Category Archives: Articles

• Alpha learning applied: Good enough is good enough… Until an Alpha makes it better

  Friday, August 1st, 2008 by Wes Ball

  Why is everyone obsessed with the idea that better quality sells? There has been more than enough evidence that this isn’t true.  Better quality or performance for the same price as what something else costs sells, but not better quality…UNLESS it helps prove that emotional fulfillment needs are being satisfied better through your product or service.

  I sat for half an hour listening to the tirade of a marketing guy from a major manufacturer who had gone down the quality path only to find over and over again that lower quality, lower cost product from Asia was being chosen in lieu of his product.  What he had missed (and I tried to tell him, but he was far too focused upon the unfairness of it all to hear it) was that unless there is a clear emotional fulfillment provided by your product or service, quality means little.

  What the Alpha Factor Project discovered was that functional performance (quality, product performance, features, etc.) only have to meet the minimum acceptable functional requirements to be considered and purchased. Once that hurdle is crossed, the battle becomes one of which brand offers the most emotional fulfillment? That means “self-satisfaction” (how I feel about myself when I buy or use your product or service) and “personal significance” (how I believe others feel about me using or buying your product or service).  If none of the other products provide any emotional fulfillment, then the choice becomes one of price.  Among those that do provide some level of emotional fulfillment, the comparison is one of which provides enough to warrant the greater price?

  I may buy Kraft cheese to make cheeseburgers, but I will probably buy a much more expensive and more unique cheese to serve to friends with wine.  If the Kraft cheese is acceptable to me (meets minimum functional performance) and I don’t think anyone will see what’s going on the meat, then why would I spend the extra money?  Where the cheese will be seen and it will be a major focus of the entertainment, then I may spend ten times as much to make sure it’s really something that will please and gain points with my guests.

  This kind of behavior can be quite predictable with a range of brands or products getting my attention based upon the situation and likelihood of anyone noticing. When an Alpha company enters the game, however, things start to change very rapidly.

  The Alpha, by definition, is in the process of continually defining what it means to be in that category or product or service. It defines the expectations and the aspirations of customers in that category.   There may be a minimum acceptable functional requirement, but that starts to move upward as the Alpha defines new, higher expectations.  Almost every competitor begins to focus its attention upon competing with the Alpha.

  Even though Starbucks is having troubles right now, it has been the Alpha in the coffee shop category for a long time.  It neither invented the coffee shop concept nor did it better than everyone else.  It did, however, bring a new minimum acceptable functional requirement to the category that pushed many local shops to do a much better job than they had in the past.  Every other shop out there (whether they were better or worse than Starbucks) competes with Starbucks and compares itself to them.  Sadly, it is because Starbucks has fallen below the minimum acceptable functional requirement that they set that they are now experiencing the problems they are.  It isn’t just the fact that they over-expanded; it’s that they over-expanded for the lower functional performance they were providing.

  Harley-Davidson, another slipping Alpha, has fallen into the same trap. When Harleys started becoming better motorcycles after the company was purchased by some employees in the early 1980s, a new and higher acceptable functional minimum was established.  Despite their poor quality, up until that point in time they had been the minimum acceptable functionality.  Most Japanese bikes were already far above that, so it did not affect them, but it did establish a new higher minimum that had to be met.

  Unfortunately, H-D (like Starbucks) fell below that minimum they set.  They also allowed other manufacturers to begin to define the leading edge of the “cruiser” and “chopper” categories that they had owned.  Now a new, even higher functional minimum has been set, and Harleys don’t measure up either in functional performance or in emotional fulfillment.

  Apple, on the other hand, is setting a much higher functional minimum in both its iPod and iPhone products.  What was acceptable just two years ago is no longer acceptable.  If someone chooses one of the competitive products, they do it knowing that they are sacrificing something they aspire to own and experience. Even among those of us that thought that there couldn’t be that much difference between lesser brand versions and the “real thing,” the truth becomes quite apparent after enjoying the “i” experience for even a few minutes.  This new higher experience has become the benchmark for everyone else to reach.

  The secret to Apple’s success, however, is not the technology that looks far beyond competitive products, but actually is probably less cutting edge than it seems.  It is the emotional fulfillment that comes from owning, feeling (they really have a terrific tactile character to them), and sharing them with others.  Competitive products tremble in comparison.

  Apple’s Mac computers have long had a much higher experiential factor that should have made them the Alpha of the personal computer category.  Because they focused so heavily upon the “artistic” market with software and marketing, they missed being able to drive minimum functionality higher in the overall category.  Unfortunately, Microsoft (through a lot of shenanigans) made themselves the minimum functionality required for most businesses and computer technicians, which drove the choices most individuals had, as well.

  Now that Apples has been able to make their product more available to all the poor souls who had to put up with Microsoft products for all those years, they are emerging as the clear Alpha of the category.  Who would not aspire to own a MacBook Air?  It feels great, looks great, performs better than any PC laptop I’ve owned, lets me do beautiful presentations, displays none of the software “crankiness” that my old XP-Pro machine did, AND runs Microsoft Office programs.  I also have people walk across the room to ask me about it.

  Quality is not and has not ever been the real “Holy Grail” that is has been purported to be.  Emotional fulfillment is the core of Alpha learning, leadership, and innovation.  Good enough is truly good enough until emotional fulfillment comes into the picture.

  Posted in Applying "The Alpha Factor", Articles, Business, Uncategorized | Comments (1)

• Starbucks’ customers prove it’s an Alpha

  Monday, July 21st, 2008 by Wes Ball

  If there was any doubt that Starbucks had attained Alpha status, it’s certain now.  With all the talk of downsizing and closing of stores due to “over-expansion,” many pundits have thought that perhaps Starbucks is just another one of those sad stories of poor management caught in an economic downturn.  The truth, however, is being displayed clearly through their customers.

  An article in The Wall Street Journal today by Janet Adamy and Anna Prior discussed the customer response to store closings.  Reminiscent of the customer outrage that saved Coca-Cola, when it made the terrible mistake with “New Coke,” we are seeing one of the strengths of an Alpha at work again through Starbucks.

  One of the key benefits of becoming an Alpha company is that you can weather difficult times and even bad management decisions better than “normal” companies can.  That extends to the point that an Alpha’s customers will often save it from really bad mistakes.  We are witnessing this at work right now.   By having made themselves the customer expectation leader so that every other coffee shop wants to either emulate or overcome it, Starbucks has made itself a part of American life that people don’t want to have to do without.

  According to the WSJ article, all across America — from major metropolises like Manhattan to small towns in Mississippi and Nebraska — Starbucks customers ranging from local neighbors to business owners and managers to city mayors are contacting Starbucks headquarters to lobby for their local stores.  Starbucks has made itself a draw for attracting people and businesses into a community and for attracting employees to businesses near a Starbucks store.

  None of this would be happening, if Starbucks had simply managed its business to be a top moneymaking machine, as business schools teach us to do.  It has only been due to Starbucks’ focus upon fulfilling high-level customer emotional needs (self-satisfaction and personal significance) that it is enjoying this level of customer support.  Customer expectations from a coffee shop have changed significantly all across America due to Starbucks.  No cost-side management could ever have created this phenomenon.  Only by understanding and fulfilling these revenue-side customer needs has Starbucks made itself anything more than one more pretty good coffee shop.

  Hopefully, Starbucks’ management will recognize that the reason behind their slowdown is not just “over expansion,” but also (and probably more importantly) a loss of focus upon continuing to raise customer expectations by driving them into higher and higher emotional fulfillment (again refer back to The Alpha Factor for a discussion on the core concepts of self-satisfaction and personal significance in driving purchase decisions).  There has been a noticeable decline in customer experience in Starbucks stores wherever I travel.  When I talk with store people, this focus seems to have been replaced with more focus upon new equipment.

  Bad move.  Luckily, being an Alpha, they have time to get back to the focus that got them where they are.

  Posted in Applying "The Alpha Factor", Business | Comments (0)

• Why your market research doesn’t work

  Friday, July 18th, 2008 by Wes Ball

  The biggest complaint I hear about marketing research from companies I contact is that they seldom get anything “new.” The insights they get are ones they could have predicted before they ever did the research.

  The problem is not just in the questions being asked, but it is also in the model your market researcher uses when accepting or analyzing the answers they receive. You would think that someone in behavioral sciences would understand that people don’t want to reveal core motivations… either to themselves or to others.  Most people are embarrassed to admit that they make their decisions based upon emotion more than upon logic.

  It’s also a lot easier to avoid an argument about whether their final decision was the right one, when they can list several rational reasons for choosing what they did.  For instance, I caught myself doing this not long ago.  I had to choose between two suppliers for a business project.  One just made me trust him more.  When I told the other potential supplier that he did not get the business, he asked why.  Instead of going through all the reasons why the supplier I had chosen made me feel more “comfortable,” I told him that it was an issue of price.  The salesman readily accepted that answer, and I was off the phone and on to something important.

  Market researchers run into the same thing.  Customers will give a list of rational reasons why they purchased something, but hidden near the end of the list (or waiting for a good researcher to pull it out of them) is the real core reason.  And it is always an emotional one.

  I was at a group gathering a couple weeks ago, and a discussion started about baby carriers.  We were talking about how difficult it is to get past the obvious, superficial responses customers give for their answers, and one of the guys in the group said that he and his wife had just gone through the buying process for this kind of baby carrier.  We called her over and asked her why she chose the one she did after comparing several other products.  She gave a list of four or five reasons, including features, sturdiness, and a Consumer Reports article that recommended it.  She stopped, but we did not let her get away with just that.  She finally admitted that her sister had told her that this was the one to get.  She was far more influenced by the relationship she had with her sister and how going against her advice might affect that relationship than anything she saw in the product.  All the reasons she had listed were nothing but the “rationalizers” to make her emotional decision acceptable to other people.

  In Alpha analysis, we delve far beyond the superficial, rational reasons consumers and customers give for their buying decisions.  In fact, we always have at least three different ways of testing whether they are telling us the truth built right into every questionnaire.  That’s the only way you can get to the real core decision factors that are being used.

  And, since our goal is always to discover ways to change decision factors to be more in favor of our clients’ products or brands, it is critical that we not waste our clients’ time worrying about superficial things that really are not at the core of decisions.

  I always believe that, if the research doesn’t give you something “new,” then it was probably a waste of money.

  Would you agree?

  Posted in Articles, Business, Market research | Comments (1)