3 Reasons Why the Zappos Hack is Bigger Than They Say

24 million records lost to hackers – wow!  That’s equal to the entire population of New York, Los Angeles, Chicago, and the rest of the top 10 cities in the U.S. combined.

Everyone seemed to breathed a big sigh of relief when Tony Hsieh, CEO of Zappas, shared [LA Times story] that the hackers had stolen just about everything but the full credit card numbers of the victims [they captured just the last 4 digits].

But don’t be so quick to let Zappos off the hook. This is still epic in three significant ways.

Zappos image stolen from TechCrunch

First, most people use their email address for their user name for every account they have. With most web sites recommending a strong password, including upper and lower case characters, a number, and a symbol – few people are willing or able to remember more than one password, so they use the same password for every account. Now, the hackers have that one password for 24 million people. Effectively, the hackers now have the login passwords to every account that most of these millions of people had. The hackers will now use automated and intelligent methods to find many of the accounts of the victims and gain access to them unless the passwords are changed.

Second, there are databases of stolen credit card numbers for sale. Now that the hackers have the full name, address, phone number, and last four digits of the credit card, they can do some computer-driven matching and make much better use of the previously stolen credit card data.

Three, this puts everyone at risk. Once the hackers have the email and social media accounts of the victims who are your friends, they can approach you under the guise of being the fiend you trust and try to extract useful information to attack you.

Actions Items: If you are a Zappos customer – stop reading now and change every password you have that matches your Zappos password, keep a closer watch on any credit cards you used with Zappos, and never let any merchant store your credit card information.

Managing PR in a Crisis

The emergence of instant online news and the broad adoption of social media among the always-connected masses has brought swift and sometimes severe consequences to corporate and individual blunders. Recent PR missteps by Netflix, Bank of America, Penn State, and Presidential candidates underscores the critical need of being able to properly respond to a PR meltdown.

Mistakes, failings, allegations of scandals, and the occasional Oops now spread like wildfire across the internet and are further amplified by the connected nature of communications. Less than 12 hours after it happened, more than 1 million people viewed Rick Perry’s moment of forgetfulness. If not managed properly, the responses of those involved only adds momentum to the carnage.

The fundamental issue in a PR crisis is trust. It is the essential element in every relationship and transaction. News that trust had been violated draws attention; the bigger the violation, the bigger the news and the faster it spreads. When this bond with customers, public, shareholders, etc. is broken, the top priority must be to minimize the extent of the damage and lay the foundation to rebuild trust.

There are seven simple rules to managing communications in a crisis:

1)      Think before you act – This means planning your response with a broad team of internal and external experts (when appropriate) to go through all the scenarios and issues to avoid doing additional damage.

2)      Tell the story yourself first – This will allow you to tell the story the way you want to and the news loses its “hidden secrets” appeal. David Letterman used this approach masterfully when he addressed his audience and revealed his soon-to-be-made-public indiscretions.

3)      Come completely clean – The truth will set you free, or at least get you on the path to healing. Feigning amnesia and denials may work in the short term, but do greater damage in the long run. Tell only as much of the story as is needed to get all the facts out. Hiding material details that will later emerge diminishes credibility and raises the question of what else you may be hiding.

4)      Don’t blame others – Deflecting responsibility undermines trust and looks childish, even if someone else is partially to blame. Everyone makes mistakes. Own up to it and you will rebuild respect and trust faster.

5)      Be remorseful – In personal matters and business, a sincere “I’m sorry” can go along way. Even Michael Vick seems to have been forgiven.

6)      Have a recovery plan for those impacted – You have to make good on what you did bad or the apology means nothing. Everyone has an internal yardstick for measuring justice.

7)      Return focus to the positive future – Even bad media coverage can be a good thing. It give you an audience you might otherwise never reach. Craft a message to deal with the crisis, but also use the opportunity to expand the reach of your core message.

That’s it. Having a crisis plan, including assigned responsibilities for key marketing personnel and executives, is every bit as necessary as a disaster recovery plan or business insurance. For additional reading, see this post from GigaOm How to Productively Handle a PR Crisis, and for the ultimate, incredibly great book about managing PR check out: The New Rules of Marketing and PR by David Meerman Scott.

The Incredible Genius Behind Stupid Advertising

Some pundits derided presidential candidate Herman Cain following the release of his “Now is the time for action!” campaign video that prominently featured his campaign manager, Mark Block, smoking a cigarette.  Stupid was a popular adjective used to describe the thinking behind the video. That was the initial reaction from critics. The public reaction that followed was something different with well over a million views on YouTube and more than $5 million in donations. Now I would call that pure genius.

Most marketers live with the dream of creating a viral video. It is on almost everyone’s to-do list: improve web content, test new PPC landing pages, get coffee, make viral video…  And why wouldn’t it be? How many bosses have commanded, “…I just saw some foreign kid biting his brother’s finger and it’s been viewed like 383 million times – go get us some free advertising like that!” It sure sounds simple enough.

But genius should not be confused with a light switch. Do some simple math and you can see that buying lottery tickets might present a better investment; buy $10,000 worth of tickets and the odds of winning are 1 in 17,500. Compare that to producing a video for the same investment. With about 1M videos uploaded to YouTube each day our 1:1,000,000 is far less appealing than 1:17K. The point is this – the odds of success are very long for either endeavor. So, how do we turn things to our advantage?

Below are my simple suggestions for making really smart, stupid videos with better odds of going viral:

1) Be wildly different – Boring is the direct product of repetition, so break away from what everyone else is doing.

2) Stay true to your core values and message. At its most basic level, the Cain video supported the candidate’s message of being different (from other politicians) and advocating individual responsibility.

3) Don’t directly offend – Too many video producers equate shock value with viewership. Being offensive very rarely leads to success and never sells.

4) Provoke comments. This means choosing popular and sometimes controversial themes that will get those with a large audience to talk about you. (My favorite was Colbert’s send-up of the Cain video).

I’ve really never been a huge fan of political advertising from either side, but I recognize genius when I see it. Now, to get started on that stupid storyboard…

Making an Asch of One’s Self – The Psychology of Conformity Marketing

Undeniably, marketers are practitioners of psychology. The most successful manage their organizations in a manner similar to a research psychologist – always testing, observing, and interpreting. Each marketing campaign is a unique psychological experiment with the target audience as test subjects.

One of the most famous psychological experiments of all time was conducted by Solomon Asch, who demonstrated the extreme power of conformity in groups. In Asch’s experiments, subjects were told that they would participate in a test as part of a group. The subjects simply had to correctly identify the length of a line.

However, unbeknownst to the subject, the others in the room were actually part of the experiment. At first, the colluding participants answered the questions correctly, but soon after began providing incorrect answers.  Surprisingly, three-quarters of the subjects quickly went along with the rest of the group and also gave the wrong answer.

The unexpected results of Asch’s experiments demonstrated the extreme power of conformity. It is based on a primal human need to be accepted and a reliance on others having superior information. This influence is even greater in real-life situations where decisions are more ambiguous and more challenging to judge.

Asch’s experiment holds 3 important lessons for marketers and business
people:

1)     Make sure your subjects hear the other participants. Endorsements, testimonials, and case studies really do make a big difference. They are the voices of others telling your audience the correct answer.

2)     The larger the group, the greater the influence. For start-ups, this means achieving rapid growth and scale must be a top priority. Being number one in a category is the strongest endorsement of the largest group. Today’s relatively small sacrifice for growth can be easily repaid at 10x or 100x greater volume down the road.

3)     Don’t make an Asch of yourself – Test, measure, and adjust all of your marketing programs on a continuous basis. There are endless ways to market, but it is a zero-sum game and there is a real opportunity cost to every activity. I can only hope that all of my competitors will commit heavily to the next Second Life that comes down the pipe.

In the end, the message is this - have great products that solve real problems in ways that delight your customers, and achieve greater success by leveraging your message and methods of communicating.

For Sprint – The Wages of Service Sin is Brand Death

Sprint has been making technology and financial headlines for the past several weeks – not so much because of any bold strategic moves on their part, but simply because Apple has decided to relent and allow the carrier to buy an end to the iPhone drought for those perpetually locked into Sprint contracts.

Of course, the rumors of an iPhone 5 exclusive for Sprint were pure folly. Why would Apple, a company that has defined itself by its allegiance to its users, force consumers back to a company so many had fled because of poor service? Keep in mind that Sprint is a company that has been the poster child for bad customer service seemingly since there was customer service in mobile technology. Once again in 2011, Sprint was at the bottom of the J.D. Power rankings for Wireless Customer Care.

But this writing is not intended as a public flogging of the perennial leader in poor service, as well-deserved as that may be, it is meant to call attention to the real economic cost of failing to meet your customers’ service expectations.

If all you have to offer is substandard service – measured by how you treat people or your ability to provide what you promise – you are relegated to competing on price and that is always a losers’ game. Sprint is not offering unlimited data plans to exploit a superior technology that gives them an advantage – the company’s Clearwire technology is a laggard. But it is a necessary move to overcome the overarching service issues.

With their announcement that they need billions in additional financing, Sprint puts a new spin on the old saying, “If you don’t have time to do it right the first time, when will you have time to do it over” The question now for this struggling carrier has become, “If you can’t afford to satisfy your customers the first time, how will you raise the money to buy them back.”

LinkedIn Gets More Social

If its Follow Company feature was a small step for LinkedIn, then its just-announced Company Status Updates is a giant leap for the leader in business social networking.

And the timing couldn’t be better. On the heels of Google+ and complex new features from Facebook, social network users are more likely than ever to encounter social-network fatigue. Managing updates on Facebook, LinkedIn, Google+, and other sites may simply be beyond the capacity of all but full-time student, and clearly more than work-a-day professionals can manage.

The update serves two purposes:

First, It will further separate LinkedIn from its potential competition and it will bring the social network contest down to a two-horse race with LinkedIn being the pony business business-to-business users ride, while FB, G+, and others duke it out on the non-business side.

In addition, it will accelerate the monetization of LinkedIn. LI has worked diligently to find a way to enhance engagement with its 120 million global users and offer something beyond being the world’s most powerful interactive rolodex.

According to a recent forecast from eMarketer, Social network ad revenue will surpass $5 billion this year, and reach towards $10 billion by 2013. Advertising revenues from the social side are less than half.

Cynics may accuse LinkedIn of simply being a Facebook copycat. But, keep in mind that the iPod wasn’t the original portable digital music player nor was the iPad the first tablet. eMarketer estimates that LinkedIn ad revenues will grow from $141 million this year to $250 million in 2013. I think they may be underestimating the speed of this thoroughbred.

HP Disproves Service Matters

We’re #1!
For yet another year, HP is the runaway loser on PC World’s list of Technology’s Least [and most] Reliable Brands.  This may not come as a surprise to the many HP product owners who’ve had problems with the once-cherished brand, but its significance should not be ignored by marketers in the technology arena nor its importance underestimated in this time of economic and industry turmoil.

Setting New Industry Standards
To give you an idea of the scope of their dominance in the PC World rankings, HP led all major vendors across three major product categories (PCs, Laptops, Printers) by having the longest hold times, the lowest phone service ratings as defined by the understandability of the rep and the information shared, and by having the highest number of problems that were never resolved, meaning that the unfortunate victims simply gave up or were compelled to pay someone else to fix HP’s problems.

 The Double Whammy
This gives HP two distinctions – the lowest rating for overall satisfaction with reliability, which is another way of saying the products didn’t work, combined with the worst support for the purchasers of those products that didn’t work. The savings derived from cutting quality and service translates into lower prices for consumers, and this is supporting sales.

 A New Strategy?
It would be presumptive to suggest this is simply the byproduct of poor execution on HP’s part; they are an industry leader with outstanding management. Give credit where credit is due; this is truly an exciting event – HP is directly challenging the long-held belief that a leading brand must provide at least minimum levels of service or risk compromising its brand and the strength of its selling position.

 Making Things Right
HP’s response has been to update their web-based self-service FAQs, to “radically expand” its forum-based support via the web (this is where smart strangers can solve an HP problem), and to assign 50 super-special expert reps to the help most influential reporters and bloggers. Noticeably missing was any mention of efforts to improve the poorly rated phone support by hiring more reps or making an investment in better training.

 How Many Will Follow?
I applaud HP’s bold initiative to differentiate its offering. Clearly, consumers of PCs and related technology products are not homogenous. If we can have an Apple on the high end, why not a Packard Bell or HP on the bottom?

 Smart marketers should watch with fascination to see which competitors try to better HP by making similar or greater cuts in quality and service, and if it will be a sustainable business strategy. Time will tell…

Up To No Good

The Promise
I just received an email with an enticing promise, “Up to 50% Off” on Your Favorite Climbing Gear”  Wow, what kind of Amazon-like algorithms did they use to divine my favorite climbing gear, and much more important, the promise of 50% off savings made my day (part-time climbers are cheapskates and we’re always looking for a discount).

Let the saving begin!
If the sender’s only goal was to get me to open the email, then promising “Up To 50% Off” was an epic success. Turns out though, my favorite gear as they presented it is a haphazard collection of odd sizes and older gear. Sheesh, how could I have misread my own desires so badly. To add injury to insult, the promised “Up To 50% Off” savings were lost somewhere along the route. Most of the cool stuff was only 10-20% off. Not a bad deal, but a long way from the promised 50%. And the sneaky “Up To” qualifier provided no consolation.

The Backlash
My trust, and that of everyone else who received the email, had been violated. Yes, I’d been tricked into opening the email, but I also learned a quick and valuable lesson – don’t trust this merchant.

Lessons for Marketers
Powerful subject lines drive some of the actions we marketers desire, namely high open and click-through rates. But they also carry a burden of responsibility.
-          First and foremost, your subject line has to deliver value by solving a problem that your target audience truly cares about. In our example, the problem was the high price of climbing gear.
-          Never forget that a subject line is a promise, direct or implied, and the promise must be kept or your reputation will be damaged. Use the ‘ol “Up To” trick only if you actually have some real offers in that range.
-          Keep your promises and you’ll continue to enjoy a fruitful email marketing program. Break your promises and watch your subscriber numbers fall, and your open and click-through rates decline. People are unforgiving of violations of trust, just ask Tiger.
-          Use conversions and revenue as your measurement gauge, and rely less on open rates. High conversion rates are the result of the perfect combination of a compelling promise in the subject line and the fulfillment of that promise.

Climb on!

The Robustiest Dilbert Comic Strip

From the first time I heard the word robust used in marketing, it felt like fingernails on a chalkboard.

I’ve just never been a fan of marketing gobbledygook. Simple, straight-forward communication has consistently proven to be the most effective approach across industries and time.  So, when I opened up this Sunday’s funnies to my favorite comic strip and found Dilbert taking marketers to task for using the word robust, I was delighted.

Blame it on the complexity of the technology segment, or maybe it’s the nature of technology marketers, but as a group, we churn out more meaningless words and phrases in our pursuit of revenue than any other industry.

The term robust as used by most marketers is void of any purpose and truly says nothing of value in promoting sales. It most commonly appears among a group of similar adjectives; scalable, reliable, robust, etc. I have long anticipated that in the marketing game of one-upmanship, those who claimed they were most-scalable would soon also claim to be the robustiest.

Hopefully, Scott Adam’s subtle and humorous form of persuasion will help purge the term robust from technology marketers’ lexicon. Then we can work on killing the practice of using the phrase “disruptive technology” to describe almost anything down to minor product updates. Until that happy day, let’s reserve use of the term robust to places where it is more appropriate, such as coffee or Victoria’s Secret models.

9 Proven Techniques to Win the Lottery…

…and other stupid subject line tricks

A recent email inspired me to revisit my thoughts on dubious subject lines. The one I received was actually slightly more subtle, and instead of promising instant riches, it promised me, “9 Proven Techniques to Double Your Sales” and all I had to do was download a book and apply the super-secret principles that my competitors were hoping I would never find.  

For me, the oddest part wasn’t the promise that we could double GDP and end the recession in the time it would take for the nation to collectively read this treatise, it was that the email didn’t come from a company also promoting weight loss products.  It actually came from one of my most revered and trusted sources for marketing info, MarketingProfs.

Once I recovered from my feelings of betrayal, a flurry of thoughts swirled; who writes such a subject line for a business audience, who could possibly take it seriously, and how regrettable it was that the big automakers didn’t read this book and “start filling their bank account with all that extra income” instead of relying on bail-outs from the government.

So, why am I attacking this poor company? Aren’t there worse crimes against logic and basic intelligence, sure there are!  Here’s why it offends me; every communication should be based on the same rock-solid foundation – it’s called the truth. Only promise what you can deliver. It’s what smart marketers have learned – the more simple and honest you make your message, the more effective it becomes.

Of course, I didn’t download and read the book, and maybe it contains some worthwhile suggestions that really could increases sales.  Nevertheless, I can’t help but wonder what the response to the campaign would be if the email promised an 18% increase in sales and then actually backed it up with hard data. There’s almost no one outside of the Cloud Computing space that wouldn’t be thrilled with 18% revenue growth in this economy.

Moral of this story – Create a product or service that solves a problem, one that people are willing to pay to solve. Then tell the simple truth about it in a credible and compelling manner, and in the places and channels that your target audience is already listening to.  This is the true proven technique that will increase your sales.