce an image video, to illustrate our corporate culture or philosophy?
Do we need to increase awareness for our newly launched product?
Do we want to increase the number of qualified and motivated job applicants for certain positions?

In some cases, the company may just want to document the annual shareholder meeting to communicate with an important group of stakeholders.

We must write down and discuss our objective or what we want to accomplish. Without this, it is difficult to stay focused when shooting the video. Moreover, this makes assessing whether you accomplished the goals you set feasible, such as with the help of Key Performance Indicators (KPIs).

[su_note note_color=”#86bac5″]

Tip 3

It is helpful to watch others’ videos with a similar objective to help you formulate your goal and decide what can be accomplished. [/su_note]

Of course, if you have the budget, getting advice and support from professionals is always helpful, but remember that, while creativity can be wonderful, keeping your goal at the forefront is key to getting your message across.

4. What will the content be?

Obviously, a marketing video about a toy train cannot be compared to one about an innovative accessory to an endoscope.

That is what determines the video’s tone. If a CEO of a medical company is talking about the technological advancement of a new product, the video has to be neutral and fact-based. This goes beyond just the product, the firm’s strategy or an event. It is about communicating what needs to be communicated well. This can easily go wrong, whether you keep your target audience in or not.

[su_note note_color=”#86bac5″]

Tip 4

Tell a story. That goes not only for better blogging, but for videos – maybe even twice as much.[/su_note]

We often want to tell a story (see Hadya Khalil above), but sometimes we only want to give important information. Either way, we need to specify what is to be communicated.

A script has to be prepared beforehand, which must be structured properly. Without structure, you risk your audience losing the thread of what you are trying to communicate, in which case they will not watch your video to the end.

Do you want to share your views? Have these tips helped you so far? Leave a comment below or read the second part (coming soon) to get more important information on how to make a professional marketing video.

5. What is your opinion?

  • How much time do you think you spend each day watching video content on your smartphone, tablet, or laptop?
  • Do you have an example of a great video for a product, event, or explaining algebra?
  • What would you advise someone wanting to make a great video? Please share in the comments.

I hope you enjoyed your summer vacation. I thought I would share some experiences from my recent travels, which were both business and pleasure.

I definitely learned a few things about what it takes to accomplish superior service in a variety of travel-related businesses. More than once I asked myself: Is great service in tourism a dying concept?

Before we start, what makes a tourist destination attractive for you? Is it, for instance:

  • the hotel,
  • the food,
  • the in-flight service,
  • the spotless public toilets, or
  • something else?

Please let me know in a comment what makes your vacation special every time. I have had numerous experiences that made me very happy:

  1. Park Rangers: Exemplary tourist ambassadors at National and Provincial/State Parks in Canada and the US
  2. Store clerks: Going out of their way to help a confused tourist get the right product at the best price.
  3. Infrastructure: Second to none, i.e. clean and spacious, as well as free.

If you want to learn more about the best social media marketing strategy for a tourist destination, Iceland is a good example. Earned media aplenty, while word of mouth and influencer marketing all do their thing to increase the country’s popularity. Icelandair’s stopover program helps increase traffic and the ROI (return on investment) for tourist attractions.

All is well, right… but how do these things work on the ground?

1. Fake news = BAD

One thing that is bothering me is how airlines seem to try to make themselves look better than they actually are. On our check-in in Edmonton, Alberta, the sign showed that our plane had left punctually as scheduled. Just one small hitch – boarding had not yet even started.

Incidentally, when you check in online, why is it that some airlines, like Icelandair in Zurich, cannot manage to have a “baggage drop off only” lane. Instead they make you queue with all those who have done nothing online… I felt like an idiot for having done this work myself, what for?

A few weeks later on the way back to Europe, the sign in Keflavik showed the flight was boarding, but it took another 30 minutes before the process even started. Of course, no information was provided on what caused these delays; I’m pretty sure every customer felt unappreciated, like I did.

Then again, we’re just customers… why should the company care?

The plane has already left... NOT - since boarding has not even started...

The plane has already left… NOT – since boarding has not even started…

From what I could see, KLM / Air France’s check-in for a flight to Amsterdam was done better. One good indicator was that they kept customers informed about what was happening. Although, I did wonder why a Dutch/French airline fails to announce things in Dutch, especially since more than half of the flight’s passengers spoke Dutch. There were French announcements, but not one passenger I saw appeared to be a French speaker…

Fact 1. The minutes of delay in European air traffic is projected to rise 53 percent in 2018 compared to 2017. For airlines faking timeliness, this means things will get much worse before they get better.
But while delays due to strikes by French air traffic controllers in 2018 are outside an airline’s sphere of influence, keeping one’s customers informed about delays with regular announcements is basic professional courtesy.

2. A little courtesy goes a long way

During our trip I discovered a few differences regarding politeness and efficiency of store clerks, such as:

  • Netto (IS): Cashiers chew gum, don’t say hello, and when you need a refund because you got overcharged, you are in for a surprise. Not even the supervisor can do the math correctly with their smartphone – and starts serving other customers in the middle of the transaction…
  • Coop, Migros (CH): Cashiers say hello, smile, and they are all courteous.
    At my neighborhood store, I was even asked how my vacation was when I shopped there after I got back.
  • Real Canadian Superstore, No Frills, Walmart, etc. (CA): The cashier says hello, asks how you are… and is helpful (sometimes almost too much politeness for us visitors).

While being polite is not enough on its own, it is a great start to making my travels enjoyable or my store experience less frustrating.

Another thing I learned is that in Canada, everybody is helpful. In other words, park rangers, staff and so forth all try their best to make your journey enjoyable.

In Iceland one often had the feeling the person got up on the wrong side of the bed. The result was ill-tempered people doing the absolute minimum, while trying hard not to be too grumpy.

When we picked up our car at Blue Car Rental in Keflavik #bigfail, I was surprised how badly things were organised. You took a number to get service. Some workers at the counter were sitting, and seemed to be idly chatting in front of their computers. “Working,” they called it when I asked with a smile if they could help. In turn, we waited 30 minutes to get our car. Incidentally, this seems to happen every morning in the same time window of about two hours, due to many arrivals from North America.

Think it gets better when dropping off our car? Think again. They could have helped everyone by staffing three more stations to serve clients faster. Instead,  they chose to stay in the background, sipping their coffees and talking to each other… as we could see. I am sure it was a meeting and important, but can it not wait until after the (relatively short) rush?

All this can be done even if your facilities appear less slick and more down to earth. And, if it’s done with a smile during both pick-up and drop-off, as at Budget on 151 Street in Edmonton, your organization wins big with this customer. Even a less-than-perfectly-clean car (e.g., we found a toddler’s shoe under the front passenger seat) does nothing to change my level of satisfaction with your service. But in the case of Blue Car Rental #bigfail, it is just another indicator that things do not work properly. Being friendly makes my experience as a customer that much more enjoyable.

Fact 2. Smile! You could be a tourist attraction.
Blue Car Rental in Keflavik #bigfail — fails the test. Its claim is, “We offer quality service.” Really? Then, PROVE IT!
As hard as I tried, all I experienced was grumpy employees doing little more than the absolute minimum required, and managers that utterly failed at management. What a pain.

3. I have enough friends – honest

The Reynolds Alberta Museum is among many locations and sites we visited that invite you to get social. Everybody is asked to write a comment on TripAdvisor, a museum’s webpage, its blog or maybe their Facebook page.

I’M ON VACATIOOOOON! (see Billy Crystal in the movie City Slickers). I’m busy, and enjoying my privacy – 5 seconds of fame on Instagram is not on the schedule. Thus sharing my experience at your location with the world is not on my list of holiday must-dos.

Everybody wants to 'get social'. Here's an idea: instead of asking me for another useless Like, how about just enjoying my visit and actually being social with me in person as you provide excellent service?

Everybody wants to ‘get social’. Here’s an idea: instead of asking me for another useless Like, how about just enjoying my visit and actually being social with me in person as you provide excellent service?

In fact, I am not sure if the Reynolds Alberta Museum staff at the cash register really want me to tell people how unwelcome I felt… Telling people at 16:15 that the museum closes at 17:00 is one thing (thanks to our annual provincial pass, we did not pay to get in…). But closing the gift shop for the final count at 16:45 in order to leave right at 17:00 is a step too far. I guess you didn’t want my money.

Thank goodness the volunteer giving us a ride in a vintage convertible still took us around at 16:58. This and the great collection of old cars and motorcycles cancelled out the paid staff’s lack of motivation and courtesy to paying customers.

Fact 3. As most metrics regarding earned media and word of mouth or influencer marketing suggest, anyone can buy Likes and online traffic.
Asking for Likes or evaluations on all sorts of platforms is now so prevalent that it is a nuisance for customers, and it’s arguably not even that valuable in the real world.
Giving your best, one customer at a time, will result in the word-of-mouth marketing you desire. I PROMISE.

But our little apartment at Hofgarðar 5 170 Seltjarnarnes (Reykjavik) (booked via Booking.com) was superb (see Google Street View).

4. Knowledgeable people are invaluable

þingvellir (Thingvellir) National Park is surely a very important UNESCO World Heritage Site in Iceland. I got great info at the information desk from a park ranger. But while in the park itself, walking and hiking, there were no rangers to be seen anywhere.

þingvellir National Park: Great info at the information desk, but not while walking and hiking in the park.

þingvellir National Park: Great info at the information desk, but not while walking and hiking in the park.

Quite different was our experience after booking and paying for a guided tour with a park ranger at Writing-on-Stone Provincial Park. That person clearly loves her job, and knows plenty about the subject (see below).

Our guide was a cheerful, amusing person that loved to share her insights and engaged us, while using a nice dose of charm as she forced us to use our brain cells.

Being very knowledgeable AND good humoured makes the tour a pleasure for customers or visitors.

Being very knowledgeable AND good humoured makes the tour a pleasure for customers or visitors.

Fact 4. Having the resources to employ knowledgeable people that are proud of what they do is a must.
The pay-off with customers will make it well worth the expense for any park or museum.

5. Scaleable facilities are a good thing

International travel is a time-tested way for newly minted middle classes to enjoy their wealth. Popular tourist destination such as

  • Iceland,
  • Banff and Jasper (Canada),
  • London (UK), and
  • Zurich, Titlis, Interlaken, etc. (Switzerland),

will have to cope with rapidly growing numbers of visitors. Unless carefully anticipated and planned for, this growth can put a strain on a facility’s bathrooms, gift shops, and cafeterias.

With limited resources, including space (e.g. museum downtown), it is not easy to cope with the ever increasing visitor numbers. Facilities need to be expanded and that requires not only space, but also money.

Parks Canada tries to achieve this by charging visitors, and in turn, providing facilities that appear to me to be second to none.

Having to search far and wide for a bathroom is a pain. In North America, this is rarely a problem, even in national parks.

Having to search far and wide for a bathroom is a pain. In North America, this is rarely a problem, even in national parks.

Fact 5. Only 4 percent of Chinese citizens have a passport, but demand is rising. Moreover, Boeing estimates Chinese airlines will need to hire 110,000 pilots between now and 2035 to handle expected growth.

By the way, Airbus estimates that 550,000 new pilots are needed worldwide within the next 20 years.
According to the International Society of Women Pilots, only 6.7 percent of pilots are female. Clearly, we need many more women to deal with this phenomenal growth, in large part driven by rapidly rising demand for pleasure travel.

It is obvious that these trends mean more visitors for most tourist attractions. Without some investment, the result will be dismal experiences for visitors and bad press for those destinations.

Plenty of parking, toilets and picnic tables is appreciated.

Plenty of parking, toilets and picnic tables is appreciated.

6. Charging to run a smooth operation

Tourists expect great service and facilities that can manage the onslaught of the masses. Moreover, helpful park rangers and knowledgeable people are expected.

But who will pay for all these things? In Iceland, visiting such sites is free. That is appreciated, but in turn, there is apparently not enough money to have support staff or public facilities that meet high quality standards.

Head-Smashed-In Buffalo Jump – another UNESCO World Heritage Site – is an example where tourists and locals alike pay to get in. The result is a great facility that offers much more than just a classic museum experience (see below).

UNESCO World Heritage Site Head-Smashed-In Buffalo Jump: History and cultural background aplenty as native dancers perform to a running commentary that explains to naive tourists why things are done a certain way... great!

UNESCO World Heritage Site Head-Smashed-In Buffalo Jump: History and cultural background aplenty as native dancers perform to a running commentary that explains to naive tourists why things are done a certain way… great!

Of course, one has to find ways to make these sites affordable for tourists and locals alike, besides school classes that don’t have to pay and get great “experience tours” with the help of park or museum staff.

Don’t misunderstand, Iceland is doing great, but to handle these masses of tourists, it needs to charge reasonable fees. No politician can expect his electorate to be happy to pay for tourists in order for them to enjoy beautiful scenery for free.

But charging people an arm and a leg for entering the privately operated Blue Lagoon near Reykjavik is not the right way to go. While tourists may be willing to cough up this exorbitant fee (about US$ 100 per person) in order to enjoy an experience that costs a fraction elsewhere in a public facility, most locals will never visit the venue. It cannot be considered okay that things are so expensive to exclude locals altogether – can it?

One viable option is to offer an annual pass, such as the one from Parks Canada or the province of Alberta (Experience Alberta History). These are just two examples that work. They are high enough in price to channel some real cash into these operations. For locals they are great as well, because they make visiting the sites highly affordable (i.e. unlimited access for a year).

Fact 6. The public purse has limited resources.
Charging tourists to access parks, historical sites and museums is a no-brainer.
These revenues cover some, if not most, of the costs incurred running these beautiful places. Most importantly, facilities can be upgraded based on visitor numbers. Satisfied customers do wonders for your reputation – also known as word-of-mouth marketing these days.

Conclusion: What is your opinion?

Increasingly, destinations are succeeding with social media marketing strategies, but as most metrics suggest, anyone can buy Likes and traffic (such as with our DrKPI.com tools). Is this really the best measure of the value of what is on offer for tourists? Somehow, the destinations seem to think so.

Maybe it’s Canada’s, Iceland’s or Calgary’s relationship with the lakes, mountains, and rivers that creates a particularly enviable summer scene for tourists to see. Or could it be the locals that make the visit more or less enjoyable?

The tourism industry offers plenty of jobs, but working conditions, such as working nights and / or weekends, and short-term contracts for high season only, mean this kind of work is not most youngsters’ first choice. Low pay and little to no fringe benefits further dampen the attractiveness of working in tourism. Could it be that this is why I see shops, restaurants, and services shutting down because operators can no longer find the necessary talent and skills?

The result is sometimes people who are neither happy with their work nor proud of what they do. Little surprise that this negatively affects performance. And while staff working for Icelandair, Ryanair or Delta Airlines may love their jobs, this does not mean their service levels give paying customers that impression.

Brewster, the US company providing services in Jasper and Banff (also Iceland) fills its vacancies with plenty of foreigners. In Canada, these seem to be mostly Australians with seasonal work permits, for many the best way to get into the country and work. So we had fun experiencing down under slang and humour wherever we went. Not a very local experience, though.

The work is so attractive that Canadians shun it... giving Australians and others a chance to get a Canadian work permit.

The work is so attractive that Canadians shun it… giving Australians and others a chance to get a Canadian work permit.

Moreover, having the driver (and everywhere else it seems as well) ask us to leave a great evaluation on TripAdvisor, Booking.com and so forth is getting on my nerves.

Leaving a thoughtful evaluation for each and every venue is time-consuming. I want to enjoy my vacation. Hence, stop asking me to work and evaluate your service, unless you are willing to face positive and less positive feedback with a smile, please.

Social media, earned media and influencer marketing tells us many things about the next vacation spot we intend to visit. Nevertheless, can you:

  • Give an example of your last business or pleasure trip during which you got very good service?
  • What annoys you the most when you go on a holiday?
  • Any tips you can share on how I and my readers can make our next vacation even more enjoyable?

The author declares that he had no conflict of interest with respect to the content, authorship or publication of this blog entry (i.e. I neither got a freebie from any of the mentioned companies nor are they our clients to the best of my knowledge).

Fotos: Urs E. Gattiker

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Developing an expert system: Much work, many challenges, challenging job. | Copyright iStock 912613902

Artificial Intelligence (AI) is and has been on people’s minds for a long time. Advertising agencies and marketing experts talk about:

  • What does Artificial Intelligence mean for marketing agencies?
  • How Artificial Intelligence Is Revolutionizing the Digital Marketing…

Such titles promise much more than most of the blog or webpage entries deliver.

One of the criticisms of AI is that such systems are unable to ace an eighth-grade science exam. The main reason being that current AI systems:

“…[cannot go] beyond surface text to a deeper understanding of the meaning underlying each question, then use reasoning to find the appropriate answer.” (p. 63)

Schoenick, Carissa, Clark, Peter, Tafjord, Oyvind, Turney, Peter, and Etzioni, Oren. (September 2017). Moving beyond the Turing Test with the Allen AI Science Challenge. Commun. ACM 60(9), p. 60-64. DOI: https://doi.org/10.1145/3122814
Check out the video at the bottom of this post !

Read the rest of this blog entry to:

  • define what an expert system is;
  • show why Pinterest’s updates are based on an imperfect AI system;
  • illustrate the challenges of using AI to augment marketing;
  • watch an interesting video about AI and learning science further below; and
  • ask you for your feedback, input and opinions – join the discussion.

This entry is part of our series of posts on AI. To stay tuned and get the latest updates, including on AI and marketing, sign up for our newsletter.

This project is part of our White Paper project for the Competence Circle Technology, Innovation and Management #ccTIM from the German Marketing Association (Deutscher Marketing Verband).

This post continues our discussion entitled, What is marketing automation?

1. Definition of an expert system

In the 1980s, we were all interested in Decision Support System(s) (DSS) and expert systems. The use of AI garnered a lot of interest from the business press.

Using AI became easier, at least in theory, thanks to the rapidly decreasing costs of calculating or doing the arithmetic for ever larger data sets. This made it feasible to use many mathematical operations to gain insights into user and customer behaviour.

At the same time, AI systems represented the risk of amplifying implicit bias contained in the data sets they were trained on. In turn, some systems can make wrongful inferences or judgments about users. Below we attempt to define what an expert system is.

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An expert system uses specialised knowledge and expertise from a human expert in a particular problem area and converts it into software code. With the help of such code, the expert system can emulate the decision-making ability of a human expert. It allows the system to perform at a level of competence that is better than that of non-expert humans.

Expert systems are part of a general category of computer applications known as artificial intelligence.
Expert systems can be used to diagnose patients, to put together a system that identifies fake news, and so on. Difficulties can arise when interpreting results produced by “black box” systems whose workings are often hard to analyse.

Edward Feigenbaum is seen as the father of expert systems.

See also definition by Encyclopaedia Britannica.[/su_box]

Of course, in cases where decisions can be clearly defined with one or even many algorithms (i.e. mathematical operations), we expect expert systems, and thus computers, to take over most of the tasks currently done by humans.

For an expert system to work well, two things are paramount:

  1. its rules and algorithms need to work properly, and
  2. the rules and decisions made need to be the right ones.

Hence, expert systems are often downgraded to represent expert support systems, which support humans in making better decisions. We define expert support systems below.

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An expert support system helps people solve problems. Like an expert system it allows the system to perform at a level of competence that is better than that of non-expert humans.

For instance, with Legalos, the user of the expert support system enters relevant information. The expert support system then uses this information and generates a template, for example a contract between a company and its cloud services provider. Here, the expert support system can provide the entrepreneur with several types of standard contracts very quickly. In turn, this helps keep a company’s legal costs down.

Another simple online expert support system is provided by Germany’s Federal Ministry of Justice and Consumer Protection. The service asks the user to enter some information pertaining to data processing and privacy measures. Based on this input it then generates a transparent data privacy policy as required by Article 12 of the General Data Protection Regulation (GDPR). This can then be slightly modified to fit the company’s particular circumstances.

See also: Luconi, Fred L., Malone, Thomas, W. & Scott Morten, Michael, S. (December 1984). Expert systems and expert support systems: The next challenge for management. Boston: MIT working paper #122, Slong wp #1630-85. Retrieved 2018-06-12 from http://dspace.mit.edu/bitstream/handle/1721.1/47478/expertsystemsexp00luco.pdf


In general, an expert system must acquire knowledge from experts. Such insights are then applied to a large set of probability-based rules to make a decision.

By contrast, an expert support system still requires the human user to weigh some of the factors and then arrive at a decision.

2. Pinterest updates – more noise

Many companies use such technology. For instance, Pinterest and Instagram use similar AI to figure out what Pins you should check out on Pinterest or which Instagramers you should follow. Twitter operates the same way, and so does Facebook (see your newsfeed) or LinkedIn (whom you should connect with).

Recently, I got just such an update (see image below), suggesting that I go and check out 18 pins I should be interested in, based on my board #MCLago.

How on earth did Pinterest's "expert system" decide that these pins are relevant to my #MCLago board?

How on earth did Pinterest’s “expert system” decide that these pins are relevant to my #MCLago board?

3. When expert systems fail to augment marketing

As you can see in the image above, whatever criteria Pinterest used to determine what pins might be of interest to me, ‘common sense’ was not programmed into this decision-making process. How it concluded that I wanted to meet single men is a mystery to me.

Why I should care about Lipitor – a prescription drug – is unclear. Yes, I do post medical stuff, but primarily about minimally-invasive endoluminal or endolumenal surgery, because of my work with Lumendi Ltd.

On the upper left in the above screenshot you can see some people in a photo. The program concluded this from one of my recent pins. I had recently posted something – with video – about a Syrian refugee (the picture shows the trainee with her co-workers and bosses). So the thought was I would like another one. Well, here a deeper understanding of the meaning underlying the item I pinned would have allowed Pinterest’s expert system to find a picture in a similar realm.

Instead, it inferred that I would be interested in “Who’s In and Who’s Out for the Next Season of Nashville“. Seems a little ridiculous.

Basically, an expert system needs to be able to do more than do simple math. Moreover, predictions are not enough to automate the decision-making process or task with the help of AI (see Agrawal, Gans & Goldfarb, Spring 2017). Below, we list the six key things an expert system must be able to handle to get AI to deliver the most value.

Agrawal, Aja, Gans, Joshua S. & Goldfarb, Avi (Spring 2017). What to expect from artificial intelligence. MIT Sloan Management Review, 58(3), pp. 23-26. Retrieved 2018-06-12 from https://sloanreview.mit.edu/x/58311

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An expert system not only executes tasks efficiently, but more importantly, gets a few things right, such as:

1. Data analysis: What kind of photos or status updates does this individual post?

2. Prediction: What action would the recipient take and / or would this potentially be of interest to the customer?

3. Judgment: Yes, this status update / photo is of interest to the user / customer.

4. Action: Include photos of interest and mail out newsletter to subscriber, user or customer.

5. Key Performance Indicator (KPI): The recipient has clicked on several of those 18 suggested pins. This expert system did better than average.

6. Quality of service: The pins the client clicked on provided content that represents added value for this user.


Unless the expert system we use can do the above, marketing activities are more likely hampered than augmented.

4. Ultimate test: Does this content answer the question I am asking?

As pointed out above, whether the user clicked on several suggested pins is one possible KPI. For instance, I clicked on more pins than could be expected. Nevertheless, ultimately it is not the clicks on pins recommended to me by Pinterest that matter. Instead, the ultimate criteria for a user is whether those pins provide information that represents added value.

In my case, that did not apply. To illustrate, I checked out the pin about 10 KPIs in marketing, which brought me to a blog entry (see image below).

When an expert system cannot deliver quality: Pinterest recommends pins that mean little or nothing to me.

When an expert system cannot deliver quality: Pinterest recommends pins that mean little or nothing to me.

As the above shows, somebody is spreading her opinions regarding KPIs. We all know that the life cycle of a client is important, but if you are running a start-up, this could be of lesser importance than getting new clients who can help you pay the rent.

Strategising your sales revenue approach is interesting, but not something that everybody needs to do. Treating your clients respectfully and providing a service that they feel is worth the money they paid you most certainly helps. When it comes to revenues, that applies regardless if you track it with a spreadsheet or do it on a piece of paper.

5. What is your opinion?

The verdict is simple. The expert system that Pinterest uses to serve me weekly or more with an email of suggested pins does not do a good job. The recommendations it makes indicate that the AI system lacks a deeper understanding of the meaning underlying each pin I uploaded. In turn, it cannot source pins that might interest me.

But do not be fooled, neither Twitter nor Instagram do better with these things. Developing a well-functioning expert system takes a lot of work and testing.

However, the fact that expert systems do make errors was already pointed out by researchers in the 1990s:

Williams, Joseph (1990). When expert systems are wrong. In Proceedings of the 1990 ACM SIGBDP conference on Trends and directions in expert systems (SIGBDP ’90), p 661-690. DOI: https://doi.org/10.1145/97709.97761

On reviewing the challenges and benefits of expert systems and neural networks, things do not appear to have become easier in 2014, even though the benefits can be substantial (e.g., https://link.springer.com/article/10.1007/s10916-014-0110-5).

What I would love to know is what you think about these issues in 2018 (#ccTIM will continue updating you on this subject):

  • Do you think AI (artificial intelligence) will revolutionise marketing? Please explain why or why not.
  • Do you have examples of great expert systems, for instance in marketing, management or production?

The author declares that he had no conflict of interest with respect to the content, authorship or publication of this blog entry (i.e. to the best of my knowledge, I got neither a freebie from any of the aforementioned companies, nor are they our clients).

Check out this video, worth watching – see quote at the beginning for reference to research paper that is source for video below.

Nadja Schnetzler from the digital newspaper Republic (crowdfunded start-up), and former CEO of Airtel Ghana Lucy Quest discussing matters during lunch break.

Recently, I attended the Campaigning Summit Switzerland 2018 (CSCH), which gave me a chance to reacquaint myself with familiar, and not-so-familiar people.

This post is the first one of three posts about this topic:

  1. Influencer marketing: Better do it right #CSCH18
  2. Influencer marketing: Smart metrics are key (by April 2 ! sign-up for Newsletter, get it first)
  3. Influencer marketing: A flash in the pan
P.S. – Download the slides (PDF file – 12.6 MB) – mostly in German – and click on the links to the resources I used for some REALLY interesting research articles.

Of course, we also exchanged our latest ideas, facts, and data about the best in social media marketing. Strategy and latest metrics for engagement, campaign success and influencers were topics as well. In influencer marketing, earned media and word of mouth also play an important role.

Naturally, the ROI (return on investment) matters when I launch, conduct and finish an influencer campaign. And yes we shared our experiences and the Campaigning Summit Switzerland using our hashtag #CSCH18.

In short, great people, great program, and here is my report.

I moderated a small session entitled, Campaigning und Influencer Marketing: Alter Wein in neuen Schläuchen? (Campaigning and influencer marketing: Old wine in new bottles?)

The most interesting small session I joined was the one by Sophie Chiquet: IQ+EQ+LQ=CQ for Corporate Quotient – Intelligence is sexy! Let’s wear fashion. At first, I was confused – I got there late. But Sophie helped us along, and participants did their share. Sustainability, transparency, reflecting personality, customisation, personalisation, link to function and to action, etc.

VAUDE, the leader in ecological outdoor clothing has learned that some are willing to pay for sustainability when they shop. In turn, their willingness makes it feasible to strive for reducing waste and water usage in the production process and supply chain.

But then there are still those that continue to go for the latest Zara or H&M outfit for the best price possible. These are unlikely to consider sustainability much when shopping.

I am convinced that using fewer materials, water, and avoiding chemicals is a good thing. As is having one classic suit for ten years instead of buying one trendy suit every year for the next ten. But not all of us will do as we say, and shop accordingly or drastically reduce our CO2 footprint. Because this would, for instance, mean not taking the plane or car to go on vacation.

What do you think, am I right or wrong?

Below the focus is on Instagram metrics and influencer campaigns – interesting if we consider where fashion might be going.

Send your colleagues the URL below that will get them directly to the section you think they are most interested to read:

  1. Influencer marketing done right is not marketing – wait, what?
  2. How should we measure influencer marketing?
  3. Your opinion counts

1. Influencer marketing done right is not marketing – wait, what?

The way we use influencer marketing disqualifies it from being called marketing.

Marketing focuses on the needs of the clients. Theodore Leavitt put it as follows:

Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the cluster of things associated with creating, delivering, and finally consuming it.” – Theodore Levitt (see https://hbr.org/2004/07/marketing-myopia).

Thus, marketing requires learning what the customer’s needs are and how the company’s current products satisfy them.

In turn, brand strength plays an important role in marketing and has the following three parts, similar to a chest of drawers:

  1. Awareness of the brand, meaning our target audience knows about our brand – or not.
  2. Association and beliefs about the brand (e.g., associating the brand with sustainability).
  3. Attitude towards the brand (i.e. positive, negative or no opinion).

An influential blogger can raise awareness of a label with one’s target audience.

If it works, beliefs about a brand might be shifted or one’s attitude toward the brand may change for the better. To illustrate, they are trying hard to improve sustainability within their supply chain.

Brand beliefs, brand awareness, and brand attitudes make up a brand's strength.

Brand beliefs, brand awareness, and brand attitudes make up a brand’s strength.

2. So what is influencer marketing then?

As the above shows we need to define these things clearly. We want to work with influencers to accomplish our influencer objectives sooner, but what exactly is “influencer marketing”?

Some define it as a grey area between an official testimonial and a subtle product promotion – the latter is done almost in passing.

Others feel that it is a non-promotional approach whereby brands focus their efforts on opinion leaders. This is done instead of reaching out to consumers or industrial buyers directly.

So influencer marketing may be useful for raising brand awareness. However, it is unlikely to be more than a flash in the pan when it comes to increasing sales.

If the objective is to increase sales, then it’s a case of influencer promotions, not influencer marketing.

It makes more sense to use influencers to get closer to the client and find out what he or she needs, and likes about our product or a competitor.

In turn, this intelligence can be used smartly by marketers to deliver a better product. It’s that simple.

Brand-Influencer Fit: There are three types of influencers, we need to choose which category suits the brand best.

Brand-Influencer Fit: There are three types of influencers, we need to choose which category suits the brand best.

2. How should we measure influencer marketing?

I recently read a great opinion piece by Sven Hildebrandt in Horizont (2018-01-25, Issue4, p. Praxis 23), who wrote

Die zugrundeliegende Begriffsdefinition determiniert das Messinstrumentarium. (How we define a term determines what measuring options we can choose from.)

But this is not necessarily accurate. In fact, it seems that the crux of the matter lies elsewhere, namely:

Once we define a term such as influencer marketing, the most critical work begins. How do we operationalise the concept, so we can actually measure it?
Influence is a complex multifaceted concept that we cannot measure with one metric. Thus, we may need several metrics to get a fair approximation of what influence entails.

Only by doing this work properly can we empower ourselves to work with the best or most appropriate metrics to gain insights.

For example, an industry blogger may only have a readership of 5,000, but they are an interested audience that trust her. Or, she may have 5,000 people that read her blog who all have a large budget to spend on her topic (e.g., those for managing risks according to GDPR – are you ready for May 2018).

It is paramount that you select someone who not only has a large audience, but whose audience is comprised of your ideal market.

B2B Influencer Marketing: Sales is not an objective at all

If you are in the B2B (business to business) market, the intention is not to generate sales, but to raise brand awareness. This way, you position your brand to become part of the key decision-makers’ choice set – the set they will choose from when making a purchasing decision.

Here are a few key context elements that your influencer ranking system should be taking into account, and why:

  • Age: Michelle Phan may be an important fashion influencer, but will she be useful to reach out to the 50+ or “bestager” group of professional women?
  • Culture and Language: Where are your influencer’s readers located?. They may be in your local market and far away. In case of a restaurant located in a popular tourist region, getting readers from far away may be useful, since those may frequent the restaurant during their vacation nearby.
  • Time: Is the influencer currently active and playing a key role in the ongoing discussion on the topic? If she has not posted for 12 weeks (I have not posted for about eight weeks here :-) ), should we choose somebody else?
P.S. – Download the slides (PDF file – 12.6 MB) – mostly in German – and click on the links to the resources I used for some REALLY interesting research articles.

Stay tuned our next post on this topic by signing up for our Newsletter.

Last speaker, late Friday afternoon: Lucy Quest explains, campaigning means you are taking people on a journey. Remember, successful campaigns are run on the ground.

Last speaker, late Friday afternoon: Lucy Quest explains, campaigning means you are taking people on a journey. Remember, successful campaigns are run on the ground.

3. What is your opinion?

We have pointed out three trends here:

a) Influencer marketing is often done in a way that feels like sales or promotions. But successful influencer marketing focuses on getting a handle on customer needs and ideas to serve them better.
b) Measuring influencer marketing is not easy; in particular we need to define the term, and then find metrics that measure what we want and provide insights (actionable metrics).
c) Finding the right influencer that fits your brand is tough work. Do not let an agency intern do the job for you, stay involved.

But what do you think?

  • What was the last influencer project that you thought was really well done?
  • What measures do you use or recommend for assessing influencer campaigns?
  • What is a successful brand campaign that uses influencers or the CEO to reach out to customers and those that could be swayed?
  • What do you like most about campaigning or Instagram?

The author declares that some of the companies mentioned herein are clients of CyTRAP Labs or subscribers of DrKPI® services.

Interesting reads

By the way, it is not just about a hashtag – #DrKPI #ComMetrics – or spreading the message via social media. It is about getting people involved in the campaign: transform the mindset and achieve more.

Spheres of influence… is where it happens, even for influencers… get the people around you to join you on the journey.

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Urs E. Gattiker and Herbert Towning having fun making movies.

In short: We thought we would give you a peek behind the scenes as we create a marketing video with one of our major clients.

Videos are becoming increasingly important as a method for communicating with your target audience. But it is not an easy process.

Just click on the hyperlinked points below to read more.

  1. Does making a video make sense?
  2. Clickaholics versus engagement artists
  3. Is it worth the effort?
  4. What is your opinion?

CEOs are busy people and usually have other things to do create a video. It also requires no distractions – easier said than done. No matter what, an interruption will happen, and you just need to deal with it.

Demonstrating the latest version of the LomMedical syringe.

Demonstrating the latest version of the LomMedical syringe.

1. Does making a video make sense?

Recently, we published 2018 marketing trends: Sharing economy grows, in which we pointed out that videos are popular, but this may differ a bit according to consumer group:

  1. The ShaRenter generation (born 1999-2018, 0-19 years old in 2018) prefers renting over owning things (e.g., streaming with Spotify or watching videos via Netflix or YouTube) or even renting the necessary textbooks for college online (e.g., Cengage Learning for US $119.99 per semester).
  2. Millennials (born 1981-1998) are 20 – 37 years old in 2018.
  3. Gen Xers (born 1965-1980) are 38 – 53 years old in 2018.
  4. Baby Boomers (born 1946-1964) are 54 – 73 years old in 2018.
  5. The Silent Generation (born 1928-1945) are 74 – 90 years old in 2018.
Thumbnail for LomMedical retractable safety syringe.

Thumbnail for LomMedical retractable safety syringe.

Obviously, the ShaRenter and Millennial generations will love watching a video. They already stream their music, rent their favourite videos and have cut the cord to their cable company (i.e. they instead watch something like Netflix). They may also no longer have a fixed line telephone, but instead use their mobile phone.

But what about Gen Xers?

Changing the script, re-shooting a video sequence.

Changing the script, re-shooting a video sequence.

And what about the Baby Boomers, who are even older?

Will they watch a video? Sure, if it provides them with information that they care about.

We believe that as long as your video conveys important information to your target audience such as employees, customers and investors, it is worth the CEO’s time.

We always try to have a laugh or two while shooting a video.

We always try to have a laugh or two while shooting a video.

2. Clickaholics versus engagement artists

Of course, since CEOs are busy people, they will want to know if it is worth their valuable time. As we all know, shooting a video takes quite a while and many retakes may be needed to get it right.

Of course, getting many eyeballs on your video could be one objective; everybody likes lots of views. However, while having many watch is desirable, the watchers need to represent one’s target audience. So if the video focuses on clients, we want them to watch.

In LomMedical’s case, the video is informational and its target audience is the company’s shareholders. In turn, if 70 percent of shareholders – about 500 people – watch the video, everything is peachy. However, if 200 of those are kids who thought the video would show them a new jingle, they will be disenchanted and click away after 15 seconds.

More views is of course wonderful, but they need to be from members of the audience we want to reach.

Here is the video (about 1 minute) that Patrizia made of our shoot.

The sequences in the clip above illustrate that we worked hard. Fortunately, we had a few good laughs with each other as well. The video has already garnered a few views and shareholders have provided positive feedback on the company blog.

Such engagement in the forms of viewer comments is, of course, very desirable. It shows that the content in the video represents added value for shareholders, LomMedical’s primary target audience for this endeavour.

3. Is it worth the effort?

Making a video is neither cheap as far as the CEO’s time is concerned, nor is the required equipment. The script also needs to be written and the shoot needs to be directed. Moreover, in addition to the camera expert, somebody needs to cut the video and edit it.

Some people do it all themselves, such as Swami Kumaresan, CEO at Databox. But such efforts do not come without cost. I know – I have tried in the past.

First I used screen capture software, then a camera with a tripod. Finally, I contacted our design editor and she did the best she could with my work.

These days, things are different. We have put together a professional team that knows what to do.

Urs E. Gattiker and Herbert Towning having fun making movies.

Urs E. Gattiker and Herbert Towning having fun making movies.

It is worth it… as the video – see below – shows.

4. What is your opinion

CEOs are busy people and usually have bigger fish to fry than taking more than half a day to shoot a video. Worse, the process requires 100 percent of his or her attention.

So, no text messaging, WhatsApp, phone calls, etc. That is not easy for most CEOs… Neither can people access the CEO in the room, though that can happen inadvertently. In our case we asked him to take a few pictures – which he did.

Regardless, interruptions will happen. Somebody rings, or wants two minutes of the CEO’s time while you are trying to finally get this video sequence right… nerve-wracking.

But what do you think?

  • Do you know of a great CEO video that you want us to watch? Please leave a URL in the comments below!
  • Do you manage to keep your CEO on-script, or…
  • How do you decide the video gets your message across?

The author declares that some of the companies mentioned herein are clients of CyTRAP Labs or subscribers of DrKPI® services.

Below you can watch the complete and final version of the video we released on the LomMedical webpage.

Trends and forecasts: Marketing strategy and metrics.

In short: I have not published new content for a while, but I thought this was a great opportunity to wish our readers a Happy New Year and all the best for 2018.

In 2018, the “ShaRenter” Generation (under 20) is challenging retailers to respond to their increasing desire to rent instead of owning product (e.g., clothes, cars, music, textbooks).

The digital age is continuing to disrupt how car brands offer product. For instance, Volvo, Cadillac, and Porsche now offer subscription models.

We address these trends in some detail and outline the challenges.

Just click on the hyperlinked points below to read more.

1. Subscription-based model for renting goods

In 1999, at the end of EICAR’s annual conference in Brussels, a Symantec employee gave me an anti-virus software CD. It was a left over sample and he suggested I give it to one of my students to use. It included the program to install the software on a PC and a one-year subscription to receive free updates. The latter was critical, of course, since virus signatures needed updating to protect against new threats. But in this context, it signalled a growing trend for subscription-based services in the software business.

These days, security software vendors only use online subscription-based revenue models. Microsoft has even switched to this approach for home users buying Microsoft Office. Dating apps like Tinder use this approach as well, offering users a Tinker Gold subscription for about US $14.99 per month. Car brands like Cadillac, General Motors’ luxury brand, offers a subscription-based model at US $1,800 a month for Cadilac’s Book service in New York. This will soon be available in Europe as well.

The advantage of such subscription-based models is that they offer a stable source of income. Definitely more advantageous for Tinder than depending solely on online advertising.

100 years, later DeStijl painter/designer Piet Mondrian is still inspiring fashion in 2017 and beyond.

100 years, later DeStijl painter/designer Piet Mondrian is still inspiring fashion in 2017 and beyond.

2. ShaRenters Generation: 2-click test

Regardless of what we want to accomplish, the website has to get users what they need quickly. If I cannot find things within two clicks, I will leave a site and go someplace else.

This is becoming increasingly important as mobile internet spreads and users use their smartphones. Keep in mind, different groups of consumers have different demands, but you need to target smartly to get what you want.

  1. The ShaRenter generation (born 1999-2018, 0-19 years old in 2018) prefers renting over owning things (e.g., streaming with Spotify or watching videos via Netflix or YouTube) or even renting the necessary textbooks for college online (e.g., Cengage Learning for US $119.99 per semester).
  2. Millenials (born 1981-1998, 20 – 37 years old in 2018)
  3. Gen X (born 1965-1980, 38 – 53 years old in 2018)
  4. Baby Boomers (1946-1964, 54 – 73 years old in 2018)
  5. The Silent Generation (1928-1945, 74 – 90 years old in 2018)

Some claim (e.g., FT.com 2017-12-23/24, p. 14) that the rental business started 15 years ago, however this is simply incorrect. Software vendors such as Symantec saw the writing on the wall years ago. Even back in 1998, a subscription-based model provided a more consistent revenue stream.

Companies like Adobe soon followed; most of its software is exclusively offered in software bundles. Most include software we do not need, but must pay for anyway. Remember cable TV? One reason why people cut the cord is that every package had a lot of content households did not want. In other words, selecting your preferred choice of channels for a personalised package that suited your individual needs was not an option.

How much things have changed over the last ten years is remarkable. Streaming has transformed the music and TV business. People choose what they want to listen to or watch, at what time and where. CDs or DVDs look antiquated in this market where people pay to get access to such content as long as they subscribe to Google Music, Amazon or Spotify. That forces music artists, film studios and so forth to adjust, and offer more merchandising for instance, as well as performing live gigs to pay the rent.

The shift from owning to sharing a car has forced General Motors, Ford, Volvo, and others to adapt. For instance, in the past a car manufacturer built the car and sold it via a dealership or an online vendor. These days, car manufacturers also have to take ownership of the cars under subscription schemes. Hence, they have to account for maintenance costs and depreciation.

One thing is clear, the ShaRenters are an impatient lot. Unless information is found within two clicks, they will not continue to hang around. In turn, usability of a website, user-friendliness and usefulness of the information provided are ever more important. I want to get what I need pronto.

This applies to recruiting as well, where most companies fail the two-click test – though there are a few that excel (see Alpiq InTec below).

School pupils aged 13-17 try to find the best place to apply for their apprenticeship. The ShaRenter generation expects two clicks get them where they need to be (e.g., how to apply, what are the benefits, etc.).

School pupils aged 13-17 try to find the best place to apply for their apprenticeship. The ShaRenter generation expects two clicks get them where they need to be (e.g., how to apply, what are the benefits, etc.).

3. Amazon, Facebook, Google, Booking.com, Airbnb: The antitrust paradox

Kahn has pointed out that American antitrust law has evolved to the point that it appears to no longer be equipped to deal with tech giants such as Amazon.com, Apple, and Uber.

Why? Glad you asked. The reason is that once a supplier gets too dominant in the marketplace, it becomes nearly impossible for a competitor to succeed. In other words, winner takes all.

US regulation focuses on price and selection. Hence, if Amazon assures a wide selection of products at competitive prices, all is good for the regulator (oversimplified, of course). One example is when Amazon manages to squeeze up to a 70 percent price reduction from UPS for parcel shipping.

It still earns money by charging its clients a bit more than it pays. Even better is that smaller suppliers still pay less by selling and shipping via Amazon than directly. The reason being that they can never get the same deal with UPS that Amazon does with its purchasing power.

All is well, right? Not so fast. Things are already problematic when you have little choice but to sell via Amazon. Amazon is a great place to sell, but only if you fit their model and are willing to submit to their rules.

Whenever things are slightly not according to their preconceived model, they get tough and bureaucratic. Tikiwe® tried and it took nearly all of a half-time employee’s hours to jump through all the hoops to get to get their products listed. Bureaucratic and not responsive, I would dare to call Amazon. Whenever one tries to get a service or response out of the company, i.e. one does not fit the model for which Amazon has an institutionalised response (e.g., getting a refund), it gets difficult and service quality drops instantly… because service is not scalable.

Lack of viable alternatives makes the splitting of Amazon an issue (Kahn, 2017-01, see link below). European regulators want to get a minimum of three competitors in a market. The telecommunications market nicely illustrates how this works. In other words, more price and service competition guarantees consumers a better deal (see Lynch, 2017-10-31).

If any platform such as Airbnb or Uber has too much market-share, you look for competition. That Lyft increased its US-market share from the mid-teens to 20-33 percent. Of course, this depends on which metric you use or statistic you believe. Nevertheless, this is good for consumers of such car-hailing services.

Kahn, Lina M. (2017-01). Amazon’s antitrust paradox. The Yale Law Journal, 126(3). Retrieved 2017-10-30 from https://www.yalelawjournal.org/note/amazons-antitrust-paradox

Lynch, David, J. FT Big Read. Big Tech and Amazon: too powerful to break up. Financial Times, p. 9. Retrieved 2017-11-04 from https://www.ft.com/content/e5bf87b4-b3e5-11e7-aa26-bb002965bce8

  • Who will get most attention from regulators?
  • Who will get most #BrandBuzz?
    CLICK for more info: Gattiker, Urs E. (2013). Social Media Audit: Measuring for Impact – ISBN 978-1-4614-3602-7

4. What is your opinion

We have pointed out three trends here:

1 – Renting and sharing of goods is becoming more popular in more markets, including clothing and children’s wear;
2 – The ShaRenting Generation is less interested in ownership of a product than just getting access everywhere, whenever they want it; and
3 – The Amazon Paradox whereby market dominance by Facebook, Airbnb or Booking.com is becoming an issue for market regulators on both sides of the Atlantic.

But what do you think?

  • What product did you buy 5 years ago, but rent these days (think music, video, Airbnb, etc.)?
  • Do you believe that Amazon is too big for its own good?
  • Do you book your hotels via Booking.com? Do you get a better deal that way than directly through the hotel?
  • What do you like the most in the renting / sharing economy?

The author declares that some of the companies mentioned herein are clients of CyTRAP Labs or subscribers of DrKPI® services.

Augmented marketing services can make our lives easier but automation can result in undesirable outcomes | Copyright: Death to Stock Photo, 2200

In short, is ordering your pizza online a result of the restaurant augmenting or just automating the sales process?
Structured, rule-based processes can be performed by robots.
Complex unstructured marketing processes that may result in different or unique outcomes are difficult to automate.
To illustrate, bento lunch boxes in Japan contain little portions of rice, fish, meat, pickles and other delicacies packed in plastic box. These items are extremely hard to grasp, thus automation is a challenge.
Here are the three answers marketers must answer soon to stay ahead of the pack.

♥ Curious? Join 1,500+ other subscribers to this blog’s newsletter and read on!

This article is part of our series of posts:

  • What is …. more follows soon

1. What is automation?

Doswell made a distinction in 1983 in his book “Office Automation” between tool and machine. In its basic form, a pencil is a tool. It cannot be used without the human writing or drawing with it. A typewriter is a machine that requires a human to use it, even if it is electric: a IBM Selectric typewriter.

Doswell defined a word processor as a programmable machine. The fact that it can function in part without a human working it results in automation.

In 1992, I wrote that the effective use of technology requires adjustments in an organisation’s structure, processes and workflows.

Today, we talk about automation, while we actually mean augmentation of services or tasks with the help of software code. We code certain steps or decisions that may result in algorithms that perform routine, rules-based processes. Of critical importance is that the outcome results in one single correct answer (i.e. a deterministic outcome).

But this situation often fails to apply. If I have a book’s ISBN number, I can soon tell my device at home to order this at my favorite bookseller. However, as soon as I enter an incorrect number, the outcome is no longer clear cut. For instance, the system could suggest the correct number, or else show me the name of the most likely author, title and so forth and I can decide if the book I want is listed.

Interesting readDoswell, Andrew (1983). Office automation (see p. 123). Chichester, UK: John Wiley & Sons.

Takeaway: Automation is a not a dichotomy but a continuum

Our understanding of what automation means is a constantly moving target.

In early 2016, Facebook used human editors to develop trending news lists. Some claimed these editors introduced a political bias. In turn, Facebook decided to automate this task and left the job to algorithms.

Later in the year Facebook discovered that algorithms cannot tell a real story from a hoax (i.e. fake news)… Facebook trended fake news.

2. Augmenting marketing services

The above illustrates that automating services is not easy. More often than not, only single tasks end up getting automated. Once things get complex, or several outcomes are possible, automation is very difficult to accomplish.

Automatic marketing services could fail either in unusual situations or in ways that produce unusual situations. The latter may be a tricky situation where various skillful responses may prevent a total disaster or only one specific response can, such as a pilot preventing a plane crash or a powerplant operator preventing a nuclear disaster like Fukushima or Chernobyl (see Tim Harford, 2016-10-11).

Neil Patel and Ritika Puri offer this definition of marketing automation:

[It] connects multiple touch points and marketing channels including social media, email marketing, and content marketing…
Marketing automation makes it easier to send personalized, 1:1 targeted messages. In other words, [it] makes communication stronger…
…Different marketing automation platforms are designed for different types of businesses… Act-On… comes with email, website visitor tracking, lead management, social media, CRM, reporting and analytics. A core value proposition is that business owners can execute their marketing from one place to (1) generate high quality leads and (2) transform those leads into sales…

The above definitions are all important, but they describe mechanisation of marketing processes. The results are what is called single outcome situations or deterministic outcomes.

For instance, you subscribe to a newsletter and get an opt-in email. In turn, you click on the link provided to confirm your signing up for the newsletter. This in turn triggers a thank-you note and so forth. Thereafter you are on the subscriber list and will receive the next published newsletter.

When using a chat box on a website, the operator or system may provide you with standardised replies for those questions that were previously listed in an FAQ (Frequently Asked Questions).

But instead of following these various definitions, it is better to focus on the characteristics of the marketing services that these tools are supposed to automate.

Takeaway: Augmentation still beats automation

By using machine learning we can improve industrial processes, marketing and customer experience.

Augmenting marketing processes is a far more common way to leverage technology than automation.

Interesting read: Lacity, M. C. & Willcocks, Leslie P. (Fall 2016). A new approach to automating services. MIT Sloan Management Review, Vol. 58(1), pp. 41-49. Retrieved 2017-07-31 from http://sloanreview.mit.edu/article/a-new-approach-to-automating-services/

Marketing automation at its best? "When the Going Gets Tough, the Tough Go Shopping" | Copyright: Death to Stock

Marketing automation at its best? “When the Going Gets Tough, the Tough Go Shopping” | Copyright: Death to Stock

3. The next five years in marketing automation

So where will we be five years down the road? How will automation of marketing services look?

Today, it is primarily defined using simple deterministic processes to define the term, such as:

Marketing automation involves a software platform that can be used to deliver content based on specific rules set by users.

Järvinen, Joel & Taiminen, Heini (2016). Harnessing marketing automation for B2B content marketing. Industrial Marketing Management, 54, 164-175. doi:10.1016/j.indmarman.2015.07.002. Retrieved 2017-08-08 from https://www.researchgate.net/publication/280875581_Harnessing_marketing_automation_for_B2B_content_marketing

Interesting read: National Science and Technology Council. Networking and Information Technology. Research and Development Subcommittee (October 13, 2016). The national artificial intelligence research and development strategic plan. Retrieved 2017-08-07 from https://www.nitrd.gov/PUBS/national_ai_rd_strategic_plan.pdf

This is the beginning. Algorithms in marketing may be alluring, but as Spotify’s music recommendations illustrate to us users, algorithms do not necessarily have our best interests at heart. They optimise things to enable the company to sell you more music – and so, make more money (see Brian Whitmann, former principal scientist at Spotify, December 11, 2012).

Takeaway: Manage your risk

Algorithms will get better but how much things will change nobody knows. Amazon’s two divisions – advertising and cloud-computing – have relied on self-service portals to attract new clients. New sales staff hires at these Amazon divisions in the second quarter of 2017 are the primary reason for the increase in the company’s headcount (from 351,000 to 382,400 at the start of quarter three).

Larger companies want personalised service. Their needs are too complex to be met by a self-service portal Amazon offers. The result is that staff has been hired to service large firms. When things get too complex, augmentation of services is the first step but automation is not always feasible.

[su_box title=”Marketing automation vs. marketing augmentation: 3 critical questions to be answered” box_color=”#86bac5″ title_color=”#ffffff” radius=”5″ width=”px 700″ ]

1.  Is there a single correct answer?

Yes, the customer wants to download a white paper or a checklist.

Or, the individual passes a security check and may therefore enter the secure area, etc.

2.  Can we develop a set of likely answers?

In many situations there could be more than one answer as outlined in point 1 above (the ISBN – maybe the client switched two numbers). This means the answer is a no, but what if…

For instance, based on the user’s past order history, the system knows that this could be a book addressing marketing issues. Going through the database, two options come up where everything is correct as typed in by the client, except for the two switched numbers in the ISBN.

So the system responds in some way and shows the person the two possibilities including author, summary of book and cover. The client can then say yes to one or no to both options of books as presented by the system. A ‘No’ answer could then trigger two or three more options, and so on, hopefully resulting in the person ordering one or two products.

3.  What degree of agility is required for performing / automating this marketing task?

One outcome may be a less than optimal recommendation list of possible songs on a client’s playlist.

In the case of advertising business, adding sales teams will help Amazon attract bigger clients. The latter do not appreciate the self-service currently offered; their service demands are too complex, requiring humans to consult.

As factory robotics has taught us, robots lack the agility of humans. It makes little sense to have a self-driving truck, if it needs a driver to unload the contents with a forklift on arrival.

If we have a box with 3 products, pens, pencils, fountain pens, the robot needs to distinguish between them. Until robots are able to do such work, Amazon will continue to use humans to pick up products in its warehouses. [/su_box]

Getting things organised - marketing autmentation | Copyright: Death to Stock Photo Workshop 8

Getting things organised – marketing autmentation | Copyright: Death to Stock Photo Workshop 8

4. Have your say – join the conversation

Organisations can use marketing automation to generate multiple business benefits. Cost savings, better customer experience and better quality can be the result of such work.

But where agility is needed, automation becomes a challenge. Unless we can train robots in an intuitive way, rather than program each possible step, move and outcome (if x then do A or ask for B…), marketing automation is more likely to be marketing augmentation.

[su_box title=”What is marketing automation? THE definition” box_color=”#86bac5″ title_color=”#ffffff” radius=”5″ width=”px 700″ ]

Sales focuses on the seller’s need to convert the product into cash.

Marketing focuses on satisfying the needs or solving the problems the client may have.

Content, affiliate, dialogue, permission and other marketing activities are just different parts of what marketing entails.

In turn, marketing automation tries to adjust an organisation’s structure, processes and workflows to optimise various activities such as content, affiliate, dialogue and permission marketing.

Going down memory lane, let us not forget

However, mechanising part of marketing does not mean with have done a terrific job.
Just think about direct marketing and software companies like Hubspot and the unnecessary things you receive daily in your letter mailbox or e-mail in-box.

As soon as things get complex, automation becomes tricky

In the early 1980s we talked about office automation. Today we have ever more people working at some kind of office. Even though things have been digitised we use as much paper as then to print…. and many things still need to be optimised further to reach an automation level that allows us to send staff to the beach.
We are still ways off having humanoid robots stand at our office door to take on our tasks.[/su_box]

But what do you think?

Source: What is marketing automation?

What is your opinion?

  • Do you think AI (artificial intelligence) will revolutionise marketing automation?
  • Do you have examples of great marketing automation with the possibility of multiple outcomes (probabilities)?

The author declares that he had no conflict of interest with respect to the content, authorship or publication of this blog entry (i.e. I neither got a freebie from any of the mentioned companies nor are they our clients to the best of my knowledge).

Strawberries - 2 days on the shelf and these fruit will show and taste accordingly | Public Domain USDA | Photographer: Brian Prechtel

In short, Amazon bets on Whole Foods to deliver groceries and events like its Amazon Prime Day on July 11.
Walmart (the world’s number 1 retailer) bought Jetcom and now Bonobos to further reduce prices and compete with Amazon.
Carrefour (the world’s number 2 retailer) left growing markets such as Colombia or Thailand. It also seems a bit too reliant on a business model developed in the 1960s.
Aldi and Lidl just opened plenty more stores in the US, UK and elsewhere.

We discuss this a bit further and wonder, who of the three famous gladiators will win… or will it be Tesco, Lidl or Aldi?

♥ Curious? Join 1,500+ other subscribers to this blog’s newsletter and read on!

We discussed how increasingly challenging e-commerce is becoming in several previous posts:

1. Are we profitable?

Which of these companies is the most profitable? Considering the news coverage it gets, one would think the answer is Amazon. I was surprised when it set out to purchase Whole Foods, an upscale food store chain in the US, for US$13.7 billion.

Of course, analysts may feel that this could help its nascent grocery business, Amazon Prime Pantry. In other words, it might allow this online supermarket to acquire enough local brick-and-mortar points to deliver perishable and staple household goods to its clients – one of the challenges it tries to overcome with its Amazon Pantry service in Germany.

But Amazon is spending less (US$500 million) while taking on more risk in India right now for its grocery business there. Here, the biggest challenge is the heat, so a large fleet of refrigerated vans is a must. It might even buy India’s largest online grocer Big Basket, which is heavily invested in Asia and poised to move into Australia.

But in India, roughly 1 percent of total grocery sales (about US$150 million) is done online. Compare this to the UK’s 5 percent… It’s no wonder the UK is considered the most advanced online market for consumer staples.

Jeff Bezos founded Amazon in 1994. In his first letter to shareholders in 1997 he pointed out the following:

… Amazon.com passed many milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838% revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry.
But this is Day 1 for the Internet and, if we execute well, for Amazon.com.

Takeaway: Some CEOs’ performance is measured differently

It shows that Jeff Bezos took a risk launching Amazon. But he was also at the right place at the right time.

Similarly, the touchscreen era began 10 years ago on June 29, 2007 when Apple’s iPhone first went on sale. The iPhone’s timing was impeccable. Google Maps and YouTube use were on the rise and, most importantly, the emergence of affordable mobile data contracts happened shortly afterwards.

If we had invested US$1000 on May 15, 1997 in Amazon shares, they would be worth about US$666,000 today. But Amazon has yet to pay dividends. Understandable, considering Amazon has a US$136 billion turnover, but made just US$2.6 billion net profit last year.

Hence, my profits come from the rise in its share price – nothing more, nothing less. But my banker would probably not give me a small business loan based on such low profitability, would they?

Jeff Bezos’s success is measured on entering new markets both geographically and businesswise. Walmart’s CEO Doug McMillon’s success is measured based on profits.

Fair? Maybe, maybe not – but investors are not always rational…

So are Walmart, Carrefour, Tesco, Lidl and Aldi doomed?

Peaches - harvested ripe: After two days on the shelf, these fruit will look and taste accordingly | Public Domain USDA | Photographer: Jack Dykinga

Peaches – harvested ripe: After two days on the shelf, these fruit will look and taste accordingly | Public Domain USDA | Photographer: Jack Dykinga

2. Where is brick-and-mortar going: Doomed?

Well, considering that Credit Suisse (mentioned in FT article) estimates that 8,640 brick-and-mortar outlets in the US will close their doors this year alone, tough times are coming for Aldi, Walmart and co… Maybe.

By the way, the Credit Suisse study mentioned in the FT article cannot be found on the bank’s website. This illustrates how Credit Suisse fails to understand the digital age as far as communicating their research is concerned :-(

Brick-and-mortar businesses have tried hard to fight the onslaught of digital vendors. For instance, former Carrefour CEO Plassard restored workers’ pride in being part of the French retailer’s staff. He came in 2012 and made a lot of changes to the 12,000-outlet strong retailer doing business in 30 markets.

Unfortunately, the company still lacks a clear vision on how retail will be shaped within the next 10 to 15 years. Its challenge is that:

  • nearly half of its sales are generated in France,
  • its online reach is limited, AND
  • its hypermarkets are challenged by discounters like Leclerc and Aldi, both of which are nipping at its heels.

New CEO Alexandre Bompard is supposed to fix the problem. He was hired based on his success with Fnac Darty, France’s largest brick-and-mortar chain. He has quite successfully fought off Amazon in France:

Takeaway: Expansion can help

In 2016, e-commerce accounted for just about 1 percent of sales for Carrefour.

Walmart went a different route by pursuing deals to improve its online reach. It paid US$3.3 billion for internet retailer Jet.com in 2016, resulting in online sales increases of 63 percent in the first quarter of 2017 in the US alone. Its challenge is to integrate key elements of its e-business with Jet.com. This also goes for 10-year-old Bonobos, a digital-focused men’s apparel group that was bought for US$310 million in cash in June 2017.

Aldi’s planned US expansion from 1,600 to 2,200 stores will make it the third-largest grocery chain operator in the country behind Walmart and Kroger.

Aldi’s 2,500 stores would equal about 53 percent of Walmart’s US outlets.

But neither Aldi nor Lidl have a great web presence and apparently have no plans to change that any time soon.

  • Do they know something investors in Amazon may not?
  • Are they wrong to expand so much with brick-and-mortar instead of in the digital marketplace?
Remember Webvan, Foster City, Silicon Valley? Webvan was an online grocery business that went bankrupt in 2001 after three years of operation. Amazon Pantry is struggling in its markets... and may fail in India. Most people prefer getting perishable foods (e.g., dairy, meat, and produce) at their local store.

Remember Webvan, Foster City, Silicon Valley? Webvan was an online grocery business that went bankrupt in 2001 after three years of operation. Amazon Pantry is struggling in its markets… and may fail in India. Most people prefer getting perishable foods (e.g., dairy, meat, and produce) at their local store.

3. Who is the winner? Growth versus profit

We do not know for sure. One reason is that we seem to be comparing apples to oranges. Amazon is growth-hungry, while Walmart is fighting for market share, but continuing to be far more profitable than Amazon (see also income statement).

Of course, the question is which of the two businesses will be healthiest in ten years’ time.

Both companies need to strive for excellence. Amazon will succeed as long as its shareholders value growth more than profitability. My bet is on Walmart staying ahead by continuing to strive in optimising its:

  • Strategy: How do we assure the strengthening of our Unique Selling Propositions (USPs) by using offline and online sales channels?
  • Best Practice approach: How can we strengthen our USPs… by doing what exactly?
  • Synergies: How can we better leverage offline and online activities, infrastructure, and logistics to optimise revenue channels?
  • Market Positioning: How can we use our online e-commerce insights smarter in our offline business and vice-versa, as well as selling B2C (business to customer) versus B2B (business to business) in more markets?

Of course, economies of scale will continue to play an important role. Moreover, dynamic pricing might play a bigger role in the near future.

Nevertheless, the last word has not been spoken. I, for one, do not appreciate Amazon’s smart attempts at dynamic pricing when selling me print books, for instance (see below).

1. Amazon shows higher price for hardcover version of Tim Harford's book. 2. After client searches for paperback, hardcover price is reduced by 18% = discount... How much can we influence an online shopper to buy the more expensive hardcover to get it faster than waiting for the lower-priced paperback?

1. Amazon shows higher price for hardcover version of Tim Harford’s book. 2. After client searches for paperback, hardcover price is reduced by 18% = discount… How much can we influence an online shopper to buy more expensive hardcover to get it faster than waiting for the lower-priced paperback?

As the above example shows, value-pricing used in combination with dynamic-pricing succeeds with me, sometimes. Some brick-and-mortar businesses have started to do the same in-store such as Fnac Darty and Migros. So far without a big backlash from their clients. But once they realise what is happening… who knows what could happen?

[su_box title=”Table 1: Dreaming together” box_color=”#86bac5″ title_color=”#ffffff” radius=”5″ width=”px 700″ ]
While Tesla and Amazon’s share prices continue to go up, if not soar, investors continue treating traditional carmakers and brick-and-mortar businesses as if they were seriously ill.

But the gloom surrounding the incumbents, which still have strengths the upstarts lack, seems overdone.

See also: Together in electric dreams

By the way, since their record-high price in June, Tesla shares have fallen by 18 percent. The Insurance Institute of Highway Safety (IIHS) conducted a crash test with the Tesla S and did not give it the highest rating. The research arm of the insurance industry, the IIHS’ crash tests are increasingly influential in guiding vehicle safety design.

4. Have your say – join the conversation

Source: Amazon, Walmart, Carrefour: The winner is?

What is your opinion?

The author declares that he had no conflict of interest with respect to the content, authorship or publication of this blog entry (i.e. I neither got a freebie from any of the mentioned companies nor are they our clients to the best of my knowledge).

Final remarks – July 11, Amazon Prime Day

Being a member and paying €69 or US$99 a year gives you faster delivery and allows you to shop and get exclusive deals during Amazon Prime Day. This year Amazon announced on June 30 that the big day will be July 11.

This Tuesday, clients get access to hundreds of exclusive deals, not for the usual 24 hours, but 30 hours. The digital marketplace giant bought TV spots for the event on various channels and in several time slots in the US (see below).

This reminds me of Christian Meyer from müllermilch (responsible for much of their marketing). In his talk at the #MCLago event in Constance (Lake Constance), he explained why his company prefers TV advertising over digital. Seems he is onto something, considering giant Amazon also uses TV to get people’s attention.