Interview with Joseph Jaffe by Adam Fraser
This is text transcript of this podcast interview with Joseph Jaffe.
Adam: I’m delighted to welcome Joseph Jaffe to the EchoJunction podcast. Joseph is one of the most sought after consultants, speakers, and thought leaders in the market on innovation, marketing, new media, and social media. He’s currently founder and CEO of Evol8tion, an innovation agency that connects early stage startups with established brands to partner via acceleration, pilot programs, and investment. Evol8tion’s clients today include Mondelez International, Kraft Foods, Time Warner and Unilever. Joseph has written four extremely well-regarded marketing books, being ‘Life After the 32nd Spot’ in 2005, ‘Join the Conversation’ in 2007, ‘Flip the Funnel’ in 2010, and his most recent book in 2013, ‘Z.E.R.O.: Zero Paid Media as the New Marketing Model.’ This is a call to action for corporations and their marketers to adapt to a die amid an increasingly turbulent, changing, and dynamic media landscape. I’ve listened to Joseph’s podcasts for a number of years and was lucky enough to see him present in Sydney in July last year at the ADMA conference. Joseph, a very big welcome to the EchoJunction podcast.
Joseph: It is great to be with you today, and what an introduction. I hope I can live up to that really.
Adam: Thank you. Great to have you with us Joseph. I appreciate your time and I’ve obviously touched on a fair few things in my intro and I want to dive into both ‘Flip the Funnel’ and ‘Z.E.R.O.,’ but if you could maybe just set the stage a bit with a bit more context on your background. I know you’ve had experience in both brand and agency side. Just provide a summary for the listeners maybe of your career to date.
Joseph: Well sure. It begins at university where I actually went through about a hundred different course directions. Didn’t know what I wanted to do. Not many people know this. I don’t really talk about it a lot, but I started out doing a BSC pharmacy. I thought I was going to become a pharmacist, and then somehow I went into BSC computer science. I figured that was a good idea, which it was. It would’ve turned up probably better had I learned how to code at a much younger age. And then I switched over to Business Science Computer Science and then Business Science Finance and then Business Science Marketing. Five different degrees in about six months. Ironically part of the whole turmoil was the fact that I’ve got chickenpox in my first year at college and I fell behind, especially with math and programming, and I couldn’t catch up. But the funny thing is, once I hit marketing, once I just kind of discovered this Principles in Marketing course I was like, “This is me. This is who I am. This is who I was meant to be.” My grades went through the roof. I pretty much came either top of the class for the last two years. I was literally either first or second in almost every subject and I just kind of hit a groove, in a sense.
But it was funny because fast forward to the end of university, of four years of studying, and all the companies come around to interview for jobs, for internships. I remember Unilever came out, Accenture, etc. and of nine interviews that I went to, I’ve got nine rejections. I didn’t even make a callback for one of them. And there were people who literally would learn from me and copy my notes and I would tutor. They’d ended up getting the jobs at Unilever and I was absolutely destroyed. I felt like an absolute failure. Now why am I saying this? Because guess what, here am I looking in the world of startups where failure is a price of entry.
But the most interesting part was there was a real jerk from Unilever who stood up. He was the head of HR at the beginning and he said, “I’m here recruiting for marketing positions at Unilever and let me tell you something, you don’t have to have studied marketing to come for a marketing position.” “Look at me,” he said, “I studied zoology and I’m the head of HR.” And I remember sitting in there going, “What an absolute son of a bleep.” He’s basically saying my entire four years are worthless. But the funny thing is, he was right, even though he still was a jerk because marketing is, you either got it in your bone, in your blood, or you don’t.
So kind of fast forward forward, I ended up working at Nando’s Chickenland, which is a company that I think Australians know about, and I worked for this very dynamic fast food company on the brand side for five years. It just gave me an incredible grounding in terms of understanding all the things that today we are either discovering as an industry or embracing: the concept of interactivity, of customer experience, of purpose, of authenticity, of irreverence. Everything that we’re now coming to realize is absolutely part of the core DNA of what it is to be a great brand Nando’s was doing and living either by accident or on purpose or just because from a cultural standpoint, it’s all they knew. And so I left South Africa after 5 years of working at Nando’s, came to the US 18 years ago. And then the quick fast forward there is worked at a number of ad agencies, went out on my own almost 13 years to the day. This week I’ve been getting all these congratulations on LinkedIn. I was like, “What is this for?” And apparently I’ve been out on my own for 13 years. And so I became, I guess, a consultant and an author and I’ve started two businesses. And so now, I’m proud to say, if people had to call me by any name, I’m sure there’s some people that have choice names but the word entrepreneur would be the title that I hope I’ve earned and deserved.
Adam: It’s a great backstory, Joseph, and it’s funny to hear your sliding doors moment was the chicken pox. We may not be talking about ‘Flip the Funnel’ if you hadn’t got chicken pox 20 odd years ago.
Joseph: And ironically now I realize, from chicken pox to selling Peri-Peri chicken. So there’ve been chickens in my past, no doubt.
Adam: So Joseph, you’ve written four very interesting books and love to talk about all of them. But in the interest of time, I’ve jumped to the final two, both of which I’ve read. ‘Flip the Funnel’ and ‘‘Z.E.R.O.’’ So if we can start into ‘Flip the Funnel’ with a sub sort of heading: ‘How to Use Existing Customers to Gain New Ones.’ Do you want to just talk people through the sort of high level philosophy you’re trying to get across in that book? And then we can sort of dive into some sub issues there.
Joseph: Yeah, absolutely. And the one kind of back point there is that I’ve been able to evolve the thinking of ‘Flip the Funnel’ and continue it and extend it into ‘Z.E.R.O’ so even though I separate them today I think a lot of that thinking, not only is it continued in ‘Z.E.R.O.’ but it’s actually evolved and extended. So the marketing bowtie, which I’ll come to in a moment, was I almost put it in as an afterthought in the book. It was literally the last final days of editing and I kind of was doodling this thing and I put it in and I started getting really blown away by how people were taking to it. And so I’ll get back to that in about two or three minutes. But the central premise of ‘Flip the Funnel’ it’s…I’ve been pretty fortunate to be early in everything. I wrote ‘Join the Conversation’ in 2007. I may have written one of the first books that talks about customer service before everybody piled on, all the social media gurus piled on. The book is really about retention. It’s not about Twitter as a customer service tool. It’s not just about, “Treat your customers better.” It’s really about this recognition that if 80% percent of your revenue comes from your customer, your repeat returning customer, why are you only spending 20% of your dollars on that same customer?
And that’s one of the better scenarios. There generally are two scenarios that I talk about. One is this kind of the leaky bucket, which is as you gain a customer you lose another one. That’s probably the most customers. Certainly in these high turn and commoditized industries, which by the way is so many of them. Look at telecommunications or wireless or whatever the case may be. The zero sum of products, which is the only way that we can maintain status quo, is to keep on going back to that trough like a pig to truffles of acquisition. And so instead of figuring out how to patch up that leaky bucket, we just keep on this groundhog-day approach.
The other scenario is the chasm and the chasm is this idea that first of all, if you can even measure the fact that 75 or 80 or 85% of your revenue comes from repeat returning customers and then recognizing that we’re probably spending 10 or 15 or 5 or 12 or 22% of our dollars, it absolutely doesn’t make sense. Then I took that one step further and I said, “Well wait a second. Even within that revenue contribution coming from retention, not all of those customers are credited equally.” And so the example I gave is only 3% of Coke Zero shoppers in the US consume 80% of all volumes. Imagine that. And by the way, in B2B, it’s even more pronounced. In B2B it’s like…look at the agency business or the services business. It’s generally four or five clients responsible for 50 or 60% of all revenue.
So the question comes down to why are we not only under investing in our customers but neglecting our best customers? And that is the concept of flipping the funnel that says the traditional funnel, which by the way was created AIDA, all of these was created over 120 years ago. So why are we using this process where everything we do gets smaller and smaller and smaller, diminishing returns on our marketing investment? I flipped the funnel and I said it should get bigger and bigger over time. Your job only begins at the point of purchase. And if you really figure out how to now practice what I call ADIAs of flip the word AIDA: Acknowledgment, Dialogue, Incentivization, Activation then your marketing dollars can actually return increasing returns. And so the idea is how to use existing customers to gain new ones and inside out approach to growing your business from your base of zealots or your base of customers. And the final point is then I connected the traditional and I flipped funnels to make the marketing bowtie to actually demonstrate, for the first time I think in marketing, a real continuum that goes all the way from pre-exposure and pre-awareness to this idea of advocacy on the other end.
Adam: Now Joseph, it just makes a lot of sense and I want to read one quote for the listeners that may not have read the book. Just from very early on in ‘Flip the Funnel’ you say, “I believe that treating customers well, remembering their names, respecting their loyalty, rewarding and recognizing their repeat business, and harnessing their untapped potential as advocates are all common sense.” Now obviously I agree 100% and I’ll be astonished if anyone listening to the podcast would disagree with that. In addition, I sort of come…I’m the numbers guy that’s coming to marketing. The sheer economics of retention versus acquisition also make so much sense. So I guess this is what you’re exploring in the book but given the unquestionable logic, how did customer service end up falling so far down the food chain? Why did it become this cost center to be outsourced and minimized and never seen as a sort of loyalty building, enhancing service? How did we get here?
Joseph: You’re asking a number of very, very important questions and I think the first part of what you said was a quote that I learned even when I was at Nando’s which is the study of, “Marketing is common sense. But how many of us have common sense?” Just look at our relationships with our wives or whatever the case may be, we act like idiots most of the time. And okay, I’m talking about myself. But the thing is, we know what the right thing to do is in life. But yet we always do the wrong thing. And so we’re inherently wired as human beings to act like doofuses, so to speak. Now the thing about customer service is, I think you could argue, it’s not that we let it slide so much and we lost touch. I think it’s just that it has elevated itself and risen in terms of importance because again of social media and because of this digital awakening, because of this cultural rise of the millenial. There’re so many forces coming together that have exposed these nerves and the nerves are that if we mess up with our customer, not only will they not necessarily give us a second chance but they’re going to tell all these people about us. So I think that might have been one of the catalysts or one of the tipping points.
But going back to what you said as well, the third part about outsourcing. I mean, it’s a great point. That is the real issue here. The real issue is the fact that we are also inherently lazy. So this is kind of like recognizing that…as I said, this week I’ve presented to two of the largest CPGs in the world, and I basically said, “Listen, corporations are built to suck.” You’ve got to just acknowledge the fact. We’re talking about entrepreneurs and startups. Startups are not ‘next big thing’. They always were the big thing. I mean, your company itself began…look at your actual names. Mr. you know, I won’t mention but it wasn’t them. But let’s just say Mr. Proctor and Mr. Gamble, they came together. You look at humble beginnings of every company and somehow, as someone once said, “Let’s see how big we can get before we suck.”
So you’ve got this almost inherent ability of us to resist change, that’s the one. To act like doofuses and not use our brains, that’s two. To be lazy, that’s three. And number four is now, we’ve looked at technology as a way to make our lives easier by automating, by streamlining, by you know…the example I always give is Apple. Apple is…people give us an arm…you’re sick and tired of hearing about Apple but don’t be because here’s what’s happening in the world. Every brand is shutting down stores, bricks and mortar stores, and they’re firing human beings and replacing them with automated tellers and automated IVR systems and machines. But what is Apple doing? They’re doing the exact opposite. They’re opening up huge stores in prime real estate, paying top dollar for that real estate, and you go into an Apple store and you’re mobbed by these blue shirts. You’re mobbed by human beings. It’s almost impossible to go into an Apple store and not bump into one of their salespeople.
So what do they know that you don’t, in a sense? What are they doing? What they’ve done is they’ve recognized…look at the Genius Bar and etc. Customer service is the engine that drives this entire Apple experience, in a sense, and it is inherently human and it is inherently actually face-to-face. Now I’m a big believer. I’ll do it through Facetime. I’ll do it through Google Hangouts. But let me feel face at least. Let me at least connect with a human being. So I think what we’re real…we haven’t realized it but this idea of did we let it fall so far away and we outsource it to India etc.? My point of view is, I don’t care if you’re in the Philippines or Malaysia or India or these areas that outsource call centers as long as you solve my problem. So listen, I have an accent too. So I don’t mind who you are, where you are, where you come from. You don’t have to be able to talk intelligently about the Yankees game last night to endear me or win me over. Just solve my problem. And I think you put all of these forces together, what you’re seeing now, and this is what I say in the book, is the 4 Ps of commoditized: product, price, place, promotion. The only way that brands will differentiate themselves moving forward is going to be through customer service and customer experience. So it has moved from being a nice to have back office outsourced tactic to what I think is the most important strategic imperative.
Adam: Joseph, you’ve touched on a few different things there that I want to explore and I almost want to pack Apple because I agree with you. I love what Apple are doing. Genius bar in itself was genius. But almost want to keep them as sort of the outlier and think maybe of telcos, utilities, banks, any large scale customer based sort of business that maybe isn’t doing anything nearly as well as Apple right now. I mean, in essence, and again, you explore this in the book, is the real answer always based around investing in human capital or to what extent can automation and technology help and facilitate? What’s your view on the sort of appropriate mix there?
Joseph: I think that’s a great point that you’re making in the sense that, is it really about humans? No, it isn’t. Again, there are intelligent systems that just work. If you think about…I’m trying to think about automated systems that…it could be banking by my PC banking that I do or my computer, my mobile banking that I do for my bank. I can deposit a check directly through my mobile phone and it’s awesome. It’s almost like a gimmick. But it works beautifully. And now, I’ve updated my bank, updated the software that it just auto recognizes the check. Seo don’t even have to focus at it etc., just take the phone automatically. So it isn’t necessa…I was at Google this week presenting to one of the CPG clients there that had a whole partner event at Google, and I was listening to the head of innovation talking about how they’ve continued to evolve the search process. Like all the things that we see in the background, like for example, the example they gave is very, very stock, was they looked at all the people that were searching for the word suicide. And even going so far as saying, “I want to commit suicide.” And they felt that they had a moral obligation to do something. And they actually, for the very first time, changed the sacrosanct algorithm in terms of you shall not put anything on either than an organic search listing. And so today, and you should go…the premise is if I tell too many people about it everyone’s going to be typing, “I want to commit suicide.” But if you go and you type, “I want to commit suicide” into Google, go and type it and see what happens. Out pops the suicide prevention hotline. So the first thing that comes up is…and they actually, within a day of doing that, call volume had increased by something I think it was like 12%, just overnight in a sense.
So other things that Google does as well is when you start to type things, it’s intelligently already trying to figure out what you’re doing. And the more they do it, the better the algorithm gets. So when you type, they’re trying to save you even a few seconds. So I think the thing is, of course technology can help and automation can help and being intelligent can help. It’s when we start getting trapped into the “press 1 to continue in English” and we all know these examples. You key in your 16-digit credit card number and the first thing the person says when they answer the phone is, “What’s your credit card number?” And you say, “But I just typed it in.” So again it’s not about…humans actually, sadly, are quite flawed and not always the most efficient. But I think that when the human touch, when it works, nothing can beat it. For everybody else, the technology.
Adam: Sure. And just sort of adding the social layer, Joseph, to this sort of discussion, in terms of good customer service in 2015, what’s your view on brands answering questions, problem solving or frankly if you at say KLM in Europe, migrating entire business processes onto social? Like KLM, you can do lots of things on Facebook, Twitter, and LinkedIn. So how do you see social sort of fitting into the customer service equation in the digital environment?
Joseph: I have to say that…and obviously we’ve seen Twitter’s CEO resign in the last couple of weeks and a lot of people are saying, “If I was the CEO, this is what I would do to fix Twitter,” and blah, blah, blah. But the reality is, and I said this years and years ago, in fact I’ve written, I’m on record in terms of writing about this. So I said Twitter should be acquired by the United Nations. Twitter serves two purposes that are so unbelievable and sublime. One of them is this global connector, real time connector in terms of…we had another shipping here in the US and Twitter is that device, that mechanism. It used to be AOL, or AIM, or whatever the case may be. But now it’s Twitter in terms of being able to immediately communicate and share information in real time. So there is a public service component to Twitter. But the other one is customer service. It is the greatest customer service tool ever created bar none. And nothing else on Twitter makes sense in my opinion.
So brands with real time Tweeting and…it’s all crap. It’s all crap. It’s weak attempts to teach an old dog new tricks. And so I would say to brands out there, you without question get Twitter right for customer service specifically and then worry about everything else. Then you can see the couple of real time Tweets in there. But I mean, that to me is like, do that, do that first, do that best and then worry about everything else. And so for me, it’s like that’s where everything begins. And inherently from a social standpoint, that is the epicenter. For everything else from a social standpoint, it’s a best practice of response. And I wrote about this even in ‘Join the Conversation.’ Response and responsiveness. One is how quickly, and two is how effectively. It’s all very well to send me an automated email that says someone will get back to you in 24 hours. My feeling is that is absolute crap as well. It should not take a corporation 24 hours to respond to someone through email or more than an hour to respond to them through Twitter. This is where the… the first move advantage, the quicker you respond to me and solve my problem, that’s the business that I’m going to give my money to.
Adam: I agree. That’s been the theme of a number of earlier interviews, Joseph, on the podcast about listening and response. And I also agree with you on the whole real time marketing thing. But we’ll park that discussion for another podcast because we’ll go down the RAO Tweet blind alley otherwise. But just extending the sort of online customer service theme. Again, in the ‘Flip the Funnel’ book you explore online communities and I’m just interested the sort of dynamic we’re now again, does that community naturally on what I’ve called a home base or the brand controls and your own website? Should that be wherever the audience is, i.g. if all of your customers are happy to be on Twitter, that’s where you base it? Just talk a bit about harnessing communities around a brand and a product or a passion and ultimately it’s peer-to-peer sort of customer service where people want to get to?
Joseph: So the thing about me is that I’m quite a stubborn mule. And maybe there’s a little bit of hubris or a little bit of arrogance or there’s a little bit of just kind of dogmatic stubbornness. But I generally believe I’m right about lots of things. And so for example…and to my detriment because when I founded crayon, we launched in Second Life. I was very bullish on virtual worlds then. I was then labeled a booster of second life, one of the snake oil salesmen trying to push this ridiculous world of Second lLfe. And then fast forward to present day where Mindcraft is so huge and I look at it and then go…but that is just Second Life with an even worse graphic interface but with a better user experience. It’s so crazy to see how history keeps on repeating itself and we poo-pooed stuff that we don’t understand and then it kind of comes back and we kind of get to witness the real promise and potential.
One of those is this idea of communities and there were so companies that tried to build these communities and failed. But it doesn’t change my point of view that the idea of harnessing…I mean even ‘Join the Conversation,’ I didn’t use the word social media in the title. I spoke about conversational marketing because marketing is bigger than media and joining our conversation was so much. It just felt like strategically, this was a better thing to talk about. But it said how to engage marketing where your consumers are through the power community, dialogue, and partnership.
When we think of crowd sourcing and crowd funding we think of communities of interest and we think of wisdom of crowds. And that’s partnership, kickstarter. Community, dialogue, and partnership. So what does community look like in 2015? I don’t know. Maybe it’s…what I’ve written about in ‘Flip the Funnel’ is about creating ambassador programs. So whether you call it a task force, whether you call it a think tank, whether you call it super consumers, whether it’s a physical group of people that meet up, there’s definitely this feeling that the network effect that comes through connected ecosystems, is that a community? What does it like? Is it mobile? Is it virtual? Is it digital? Is it physical? Those are the questions that companies need to answer for themselves quite frankly. Or they can hire people to help them understand. But I still very much believe in the power of tapping into these existing bases of like-minded and affinity-driven groups. Now it could be…Nike’s another example that I use all the time and some people feel it’s overused but Nike has these running clubs that run from all of their stores. So they’re all about running. They’re all about just doing it. So Nike lives that promise by creating these physical communities, as I said, running clubs that run from their stores every week. But also, with a lot of their digital products now where there was FuelBand or Nike Running or Nike+, they’re constantly trying to think about leaderboards, have friends following. Even if you look at MapMyFitness, the same kind of concept as well. MapMyFitness and MapMyRun was bought by Under Armour. So look at Under Armour and Nike. It’s two competitors, both of them trying to tap into these existing communities to create some kind of connection, relevance, resonance.
And so going back to what you said, the answer is going to be sometimes the community will exist already and you get to tap into it and hopefully get permission to be a part of it. Other times they can be created as well. So there is no one size fits all in terms of, “This is the way to do it.” But the it part of it is this ability to say activate. That’s the A of ADIA. Activate your promoters. Activate advocacy. Activate the people that have demonstrated their loyalty, their affinity, their love for you, for the brand, for one another. And that’s what brand can surprise and delight, by standing for something and being a catalyst. In Join the Conversation I said there were five steps to follow. There is listen, respond, be invited to join. So not just join. You’ve still got to be invited to join. Catalyze, make it better and then and only then can you start. And I haven’t even mentioned those five steps, funny enough, in two or three years because I’ve been talking about the other books. But it’s so important to actually follow these five steps because what does the brand typically do? The brand arrives, bursts through the door uninvited. They are the party crasher saying, “I’m here. I’m here. I’ve arrived. Everybody shut up. Listen to me. I’ve got something to say.” And almost always, the brand has absolutely nothing to say. But it’s not going to stop them from talking. So that is the start of the conversation.
And the problem is, when the brand leads for that step five, it almost never works. That’s when you end up with a ghost town or the white elephant. That’s maybe why community itself, we’ve never quite lived up to the promise and potential of community. I’ll say one more thing, which is in digital and 101 when the internet began, people spoke about the three Cs at the time: content, commerce, and community. Those were the three elements of 101, of web 1.0 and we still have never lived up and delivered on the power of community.
Adam: No it’s funny, Joseph, hearing you talk about listen and respond as numbers one and two. So I don’t know if you saw the Edelman brandshare report. In case anyone…Edelman, the largest PR firm in the world. They actually a survey, it was quite refreshing. They actually, rather than brands and agencies and consultants and advisors, they asked thousands and thousands of consumers what they want from a brand. And the results, absolutely sort of consistent with the ‘Flip the Funnel’ ethos and I’ll just summarize in brief terminology. What consumers want, ask questions, get responses, provide opinion, access information. So a lot of the stuff that the marketing fraternities spend a lot of time on, totally not mentioned there, and totally doesn’t give people what they’re looking for. So I’m not saying there isn’t art and theater and people don’t want some creativity but arguably, it’s a very functional relationship people now want with brands, which it sounds like you’ve been saying for up to 10 years.
Joseph: Yeah, and the other part of that is utility. I’ll take you back even further. In ‘Life After the 32nd Spot,’ which is now celebrating its 10th year, there was a section where I said from ROI to RUE. And RUE stood for relevance, utility, and at the time I wrote entertainment. I’d probably replace that now with experience. But utility there and then was don’t make a promise, keep a promise. Actually add tangible value in a sense. And so I think that’s a great opportunity now for brands to deliver utility by making lives better. That’s why through Evol8tion, through my company, this whole idea of connecting brands and startups, it’s specifically designed to deliver utility to customers. We don’t talk about it as specifically as that. But when we say, “What if Kodak acquired Instagram?” Or you look at Under Armour’s acquisition now of MapMyFitness and MyFitnessPal. You look at Charmin, the toilet paper brand that bought SitORSquat, which is a public restroom finder. Mobile now holds the key to this, and it goes into ‘Z.E.R.O.’ as well, into this direct relationships between brands and their customers.
But specifically the question is, it’s not so that we can deliver more ads to them. It’s so that we can actually serve and service them and make their lives better. And that really comes down to one word, and that’s value. And the beauty of this whole vision is that the antidote to price wars and the antidote to bargain basement and competitive conquesting that is all discount and short term pricing based is through value. And I probably said this in one of the earlier books too, which is you could take two people off the street and both of them are going to buy the same brand spanking new BMW and one views it as kind of boring in a sense because they’ve got another four cars or five cars in their garage. And the other one has literally saved up their entire life to buy that BMW, their dream car, and it’s the realization, their retirement gift to themselves.
So how was it that two people could spend the same amount of money for the same product and walk away with a completely different experience? And then you add to that another scenario, which is two people can pay the same amount for the same product and one feels that they’ve got ripped off and the other one feels like they got the deal of the century. It is all the perception of value in a sense. And that is our goal right now as brands, which is deliver. People will pay, and I wrote about this in ‘Flip the Funnel,’ people will pay a premium for superior customer service and customer experience. And so if we really want to be able to charge that premium and get a kind of margin that our shareholders are going to be happy with, the answer is don’t find a new celebrity to borrow interest from and endorse. Add more value. For amazon.com, it was free shipping and Prime. And they would never have gotten to Prime without free shipping. That’s the important point. They would never have gotten to this “pay a subscription fee for one year to get unlimited two day free shipping,” if they hadn’t, if Bezos had not cut his television spend and said, “Free shipping for our customers.” That is what counts. That’s real utility. Everything else is just fluff.
Adam: I agree Joseph. And final question on ‘Flip the Funnel’ related to that and then we’ll jump into ‘Z.E.R.O.’ I love the quote, the overarching quote in ‘Flip the Funnel,’ “Retention is the new acquisition.” And all on board in the importance of customer service. My sort of final question would be, however good the service, does having a great product come first? Now here, in Apple’s case, they’ve got both but if I’ve got exceptional customer service and follow through but my underlying product is just substandard I guess, is that a substitute for a…will people value a 7 out of 10 product with great customer service ahead a 9 out of 10 product? I guess is what I’m saying.
Joseph: So if there is a formula, the formula generally would be create a great product, surround it with great service and then basically get out your own way and let your customer kind of carry you and partner with them and create that inside out approach. So first of all, let’s talk about great products or bad products. I think going to market, as the old saying goes, “You can’t put lipstick on a pig.” I think first of all, that’s been the problem so much, is that we either go out with a pig over product and we try and mask it with too much lipstick, which is advertising, or sometimes we take an average or mediocre product and we try and make it out to be something that it’s not. And that is the classic over-promise and under-deliver. So I don’t mind if the product is average or mediocre as long as it’s not inferior in a sense.
Soaps and toilet paper, there’re so many and too many products that are in fact, they’re frequently purchased, low involvement consumption items in a mature and/or declining market. So sometimes there, for example like SitORSquat, the ability to reinvent or breathe life into it. Another thing Charmin does, which I think is fantastic, is they have this initiative called Potty Palooza. And so they do it in different iterations. But one place they’ve done it, I don’t know if they’re still doing, but I hope they are, in Times Square, New York, during the whole December-January kind of holiday period and winter months here. They take over, it’s the information center in Times Square, two or three floors and they turn it into this Potty Palooza. They’re literally about a hundred magnificent toilet stores. And I’m talking about porcelain and high end faucets or taps or whatever the case may be and there’s a whole long line and they have these bouncers that are very, very extroverted. I remember them shouting at the door, “Come to the number one urination station in the nation.” I never forgot that line. And because it’s P&G, they also bought in Duracell. So while you were waiting you could charge your phones and charge your cameras and so on and so forth.
So that is a great way of being able to again, through experience and service, but that’s just really experiential marketing of delivering something different. But I think the point is, we always need to strive towards creating a great product. It’s got to be there as well. But I think that is always the first prize. The second prize is avoid the over-promise. If anything, let’s just try and always be humble and under-promise to over-deliver. We’re much more likely to come good on that promise and be successful as opposed to the alternative, because even if you look at the movie industry right now, we never should and have to, in fact never will see a crap movie again. I mean, we shouldn’t have to. If we do it, it’s just because we’re stupid. A movie comes out. There and then, people through Facebook and Twitter and Rotten Tomatoes and all these different places are going to tell you, “This movie sucks.” The new Entourage movie, I’m not going to go and pay essentially $100 when I have to factor in babysitting and over-priced popcorn and parking and etc. to go see that movie because it’s getting really bad reviews. I will go see it and I will see it under two conditions. One, because I really love Entourage and I don’t care what the reviews are. I’m still going to enjoy it. So buyer beware. Or I’ll wait for it to be on a plane because I fly often and I’ll get it for free or I’ll wait for it to come on to our pay TV station.
So the point is, if you’re in that business, how many millions and millions and millions of dollars are you spending right now on talent, on production, on promotion, on marketing? We are now…the emperor has no clothes. If you’re in that business now, you really have to avoid sucking royally and making an obsession because there is no safety net anymore. That’s why, for example, Peter Jackson, when he created Lord of the Rings, he was one of the first I think directors to tap into that zealot base, that fervent fan base, recognizing that if he could come good with the super fans of Tolkien and the Lord of the Rings trilogy, he was stand a much better chance of succeeding. If he can make them happy, he would make everybody else happy.
Adam: That’s great Joseph. And you mentioned the word zealot. It’s a good segue if we can probably…let’s talk ‘Z.E.R.O.’ for the last two or three questions. And definitely some consistent themes with what we’ve been talking about in ‘Flip the Funnel’ and experiences, customer service retention. But just to remind people, so the tagline, if I can call it, of ‘Z.E.R.O.’ is Zero Paid Media as the New Marketing Model. So we come from an era, can I say decades of 30 second slots on TV, print, radio, billboards, and whilst digital is getting lip service and maybe the crumbs of the budget, you’re presenting a pretty sort of extreme straw man, if I can call it, that you’re saying the ultimate endgame or the optimal endgame is actually zero paid media. So do you want to talk us through your high level message and thinking in this book?
Joseph: Sure. The message is, the setup and the preamble to ‘Z.E.R.O.’ is that a perfect storm is coming where the entire media industry, the bottom could fall out the model. It is based on having spoken anecdotally to several CMOs who have expressed deep concern and fear about the fact that they’re being priced out the market. These numbers continue to decline and fragment and so does attention and prices continue to rise. We all know that. But the missing piece of information is that media inflation continues to outpace economic inflation. And it has been like that and if it continues to be like that within the next three to five years, we could actually be priced out the market. It is going to become too expensive to maintain even minimum acceptable levels of reach and frequency, share of voice, etc. That’s the premise.
So rather than tweak the model, myself and my former Coca-Cola and AB-InBev client, Maarten Albarda, we wrote the book together, we basically said in a perfect world, the optimal paid media budget would be zero. Why? Because you would have enough customers, enough zealots, enough word of mouth, enough referrals, enough content, enough data, enough innovation. The whole idea is both around this vision of moving from a tenant, renting media, renting eyeballs to owning assets and monetizing those assets and therefore monetizing marketing. So from a tenant to a landlord. And so in addition to that, which is a bold enough vision, we also created an acronym from the word zero which became, and you’ve heard the word several times today, Zealots, Entrepreneurship, Retention, and Owned Assets. So the Z of zero stands for zealots, which is advocacy. The E of entrepreneurship is all about innovations, so technology, startups becoming more agile as an organization. The R stands for retention, which clearly is an extension of ‘Flip the Funnel.’ And the O is owned assets. And again, what is an owned asset? Your people, your packaging, your products, your stores, your employees, your clothing, your data, your content, your website, your apps, your customer service. And so that is the vision which basically says…in fact at the end of the book…I didn’t even write this in the book funnily enough. But I talk about it which is the 50/50/5 rule. In five years’ time, 50% of all marketing should be direct.
So if we can get there I think the brand that can actually commit to ‘Z.E.R.O.’ by saying…first of all, it begins by saying, “Do we even know what percentage of our marketing dollars right are now direct versus indirect?” And just being able to get to a balance of 50%. I mean, that’s an amazing, very clear path in my opinion, which is to say, “You know what, right now we’re 70/30 in favor of indirect.” Who the hell wants to be a renter, a tenant, when you’ve got the ability to become a landlord and even monetize that marketing? So that becomes very clear I think true north or North Star in a way. In addition to that, a concept we bring up is this idea of embracing your heresy. So are you prepared to put yourself out of business? Are you prepared to embrace the thing that you fear the most? Maybe it is zero paid media. Maybe it is margin. Maybe it is the fact that even if you gave your product away for free, would people still even want it? And that might sound like a ridiculous scenario but it’s not. I mean, the newspaper industry right now, in the UK I think The Evening Standard is free. I don’t even think anyone wants it. Why would you even want something that stains your fingers and cuts down trees when you can just use the internet? So millenials don’t even want free newspapers anymore.
So we’re seeing this heresy coming through. In the beverage industry, Coca-Cola has been embracing the heresy that they’re in some way, shape, or form contributing towards obesity. So they have come out with this initiative, you want the ultimate heresy. Coke has teamed up with Pepsi and Dr. Pepper to create this movement called Mixify, which is basically the three…the enemy of my enemy is my friend. And in this case, it turns out that working with their competitors, the lesser of evils for them to actually all come out with a unified message saying we better get behind, or in front of in this case, the fact that if we continue making everybody fat, we’re going to go away at some point because the government will regulate us.
So let’s bring it all the way back to zero. This idea of striving towards zero paid media, we even say it in the presentation in the book, you may never get any, in fact you probably won’t get at the end of this lifetime. That doesn’t mean it isn’t the right path. This is the journey. And if success is a journey, not a destination, to be in a business where every year you can start reducing your carbon footprint, if you can reduce your paid media by one basis point, one percentage every year, isn’t that worth striving towards?
Adam: It’s so interesting and so much to explore in what you just said Joseph. And in the book, I picked up on the…in essence in going direct, like many things in the digital space, anywhere where there is an intermediary, they can in essence be cut out and I think a lot of what you’re saying, take out the sort of…where there’s TV, print, radio why go through a middle man when you can talk and engage directly with your customers? I’m interested just in terms of advertising and obviously you wrote a book called ‘Life After the 32nd Spot,’ where coming up to a hundred years on from John Wanamaker’s famous comment, “Half the money I spend in advertising is wasted. I just don’t know which half.” I was thinking of that in tandem with discussion I’ve been hearing about I think Apple iOs 9 is going to be add blocking capability built in, and one of the most popular apps amongst millenials is ad blocking. I mean, it’s almost got me thinking, was the advertising product just fundamentally flawed from the outset? It sort of got interruption baked into its nature? You’re watching Premier League, Coronation Street, The Voice, Idol, it doesn’t matter. You’re not there to watch the ads. So almost, was the advertising era always going to come to an end or is it the major digital disruption and fragmentation that’s come post-internet?
Joseph: I absolutely love, love, love that question and I don’t think I’ve ever been asked in that way which is, “Was it always flawed?” I don’t know that it was inherently ever completely flawed. I mean, the soap opera…certainly at the beginning, advertising was the reason why we ended up getting content. The whole ad supported…the soap opera was all ultimately generated through advertising. But I think through proliferation and fragmentation and through so many factors, it has declined and decayed in terms of its efficacy. And I think there is that just noticeable difference as they talk about in market. You see someone every day and they look fine and then you don’t see them for two weeks and then you say, “My God, you’ve lost a lot of weight.” Or, “My God, you’ve put on a lot of weight.” And so I think that’s kind of what’s been happening in a sense where now we look at it and we say, as the old saying goes, there are three types of people. Those who make things happen, those who watch things happening and those who turn around and say, “What happened?” And I think we’re getting to that WTF or what happened moment.
But let’s go back to what you said. Was it always inherently flawed? The reality is that we are in a new generation. This millenial generation, which by the way, by 2020 they are going to be 40 years old. So right now they’re 35. The oldest of them are 35 and 36. So they’re not the millenial that we always think of, the 21 year old living in the basement still at home of mom and pop etc. I think we’re recognizing now that we are very quickly getting to a post-marketing, well post-advertising but even arguably a post-marketing era. In order to stay relevant and survive, we’re going to have to be both relevant and resonant. So can technology help? Can technology save marketing and save advertising?
Again, I think I created part of the solution 10 years ago. I called it advertising on demand and I basically said, “Listen, if I’m looking to buy a car, give me car advertising. I want to see it. In fact, I would hate to know that I missed out on a great deal.” So if we can somehow embody the principles of ‘Join the Conversation,’ of community, dialogue, and partnerships, if we can work with our customers, if we can figure out the optimal mix and the optimal amount of participation and permission, I don’t think it takes a genius to fix the model. But in order to fix the model, we’re going to have to take a step back in order to move a step forward. And that means eliminating the waste. It means recognizing right now that the creative product sucks. There is so much wrong right now with the model. But ultimately, as I said, if I’m looking to buy a car, I’m going through a mid-life crisis, motor bikes are awesome, convertibles are terrific, two doors and sports car are amazing. Do not show me a minivan. Bring it on. Give me an hour of that program. Take me under the hood. Let me understand, compare performance and whatever the case may be. I’ll watch a 30 minute documentary glorified piece of advertising from Porsche or BMW or Audi.
But why on earth haven’t we figured that part out? And when we do, that’s when we may see a new lease in life where we see marketing 2.0. I also believe that marketing 2.0 will be one that absolutely, inextricably will be connected with technology. So that goes back to this whole vision between connecting startups and brands. I think right now, marketing without technology is like being all dressed up and nowhere to go. And so the ability to kind of bring that in and is that same digitization and measurability and real time optimization that will save the television industry if the traditional media business is prepared to live and die by actual efficacy. And so just to kind of put a final touch on that, here’s my point. Again, I feel like a broken record. It’s almost like a giant rent. But ultimately, marketers are not going to pay for the stuff that is never seen, never served, blocked, fast forwarded through, skipped, etc. And that day is coming. If you don’t believe it, you’re a fool. That day is coming.
However, the good news is that marketers will pay or should pay for an ad that is paused, that is rewinded and watched again, that is shared, that is commented on, that is extended, that is favorited, etc. And I think those higher value actions that say, “They noticed us. They liked us. They remembered us. They shared us. They even watched us again.” In that case, as a marketer, I would pay you four times. I would pay you double or triple or quadruple for an ad that actually managed to somehow break through. It sounds like a bit of a…from the sublime to the ridiculous. It’s almost like, thinking of advertising, I’m just realizing now as sperm. One tiny little sperm is going to make it through and survive and that’s going to end up creating life. So in that case, the stakes are pretty damn high. But ultimately, to the victors are the spoils. And victory will come through creativity. It will come through innovation. It will come through risk taking. But the ultimate prize is an incredible one. But to get there, it is like the Hunger Games. It’s tough.
And by the way, if you at the Super Bowl, there are 50 advertisers and one week after the Super Bowl concludes, I do this exercise all the time. I go to people even in the business and I ask them to reach us to remember as many ads as they can. They can’t even get through five. So I think to myself, “My goodness, those 45 advertisers, they just flushed 5 million dollars down the toilet. What could they have done differently? Could they have created their Amazon Prime moment? Could they have created a startup? Could they have invested in an entrepreneur?” The possibilities are endless.
Adam: Joseph, it’s fascinating stuff, and you actually got me thinking as you were almost talking about performance-based TV. Does the Google AdSense model end up driving TV and I’ve had 5, 10, 15, 20 or is never going to happen. But ultimately, I think that’s what you’re getting to, that marketers and brands will want defined ROIs and defined performance metrics. So, really, really interesting stuff Joseph. We could go on for so many more questions but just glancing at the clock I want to be respectful of your time and unfortunately I have to bring this to a close. Before I do, I don’t let guests go without the EchoJunction quick-fire round. So hang on to your hat so you’re all set.
Joseph: I’m ready and I hope I can give you good answers. I fear I may not.
Adam: So, very easy. Quick-fire question number one. Joseph Jaffe of Evol8tion, if you could only use one social network for any purpose in the next 30 days, which would you choose and why?
Joseph: It’s a good question. I am probably just going to go with Facebook, only because I think Facebook actually has the conversational juice at the moment. I’m going through a very heated debate right now on Facebook about gun control, etc. I just fear and feel that Twitter has kind of lost a tremendous amount of momentum, and so in terms of where the engagement is right now it would be Facebook.
Adam: Great answer. Question number two. Joseph, what is the most influential and impactful business book you’ve ever read?
Joseph: So I would probably have to go with ‘Cluetrain Manifesto’ in terms of…that was the book that kind of set the cat amongst the pigeons. Also in my current iteration with innovation, ‘Startup Nation’ is an amazing book to read.
Adam: Great. I will link both of those up in the show notes. And Joseph, final question. Who are the top three people you personally follow on social media?
Joseph: This is probably like a cop out answer and a ridiculous answer but there’s really no one because it’s really everyone. There’s no individual or personality that I…and that’s also a heresy, right? Because anybody listening that might say, “But Jo, you were one of our three.” That’s flattering but at the end of the day, it’s the kind of the wisdom of crowds that keeps me smarter and engages me. And I think also with technology the way it is, like again, if you look at Facebook for example, they have a habit of showing you the post of the people that you comment on the most or connect with the most. I will say the actual network that I use the most is not Facebook. It’s Instagram. That, for me, photography and visual communication and storytelling has on a personal level, not even for work purposes, but on a personal level, has been the one that has resonated the strongest with me. So again, it’s not an individual. It’s just more of being connected to the conversation.
Adam: Great answer Joseph. Thank you so much for your time. It’s been fascinating to explore these topics. Before I let you go, where do you like to send people that want to learn a bit more about you and your business and your books?
Joseph: The company is called Evol8tion, and our URL is startupsforbrands, and that’s startups with an s, plural, and brands with an s, F-O-R. So startupsforbrands.com. And for me, even though I’ve given Facebook a little bit of a punt today, if you ever want to reach me quickly and get a response from me, probably the best way is through Twitter. So @jaffejuice. On an individual basis it’s a good way. So I guess that would be it which is jaffe@startupsforbrands is my email. My company is startupsforbrands.com is the domain of Evol8tion and @jaffejuice on Twitter.
Adam: Joseph, fantastic stuff. Thanks so much for being with us.
Joseph: You’re very welcome.
Adam: There we go ladies and gents, Mr. Joseph Jaffe. I hope you enjoyed that interview. So much to think about. So many really interesting points of view presented by Joseph. If you’ve got any involvement in marketing and the digital space, really a lot of food for thought. So if you haven’t checked out any of Joseph’s books or blogs or work before, I really would encourage you to do so. And I’ll leave all the links in the show notes.
Check out the show notes for the interview with Joseph Jaffe.