Tuesday, July 28, 2015

Humpty Dumpty Marketers

This post does not mark the end of my annual hiatus which will run into August.

I’ve been mulling over a future post that a business school professor-friend of mind asked me to write about what I see as the future for community destination marketing organizations, my former profession.

It will be an opportunity for me to practice what I preach about looking back to see forward for strategic insight.

It pains me to admit that many in my former profession don’t seem to be the brightest bulbs in some respects or there would be far more than 200+ of these organizations that are accredited.

Maybe I resemble that remark in some respects (smile.)

But even accreditation, which is essentially a diagnostic to identify areas for continuing improvement, isn’t a guarantee against a proclivity common among far too many DMO execs.

This is the regressive tendency of a few tenacious but well-meaning and otherwise reasonable execs to waste everyone’s time trying to put the proverbial “Humpty Dumpty back together again.”

What these folks fail to grasp is that forms of organizational structure and marketing strategy along with various tactics become obsolete because essentially the “ecosystem” of tourism has rapidly and perpetually evolved.

They could easily spot these paradigm shifts in SWOTS analysis if they were not in such a hurry to check that process of the list rather than mine it for insight.

Brian Solis, a strategic analyst, futurist and principal for Altimeter Group, now a Prophet Company, has a great line.  “The future of marketing has little to do with marketing.” He is referring to traditional marketing and especially advertising.Cleansville Billboard in Durham

Some businesses and organizations in the various industries that make up travel and tourism are guilty of hypocritically keeping roadside billboards on life support.

I call their use “desecration marketing” because they underwrite no content other than the advertiser “yelling at you” while blighting the communities and scenic assets that motivate travel.

All of this to reach 2/10th of 1 percent of people who are motivated to buy something in a given year based on that form of message.

If you have read some earlier posts, you will see the irony in the message on the image captured of a billboard in this essay.  It was posted on one of the 80 or so remaining in Durham, North Carolina where I live and where billboards were banned in the early-1980s.

For those new to this blog, between smart devices and in-vehicle navigation systems, eight times the percentage of Americans who aren’t turned off by billboards in general have already shifted to navigation systems for both directions and to find points of interest such as gas stations.

The advertiser on that billboard shown above is proud of its efforts at conservation and environmental restoration but that apparently doesn’t extend to scenic preservation including eliminating sense-of-place pollution such as sign blight.

It is not the first company where company marketers apparently feel exempt from social responsibility policies when it comes to where they advertise or oblivious to metrics such as turn-off ratios.

Traditional advertising overall (in newspapers and on radio, television and billboards) began an overall decline in effectiveness three decades ago that by 2010 had reached a negative return on investment.

When adjusted for inflation, ad revenues for newspapers today have fallen below where they were in 1950.  Even when digital and other revenues are included they are essentially where they were 65 years ago.

Other traditional advertising mediums are or will be following suit.  Analysts now project that newspapers are poised to replace local television when it comes to local video content within the next ten years.

The rapid shift to online advertising instead has created what experts such as Mathew Ingram, a senior writer for Fortune, described as an “arms race” this month between advertisers who still don’t get it and viewers determined to block out ad content.

Marketers engaged in this arms race have failed to notice that even online, where ad blocking has grown 7 times just over the past five years, that the ecosystem for advertising period has changed.

If you want to reach consumers, it no longer works to yell at them which is essentially what advertising is. There is no use trying to put that obsolete “Humpty Dumpty” back together again.

It isn’t the nature of advertising that changed; it is the overall consumer ecosystem.  It is long overdue for communicators to also evolve.

But many marketers, including more than a few in my former profession of community destination marketing simply won’t.  That’s apparent by their steadfast refusal to evolve or perhaps due to stakeholders who won’t let them or peers who keep pulling them into futile schemes to reassemble old “Humpty.”

Billboards are an example.  The first one was erected in the United States in the 1830s.  They had become a pariah to consumers by the 1880s when billboard owners turned to out-of-step lawmakers to keep them on life support.

Oblivious or lacking a strategic bone in their body, many advertisers who are obviously also very bad at math still insist on using them today, even though eight consumers are turned off by their use for every one who isn’t.

Like I said, not the sharpest knives in the drawer.  But hey, neither was “Humpty Dumpty.”

Friday, July 10, 2015

Before Adios, A Word About Engagement

Regular readers know that over the course of a year I manage to research and write one of these little essays every 1.4 days.

On average, it takes me four or five hours to research and write each one, which is about the amount of time Americans spend working and commuting each weekday.

It’s what I do in retirement; one of the things I enjoy for fun.

I take some extended breaks each year and one of them, give or take, will be over the next four weeks, as I do about this time each summer.

According to a Harris Poll, 90% of Americans take breaks this time of year, one-in-five over last week’s July 4th holiday.  Nearly a third of us (31%) take a plane and 75% of us use a car to travel.

One of ours will be in the Jeep and the other a cross-country flight.  Both will involve family in various parts of the country as will 46% of trips this summer.

Americans traveling this summer will, on average, travel 660 miles round trip.  Each of our trips will far exceed that.

Even though my career involved marketing destinations to potential visitors and then encouraging them to circulate as much as possible, it took the fun out of travel for me.

I’ve always been more of a homebody-lake-excursion person anyway, but in retirement I am now free to enjoy a trip without it feeling like work.

It is probably higher by now, but a 2012 survey found that 71% of travelers are attempting to make more environmentally-friendly choices when it comes to transportation, lodging and food sources.

While there are still some destinations and visitor features that hypocritically practice desecration marketing (such as using roadside billboards) while claiming be eco-friendly—a  few even featuring exhibitions about the environment—they are more noticeable now as exceptions.

I’ve had my eye on a UK company in particular that offers water management solutions and software to hotels and other customers called Waterscan.

The company has found that a hotel, for example, will typically use about 53 gallons of water per day for each occupied guest room.

That can be reduced 30% by harvesting rainwater which can be treated and fed back into the building for non-potable purposes such as irrigation, vehicle washing and flushing toilets.

The amount of water used can be further reduced another 40% by recycling gray water from showering and bathing.

This involves an ultra-filtration membrane system using three underground tanks.

One collects and treats the gray water and feeds it to a filtration tank while the third is a reservoir from which it is fed back into the hotel, again, for non-potable uses.

I suspect it could also be used to treat storm water.

This is especially efficient for hotels because there is an equilibrium of uses and a cost savings of 70% on water use.

For nearly a decade now, Gallup has studied what makes some customers engaged while others are indifferent or even actively disengaged such as being passive aggressive.

Fully engaged customers, researchers have found, are “emotionally attached and rationally loyal” as contrasted to those who are indifferent or neutral with a take it or leave it allegiance.

Activity disengaged customers are detached emotionally from a product or service and may become virulently antagonistic.

I believe those who actively seek out environmentally-friendly brands are likely to be fully engaged and it makes a big difference to the bottom line.

In visitor-related industries, for instance, Gallup found that fully engaged patrons of casual dining restaurants make 56% more visits per month than actively disengaged customers.

Even for fast food restaurants, it is 28% more visits per month.  In hotels, guests who are fully engaged spend 46% more per year than actively disengaged guests.

While many many brands hope to change consumer perceptions by “embarking on big traditional advertising and marketing campaigns,” even social media, according to Gallup has a great deal of influence on only 5% of purchasing decisions and no influence at all on 62%.

But it is the currency of actively disengaged consumers.   Fully engaged consumers are far more attracted by concerns that are aligned with their values.  Fully aligned brands also have double the “share of wallet.”

Communities, businesses and features such as museums, athletic teams and theaters should take note, especially those using desecration marketing such as billboards or those that flippantly cast aside sense of place seeking to be mainstream.

For hotels, as an example, only 28% of guests are fully engaged while 25% are actively disengaged.  The other 47% are indifferent.

Nearly half (45%) of economy hotels as well as 38% of those in midscale properties and 22% of those in upscale properties are actively disengaged.

Even in luxury properties where 38% of guest are fully engaged, 13% are actively disengaged.  Recently, the Ritz Carlton in Charlotte was called out for discrimination after it applied a special service charge during a tournament for a league of historically black colleges.

Some called it a “black tax.”  The hotel apologized and made a charitable contribution to the tournament when challenged.  But there, most likely the service charge was added because studies have shown that black people are notoriously poor tippers, even when holding constant for social economic factors.

While the hotel was probably trying to watch out for its service staff, many of whom were probably also minorities, it may have strayed from its values.

One way or the other, it will now have a lot of actively disengaged consumers over those dates next year.  There is only room for one person at a time to stand on principle.

It is clear that the road to differentiation and alignment begins with knowing who you are as a community, business or organization and then remaining true to that brand.  That doesn’t include paying huge subsidies to attract groups for whom that makes little or no difference.

Unfortunately, only 46% of managers and 37% of non-management employees strongly agree that they know what their organization, business or community stands for and what makes it different, or in other words, a staff that is aligned.

More on this when I get back but read Gallup’s State of the American Consumer.

Thursday, July 09, 2015

The Origin of Poverty and Our Biases Today

The four-county area centered around Durham, where I live, along with Chapel Hill, North Carolina is possibly the most highly acclaimed in the nation when you take into the breadth of the accolades it has earned as an MSA and those of its individual cities.

It also has the distinction of being the 20th MSA with the widest gap between rich and poor, according to the blog 24/7 Wall St.  The wealthiest half of households earn more than half (53.5%) of all income earned here while the poorest 20% earn just 3%.

The wealthiest 5% have one of the highest household incomes in the nation for that percentile.

In the book I mentioned yesterday about the history of capital and related inequality, French economist Thomas Piketty notes that worldwide, the poorest half of the population still owns nothing, while the middle class now owns between a quarter and a third of total wealth.

He continues to explain that “the wealthiest 10% now own two-thirds of what there is to own.”  Apparently, it was even worse a century ago.  Anyone interested in closing this gap needs to read Capital in the Twenty-First Century.

It may not sound like a page-turner but it is.  In a very easy to understand way, Dr. Piketty weaves historical events and data with paradigm shifts.

In part, income equality is rooted in the shift from land to things like profits, dividends, interest, rents.

In other words, income generated from capital and what Piketty calls “the  long-term evolution of the relative roles of inheritance and savings in capital formation.”

When inheritance rather than work and savings begins to predominate, “the past tends to devour the future.”

I’ve written before that Durham’s poverty rate took root in the late 1940s and early 1950s when the number of jobs plateaued but the community continued its rapid growth, in large part, due to it historical role as a magnet for those looking for work.

This was also a period when Durham economy began to rapidly transform from tobacco and textile manufacturing to education, research and development and high tech industries.

Despite efforts to re-educate the workforce, many who had come here for blue collar work and failing to see the paradigm shift, merely went home and waited for the next call-back to the factories as they had done for generations during layoffs.

Some have now become disconnected from society altogether while those who did shift gears found primarily low-wage jobs.  By 1960, 1-in-3 Durham County residents lived in poverty as did 40% of North Carolinians overall.

All the while, Durham’s economy skyrocketed but with jobs requiring far more education.  While much lower now than in 1960 when the economic transformation took hold, poverty still haunts nearly one-in-five residents in the City of Durham.

Last year a scientific opinion poll of Americans asked, “When people are poor, do you think that’s more likely to be because they had fewer opportunities or because of individual failings?”

Overall, 30% said “personal failings,” including 17% of Blacks and 30% of Hispanics, as did 48% of Republicans and Conservatives as well as 41% of those with household incomes over $100,000.

But 44% of Americans said “fewer opportunities,” including well more than half of minorities and those making under $40,000 as a household and including 36% of households making $100,000 plus, 28% of Conservatives and 23% of Republicans.

Americans were also asked, “When people are poor, do you think that’s more likely to be because good jobs aren’t available, or because they have a poor work ethic?”

Overall, 28% cited poor work ethic including 21% of Blacks and 33% of Hispanics as well as 49% of Republicans, 44% of Conservatives, 35% of those with household incomes over $100,000 and 24% of those making $40,000 or less.

But 47% of Americans said it is because good jobs weren’t available including 33% of Conservatives, 21% of Republicans and 42% of households making over $100,000.

When asked how some people became wealthy, 52% of Americans chalked it up to having more opportunities compared to 31% who believed they worked harder including 50% of Republicans but only 36% of Conservatives and 33% of those with incomes over $100,000.

Nearly 60% of Republicans believe unemployed people could find jobs if they really wanted to, a view also held by 51% of Conservatives as well as 53% with incomes over $100,000 and 35% of those making less than $40,000.

Interestingly a new study in Germany finds that more-trusting people on average have an increase in income over those who are cynical.

No community that I know of is more determined or does more to eliminate poverty than Durham. Hopefully, this will be useful perspective, both macro and micro, for those on the front lines.

Wednesday, July 08, 2015

Catastrophizing Ultimately is Really About Expectations

If my parents ever disagreed, it was often about politics, religion or money.

In fact, as life-long Republicans, if they couldn’t come to agreement on who they would vote for, my dad would famously say that they just as well not vote then because they would just cancel each other out.

Their marriage lasted 36 years, but during that span, mom usually prevailed when it came to money and religion, but it is the latter that ultimately brought their union to an end.

They are both gone now but a survey of Americans last year found that about 35% of Americans today also find it difficult to discuss politics, and even then I suspect what they hear is influenced by adversarial listening.

Religion falls close behind at 32% but taxes and personal health fall to 21% and 20% respectively.

According to a 2013 poll by Market Pulse on behalf of Wells Fargo, it is finances that Americans find most difficult to discuss (44%) even more than death (38%.)

Ironically, although 71% today learned the importance of saving from their parents, only slightly more than a third (36%) of parents report discussing the importance of saving money with their children on a frequent basis and a large percentage not at all.

American couples find it as hard to discuss money as they do discussing sex.

More than religion, it may have been my father’s struggle with deep episodes of depression as well as my mom’s emotional relationship with money -- spending it that is -- that ultimately pulled them apart.

My dad suddenly showed up to visit me in Alaska after the breakup.  He was deeply depressed but it wouldn’t be for another twenty years before I could talk with him about his depression.

He never let it affect his work but during these episodes he would often sit for hours in the dark without talking.  When I was little, it would scare me.

I know now that he was struggling with deep bouts of feeling inadequate, just as he probably was during his visit to Anchorage after his break up.  I could have said so much that would have been helpful but back then I was more prone to change the subject.

In his extraordinary book entitled, Feeling Good: The New Mood Therapy, Dr. David Burns, a Stanford researcher who helped develop Cognitive Therapy, notes that we really don’t know yet how the brain creates emotions.

Reflection on our own thoughts can either be a powerful stimulant to insight or a spiraling cycle of negative thoughts.  Learning to foster the former and intervene to break the latter is a challenge everyone faces I suppose.

My mom’s emotional relationships with money and food fed into a set of expectations that were very different than my dad’s.  That’s what they really needed to discuss.

I’ve always envied, in a way, the people whom I have come across in life whose “my way or the highway” way of thinking and rationalizing seems so effortless.

Most often though, whenever I was obligated to stand up to someone like this I failed to discuss expectations and instead sailed into analysis.

Occasionally, before catching myself through reflection, I would fall into the all or nothing or black and white thinking trap as well.

A foundation built on clearly understanding expectations is the most essential element for fruitful strategic partnerships.

It is no different with another couple in dispute, Germany and Greece.

French economist Thomas Piketty who wrote, Capital in the Twenty-First Century a book that deals with the evolution of inequality and wealth concentration, reminds us that Germany is being more than a bit hypocritical when it comes to Greece.

Greece was among a number of countries in 1953 that stepped forward to forgive 50% of the massive bailout given to Germany following WWII.

He makes a good point.  Of course, what led to Germany’s indebtedness in 1953 and to Greece’s problems today are very different but no less “moral in stance.”

“Until 2009”, according to Piketty as reported by Chris Harlan on Wonkblog, “Greece forged its books.”  But he notes that austerity measures are forcing the burden on subsequent generations who were not part of that.

Similarly, the post-WWII government in Germany was trying to dig out from under a mess left by the Nazis.  Greece and other countries could have insisted on repayment, creating the same austerity forced on them after WWI which led to WWII.

The struggle regarding Greece’s bailout today is really about expectations more than it is money.

The “catastrophizing,” as cognitive behavior therapists call it, on both sides is just another form of all or nothing thinking.

Tuesday, July 07, 2015

The Significance of our Ephemeral Little Brook

On each morning’s walk before hiking up the slopes of what we affectionately call Mt. Rockwood in Durham, North Carolina where we live, we cross repeatedly over a small unnamed brook.

It is smaller than a stream and way smaller than a creek, or as we said growing up in Idaho, “crick.”  Seasonal or storm-fed waterways such as this make up 60% of the stream miles in America.

There are no fish that I’ve seen but it is certainly home to choruses of bullfrogs.  Similar to 53% of the stream miles in the United States, it is classified as “small, intermittent or headwater,” and like almost 60% of the stream miles in America, it is seasonal and/or depends on groundwater seeps and storms.

They are the subject of efforts in Congress right now, where, at the behest of special interests I suppose such as mining companies, frackers and maybe even developers, who want to exempt these most seminal of waterways from the Clean Water Act.

They have also enlisted more than two dozen states controlled by legislatures holding the same ideology. Here is a link to the definitions to which they object.

The one over which we zigzag each morning comes off a nearby hillside and after flowing through Rockwood Park, it feeds into Third Fork Creek, near its genesis, one of 14 watersheds in Durham.

Much of this fragile brook was protected when a developer named Willie Carver deeded the parkland to the City of Durham in the 1940s; apparently even before this area a little more than a mile from Downtown had been incorporated.

It was a time when developers innately grasped the importance of green infrastructure.  Maybe it should be named “Willie Brook.”

After joining with several other creeks, it now helps fill the 14,000-acre Jordan Lake, a drinking water reservoir south of Durham that outlets as the Cape Fear River where waters from the little brook flow another 200 miles and then into the Atlantic Ocean.

In the March issue of Scientific American, two UCLA scientists give the example that “If Earth was a fully loaded Boeing 777, then its ocean would have the mass of a single passenger.  As strange as it may seem, proportionally our planet is some 100 times drier than old bone.”

And it all starts with these small, intermittent, often epemeral trickles that originate from springs or seeps of groundwater and then combine with storm run-off to create tiny brooks that build into streams and then creeks and rivers.

Even though it is impossible for the Clean Water Act to achieve its purpose without dealing with these intermittent waterways, some in Congress today are seeking to exclude them rather than permit regulations adjusted to address a technicality.

They apparently aren’t listening to 77% of Americans including 58% of Republicans who want even stricter environmental protections.

Nor are they listening to the 155,000 members of Trout Unlimited or for that matter to the $114 billion that 33.1 million anglers such as this generate to the economy.

Many people assume sportsmen and sportswomen such as these are conservative in ideology and half are.  But overall they are all conservationists by nature.

According to surveys, nearly 40% of those who fish and/or hunt believe we have a moral obligation to confront climate change.

When the NRA speaks out against gun control, it represents only 1-in-4 hunters and even then three-out-of-four NRA households overwhelmingly support various controls such as background checks on private gun sales.

Nearly a third support bans on high-capacity clips and assault-style weapons.

Watersheds are often called basins from which various waterways collect.

Durham is divided into two major watershed that fall from each side of the ridge that runs through Downtown, along the railroad tracks.  But each of these break down into several others.

To the north they break down into six or seven watersheds, two that are intercepted to fill two Durham drinking water reservoirs. The remainder, fill Falls Lake, created here so it could be tapped for drinking water down in Raleigh, to make that city viable.

The two rivers tapped for Durham drinking water, the Flat and Little, originate from small headwaters in adjacent southern Person County and north-central Orange County respectively.

In fact, the north and south forks combine to form the Flat River just a stone’s throw from where Willie Carver was born and just before the river becomes a class I-III whitewater river in Durham after storms.

Another, the Eno originates in a 10-acre farm pond in northwest Durham, which after collecting Little River and joining with Flat River and filling Falls Lake spill down to form the 248-mile Neuse River before it flows into Pamlico Sound.

Hyco and Mayo lakes up along the border with Virginia north of Durham are part of the Roanoke River watershed.  That river originates in brooks high in the Blue Ridge Mountains of Virginia and flows down into North Carolina’s Albemarle Sound.

Headwaters are particularly vulnerable to land use changes which is why I’m guessing that special interests, and not just ideology, are behind the push to exempt them from the Clean Water Act.

Rivers are a continuum, a reference coined in a 1980 study that determined, “A river is more than a sum of its parts and that to understand what is happening at any point along the way, you must understand what is happening upstream and what is entering the watershed.”

In North Carolina, 66% of overall stream miles are in headwater streams and 38% are intermittent but because some major rivers and watersheds here are headwatered in Virginia, it is important to understand that state’s make up too.

In Virginia 62% of stream miles are headwater streams.  In the specific area where the Roanoke River begins its journey to Albemarle Sound in North Carolina, 58% of the streams are intermittent while 63% are headwaters.

Angler enthusiasts including many of the 1.5 million in North Carolina along with another 329,000 who visit have spent tens of millions of their own dollars to restore and protect these intermittent streams including 700,000 volunteer hours each year by Trout Unlimited members alone.

In many ways trout are the sentinels of clear water.  It is in these intermittent headwater brooks, streams and creeks that you find native trout such as the Yellowstone Cutthroat I marveled at as a boy growing up near the Henry’s Fork in Idaho’s the Yellowstone-Teton nook.

In North Carolina, it is the Brook trout that is native.

There are still 25 native trout species unique to regions of the country out of the 28 that once existed.  But according to the just-published State of the Trout report, thirteen occupy less than 25% of their historic habitat.

As noted by Chris Wood who is President and CEO of Trout Unlimited, “If you care about clean drinkable water, you should care about trout because they persist in only the highest quality water.”

They are also the “proverbial canary-in-the-coal mine for the effects of a changing climate.”