Performance Predictors

Which P is your company's focus?

2009-09-29T16:13:00.000-07:00

In the vast majority of organisations around the world, the focus of the marketing mix can be depicted as follows:

Product - Price - Promotion - Place - People

As you can see, promotion dominates the resources of most marketing departments, followed by price ... with product, place and people taking out a distance third place.

In my opinion, this represents illogical thinking. This implies that it is most effective to heavily promote products that haven't been given the necessary budget to develop, and an unjustifiable amount of time pricing them.

Immutable logic says that the resources allocated to the marketing mix elements should look more like this:

Product - Price - Promotion - Place - People

In summary, promote products that people really want. Then, you can reduce your promotion budget by the word of mouth factor created by great products. And, promote those performance predictors that will flow naturally from the great products.

The most powerful performance predictor of them all (potentially)

2009-09-14T16:05:00.000-07:00

So, what is the most powerful performance predictor of them all, and why have I added potentially?

A brand is potentially the most powerful performance predictor of them all. And I say potentially because when branding is executed poorly it has the reverse affect - it becomes a performance detractor.

Branding is commonly misunderstood, even by marketing people. A brand is no more than a promise of performance delivered in advance of actually experiencing the service or using the product. Another helpful explanation is that a brand is the organisation's reputation.

A well developed brand (that is, one which highlights deliberate attributes in a powerful way) willl make perspective customers feel like they have already experienced the service or used the product before they actually have. Clearly, this performance predictor has great potential to fast-forward prospective customers into the future.

Fusing performance predictors into products

2009-09-08T16:06:00.000-07:00

Unlike the traditional relationship between product manufacturers and advertising agencies, performance predictors should not be bolted on to a product as an after thought.

Instead, performance predictors should be fused into the products before, or during, development. This will ensure greater alignment and authenticity between the product and associated marketing communications.

For example, if a restaurant wanted to use a celebrity chef to endorse the establishment, it be would be most effective to have that chef involved in the development of the actual menu (i.e. methods, ingredients, etc.) rather than just promoting the restaurant via marketing communications.

Similarly, rather than have the product development team develop the product and hand it to the marketing team to develp a risk-reversal guarantee, why not have the marketing team involved in the product development and the product development team involved in the development of the guarantee?

Consumers shouldn't be able to tell where the product ends and the performance predictors start.

Human-uniqueness Performance Predictors

2009-09-07T16:09:00.000-07:00

Every single human being on the planet is unique. Some in big ways, others in small ways. But regardless of the extent of these differences, the fact remains, we are all different.

For this reason, there are performance predictors which will be relevant to some consumers and not to others (in some cases, no others!).

For example, in Kevin Roberts excellent book Lovemarks, he quotes the following comment left by a visitor to the Lovemarks website:

"A tradesman came to my house to give a quote - but when he pulled out his Palm Pilot to check his schedule I knew I would give him the job ... When you come across another Palm Pilot devotee you have found a friend, someone on your wavelength, someone who understands." [Consultant, Australia]

So, for this consumer, the tradesman owning a Palm Pilot was a critical performance predictor. But does this mean that all tradesmen should go out and buy Palm Pilots because they are an important performance predictor? Perhaps, but probably not.

The Palm Pilot was a human-uniqueness performance predictor for this particular person. And the dichotomy here is that there may be other consumers seeking the same performance predictor, but the question for tradesmen to ask is: Are there enough consumers in this category to warrant buying and using a Palm Pilot?

What I am saying is, before running off and implementing every single performance predictor suggested by individual consumers, it would be wise to consider the greater impact this performance predictor may or may not have on your target market.

100% User

2009-09-01T16:12:00.000-07:00

Imagine if all your staff (regardless of the size of your organisation) all used your products 100% of the time when requiring a product in your particular category. That would be a powerful performance predictor indeed, would it not?

To ensure even the most skeptical of consumers are impressed by this type of performance predictor, insist that all staff (including yourself), actually pay for the products they use. Don't include your own products as part of their remuneration package.

On the flipside, imagine if a key customer saw one of your executive team, or you as the owner, making a substantial purchase from a competitor. What message does that send? How about, "The owner thinks the competitor's offering is better than her own". Scary thought.

The impact of all staff being 100% users would have a 'sideline benefit' too. The user-feedback generated via the staff could provide many useful insights. With all staff experiencing a customer-perspective and a staff-perspective, their feedback should be at an entirely new level of depth.

A belief in your products is most effectively communicated with '100% staff use', not slick salesmenship.

The different spots of sampling

2009-08-31T16:15:00.000-07:00

All leopards have different patterns of spots, as you know. This unique identity helps to tell leopards apart from one and another.

In the world of sampling, each organisation's approach should be similarly unique. This uniqueness should coincide with the type of offering the organisation is making to the marketplace.

For example, an organisation selling 'services' (i.e. intangible products) should offer seminars, white papers, complimentary consultations, first free lessons, published articles (a sample of information) and free guides.

On the other hand, organisations offering 'goods' (i.e. tangible products) should consider offering a sample of the actual goods. This offer could be a taste test, test drive, user trial (i.e. take the goods at no cost and pay later if you want to keep it) or 'first one free'.

In an increasing skeptical world, sampling really is a great way to reduce pre-purchase risk.

Tryvertising and Customer-made

2008-11-03T02:33:00.000-08:00

The best way to gain consumer trust is to shift the seller power to the buyer. How?

The most extreme (and most effective) way is for consumers to make their own products and services. Think Subway (make your own sub), Dell (build your own computer) and write-your-own will kits. In these examples, the seller is inviting the consumer into the 'production process' and as a result reducing dependence.

Tryvertising is an intriguing term used to describe sampling as the call to action in advertising. Examples include 'visit your nearest dealer to test drive today' and 'receive your free perfume sample inside this magazine'.

By the way, I came across the terms 'customer-made' and 'tryvertising' in The Truth about Trust in Business which I have recently finished reading. The book supports the position that traditional advertising is losing its effectiveness as consumers are becoming increasingly sceptical.

"In a study conducted by Edelman in 2005, 45% of people surveyed said their most trusted information source was personal contacts, with only 4% trusting advertisements". In summary, consumers are more likely to trust other consumers than organisations.

Small Business Champion Awards

2008-09-24T23:47:00.000-07:00

At Destiny Financial Solutions, I am able to put performance predictors into action. This is a video of me accepting the NSW & ACT Small Business Champion Award (Professional Services) for Destiny. And yes, I do need to work more on my celebration dance :-)

How a negative performance predictor almost turned off a prospective staff member

2008-08-13T15:56:00.000-07:00

Performance predictors have a positive impact throughout an organisation, not only in marketing circles. Conversely, negative performance predictors can result in negative impacts to an organisation outside of marketing.

Yesterday, we almost lost a prospective staff member due to the sub-standard fit-out and poor external appearance of one of our offices. The prospective staff member was interested in applying for a vacant position within Destiny Financial Solutions, however was intending to withdraw his interest after driving past our office.

It took some convincing to assure him that this office was closing during the week and a new office with an updated fit-out and professional appearance re-opening.

The point is, performance predictors such as office appearance, have a far greater impact than just marketing. Furthermore, what impact are negative performance predictors having on your organisation? Perhaps you don't even know the extent of this problem...

Sampling is universal

2008-07-17T03:37:00.000-07:00

Sampling is a very powerful type of performance predictor. There is no better way to 'fast forward a prospective customer into the future' than to actually allow them to experience the product or service first hand.

Last night I was part of an informative teleconference call hosted by Results Coaching Systems. The teleconference itself was a performance predictor for the organisation - professionally conducted, innovative and contained experiential content. However, the closing offer proved to me that sampling is universally possible, even in the case of a highly intangible service like business coaching.

All participants on the call where offered a sample 1.5 hour coaching session with a Results Coach. No cost, no obligation. The message was simple - try out one of our coaches for yourself so you can experience how good we really are.

All that glitters is not gold

2008-07-17T03:21:00.000-07:00

As consumers, we are attracted to products and businesses because of the glitter, sizzle and bling. We are driven by emotion first, and logic later.

Whilst presenting a professional image is a performance predictor in its own right, it should not be the only performance predictor your business offers. You might be successful in the short-term, but glitter with no gold is not sustainable.

I agree with Lynn Upshaw, in his book Truth: The New Rules for Marketing in a Skeptical World when he cites "offering only products and services that perform so superbly that they generate their own marketing momentum, above and beyond formal marketing efforts" as an astute tactic.

Increasingly, consumers are scratching the surface to see what is hidden under the glitter. After all, nobody wants to be caught with fools gold.

Replacing the megaphone with a magnet

2008-05-23T22:22:00.000-07:00

Is it possible to remove 'promotion' from an organisation's marketing strategy and still operate a profitable enterprise? Effectively stopping all advertising, sales promotions, online marketing, PR and direct marketing. This would be a very bold move to say the least.

It could work.

To pull off this marketing miracle, you would have to develop and continually innovate a great product. You would have to build performance predictors and lead generation into the product, price and distribution channels.

Has it been done before? World-class surgeons have been doing this for years. Their reputations (created by delivering a great product) acts to draw in new clients. They don't advertise or sell or send press releases or direct mail. And theirs' is amongst the most profitable of business models in the world.

Why performance predictors matter

2008-05-23T22:07:00.000-07:00

During the process of writing this book, I consulted various colleagues, associates, friends and family. Many provided valuable input which shaped my thinking on the topic. Often the most difficult feedback to receive, but more useful than a vague 'slap on the back', is critical analysis of the concept and its relevance.

After I had explained the concept of performance predictors to an associate he simply asked, "Why do performance predictors matter?" At the time I was taken back, however this powerful question forced me to drive deeper into the concept.

Performance predictors matter because it is unfair for marketers to ask consumers to trust their claims, when they have a vested interest in the consumer buying. In an increasingly distrusting society, performance predictors matter more than ever.

Why marketing rules business

2008-05-16T20:46:00.000-07:00

Peter Drucker said, "Because the purpose of business is to create a customer, the business enterprise has two - and only two - basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business." He was right.

When you consider that marketing controls the marketing mix, comprised of product, price, promotion and place (distribution), it certainly helps to assert Drucker's viewpoint. Traditionally, the marketing department had spent almost all of its time, effort and resources on promotion. However, the modern marketer has realised the power of product, price and place on creating customers.

Marketing not only rules business, it is the reason for the existence of business. Without marketing, business fails.

The power of performance predictors

2008-05-16T20:27:00.000-07:00

The power of performance predictors is derived from the following immutable facts:

Consumers are sceptical
Consumers dislike risk
Consumers want evidence to support claims
Consumers are jaded from marketing-hype
Consumers like to buy, not to be 'sold at'
Promotion should permeate out of the product
Brands need substance to survive
Trust is marketing's only objective

Performance predictors mitigate the challenges presented by these facts, and captialise on the opportunities.

Why performance predictors will help you become a better marketer

2008-05-16T20:17:00.000-07:00

Performance predictors reduce consumer scepticism.

They achieve this by providing evidence to support claims, reducing pre-purchase risk, getting to the point fast, drawing consumers in rather than pushing products onto them and building trust.

Why is reducing consumer scepticism critical to marketing success, now more than ever?

The answer lies in the early meaning associated with the word scepticism. In Greek philosophy, scepticism was associated with a "suspecion of judgement". Sceptics take the view that the only course of action is to suspend judgment and adopt a position of indifference toward the product.

If all consumers suspend judgement, there will be no products sold. To be successful as a marketer, you must reduce scepticism to allow purchase decisions to occur.

Buying the Intangible

2008-04-02T23:22:00.000-07:00

Everyday around the world, people and organisations ask consumers to buy "outcomes" which do not exist. Think about it for a moment - when you go to the hairdresser you are trusting him or her to achieve your desired outcome. But you can't be certain this outcome will be delivered. You are taking a leap of faith.

When offering "intangibles" like haircuts, performance predictors are mission critical to your marketing. Without performance predictors, prospective customers are likely to weigh-up the risks and benefits and not move forward. Honestly, do you blame them?

Aligning performance predictors with market position

2008-03-30T15:07:00.000-07:00

Well considered and communicated performance predictors should assist in effectively positioning your product or service.

Occupying the ‘best quality’ position requires the business to produce best quality service, advertise in the best quality publications, associate with best quality strategic alliances and employ best quality staff.

The risk of not aligning performance predictors with your market position is that consumers are less likely to receive your message, because the mismatch will lead to confusion.

Consumer decision making and performance predictors

2008-03-27T14:48:00.000-07:00

As a marketer you may be considering spending a part of your budget on ‘testing’ the theory of performance predictors on a sample of your customer base at a focus group. Unfortunately, this is unlikely to provide any meaningful validation of the concept.

Quite frankly, the ego of the focus group participants will get in the way of the truth. They will make comments like, “I select lawyers based on non-subjective factors such as service provision and price, not the number of diplomas on their walls!” But don’t be fooled, this is pride talking.

In reality, it is very rare that a prospective customer acts in a totally rationale manner when making a purchase decision. Emotions cloud our judgement when we are attempting to make a rationale purchase decision.

You are, however, able to test the effectiveness of individual performance predictors in your marketing communications. For example, you may promote one form of guarantee for a specified time, and when the time lapses, change the guarantee. You can then assess the impact of the two guarantees and select the most effective to move forward with on a permanent basis.

Your own performance predictors business

2008-03-26T15:00:00.000-07:00

Whilst organisations can improve their marketing results by using performance predictors, there is also an opportunity to start your own performance predictors business.

You may have noticed the following performance predictors:

As consumers become increasingly sceptical, the opportunity to start-up performance predictor businesses increases too. Consumers want evidence of performance.

Consumers are sceptical

2008-03-25T14:31:00.000-07:00

Jarrod and Katherine are a married couple in their mid-30s, and planning to build their ‘dream home’ before the arrival of their first child in 8 months. Given the importance of their decision, they have conducted extensive research into the 3 building companies they have short-listed as possible candidates for the project.

The problem for Jarrod and Katherine is that none of the builders provide much more than a glossy brochure and a fast-talking sales representative’s pitch upon which they can base their final decision. In Katherine word’s, “We’re pretty sceptical and don’t like taking risks. I wish we had a crystal ball to see into the future so we could know, without any doubt, which builder to trust.”

Jarrod and Katherine are typical consumers (in fact, their feedback is representative of the collective voice of global consumers) – they are risk adverse and don’t trust any form of so-called marketing. Performance predictors would convince Jarrod and Katherine.

Do you have 'Jarrods and Katherines' approaching your business? What can you do to convince them of your performance?

Servicescapes and Performance Predictors

2008-03-24T15:07:00.000-07:00

Servicescapes, as defined by Booms and Bitner, are the environment in which the service is assembled and in which the seller and customer interact, combined with tangible commodities that facilitate performance or communication of the service*.

The servicescape is concerned with a customer's perceived surrounds and includes tangible and intangible aspects. Tangible aspects include decor, layout and architecture. Intangible aspects include smells, time, sound, temperature, lighting and colours. All these aspects will have an impact on the customer's mood and feelings, which ultimately alters their behaviours (hopefully, for the marketer, in a positive manner).

The servicescape influences customer’s thoughts and behaviours. As everyone is different, based on their unique experiences in life, the interpretation of the servicescape will be slightly different for every customer.

This interpretation is largely influenced by the tangible aspects of the physcial environment which forms part of the servicescape. For example, a clean and tidy retail store is typically interpreted as being inhabited by an efficient business. In this example, the store environment acts as an important performance predictor.

*Source: Wikipedia [Accessed 25/03/08].

How will you be judged?

2008-03-18T14:57:00.000-07:00

When deciding on what performance predictors to develop and promote, ask yourself "How will customers judge the product?" The answer will lead you to the development of performance predictors which are relevant, and therefore, powerful.

For example, will customers judge the product on performance and/or durability and/or speed and/or reliability and/or results and/or cost and/or image and/or responsiveness and/or credibility and/or accessibility and/or security. If you don't know, ask them.

One versus many

2008-03-17T15:10:00.000-07:00

A single performance predictor provides prospective customers with a glimpse into the future by reinforcing product benefits. For example, backing a product claim with a guarantee of performance.

Exposing prospective customers to a host of performance predictors essentially allows them to recreate the likely future in the present. A skilled marketer who uses performance predictors effectively will shift the prospective customer into the future with a range of performance predictors creatively communicated and engaging the five senses.

Price as a Performance Predictor

2008-03-16T15:05:00.000-07:00

Price is an under-rated element of the marketing mix. Pricing strategies can be employed to achieve a host of outcomes, relative to the objectives set.

As far as performance predictors are concerned, price indicates quality. Let's look at cars as an example.

If BMW and Hyundai were to reverse their car prices, how would your perception of the quality of their vehicles change? BMW has been positioned as a luxury car provider and its prices MUST reflect this position or sales will NOT be maximised.

When there is a mismatch between quality and price, prospective customers will hesitate as a result of the confusion created (at the subconscious level). This hesitation is likely to either stop the sale in its tracks or cause the prospective customer to begin the decision making process again (with the aim of looking for more or less value).

Vicarious Learning and Performance Predictors

2008-03-13T15:24:00.000-07:00

Vicarious learning is a term used to describe learning by observing another. Vicarious is defined as received in place of another and learning as the act or process of acquiring knowledge or skill. Mentoring is an example of vicarious learning. Most people will tend to mirror the behaviour of another when they see it resulting in positive consequences.

What does vicarious learning have to do with performance predictors?

Testimonials, case studies, success statistics, before & after demonstrations, celebrity endorsements and prominent client lists are powerful performance predictors and they all have an element of vicarious learning. For example, testimonials outlining the positive results achieved by the customer are typically viewed by prospective customers with aspirations for similar success. What's more, they learn what the customer did to achieve the results (for example, engage the service provider that helped to achieve the described outcome) and follow suit.

The skill required by a marketer is to move this vicarious learning into action. Without action, the prospective customer will 'live through the other person' forever and not take any action for themself.

As humans we often think, "If they did it, may be I can to". That's why little boys have been wearing capes and jumping off fences for decades!

Salient Beliefs and Performance Predictors

2008-03-12T15:07:00.000-07:00

Salient beliefs, in a marketing context, are those beliefs consumer's hold that are highly visible or prominent. Through the experience of life, consumers take on-board various beliefs about organisations, people, objects, brands and products in their environment. Each of these beliefs are retained in memory, and comprise a complex interconnected system of linked meanings.

Skilled marketers can influence which salient beliefs will be activated by consumers in particular situations. This is achieved by locating stimuli in the servicescape (including performance predictors), positively influencing the mood of consumers with humour (for example), projecting back consumers' values and initiating a discussion on consumers' goal aspirations.

A common example of using salient beliefs in marketing is the bright lighting and upbeat music playing in most retail stores. This environment contains stimuli to 'bring out' salient beliefs in shoppers, with the aim of them making a positive link back to a past experience.

Consumer attitudes and performance predictors

2008-03-11T15:08:00.000-07:00

Consumers typically have attitudes toward most tangible objects and intangible aspects including products, brands, opinions, experiences, events, locations, ideas and people. Every individual is likely to have a differing attitude toward each of these objects and aspects.

Furthermore, consumers have attitudes toward their own actions and thoughts in the past and present.

What this means to marketers using performance predictors is that placing your efforts on one performance predictor (aka the silver bullet approach) will be unsuccessful, because everybody has differing attitudes toward everything.

There is no such thing as a performance predictor with universal appeal. As a marketer, you must research your target market and promote performance predictors which are likely to appeal to the largest possible percentage of your chosen sub-market.

Brands and Risk

2008-03-10T14:59:00.001-07:00

Small and medium sized enterprises (SMEs) are unlikely to possess a brand which is a household name. A brand helps to establish trust and reduce risk through familiarity.

As such, if trust isn’t delivered and risk reduced through a well known brand, then you need to develop other ways to minimise the risk of doing business with you.

Performance predictors help to reduce this perceived pre-purchase risk by providing evidence of the likely performance of the product or service.

When (or if) you have a well known brand, you can use performance predictors to reinforce the brand's attributes and your market position.

The objective when implementing performance predictors may be different between those organisations with well known brands and those without, but the result will be the same: more sales.

Personal branding by association

2008-03-09T15:20:00.000-07:00

If you were to meet a person for the first time at a friend's BBQ and they arrived in a new BMW, wore Jag jeans and a Gucci watch, what would your impression be?

The brands we display as a person, provide signals to others as to who we are. They act as performance predictors, providing an insight into who we truly are on the inside.

Do performance predictors eliminate the need for emotion-generating marketing messages?

2008-03-08T18:05:00.000-08:00

Does the introduction of performance predictors to marketing content imply the elimination of an emotion-generating message to consumers by marketers?

The short answer is, no it does not. Performance predictors provide consumers with the evidence they crave, but it does not suggest that marketers should present the evidence in a purely rational context.

As neurologist Donald Calne states:

"The essential difference between emotion and reason is that emotion leads to action while reason leads to conclusions"*. For this reason alone, it is important to place your performance predictors into an emotional message to elicit action (i.e. a purchase) rather than draw a conclusion, for example, "Oh, so BMW really is the best made car in the world. That's nice to know".

Just because consumers are becoming increasingly sceptical and fact-seeking, doesn't mean that bland marketing messages containing only proof of performance will get results. Creative messages aimed at generating an emotional response including performance predictors is likely to achieve maximum impact today.

* Cited in Lovemarks: The Future Beyond Brands (K. Roberts), Millers Point: Murdoch Books, pp42.

Everybody is different

2008-03-06T14:28:00.000-08:00

Prospective customers will place varying degrees of importance upon individual performance predictors. Whilst we may think one particular performance predictor holds the greatest importance for every prospective customer, we are likely wrong. Because everybody is different.

Yesterday a prospective customer phoned to ask about the qualifications of two franchisees within the same city. She was making her choice based on the performance predictor of qualifications; placing more importance on this aspect than experience, size of office, location, etc.

Never assume anything when it comes to the appeal of individual performance predictors to prospective customers, because everybody is different and people change.

Performance Predictors in B2B Marketing

2008-03-05T14:10:00.000-08:00

Yesterday, I was discussing a major project we are undertaking at Destiny Financial Solutions and it requires the design of a graphical interface. A colleague is travelling interstate to discuss the design elements of this project with a graphic designer and he asked me what he should be considering when assessing the capability of this designer.

My answer was simple: "Ask to look at his portfolio of previous work and find out his hourly rate?" His portfolio and price are both performance predictors.

Performance predictors are equally relevant to B2B marketing as they are to consumer marketing.

Cornetto has "no boring bits"

2008-03-03T14:20:00.000-08:00

A great example of aligning performance predictors to a point of difference is the current Streets Cornetto campaign. The point of difference being communicated is the fact that Cornettos have chocolate and nuts all the way to the bottom of the cone. But rather than just assert this point of difference, Streets prove it with a very clever performance predictor. See http://www.cornetto.com.au/. Can you spot the performance predictor?

Aligning perceptions to performance predictors

2008-03-02T14:05:00.000-08:00

The majority of marketers are concerned with changing consumers perceptions of a product to ultimately resuult in a purchase. This outcome is achieved through advertising, packaging, point of sale material, positioning, branding, etc.

In many cases, performance predictors work in the opposite direction. Consumers who have an existing perception of a product, brand, organisation, person, community or idea may change their perception to align it to a performance predictor(s).

Let's look at a common example (I'm sure you will associate with this one). You meet someone new, let's call her Sue. It is an informal meeting at a breakfast seminar, over a cup of coffee. Your first impressions of Sue isn't great. You find her to be untidy, poorly spoken and vague.

A week later, you are talking to a colleague who also attended the breakfast seminar (and as it turns out they know Sue, but you are unaware of the connection). You are chatting about the seminar and mention that you met a lady by the name of Sue, and express your negative impression of her. Your colleague replied, "Oh really! Sue must have been having a bad day, because Sue can speak 5 languages, raised 7 children whilst completing a PhD, she used to be a violinist with the Australian Symphony Orchestra and authored 2 best-selling books".

What happen's next?

Typically, you would add some excuses for your negative perception of Sue, for example, "Oh, Sue must have been having a bad day, you're right. Some of us are just not morning people are we?" Your brain would then realign your previous perception of Sue with the performance predictors about Sue that your colleague has just told you to create a new perception.

Performance predictors have a very profound impact on perceptions. Use this fact to your advantage.

The truth about performance predictors being ethical

2008-02-29T21:59:00.000-08:00

The truth is not all performance predictors are ethical, because not all marketers are ethical.

Like any form of marketing, performance predictors can be manipulated and falsely claimed for the self-serving benefit of the organisation. Whilst I believe performance predictors are one of, if not the most, ethical forms of marketing currently employed, it is sure to be exploited by the dishonest minority.

For performance predictors to be ethical the 'envisioned future' created and subsequently presented to the prospective customer must be representative of common reality; as opposed to an abstract reality based on a perfect one-in-a-million outcome.

For example, a product demonstration proving the effectiveness of a carpet cleaning foam (typically shown on day time infomercials) are ethical where the carpet is standard household carpet and the red wine is, well, red wine. However, if the marketer 'enhanced' the demonstration with synthetic carpet and coloured water, obviously the ethics involved are questionable.

Developing performance predictors by minimising risks

2008-02-28T14:01:00.000-08:00

Grab a blank piece of paper, draw a line down the middle and head the two columns – Potential Benefits and Perceived Risks. Put yourself into your customer’s shoes and fill out the columns.

Next, focus on the perceived risks column, and brainstorm performance predictors that would reduce each of the perceived pre-purchase risks.

To gain maximum effectiveness, aim to generate at least 10 potential performance predictors for each one of the risks. You may be surprised how often it is the last 2 or 3 ideas which are the best.

Fear of the Unknown

2008-02-28T01:50:00.000-08:00

As humans, we allow many fears to drive negative behaviours in ourselves, such as inaction, anger, avoidance and anxiety.

For marketers, removing fear of the unknown for prospective customers is critical to ensuring conversion or commitment results.

Performance predictors allow prospective customers to fast-forward themselves into the future to 'experience' the product or service and use the wisdom gained to make an astute purchase decision in the present ... and hence, reduce (or in many cases eliminated) fear of the unknown for prospective customers.

Are performance predictors, points of differentiation?

2008-02-27T14:03:00.000-08:00

Consumers do not typically assess an offering in isolation. Instead, they consider an offering in relation to alternatives based on their own predetermined minimum requirements.

Points of parity* are the minimum expectations for a given product or service to be considered within a specific category or industry. Prospective customers require that these points of parity exist in a product or service offering before serious consideration is granted, and it is deemed a legitimate contester for the consumer’s share of wallet.

Failure to ensure your product or service includes your target markets' specific points of parity, is likely to result in your offering not being added to their “short-list” of potential providers.

As an example, you may be planning to introduce a new mobile telephone that includes video conferencing, allowing both callers to see one and another via their mobiles whilst carrying on a conversation (importantly, this is an example of a point of differentiation). Obviously this innovative feature would appeal to a large section of mobile phone users, and result in significant demand.

But, as you can see, this one feature is clearly not enough to ensure widespread consumer take-up. Without critical points of parity such as the ability to send and receive calls, send and receive SMS messages and store contact names and numbers the new product would be unsuccessful.

Importantly however, points of parity alone are not enough. In other words, points of parity are a necessary evil, but are not sufficient for consumers to use as the grounds for a final purchase decision. This is where performance predictors which are also points of differentiation come into the picture.

For example, promoting a client success statistic such as Nicorette's ActiveStop program which claims that smokers are 4 times more likely to quit smoking by using the ActiveStop program than with will power alone^. This success statistic is a point of differentiation for Nicorette (it is also a performance predictor). And if a competitor were to introduce a client success statistic that is perceived to be 'better' by smokers wanting to quit, then Nicorette would need to innovate and improve their results or change their point of differentiation (and performance predictor) to focus on another area.

* The term 'points of parity' is credited to Kevin Lane Keller, Brian Sternthal, and Alice Tybout (2002); cited in "Three Questions You Need to Ask About Your Brand," Harvard Business Review, September, 80 (9), 80-89.

^ Source: www.nicorette.com.au [Accessed 28/02/08]

Performance Predictors and Open Source Marketing

2008-02-26T13:54:00.000-08:00

Open source marketing is concerned with listening intensely to customers and working with them to develop (and re-develop) the products and services they desire. With open source marketing, gone are the days of creating products, experiences and marketing in isolation of customers, and later releasing it onto them. To explore the concept in more detail, see: http://www.changethis.com/14.OpenSourceMktg.

How does open source marketing apply to performance predictors? Well, I previously mentioned that performance predictors should not viewed as an after thought or add-on to the product development process. And the product development process should not be carried out in isolation of customers. So, when the customers are present, co-creating the products and services, they should also co-create the performance predictors.

The line between where the organisation ends and the customer begins is becoming increasingly blurred. Isn't that great?

Performance Predictors and One-to-One Marketing

2008-02-25T14:04:00.000-08:00

In 1993, more than a decade ago, Don Peppers and Martha Rogers penned one of the greatest marketing books ever written, The One to One Future: Building Relationships One Customer at a Time.

At the time, marketers around the world recognised the potential implications for a one-to-one marketing approach, with the first step being to implement a customer relationship management (CRM) system. There were wide ranging challenges which slowed or stopped the successful adoption of CRMs within many organisations, and, in my opinion, the full benefits of one-to-one marketing were never realised.

One-to-one marketing is not about CRM; although CRM is typically required to manage a one-to-one marketing approach. Take the start-up company, Brewtopia* as an example of one-to-one marketing.

Brewtopia (see http://www.brewtopia.com.au/) allows customers to 'brand' their own beer, wine and water. So, you could have your name on your own bottles of beer! This is one-to-one.

How do you merge the concepts of performance predictors and one-to-one marketing? The answer is tailor-making (as opposed to mass offering) your organisation's performance predictors to the requirements of the individual prospective customer.

For example, your organisation could provide a customised guarantee on the part of a product or service which is 'most feared' (i.e. carries the highest perceived risk) to the prospective customer. For one customer this may be lowest price, for another it may be after sales support. Provide a guarantee which is most relevant to the individual customer standing in front of you, rather than generalising based on the entire market.

*The author would like to disclose ownership of Brewtopia shares.

Incorporating emotional appeal into performance predictors

2008-02-24T13:58:00.000-08:00

Whilst performance predictors are essentially concerned with rational content which appeals to the left side of the brain, they can be incorporated into an emotional message (which have been proven to elicit action).

The current NZ Tourism TVCs are a good example. The scenes presented, of various NZ landscapes, are performance predictors (you can almost feel yourself in the scene!). However, they are presented in an emotional context to encourage action from viewers.

You are also able to 'tail' emotional content with rational performance predictors. For example, the NZ Tourism TVC could finish with, "94% of international visitors to NZ report it is the best destination they have ever visited".

Simply stating the facts and nothing but the facts in a very bland format may not be the best way to promote your performance predictors. Some inspiring content goes a long way to ensuring prospective customers actually receive your performance predictors within the context of a well crafted message.

Attraction, Conversion or Retention?

2008-02-21T15:24:00.000-08:00

Most marketers spend the majority of their time and focus on 'attraction' activities. Flaging prospective customers down and drawing them in.

You can certainly use performance predictors as a magnet to attract prospective customers. For example, Flight Centre's Low Price Promise (previously framed as 'Lowest Airfares Guaranteed') has been employed very successfully as an attraction performance predictor.

Performance predictors can also positively impact conversion. For example, prestigious lawyers operate from offices with high class fit-outs to help 'justify' their fees (which assists to convert prospective clients).

Finally, existing customers can be retained with performance predictors. This one is more difficult to understand. You see, existing customers continue to evaluate and judge an organisation, even when they have become a customer (especially in the case of organisations which charge ongoing fees). For example, updates to numbers of testimonals and client success statistics are duly noted by existing customers, and encourage their ongoing patronage.

Reducing pre-purchase risks

2008-02-20T14:13:00.000-08:00

Why are widely known brand names worth so much? Why are referred prospects the easiest to convert? Why do the majority of consumers compare a few suppliers/products before making a final purchase decision? The answer to all these questions is risk.

In most situations we, as human beings, are motivated to avoid risk of all kinds. Have you ever decided against buying a ‘home brand’ product so as not to appear cheap in front of friends? This is social risk at work.

Risk is a barrier to the prospective customer buying. From the customer’s perspective, there is a risk that the actual product or service may not deliver on expectations.

If the perceived risks outweigh the potential benefits, the prospective customer won’t buy. The key to success is minimise the risks by making the potential benefits more real. This can be achieved using performance predictors.

Generating money in the bank

2008-02-19T14:25:00.001-08:00

Do performance predictor create value for an organisation? Or are they simply another marketing cost to add to the budget?

I believe a strategically aligned and carefully considered batch of performance predictors drive revenue. The benefit of additional value creation far outweigh the cost - when implemented successfully.

All major shopping centres require tenants to upgrade the façade and fit-out of their shops every few years. Why? Obviously it makes the shopping centre seem more modern and appealing, but the tenants also gain a benefit … it actually results in an increase in sales that almost without exception, more than covers the costs of the upgrade.

The cost of implementing performance predictors should be considered negative revenue.

The best performance predictor ever

2008-02-19T01:42:00.000-08:00

Today, I was fortunate to hear a suggestion which I believe to be the best performance predictor I have ever heard of. At Destiny Financial Solutions, the organisation I am a part of, we help inspiring and experience property investors succeed by providing property-focused investment advice.

My boss suggested we video a 'role play' or reenactment of prospective clients going through the process of becoming clients. This video would then be shown at initial interviews with prospective customers to reduce their anxiety around not knowing what lies ahead.

This is pure genius, and the best performance predictor ever.

Performance Predictor Examples

2008-02-18T14:08:00.000-08:00

The following are some classic examples of performance predictors:

The delivery vehicles of a courier company. Do the courier delivery vehicles look as though they have been bought from a scrap heap? Are they dented and scratched? What is the paint job like? Consumers think that a dented and scratched delivery vehicle = a dented and scratched parcel. In the consumer’s mind, great delivery vehicles = great courier company.
The written plans of a financial planning firm. What is the paper quality like? Are there any spelling mistakes? How professional is the layout? Is the plan comprehensive? In the consumer’s mind, great written plan = great financial planning service.

The location of an advertising agency. Are they located in a high-profile business location or out the back of Burke? The world famous Madison Avenue, in New York, houses many of the United States most prominent advertising agencies. This location gives prospective customers a predictor as to their calibre and quality of work.

The actual bottle of a bottle of wine. Is it heavy glass? Is the label appealing? Is it professionally sealed? Has the wine won any awards? Where is the wine sold, top class restaurants or local pubs?

The foyer of a hotel. Is the lighting adequate? Are the floor coverings worn? Is the front desk granite or chipboard? Another performance predictor would be the ‘star rating’ of the hotel. Five stars = top quality. Photographs of the hotel, on websites and brochures, is another performance predictor.

There are literally hundreds of different performance predictors, many are unique to specific industries or business types. For example, prospective customers of consultants regularly consider qualifications, book authoring, involvement in industry associations and lecturing engagements as relevant performance predictors. However, for a luxury motor vehicle the performance predictors might include grade of leather interior, motoring association ratings and price.

Immersing prospective customers is the 'secret'

2008-02-18T01:53:00.000-08:00

While making a cake, your young child sticks their finger into the flour and puts their finger in their mouth. Immediately, they screw up their face and mumble "yuck" (the taste is a surprise as their older sibling had said that cakes tasted great!).

When the cake is finished cooking and has been iced you offer a piece to your flour-tasting-child to be received with, "no way". Your child has experienced the negative impact of jumping in too soon and only being exposed to one ingredient.

The implementation of performance predictors is similar in many ways to this cake tasting experience. The secret to performance predictors is ensuring you have immersed prospective customers in a range of them. Don't try implementing one or two, monitor the results and give up.

Remember, performance predictors allow prospective customers to fast-forward themselves into the future and this isn't achieved with only a couple of them. You need to promote a range of performance predictors that all reinforce one and another, and are aligned to your market position. Prospective customers must be immersed in performance predictors for commitment to be gained.

'Professionals' using consumer products

2008-02-18T01:40:00.000-08:00

A professional or profession endorsing a consumer product is a form of performance predictor. I was reminded of this today when a colleague was recalling the purchase of their family's washing machine. They purchased a Maytag, in large part, because the salesperson said, "This brand is in all the laundromats - they are very durable".

Oral B has created an extremely successful consumer brand largely based on the slogan, The brand more dentists recommend. Prospective customers receive this message as - if dentists recommend it, it must be good (who am I to argue with the recommendations of dentists?).

Visual branding as a performance predictor

2008-02-17T14:21:00.000-08:00

The problem is that visual branding is perhaps the most common performance predictor in the business world. Poor visual branding means a lot of things to prospects. For example:

Poor quality products and services
The business does not have sufficient capital to operate
Sub-standard attention to detail

What impact is ‘cheap’ visual branding having on the outward quality your business is reflecting?

First impressions count

2008-02-14T14:39:00.000-08:00

Many performance predictors reside in the various first impressions created by an organisation.

Try taking off your ‘owner’ hat for a moment, and try on a ‘client’ one. Look at your business as if you were going to do business as a customer, and were meeting for the first time. What would your first impression be?

Are your premises clean and tidy? Would you be fizzing with enthusiasm and faith in your new financial planner if their office space looked like a garage, with dead cockroaches slowly piling up behind the door?

Are you clean and tidy? What if your personal trainer rocked up to your house looking like the rats had just kicked him out of the gutter and with eyes more bloodshot than a Tequila worm?

How do they pay you? Do you offer a choice of EFT, cheque or cash? Would you pause before signing if the invoice from a courier company was a badly-spelt and barely legible scribble on the back of an envelope?

These may be extremes, and you may be snorting in derision at how far from your organisation these examples are, but hold on and think a bit more. Are you presenting your organisation at its best? Just how far from the examples are you really?

Ensure the window into the future of your organisation provides a snapshot of reality by using performance predictors to make a positive first impression on prospective customers.

Bees to the honey pot

2008-02-13T14:30:00.000-08:00

When a range of performance predictors are in operation, word of mouth will spread. Prospective customers will be attracted like bees to the honey pot.

A business with effective performance predictors will tend to find that good quality prospects will gravitate toward the business over time. The best source of new business is referrals. Let your existing customers lead you to your new customers using performance predictors as the path.

Make your organisation impossible to resist.

Crash course in Performance Predictors

2008-02-12T13:56:00.000-08:00

The first step to implementing a performance predictors’ strategy is to focus your attention on the first P in the marketing mix – PRODUCT (from a product performance perspective). This singular action will reduce the requirement for the development of a marketing façade to ‘hide’ a lack of product substance.

However, great products alone fail in the marketplace everyday. So, what else is needed?

Delivering an exceptional ‘product’ is only the beginning of this new marketing journey upon which I am proposing. Sceptical consumers aren’t simply going to line up in droves because we have focused on delivered an exceptional product (after all, how will they know that we are in fact offering an exceptional product when they don’t know it exists?).

Next, you need to perform – either deliver exceptional service (resulting in high levels of satisfaction) or offering a fantastic product (with zero defaults). This is called “getting the runs on the board”.

Finally, you need to develop and promote performance predictors which highlight the benefits and strengths of your product or service.

Why are performance predictors a 'hot' marketing topic?

2008-02-11T14:05:00.000-08:00

Consumers are skeptical and sophisticated. They don't want assertion; they want proof. And that is what performance predictors deliver.

Have consumers really become that skeptical and sophisticated? Here's proof: http://www.trendwatching.com/trends/expectationeconomy.htm and more proof: http://www.choice.com.au/pressReleaseHomePage.aspx?id=106143&p=1&catId=100582 and here's some more for good measure: http://www.hergestridge.com/skeptical-consumers-122.

(P.S. Still skeptical about consumers being skeptical? Here's one more for you: http://findarticles.com/p/articles/mi_m0BDW/is_47_39/ai_53457352)

Change rooms as performance predictors

2008-02-10T13:53:00.000-08:00

Over the weekend, my wife and I had two interesting experiences with change rooms in ladies clothing stores.

The first one involved no change room at all! My wife was interested in trying on a dress, but was astonished to find that the store had no change rooms. Change rooms allow prospective customers to fast-forward themselves into the future to 'experience' the product or service and use the wisdom gained to make an astute purchase decision in the present. Shoppers 'experience' the product by trying it on and trialing how it feels, fits, smells and looks. Clearly the provision of change rooms is an important performance predictor for shoppers.

The second experience involved a change room which doubled as a staff lunch room, and tripled as a storage room. The paint was peeling off the walls, the carpet was dirty and there was stuff everywhere. A negative performance predictor in deed.

The more confidence you can instill, and credibility you can display, the more sales will result. In both 'change room instances' my wife bought less product as a result of the none existent and negative performance predictors, respectively.

Death by 1000 bee strings

2008-02-07T14:09:00.000-08:00

Implementing a company-view strategy of performance predictors is not for those attempting to achieve the highly sort after, but highly allusive, instant gratification.

Prior to implementing performance predictors, you obviously need to perform! And this may take some time. Performance predictors are not some form of clever marketing facade - they are real. And creating substance does not happen over night.

Death by 1000 bee stings...

Do not attempt to wage your entire marketing on one performance predictor, hoping to achieve instant gratification. From the consumer’s perspective, it is the cumulative effect of all the performance predictors, rather than any one in particular, that is likely to gain their commitment to buy. It is a case of death by 1000 bee stings.

Changing brand associations with performance predictors

2008-02-06T14:17:00.000-08:00

Performance predictors can be employed to change an unwanted brand association. For example, Hyundai has pursued the ‘budget’ position for many years, however consumers were questioning their product quality.

Hyundai cleverly employed a couple of performance predictors (extended 5 year warranty as standard and 24-hour test drives) to rectify this unwanted brand association.

Such a strategy requires the 'brand managers' to walk a thin line between overcoming the negative brand association and not detracting from the brand position. In the case of Hyundai, you do not want consumers to perceive that Hyundai is moving from 'budget' from to 'quality'.

Degree of believability

2008-02-05T19:27:00.000-08:00

Performance predictors can be introduced into a lackluster marketing campaign and deliver limited success. There could be numerous reasons, and one common reason is the believability (or lack thereof) of the performance predictors being displayed.

Following are some examples of performance predictors which carry a high degree of believability:

Independent auditing of client success statistics and internal survey results.
Unpaid and/or unscripted celebrity endorsements.
Product demonstrations conducted by the public (i.e. somebody with no link to the organisation).
Product packaging that shows the actual product inside, rather than a photo of the product.
Testimonials supported by customer photos and reference details for validation of comments.
Providing media articles to support any factual performance predictors being stated (e.g. years in operation can be supported by a newspaper article covering the business opening).
Providing the original source document of a critic review, rather than re-phrasing or quoting the review.

Performance predictors executed effectively will achieve 'effective results'. The reverse is also true.

Using a sports car to sell homes

2008-02-04T14:16:00.000-08:00

A colleague was telling about his friend, a moderately successful real estate agent, who told his accountant that he would love to own a Jaguar sports car. The accountant scoffed at the very thought, since he was barely earning enough commissions to sustain the operating costs of his Falcon.

The agent wasn’t deterred, and went to the local Jaguar dealer for a test drive. The astute salesperson there understood the importance of performance predictors, and the agent left the dealership with a signed contract for a new Jag that same day.

The salesperson didn't apply the concept of performance predictors to the Jag sale itself, however understood that the Jag would work as a performance predictor for the agent in his role. Prospective vendors would see the agent as highly successful – and it worked.

His income doubled over the next twelve months. Within moments of seeing the agent pull up, the prospects saw what his success would mean to them - fast sales at the maximum price. After all, who doesn’t want a successful agent selling their home?

Risk minimisation is big business

2008-02-03T14:10:00.000-08:00

How much money is spent each year by people protecting themselves against risk? In Australia alone, the figure would be billions of dollars. Think of all the insurance policies, ambulance cover, alarm systems, fire extinguishers, health check-ups, etc.

That is telling marketers an extremely important lesson – consumers hate risk, so much that they are willing to pay billions to minimise any and all perceived risk.

Do you sometimes feel like it’s an uphill battle to convince a prospect to commit? They have the need, they have the money, but they just won’t commit. Why not?

The answer is that you haven’t tipped the potential benefits scale in your favour. You need to employ some performance predictors to do the 'convincing' for you. Talk is cheap.

Every time a consumer considers a purchase, they engage in a cost/benefit analysis in their mind. This will result in a number of outcomes, for example: (a) that’s too expensive, (b) that will make me look fat, (c) it doesn’t include delivery, (d) people will think I’m cheap, (e) I’ll feel a lot safer, etc.

Consumers almost simultaneously weigh up the perceived risks (including functional, psychological, etc.) against the potential benefits prior to making a purchase, or a non-purchase.

For example, a new type of tasty soft drink that cleaned your teeth while you drank it would likely be priced higher than standard soft drinks. The potential benefits include the removal of the need to clean your teeth the conventional way (including the cost saving of not having to buy toothpaste or toothbrushes again), the potential to have cleaner teeth as the soft drink can get into all the gaps between your teeth, the improved social image associated with trying something new, the dentistry savings as a result of cleaner teeth, etc.

Or a horror book that omitted an electric shock and loud frightening sounds at the points of a climax within the story line (using visual sensory technology to assess where the reader is up to) would again fetch a higher price than a traditional paperback. Consumers trade off the potential benefits and perceived risks prior to making a purchase decision; your job is to make sure that the benefits outweigh the risks. Highlight the benefits with performance predictors, not idle claims.

When consumers purchase low cost items, they do not take as long to make a decision as when they are choosing a high ticket item. This is because with low cost items the risks carry less severe consequences. Take the purchase of a packet of lollies, for example.

Perceived Risk:

“People might think I’m greedy"

Potential Benefit:

“Eating lollies gives me extra energy”

Perceived Risk:

“Will my friends think it’s cool to eat this brand of lollies?"

Potential Benefit:

“Eating lollies makes me feel good”

Perceived Risk:

"Will the texture of the lollies feel nice on my tongue?"

Perceived Risk:

"Will the lollies make my breath smell bad?"

Potential Benefit:

“My breath will smell better and therefore people will like me”

Perceived Risk:

"Will the lollies make me feel sick after eating them?"

Potential Benefit:

“The lollies will satisfy my hunger until dinner”

Perceived Risk:

“Am I wasting my money by buying lollies?”

In the above example, the perceived risks outnumber the potential benefits. But this doesn’t necessarily mean that the consumer wouldn’t buy the lollies. One of the potential benefits might carry substantial importance and tip the scales in favour of buying.

For another example, let's consider someone buying a luxury cruiser:

Perceived Risk:

"How can I be sure the boat will perform on the water?"

Potential Benefit:

“My wife will appreciate me more because I’m trying to get the family together by owning it”

Perceived Risk:

“Will my friends accept me owning an expensive boat?”

Potential Benefit:

"Friends will look up to me because I own a luxury cruiser"

Perceived Risk:

“Can I afford the ongoing costs of owning this boat?”

Potential Benefit:

"I will be able to take customers out on my boat"

Perceived Risk:

“Does the company provide a speedy warranty service so my boat would never be out of action long?”

Potential Benefit:

"I love boating and fishing. This cruiser will be great for both"

Perceived Risk:

“Will it take long to deliver my boat once I order?”

Perceived Risk:

“Will the motor be really noisy and hurt my children’s ears?”

You should always be working on ways to increase the potential benefits and minimise the perceived risks of prospects doing business with you.

If you do not have the luxury of a Big Brand, you need to minimise the perceived risks using performance predictors.

In the example of the luxury cruiser's performance ("How can I be sure the boat will perform on the water?"), you could highlight the German engineered motor, winning of an industry award for the motor's performance, client testimonials mentioning solid performance of motor, offering of an extended 'test drive', independent research comparing the motor's performance with competitors, dollar amount of the R&D budget spent on the motor, offering of an extended warranty and boating critic reviews.

Prove it to me...

2008-01-31T13:56:00.000-08:00

“I am skeptical. I doubt every single word you tell me about your product and business. I feel jaded. Everyday, marketers are screaming their messages at me ... trying to attract me to buy their product. When you tell me how fantastic your product is, I think “prove it”, or I will ignore you. If you are making unsubstantiated statements in order to get my money – forget it, I’ve heard that before.”

This message is being delivered by the consumers of the world. As marketers, we must listen.

The answer is not to move focus from advertising to public relations, or public relations to direct marketing, or direct marketing to online. The answer is...

...performance predictors. Walk the talk.

The ‘customer side’ of ingredient branding is a performance predictor

2008-01-30T13:52:00.000-08:00

Ingredient branding is a technique used by wholesale suppliers of 'inputs', which are added to create the final product for the end-user. For example, Intel microprocessors successfully used the ‘Intel Inside’ ingredient branding campaign to gain the number one spot in their market. Intel created a new demand for computers that have the Intel ingredient added.

As these ‘ingredients’ become better known and their positive reputation grows, there is another side to this story. The ingredients become performance predictors, from the consumer’s perspective.

A multi-award winning builder from my home town, Toowoomba in Queensland, established a premium status by highlighting the ingredients in their homes. Austral bricks, BHP Colourbond rooves, Rheem hotwater systems, Doof tapes, GJ James glass, SMEG appliances … and the list continued to outline each and every supplier of all the ingredients of their homes.

Prospects were given an important insight into the likely quality of the end-product by the builder highlighting the quality ingredients used in construction. Ingredient branding may be a performance predictors of relevance to your business. Or more importantly, of relevance to your customers!

Negative performance predictors detract

2008-01-29T14:31:00.000-08:00

During the conceptualisation phase of Performance Predictors, I had discussed the concept at length with my wife Michelle. After a few months of me boring her with the concept, she suddenly questioned, “What is the opposite of a Performance Predictor?” as we drove by a high school in Perth where our soon-to-arrive Brazilian exchange would be attending.

I asked, "Why?"

Michelle simply pointed to the barbwire around the top of the 10 foot high fence that surrounded the perimeter of the school grounds and said, “I’d never send our children to a school that has barbwire around it; because it is there to either keep uncontrollable children in, or problem residents out.”

Performance predictors which would typically be viewed as detracting from the 'potential performance' of an organisation, school, person, community, etc. should be eliminated. These negative performance predictors detract from the reputation building process which positive performance predictors create.

Packaging as performance predictors

2008-01-28T14:36:00.000-08:00

Imagine yourself in your local deli. You really feel like some chips, and so head for the displays, where there are two brands (this is a very small shop). The first one has a big display, shiny bright packets and a selection of flavours. The second also has a big display, but it’s sitting at a strange angle, and one of the corners is dented. Their packets seem faded, with barely legible barcodes and brand names, and you have to rummage to see how many flavours are there. They both sell for the same price, so which do you choose?

Or, for a slightly more up-market scenario, you’re at the airport, about to board a plane. Whether or not you get airsick, how far would your heart sink and stomach rise if you saw your plane, the hunk of metal that was all that stood between you and a radical makeover as a pancake, was a grime covered specimen with peeling paint and what looked suspiciously like a giant rubber band beneath the hood?

These may be extreme examples, but every day we ignore our parents and go around judging books by their covers. Those chips mentioned above may be delicious, lovingly hand made morsels of cholesterol enhancing snacky-goodness, and your airline may have no money left over for paint jobs and windscreen wipers because they’ve funneled all their resources into the latest and greatest safety precautions, but that doesn’t change your original impression – and when your customers are considering business with you, these impressions have to count.

Packaging, whist an obvious type of performance predictor, is often given limited attention as we marketers move quickly to the more important stuff. However unfortunately for us marketers, without performance predicting packaging, consumers never move past a 'passing glance'.

Lost customers can be saved

2008-01-24T14:31:00.000-08:00

A negative performance predictor does not always result in a lost customer. However, there is a disclaimer: you need to have other more powerful positive performance predictors to counteract the negative.

How many times have you as a consumer thought, "everything else feels right so I'll overlook this one negative aspect. After all, there is no such thing as perfection"?

I remember a few years ago, my wife and I engaged the services of a conveyancer who had a vast amount of experience, testimonials from satisfied clients and masters level qualification, but when you went into his office he had client files piled around his desk. When we were making the decison on whether to proceed, we discussed these aspects and decided to move forward with him as the positives far outweighed the negatives.

Obviously, over time, and with an effective client feedback system operating, you should remove all negative performance predictors as you become aware of them.

Performance Predictors as a Barrier to Entry

2008-01-23T11:31:00.000-08:00

An organisation with very prominent and relevant performance predictors will act as a barrier to entry for other would-be industry entrants. The organisation will in affect 'scare-off' prospective competitors.

In this regard, performance predictors are a risk reduction strategy for the organisation implementing them. That is, the performance predictors reduce the risk of excessive competition within the industry.

Hidden performance predictors

2008-01-22T13:49:00.000-08:00

Many organisations have the content or ingredients for at least one performance predictor, but have failed to recognise its potential for marketing. For example, many pure product providers have products to offer that actually work. However, few use 'berfore and ask demonstrations' to prove the point. Or for another example, consider testimonials per se. All successful organisations have satisfied customers, but how many actually ask them for a testimonial?

As Stephen M.R. Covey says in his book The Speed of Trust, "In creating credibility with others, it's not just the results that count; it's people's awareness of the results. Thus, it's important to be able to appropriately communicate results to others." Performance predictors which are promoted assist in building trust. And trust is important, very important.

How many performance predictors are laying dormant in your organisation which you could promote?

Performance Predictors: Brand Marketing or Direct Response?

2008-01-21T20:00:00.000-08:00

Brand marketing is concerned with developing and promoting brands in the market. The objective is to engage and resonate with consumers, and over time, impact on their purchase decision making. In contrast, direct response marketing is designed to solicit a direct response from consumers that is measurable.

What are performance predictors - brand marketing or direct response marketing?

The answer is both.

Some performance predictors will serve mainly to reinforce brand attributes and assist in creating engagement. For example, the professional offices of an accounting firm. Others will generate a direct response from consumers, because they are compelled to act now. For example, a before and after demonstration of acne cream.

You may even consider 'planting' a direct response orientated performance predictor into a brand marketing campaign to ensure it delivers a return on investment.

'Producing' performance predictors

2008-01-20T14:05:00.000-08:00

If you are lucky, you might work in, or own, a company that already has performance predictors ready to be promoted. However, if you work in an average business (that is, the vast majority), you might have some internal improvement to make before promoting a performance predictor.

As a rule of thumb, service providers should focus on service delivery excellence (including experience management, service feedback, capability improvement, customer satisfaction and customer results), whereas product providers should focus on product development excellence (including quality assurance, innovation and continuous improvement).

By focusing a company's limited resources in the above areas, there is a greater chance of creating a performance predictor of merit. For example, a law firm that promotes, "We win 97.8% of our clients' cases" has focused on excellence in service delivery to create this performance predictor. Similarly, a paint manufacturer that promotes, "Dripless paint [and proves it with a product demonstration]" has focused on innovation.

There are some performance predictors which can be used as 'Catalytic Mechanisms' (see Good to Great by Jim Collins for an indepth explanation of this concept). Catalytic Mechanisms force behaviours to change in alignment to the mechanism itself. Guarantees are a good example. If an advertising agency guranteed to always deliver client projects on-time or the project is free of charge there is a very good chance that all projects will completed on-time once the guaranteed is promoted (even if this wasn't the case in the past). There is an invisible discipline at work.

It may take your organisation some time to produce a powerful performance predictor, but the effort will be worth.

'Matching' is the new 'Selling'

2008-01-17T14:11:00.000-08:00

When an organisation embraces the concept of, and effectively implements performance predictors, selling becomes irrelevant.

Selling is associated with the concepts of convincing, influencing, asserting and persuading (sceptics may also add manipulating and deceiving to this list).

With performance predictors shining bright, the people within the organisation become experts, solution-providers, value-creators and trusted advisers (regardless of their position). The performance predictors are continuously 'selling in advance' for the organisation.

This 2.38 minute video makes the point perfectly: http://www.youtube.com/watch?v=EZS9ECoDnWg.

What was once selling, may be replaced with matching, only in the instance where the prospective customer isn't sure if they 'fit' the organisation. Additionally, where the prospective customer knows they fit, no matching will be required.

No longer will the organisation be pushing products onto prospective customers with a passing interest. Instead, prospective customers will be trying to gain approval to be served by the organisation.

"That's too risky!"

2008-01-16T13:57:00.000-08:00

All consumers (aka human beings) are risk adverse, albeit to varying degrees. Less risk is better.

Lovelock, Patterson and Walker in their excellent textbook, Services Marketing, propose six main types of risk consumers experience when making a buying decision.

1) Functional risk is concerned with performance outcomes. For example: How can I be sure this accountant will gain the maximum tax return for me?

2) Financial risk is concerned with monetary loss and unexpected costs. For example: Will this electrician add extra costs to my final bill that were not quoted or mentioned to me?

3) Temporal risk is concerned with wasting time and consequences of delays. For example: Will the cafe have my lunch order ready on time, so I am not late back to work?

4) Psychological risk is concerned with personal fears and emotions. For example: Will I feel stupid if I don't understand the diagnosis given by the doctor?

5) Social risk is concerned with how others think and react. For example: Will my colleagues dislike my new tie and make wrong assumptions about me as a result?

6) Sensory risk is concerned with unwanted impacts on any of the five senses. For example: Will the restaurant still spell strongly of new paint like last time?

Knowing what are the main risks typically experienced by your customers is step number one. Next, you need to develop performance predictors to eliminate (or at least reduce) each of these risks. In the first example above (How can I be sure this accountant will gain the maximum tax return for me?), you could promote a client success statistic stating that '94% of clients are "pleasantly surprised" with the tax return received from XYZ Accountants (source: 2007 client survey, audited by PWC)'.

When you have completed the process of eliminating risks with performance predictors, you need to select your flagship performance predictor from the list.

What will your 'Flagship Performance Predictor' be?

2008-01-15T14:20:00.000-08:00

A golden rule of marketing communications is send only one message in your communications. Less is more when it comes to marketing content. Why?

The ultimate answer lies in the way the human brain processes information. Our brains prefer (and are most effective) when dealing with one concept at a time. Consider the example of catching tennis balls.

If I were to throw you one tennis ball, the chances of you catching it are high. However, if I were to throw you 3 tennis balls, the chances of you catching all 3 balls would be slim. In fact, in an attempt to catch all 3 balls, it is highly likely that you will catch none. The brain prefers to focus on one thing at a time.

Applying this theory to performance predictors leads us to the conclusion that you must develop and promote one flagship performance predictor. Remember, less is more.

In selecting your flagship performance predictor, I would suggest you choose the one with the greatest "wow factor" or potential impact on prospective clients. If you're not sure which one this would be, you should conduct some market research to confirm.

Selecting a flagship performance predictor doesn't in any way suggest you should only have one performance predictor, however promoting only one will maximise the effectiveness of your marketing communications.

Your other performance predictors should act to reinforce your value, position and brand promise. Often your customers will be exposed to your other performance predictors as they progress along, or engage in, your client experience.

Performance Predictors and Marketing Communications

2008-01-14T14:36:00.000-08:00

Marketing communications are messages used to communicate with a market (Source: Wikipedia). The typical channels of marketing communications include advertising, public relations, direct marketing, personal selling, sales promotion and online marketing.

Using the above definition, it is obvious that performance predictors are a form of marketing communications. That is, they are a form of message used to communicate with a market.

Performance predictors can be used as content for marketing communications. For example, product demonstrations (one type of performance predictor) is common in infommercials.

I say can be used as content for marketing communications, because they can also be integrated into the service delivery process or product itself. For example, FedEx answering incoming calls after only 1 ring.

Seeing is believing

2008-01-13T14:03:00.000-08:00

You may of heard that...

People believe approximately 10% of what they hear, 20% of what they read and 70% of what they see.

The fundamental human behaviour which this statement reflects underpins the effectiveness of performance predictors. Human beings are typically skeptical and inquisitive by nature, which results in consumers wanting facts, data, examples and trials to substantiate any marketing claims made by organisations before committing. Fair enough.

Take the following for example...

If I told you that there was a guy who could significantly alter your thinking in a matter of minutes, you would probably be skeptical. Instead of not believing this claim, please visit You Tube and look at this video: http://www.youtube.com/watch?v=befugtgikMg.

Now, you may still be skeptical after watching the video, however you would be a real cynic not to be open to more explanation about the process used in this video.

When selecting or developing performance predictors always keep this fundamental human behaviour in mind - we believe when we see (more than when we are told or read something). In fact, the best performance predictors combine seeing, hearing and reading the 'evidence' simultaneously.

Employee Probation

2008-01-10T13:49:00.000-08:00

You might be thinking, 'What has employee probation got to do with performance predictors?" The answer lies in the definition of probation.

Dictionary.com defines probation as the testing or trial of a person's conduct, character, qualifications, or the like. Probation is a performance predictor which employers use to ensure the claims and promises made by candidates in job interviews can be substantiated.

Reference checks are another example of performance predictors used by job candidates. Imagine the impact created by a candidate who listed 15 referees, instead of the standard 3, and offered to extend the 'standard' probationary period by 6 months!

FedEx has positioned performance predictors

2008-01-09T13:58:00.000-08:00

FedEx are masters of positioning. They chose speed as their market position, and this position permeates throughout the operations of the company.

An excellent example of aligning market position and a performance predictor is found at FedEx. When you phone FedEx they answer all inbound calls after only 1 ring, when 'business norm' is 3 rings.

Saying your fast is one thing, but proving it (in a small way using this performance predictor) is another. This 1 ring philosophy provides prospective customers with a 'window into the future' of how FedEx will performance.

Consider these other performance predictors which reinforce their market position:

immaculate presentation of their delivery vehicles (unlike the scratched and dented vehicles used by their competitors)
quality staff uniforms and presentable delivery drivers
quality packaging (that makes the object look like it will get there faster)

The lesson learnt from FedEx is walk the talk, even it is only a small gesture of proving your claims.

"SHOW ME THE MONEY!"

2008-01-08T14:07:00.001-08:00

We all remember these famous words that Cuba Golding Jnr's character, a struggling NFL gridiron player, ordered down the phone to Tom Cruise's character, a sports agent.

The words he used were, "Show me the money!" But the message being sent was, "I want proof, validation and evidence of all the hollow promises you have just preached. You tell me you are good, but I want evidence. And the evidence I seek is a playing contract".

The more salespeople, like Tom Cruise's character, "sell-speak" the more evidence we want, because we don't trust people that talk hollow promises and send message with hype as the central theme.

This is my message to salespeople: talk less, prove more (using performance predictors). If you don't, only those with the personality of Cuba Golding Jnr's character will ask you for the proof ... the others (that is, the majority) simply won't buy.

Are Performance Predictors Relevant in All Industries?

2008-01-07T14:07:00.000-08:00

When I was originally exploring the concept of performance predictors, I prematurely concluded that performance predictors were only relevant to pure service businesses, such as engineers, accountants and advertising agencies. However, I was wrong.

Let's investigate five broad categories of business types, and consider relevant performance predictors for each in turn.

1. Pure products: are defined as tangible objects with no intangible service component. Examples include salt and razors.

Relevant performance predictors may include:

'Before and after' demonstrations
Prices
Celebrity endorsements
Consumer confidence programs (for example, the Heart Foundation Tick of Approval)
Product trials
Packaging
Size of R&D budget
Testimonials
Guarantees

2. Pure products + service component: are defined as tangible objects as the core offering with an add-on service component. Examples include new homes and cars.

Relevant performance predictors may include:

Market position rankings
Prices
Product trials
Marketing collateral
Industry awards
Testimonials
Guarantees
Critics reviews
Photographs

3. Hybrids: are defined as offerings with an almost equal composition of product and service components. Examples include restaurants and hair cuts.

Relevant performance predictors may include:

Prices
Location & fit-out
Visual branding
Marketing collateral
Industry awards
Testimonials
Professional memberships
Critics reviews
Signage

4. Pure service + product component: are defined as intangible experiences as the core offering with an add-on product component. Examples include air travel and theatre.

Relevant performance predictors may include:

Prices
Celebrity endorsements
Visual branding
Marketing collateral
Website quality
Industry awards
Testimonials
Years in operation
Signage
Photographs

5. Pure services: are defined as intangible experiences with no tangible product component. Examples include engineering and teaching.

Relevant performance predictors may include:

Market position rankings
Prices
Celebrity endorsements
Location
Qualifications of personnel
Marketing collateral
Website quality
Industry awards
Testimonials
Professional memberships
Years in operation
Guarantees
Client success statistics

I have only applied common performance predictors to the above categories. There is scope to be more creative and tailor performance predictors to a specific business based on what is known about its clients.

Performance Predictors in Action

2008-01-06T14:05:00.000-08:00

Over the festive season, I witnessed many reminders of the versatility of performance predictors.

Banana Boat - the company that produces sunscreens - were running TV advertisments for their new Powder-Dri sunscreen which dries into powder, so sand doesn't stick to your skin. Instead of simply making the claim, the advertisement showed a demonstration to prove it. A very appropriate performance predictor for this product indeed.

Additionally, Weight Watchers were running TV advertisements at the start of the New Year (very smart timing), stating that "people lose 3 times more weight with Weight Watchers than going it alone". So, those people who set a New Year's resolution to lose weight, would be seriously considering attending Weight Watchers after having been exposed to this advertisement.

Finally, I was reminded of my first exposure to the power of performance predictors. Many years (about 10 in fact) I remember vividly a close friend who was travelling overseas before starting university saying he was going to Flight Centre to book all his travel arrangements. When I asked why, his answer was, "Why wouldn't I? They guarantee the lowest airfares!"

Performance Predictors are all around us. Perhaps you could put one (or more) into action.

Product Features vs. Performance Predictors

2008-01-01T19:01:00.000-08:00

Product features may be mistakenly considered performance predictors, however product features alone do not allow consumers to predict the future performance of the product.

For example, the new car industry is in continual product innovation mode. All the car manufacturers advertisements list a range of new product features, but rarely do they back-up these features with performance predictors. Remember, today's sophisticated and sceptical consumers are listening, watching and reading claims made by organisations and asking, "Why should I believe it? Prove it to me!"

Following is copy extracted from a car manufacturer's advertisement in a magazine [with comments added]:

The new Audi Q7. The first performance 7-seat SUV.

Get carried away by the new Audi Q7. Tuned to respond to the driver's needs, the high-torque 3.0 TDI quattro, 3.6 FSI and high performance 4.2 FSI V8 [notice the features listed do not answer the question: why should I believe it?] are all built to deliver refined power and explosive acceleration [the copy now makes the link between features and benefits, but still does nothing to prove the claims]. This, together with our famous quattro permanent all-wheel drive and servotronic speed sensitive power steering makes for superb handing and an exhilarating ride [more benefits, but again no performance predictors to substantiate the claims]. The spirit of 'Vorsprung' lives in the new Audi Q7.

For more information or to book a test drive [finally, a performance predictor. A test drive allows the consumer to prove the claims made by the manufacturer for themselves], call 1800 50 AUDI or visit your nearest Audi dealer.

Scanning through some other magazines revealed a couple of car manufacturers using creative performance predictors to reduce pre-purchase risk and reinforce their marketing claims:

The new GS450h ingeniously combines a 3.5 litre Direct and Port Injection V6 engine and 147kW electronic motor; so you can finally enjoy V8 performance (254kW) with four-cylinder efficiency (7.9 litres per 100km*) [notice the performance predictor in the last bracket substantiates the claim of 'four-cylinder efficiency'?]

Another example:

"How can we coax BMW performance out of a technology historically know only for economy?" Our answer was to win the Nurburgring 24-Hour Race [this directly answers the question: why should I believe you?] with a diesel 3 Series using innovative Common Rail injection technologies.

Product features are not performance predictors, however performance predictors should always be used to support product feature claims wherever possible.

What Makes Referrals Work?

2007-12-27T03:09:00.000-08:00

Referrals occur everyday, in every industry around the world. And, sure, excellent service typically results in a high level of referrals being generated over time. But what actually drives referrals in the consumer's context?

To answer this question, I am going to describe a common situation - the BBQ referral situation.

"Bill" informs "Bob" over a drink at a BBQ that he is planning to build the family dream home in 12 months. Bill asks Bob if he knows a good builder that he would recommend. Bill responses with the name of a building company and mentions that they used this company to build their home 5 years. Bob thanks Bill for the recommendation and the conversation changes direction.

This referral is based on trust. Bill trusts Bob's judgement. However, in a society which is becoming decreasingly trusting of others, this level of 'blind faith' is in rapid decline. If "Bill" was more sceptical (i.e. more representative of the modern day consumer), he would ask "Bob" a series of questions to delve further into the performance of the building company. Enter performance predictors...

Assuming the building company being recommended communicated a number of performance predictors, Bob could simply quote these as his justification. For example, they offer a 100% unconditional satisfaction guarantee (and in 23 years only one customer has ever asked for this to be envoked), you can visit their display home to see their craftsmanship for yourself, they only use quality products in their homes [list off the quality suppliers], etc.

Make it easy for your existing customers to lead you to your new customers (via referrals) by communicating your performance predictors to them. Performance predictors make referrals work.

Justifying Purchases with Performance Predictors?

2007-12-25T19:07:00.000-08:00

Performance predictors are a very powerful force in post-purchase evaluations.

There is a psychology term used widely in marketing circles called "cognitive dissonance" and it applies when consumers are evaluating their decision post purchase. Post purchase dissonance is the insecurity a consumer feels about the appropriateness of the purchase decision after the decision has been made. This occurs because consumers typically purchase emotionally and evaluate rationally.

Performance predictors provide consumers with the necessary rational justification to feel comfortable about their purchase decision when the dust has settled.

My wife is a master of the art in this regard. Michelle regularly justifies paying more than the category median price by steering my attention to a performance predictor. For example, she loves to shop at Pumpkin Patch for our girls clothing. These purchases are justified by the fact that this clothing lasts longer, even though it costs more than other department and clothing stores in the children's clothing market. Pumpkin Patch offers a 100% satisfaction guarantee with all their clothing (to make it easy for Michelle to justify her decision to me).

Four Questions to Assess the Potential Impact of a Performance Predictor

2007-12-23T21:37:00.001-08:00

When considering the viability of a particular performance predictor, the following questions will assist:

(1) How immutable will the performance predictor be?

Does the performance predictor provide prospective customers with clarity of truth? The performance predictor should answer questions in the prospective customer's mind, not spur an avolanche of doubts. You want prospective customers to believe your claims without a shadow of a doubt.

(2) Is the performance predictor aligned to your market position?

Ensure your performance predictor reinforces and contributes to your chosen market position. Don't 'launch' a performance predictor which may create confusion in prospective customers as to your market position. If you occupy a 'budget' market position, then only select performance predictors which will reinforce a budget image.

(3) Will the performance predictor reduce the prospective customer's pre-purchase risk?

Resist the temptation to introduce performance predictors for the sake of the exercise. All performance predictors must be relevant to prospective customers in as much as they reduce pre-purchase risk and ensure the decision is made with certainty.

(4) Is the performance predictor sustainable?

When asssessing your performance predictor, ensure it is sustainable within the context of your business model. There is no point in launching a performance predictor only to find out it is costing a small fortune and returning very little. All performance predictors should contribute to driving profit, either directly or indirectly. If it doesn't pass this acid test, drop it.

Performance Predictors and Product Development

2007-12-20T13:50:00.000-08:00

It astounds me in the current business environment, with hyper-competition, globalisation and highly sceptical consumers, that marketers are not always included in the product development phase of marketing.

In order to reduce marketing communication budgets and gain consumer trust, marketers must be involved in product development. Why?

Marketers need to build lead generation capabilities into the product, rather than artificially (and often ineffectively) 'tag-on' on lead generation capability at the end of the production line.

Performance predictors should be considered whilst the product is being developed, not after.

A Performance Predictor worth US$2.17 Billion!

2007-12-19T13:57:00.000-08:00

Do you know "Jared the Subway Guy"?

Jared Fogle is famous around the world for losing 235 pounds in 12 months by eating Subway sandwiches and walking. He has become somewhat of a pop-culture icon and travels some 230 days a year to promote healthy eating amongst school children.

He is a performance predictor for Subway and created US$2.17 billion in additional sales revenue between 1999 and 2003. If you were trying to eat heathier and needed something fast, where would you visit?

Performance predictors work.

The Proof of the Pudding is in the Eating

2007-12-18T14:26:00.000-08:00

This commonly used phrase (or more commonly used shorthand version: the proof is in the pudding), perfectly summates performance predictors.

The phrase means to demonstrate something to be true. Or defined in marketing terms, the true value or quality of something can only be judged when it's put to use.

In the case of performance predictors, I would argue that the prospective customer does not need to actually experience or use the product or service to make a purchase decision (or the implication would be that every business in the world would have to provide 'pre-purchase trials' on all products).

Powerful performance predictors will remove the pre-purchase doubt and result in prospective customers feeling confident in the ability of the business to deliver on its promise.

The Proof of the Pudding is in the Performance Predictors.

Performance Predictors and Market Position

2007-12-17T15:05:00.000-08:00

Performance predictors should be used to reinforce your chosen market position. Well crafted performance predictors create evidence to support a position of quality, safety, speed, budget, or whatever your market position happens to be.

Let's look more closely at the Australian success story Bunnings Warehouse and how they have used performance predictors to reinforce their market position.

Bunnings Warehouse have been successful in 'owning' the budget position in the Australian hardware market. The performance predictors they have employed to achieve this positioning includes:

Oversized warehouse-style stores, including concrete floors, unlined ceilings, colourbond external cladding and chalkboard signs;
Lowest Prices Guarantee;
Loss leaders inside the main entry of the stores; and
'Cheap perception' promotions using staff in TVCs and black illustration catalog drawings.

Select your market position and subsequently employ a range of performance predictors which provide evidence to prospective customers that the market position is reality.

Performance Predictors All Around (Part 3)

2007-12-16T14:07:00.000-08:00

This is the final instalment in this series about the wide application of Peformance Predictors. Let's put schools under the spotlight...

I mentioned we had moved from Perth to the Central Coast. We also moved from Queensland to Perth 18 months prior and whilst living in Perth we had an exchange student from Brazil living with us. The organisation coordinating the exchange student sent us a notification prior to Natalia arrive of the school she would be attending.

My wife and I decided to drive past the school to ensure it was within walking distance, and if not, that a bus service existed. However, when we arrived out the front of the school the conversation changed dramatically starting with the comment, "I would never send our children to a school that has barbed-wire all the way around the top of a 8ft high fence".

Further, "Do you think the barbed-wire is there to keep the children in, or undesirable nearby residents out?" "Either way, this can't be a good thing."

As you can see, negative performance predictors have a significant impact on prospective customers. The school could have had a range of positive performance predictors too, such as a large percentage of leaving students with high OP results, quality extracurriculum facilities and outstanding teachers ... unfortunately these weren't given the opportunity to shine because they were encased with a negative performance predictor.

Performance Predictors All Around (Part 2)

2007-12-13T14:01:00.000-08:00

When I moved my family from Perth to the Central Coast of NSW some 18 months ago, my wife had some apprehension about our new community when we first arrived.

When I asked why she was feeling this way about the Central Coast she replied, "Oh, I just have a bad feeling about the place".

I probed further with, "Is there something specific that has resulted in this bad feeling?"

My wife then proceeded to rattle off this list of negative performance predictors:

"There are two cars on the side of Wyong Road that have obviously broken down, and now there windows are smashed and tyres slashed";
"There are several crimes stories on the news every night" [Nb. the majority of crime reported was occurring in Sydney, but the perception of high crime was being absorbed by my wife];
"Hearing sirens is common - almost daily"; and
"Residents don't seem very house-proud, because many yards have overgrown lawns".

Not displaying negative performance predictors is equally as important as displaying positive performance predictors, as the story above indicates.

[Nb. Lucky for me, my wife and I have a very supportive relationship. We still live on the Central Coast, and happily so.]

Performance Predictors All Around (Part 1)

2007-12-12T14:46:00.000-08:00

The application of performance predictors is wide spread. So far, I have applied performance predictors to business, however they are equally relevant to people, communities, schools, etc. Consider this example...

You are recruiting a new CEO for a publicly listed company of which you are on the board. The following applicant presents themself with these performance predictors:

- During their last position as CEO the company increased profit by 415% (ethically).
- They can speak and write English, French and Mandarin Chinese fluently.
- Michael E. Porter says, "This person is the most capable business strategists and leader the world has ever witnessed" and Jim Collins comments, "This person should teach other CEOs how to do their job".
- They are entry No.1 in the world business edition of the Who's Who Book.
- They have a Harvard Business School MBA and completed the McKinsey & Co. graduate program.
- They run 5 marathons a year, and have done so for the last 3 years.

Assuming they 'fit' your corporate culture, are you likely to hire them based on the above?

In our low-trust society, performance predictors are the confidence we can provide to others about ourselves.

What marketing can learn from the boiling frog story

2007-12-11T15:12:00.000-08:00

As you have no doubt heard, they say that if you drop a frog into boiling water, it will hop straight out to escape the danger. However, if you drop a frog into cold water and very gradually heat the water until it is boiling, the frog will not become aware of the threat until it is too late.

Consumers (the soul of marketing and its reason for being) have changed gradually over the past couple of decades, but has marketing kept pace?

Sure, we have moved our messages online and explored new concepts like open source marketing, guerilla marketing and one-to-one marketing, but has marketing fundamentally changed?

Is marketing slowly boiling to death?

Premium Pricing: A Performance Predictor?

2007-12-10T14:33:00.000-08:00

As I previously mentioned, performance predictors are not performance perceptions, they are reality! Following is an excellent example highlighting the difference.

Premium pricing is a strategy which suggests a business should set prices artificially high in order to encourage favourable perceptions.

As you can appreciate, premium pricing does not suggest you create more value or deliver additional benefits when increasing price ... it is simply about creating a false perception. This is not a performance predictor.

Pricing that reflects the true value (as indicated by consumers) and market position (in the mind of consumers) of the product or service is a performance predictor.

Performance Predictors vs. Performance Perceptions

2007-12-09T14:16:00.000-08:00

Performance predictors are not shallow facades 'bolted-on' to create a positive perception of performance. Performance predictors are focused on helping consumers make astute purchasing decisions by providing pre-purchase evidence to the likely performance of the product or service.

This said, there are some individual performance predictors which may be seen as merely perception creators, however such performance predictors should only be executed in conjunction with 'client outcome based' performance predictors. For example, a performance guarantee in conjunction with a client result statistic.

Marketing with integrity

2007-12-05T13:06:00.000-08:00

Performance predictors are founded on the philosophy of integrity in action. This is not an exercise of manufacturing perceptions to manipulate consumer's judgement. It is based on delivering results to customers and then communicating the results to prospective customers.

Consumers are fed-up with companies who make empty promises. Organisations need to prove their claims. And prove it by proudly displaying performance predictors which eliminate the perceived purchasing risk. Performance predictors allow organisations to publicly display internal realities.

Performance predictors ‘prove promises’ as they simultaneously draw prospective customers into an organisation. It is the most ethical form of marketing available today.

Two types of performance predictors

2007-12-04T14:18:00.000-08:00

Performance predictors can be categorised into tangible and intangible.

Tangible Predictors

Tangible predictors have a significant impact on the perceptions drawn by consumers. For example, Storm Financial has created a perception of quality partly based on their office fit-out. The importance of tangible predictors, such as those listed below, should not be underestimated as consumers subconsciously filter these elements to assist in predicting future performance.

Some examples of tangible predictors include:

- Office or store fit-out
- Location
- Product demonstrations
- Visual branding
- Stationary
- Marketing collateral
- Product packaging
- Staff uniforms
- Tools of trade
- Signage
- Photographs

In the case of a courier delivery company, consumers make the logical progression from dented and scratched vehicle equals dented and scratched parcel. This consumer thought pattern happens instantaneously at the subconscious level. For courier companies, tangible predictors are critical to success.

Intangible Predictors

Not all performance predictors are physical objects. In fact, many of the powerful predictors are actually intangible. The intangible predictors are typically absorbed by the conscious, or rational, part of the brain.

Intangible predictors include:

- Independent research findings
- Before and after demonstrations
- Market position rankings
- Prices
- Celebrity endorsements
- Consumer confidence programs
- Qualifications and standards for the conduct of personnel
- Size of R&D budget
- Industry awards
- Prominent client list
- Testimonials
- Professional memberships
- Years in operation
- Guarantees and warranties
- Critics reviews
- Client result statistics

Intangible predictors can be represented with tangible objects. For example, winning a business award would be considered an intangible predictor; however this ‘win’ can be represented with a trophy or certificate.

It is a combination of tangible and intangible performance predictors working in synergy, rather than any one in isolation that produces sustainable results.

Performance Predictors in Action

2007-12-03T13:58:00.000-08:00

To provide some clarity around the concept of performance predictors, let us consider an example.

Hyundai has pursued the ‘low price’ position in the Australia new car market for some time, but consumers were questioning the product quality. As a result, Hyundai introduced an extended 5 year warranty as standard and 24 hour test drives. The extended warranty and 24 hour test drive are both examples of performance predictors. They provide prospective customers with an insight into the likely performance of the vehicle.

From perception to performance

2007-12-02T14:03:00.000-08:00

Organisations that embrace the concept of performance predictors and pursue the strategy at all levels, are in essence, changing the focus of their marketing from perception to performance.

Most marketing attempts to sugar-coat the product or service being promoted and create a perception of quality, low-cost, speed or whatever the relevant market position happens to be, however performance predictors simply highlight what exists in reality.

Consumers are becoming increasingly sophisticated and increasingly sceptical, so sugar-coating is losing its effectiveness rapidly. Typically, marketers need to focus more on product performance and less on marketing communications.

What are performance predictors?

2007-11-29T14:13:00.000-08:00

Performance predictors are tangible and intangible signals as to the likely performance of a product or service. They provide prospective customers with evidence upon which to make their purchase decisions.

Performance predictors allow prospective customers to fast-forward themselves into the future to 'experience' the product or service and use the wisdom gained to make an astute purchase decision in the present.

Performance predictors are highly relevant for today's marketers because consumers are highly sceptical of all marketing communications.