May’s top five most-read sto­ries

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Voda­fone launches new piggy po­si­tion­ing, re­tires James Rolle­ston Burger King puts its Whop­per price on the line with Joseph Parker promo Chris Ri­ley re­signs from DDB, Mow­day quashes ru­mours about ‘mass re­dun­dan­cies’

In­side: Barnes, Catmur & Friends Night of the acronyms: MBM, FCB Media and Spark PHD en­joy Bea­cons suc­cess

through a wide va­ri­ety of dif­fer­ent media chan­nels. In May last year, we had an event at Auck­land Zoo to launch our new chil­dren’s book, Sleep­Drops’ Sleep­time at the Zoo, a bed­time story where we take kids on a jour­ney through their bed­time wind­down rou­tine. This was a highly suc­cess­ful event that gen­er­ated a huge amount of pos­i­tive feed­back from the public and re­sulted in great media cov­er­age. ASA reg­u­la­tions can be de­cid­edly re­stric­tive around nat­u­ral reme­dies. It is frus­trat­ing hav­ing to tip­toe around the ben­e­fits of our prod­ucts. We lit­er­ally can­not tell peo­ple how our reme­dies work and what ben­e­fits they can ex­pect from the range. We can’t even use the word in­som­nia on our web­site or in any of our mar­ket­ing ma­te­rial. If I ever see the word ‘sup­port’ again… We’ve adapted though and it just means we have to be a bit more cre­ative with our mar­ket­ing and PR. There are an enor­mous num­ber of com­pet­ing sleep reme­dies in the New Zealand mar­ket, over 100 in phar­ma­cies alone. How­ever, as our prod­uct range of­fers a clear point of dif­fer­ence we have not found it too hard to set our­selves apart. We can of­fer the con­sumer an in­di­vid­u­alised pro­gramme tai­lor­made to their needs.

As well as this, we spe­cialise in sleep and stress reme­dies and can of­fer each cus­tomer one-on-one pro­fes­sional sup­port to en­sure that they get the best re­sults that they can from the Sleep­Drops range. The re­sults speak for them­selves. We wouldn’t have got to num­ber one brand and num­ber one prod­uct in three of the sleep cat­e­gories if our prod­ucts didn’t work. Happy cus­tomers help us to cut through. Make great prod­ucts, have in­tegrity and cre­ate a point of dif­fer­ence. For some­one to want to buy your prod­uct, there has to be a no­table ben­e­fit in choos­ing your prod­uct over some­body else’s. On top of this make sure that you are do­ing some­thing that you are pas­sion­ate about and that you truly be­lieve in. If you are do­ing some­thing you love and strongly be­lieve in, the rest will fol­low. We want to change as many lives as pos­si­ble for the bet­ter. We hope to one day end up as a house­hold name on ev­ery bed­side ta­ble in the world. The sky is the limit.

“This cam­paign is bril­liant. In a cat­e­gory so of­ten filled with blood, smashes and gore, this ap­proach brought the is­sue to life by reimag­in­ing past mem­o­ries into the present and high­light­ing what was lost, and what can be lost. An in­ter­est­ing col­lab­o­ra­tion with Weta Dig­i­tal too. The re­gen­er­a­tion process broad­ened and deep­ened au­di­ence en­gage­ment by show­ing the loss spread over a life­time that wasn’t able to be lived. Very clever. I’m jeal­ous.” Kate Humphries, course leader at Media De­sign School’s Ad­school: “Very mov­ing work cre­ated from a strong in­sight. Well done to both Weta and Y&R.” James McKee, mar­ket­ing man­ager at Jaguar Land Rover New Zealand: “A re­ally gutsy pro­ject for the fam­i­lies to be in­volved in but it’s ex­e­cuted with a real re­spect for all in­volved and I think that is what makes it so cap­ti­vat­ing. Team­ing up with Weta added real in­tegrity to it and cer­tainly added to the in­ter­est in the PR el­e­ment.”

Cam­paign De­scrip­tion: To celebrate its 75th an­niver­sary, Air New Zealand wanted to thank Ki­wis ev­ery­where for trav­el­ling with them. This cam­paign told the air­line’s story through the eyes of its cus­tomers. It used pas­sen­ger photos, videos and sou­venirs to cre­ate a very real snap­shot of ev­ery­thing the air­line and its cus­tomers have done to­gether over the years. Cam­paign De­scrip­tion: From Munter to Mighty River Power, ac­tor Tammy Davis shows how Mighty River Power’s Globug makes it easy for Ki­wis on a bud­get to save money on their power in a new branded con­tent style com­mu­ni­ca­tion that added a sales ac­ti­va­tion thrust to the brand cam­paign us­ing Brand­World’s Dis­cover plat­form. In Tammy’s words: “Boom!”

Agency: DDB Group New Zealand Client: McDon­ald’s Brand/prod­uct: McRib burger Media: Dig­i­tal, so­cial media Cam­paign De­scrip­tion: To get Ki­wis ex­cited about the re­turn of Macca’s cult clas­sic McRib burger, we re­leased a film, es­pe­cially for Face­book, un­veil­ing a more saucy side to the brand. Agency: Ogilvy & Mather NZ Client: Rebel Sport Brand/prod­uct: Win­ter cam­paign Media: TV, dig­i­tal, mailer, so­cial and in­stal­la­tion

It’s about rel­e­vance and res­o­nance. It’s about giv­ing us a dif­fer­ent con­ver­sa­tion to have with cus­tomers other than just price. So, we’ve run a num­ber of home­ware pro­grammes—we’ve had Jamie Oliver crock­ery, glasses and crock­ery and kitchen knives—and those very much are about the house­hold shop­per … It’s a clas­sic ex­am­ple of what’s old is new again. Col­lect­ing cards is noth­ing new. I re­mem­ber as a child get­ting cards out of Weet­bix pack­ets. What I find fas­ci­nat­ing about the re­cent pro­grammes is that it’s rel­a­tively old­fash­ioned. It’s not a high-tech thing. It’s just pa­per. Yet, we’ve had peo­ple queu­ing up for swap days for some­thing that’s mod­er­ately old-fash­ioned. It’s no se­cret that we had a rough ride at the be­gin­ning of last year with a lot of neg­a­tive fo­cus on our busi­ness, so we are very honed to hear what is said about is. And, where we can, we look to re­spond ap­pro­pri­ately … We’ve learnt to lis­ten very care­fully to what is said [in the media]; and wher­ever we can, we look to set things right. We don’t use that phrase. We don’t be­lieve in the con­cept of a price war. How­ever, what we do be­lieve in is that if you ask New Zealand con­sumers about what is im­por­tant to them in choos­ing where they buy their gro­ceries, most of the top twenty rea­sons have some el­e­ment of price or value. We are an ex­tremely price-sen­si­tive mar­ket, and the global fi­nan­cial cri­sis and all of the other tough times we’ve been through have honed this price sen­si­tiv­ity al­most to an art form. And I do not see this chang­ing, even though we might be a rock star econ­omy. It has be­come so in­grained in us that whether you’re a low-in­come con­sumer or have the lux­ury of high in­come ev­ery­body is look­ing for the best price on the prod­ucts that they want to buy. We don’t be­lieve that we have a right to charge more for a can of beans than any­one else. We’re in mar­ket with cam­paigns say­ing things like ‘We are com­mit­ted to bring­ing you cheaper gro­ceries’. That’s a re­ally overt state­ment. They are very clear ar­tic­u­la­tions of our in­tent. We’ve been on that jour­ney since Oc­to­ber 2013, and it re­ally started to hit its stride in Fe­bru­ary or March last year fol­lowed up by the $1 bread. It is very clear that we are look­ing at the prod­ucts that mat­ter to Ki­wis and bring­ing our prices down, and where we can, we lock them down in­def­i­nitely at that price. Does this kick off the words I don’t be­lieve in? We haven’t seen a price war. We’ve seen re­sponses. We’ve seen re­ac­tion. I have no doubt that the other guys look at what we do and take it very se­ri­ously, as we do with them. You’ve hit a nerve there. My view on New Zealand­ness is pretty sim­ple. I work with a team of 18,000 Ki­wis. I’m the cus­to­dian of a brand that op­er­ates in 174 com­mu­ni­ties. I don’t know what else it takes to be a New Zealand brand. We’re owned by Wool­worths Aus­tralia, and are proud to be. It’s fan­tas­tic to see a guy [Dave Cham­bers] who started as a gro­cery as­sis­tant spend 37 years in the New Zealand su­per­mar­ket busi­ness, and then go on to head up 900 su­per­mar­kets in Aus­tralia. I think that’s pretty cool—and that’s what be­ing part of the Wool­worths group is about. We’re owned by an Aus­tralian com­pany, but you walk into any Count­down and you’re go­ing to find a group of pas­sion­ate Ki­wis of var­ied back­grounds who are work­ing to serve other Ki­wis. And for me, that’s the end of it. Why do we do it? Be­cause it works. Why do we put un­ad­dressed mail­ers into 1.4 mil­lion let­ter­boxes (which is just a pa­per ver­sion of shout­ing)? Be­cause it works. I’m a pretty sim­ple per­son. In terms of our media strat­egy, I’m go­ing to ad­ver­tise where the eye­balls are. In terms of our style of com­mu­ni­ca­tion, I’m go­ing to do the stuff that works. That’s a gross over-sim­pli­fi­ca­tion, but re­tail advertising in New Zealand is pretty shouty … I would like to think that there is op­por­tu­nity for us to even­tu­ally be more el­e­gant, but that’s a long jour­ney … So, will we be the lead­ing force in chang­ing [the shouty advertising]? I think that’s un­likely. We’re not dif­fer­ent from any other big brand. We’re look­ing hard at where the eye­balls are, and our in­vest­ment in dig­i­tal has grown sig­nif­i­cantly in the last three years. I use the dig­i­tal ref­er­ence in its broad­est terms to in­clude ev­ery­thing from our emails through to so­cial and search. We have tre­bled our spend in three years—off a small base ob­vi­ously … I can only see that in­vest­ment grow­ing, but the chal­lenge we face is that frag­men­ta­tion, par­tic­u­larly in the mar­ket­ing mix, can be pretty chal­leng­ing to keep a han­dle on. So we’ve made spe­cific de­ci­sions on which so­cial chan­nels we’ll be in­volved in. We were rel­a­tively early into the so­cial space in terms of re­tail brands, and now have 230,000 odd Face­book fans on the chan­nel … One of the rea­sons we got onto Face­book early was to be able to hear the things cus­tomers were say­ing about us. There were things that peo­ple were say­ing about us any­way, but we weren’t hear­ing it be­cause we weren’t part of the con­ver­sa­tion. To be part of the con­ver­sa­tion can be un­com­fort­able, be­cause it’s not great when you have a cus­tomer talk­ing about their poor ex­pe­ri­ence in that en­vi­ron­ment—but I would much rather hear about it and do some­thing than not hear about it at all. There’s a cri­sis loom­ing in this coun­try around obe­sity, di­a­betes and other re­lated is­sues. And as a food re­tailer, we have to stare into that. That’s not to say that we won’t sell foods that don’t have sugar and salt in them. We will sell prod­ucts that Ki­wis want. But can we am­plify the con­ver­sa­tion around prod­ucts that are bet­ter for you? Can we am­plify the con­ver­sa­tion around how to cook a healthy meal? Ab­so­lutely, we can. So when you start to think about how re­tail mar­ket­ing can be more el­e­gant, those are the sorts of con­ver­sa­tions you want to see com­ing to the fore. Peo­ple choose what they buy in our stores. We’re not here to tell Ki­wis what to buy. I think that would be in­sult­ing, quite frankly. Online shop­ping is a real jewel in the crown for us. We’re re­ally proud of it, and we’ve been do­ing it around 17 or 18 years. Best prac­tice puts it at four to five per­cent of sales (the ob­vi­ous one that ev­ery­one looks at is Tesco for this). We’re not there yet, but the space is grow­ing very well. Clearly, as in­fra­struc­ture and tech­nol­ogy im­proves, growth comes with it.

If there is one tru­ism that can be taken from ev­ery gang­ster film ever made, it’s that you can’t buy loy­alty in the busi­ness world. Sure, you can get peo­ple deep in your pocket, do­ing favours for you. But you’ll never re­ally own their soul this way. And given half a chance, they’ll sell you out over lunch one day in a slow mo­tion hail of gun­fire and sweep­ing or­ches­tral mu­sic.

But recog­ni­tion of this im­mutable law doesn’t stop busi­ness try­ing to achieve just that. Loy­alty ini­tia­tives and pro­grammes are big busi­ness glob­ally, and the idea that cus­tomer loy­alty can be nur­tured through the pro­vi­sion of in­cen­tives and re­wards is a corner­stone of mod­ern mar­ket­ing prac­tice.

In the US alone, $50bn is spent an­nu­ally by busi­nesses on loy­alty pro­grammes and half the top 100 re­tail­ers in the US Na­tional Re­tail Fed­er­a­tion have one in place. Ac­cord­ing to a re­cent BCG re­view of this space, the typ­i­cal US con­sumer has 29 loy­alty mem­ber­ships, us­ing 12 ac­tively. And the space con­tin­ues to grow. Mem­ber­ship in pro­grammes jumped 26 per­cent from 2012 to 2014 alone. Such is the ubiq­uity of these pro­grammes that even as far back as 1993, the av­er­age mem­ber­ship of air­line schemes alone was 3.1 per trav­eller.

And it’s not just a US phe­nom­e­non ei­ther. In New Zealand, 2.4 mil­lion Ki­wis, across 74 per­cent of the coun­try’s house­holds, be­long to Fly Buys alone. And Air New Zealand’s Air­points pro­gramme has grown by more than a quar­ter of a mil­lion mem­bers over the past 12 months to 1.8 mil­lion. The re­cent switch from earn­ing points with BNZ to West­pac made sig­nif­i­cant press cov­er­age, as more than 20 per­cent of all credit card spend in New Zealand is on Air­points earn­ing credit cards. It will be a real test of the power of this pro­gramme if it is suf­fi­cient to trig­ger chang­ing banks.

In­deed, so en­trenched is the idea of in­cen­tivi­sa­tion and re­wards for be­hav­iour that it has be­come a very es­tab­lished part of con­sumer ex­pec­ta­tions as to how busi­ness will be done in many mar­kets. A huge amount of sur­vey data ex­ists show­ing that con­sumers around the world now ex­pect to see this as part of their trans­ac­tions with the busi­ness world, and claim it to be a big in­flu­ence on their de­ci­sion-mak­ing be­hav­iour.

Of course, in the real world of mar­ket­ing, we are en­ter­ing into these pro­grammes with far loftier goals than sim­ply ‘ buy­ing’ cus­tomer loy­alty in the mode of Don Cor­leone. The un­der­ly­ing ra­tio­nale has al­ways been founded on the prin­ci­ples of re­la­tion­ship mar­ket­ing; the idea that de­vel­op­ing strong bonds with the best cus­tomers leads to far greater long-term suc­cess and prof­itabil­ity. Loy­alty pro­grammes have, at best,

These in­sights into ac­tual be­hav­iour are star­tling not only be­cause they ques­tion the ef­fi­cacy of what is a very es­tab­lished mar­ket­ing prac­tice, but also be­cause they run con­trary to what con­sumers them­selves are telling us about how they make de­ci­sions. Peo­ple claim these pro­grammes to be im­por­tant to their de­ci­sion-mak­ing, but the truth is they re­ally don’t seem to ac­tu­ally im­pact their be­hav­iour over the long run. Part of this can prob­a­bly be at­trib­uted to the ubiq­uity of loy­alty of­fers and the idea that you can shop at any gro­cery store, petrol sta­tion, cof­fee shop, air­line or bank and still take ad­van­tage of a loy­alty of­fer. But part of this also needs to be at­trib­uted to the sim­ple fact that we don’t know our own be­hav­iour as well as we think we do, that a huge amount of our de­ci­sion-mak­ing hap­pens sub­con­sciously ac­cord­ing to a set of ar­bi­trary rules we may not com­pletely un­der­stand. Our con­scious brain can look to ra­tio­nalise these be­hav­iours, but we should be wary of tak­ing what peo­ple say about what they want at face value.

And let’s face it, if you ask some­one if they would like the com­pany they buy from to give them a re­ward, be it a dis­count or points to­wards a gift, who wouldn’t say yes? Qual­i­ta­tive work in New Zealand has shown us that when of­fered the op­por­tu­nity to join a scheme peo­ple say yes, but af­ter­wards con­sign the card to the deep re­cesses of their wal­let or even that handy-for-shop­ping place, ‘the shelf in the kitchen’, and never give it another thought.

“They al­ways ask you when you pay if you’ve got a card and half the time I don’t know if I have but you look an idiot if you don’t look for it,” ob­served one shop­per.

When the ev­i­dence on per­for­mance is taken to­gether, it’s hard to get ex­cited about the ef­fi­cacy of these pro­grammes. But we do. In­deed, one imag­ines there are a huge amount of read­ers right now think­ing some­thing like, “yeah, but what about Tesco or Star­bucks? What about Air New Zealand? What about Count­down [see in­ter­view with Brid­get Lamont on page 16]?” And you’d be right. There are ex­am­ples where loy­alty pro­grammes have helped fuel sig­nif­i­cant suc­cess for their brands. From 1991 to 2010, Tesco achieved a 675 per­cent growth in its bot­tom line, as it ag­gres­sively pur­sued one of the world’s best ex­am­ples of a loy­alty pro­gramme.

But, it is im­por­tant to see these ex­am­ples as out­liers in the mar­ket­ing world. Most of the $50bn plus be­ing spent in the loy­alty cat­e­gory is achiev­ing lit­tle, and in­her­ent in this fact must be the ac­knowl­edge­ment that we are typ­i­cally get­ting things wrong in this space. So why is that? Where are mar­keters go­ing astray, and what can the truly great pro­grammes tell us about how we can more ef­fec­tively spend our mar­ket­ing bud­gets to achieve loy­alty gains?

Look­ing back

The first mod­ern large-scale con­sumer loy­alty pro­gramme ar­rived in May 1981, with the launch of the Amer­i­can Air­lines AAd­van­tage Fre­quent Flyer pro­gramme, which gave spe­cial fares to fre­quent cus­tomers. This was fol­lowed al­most im­me­di­ately with pro­grammes from Delta and United. In­deed, so quick was the com­pet­i­tive re­sponse that United launched its own pro­gramme only a week later.

Much as wars drive ad­vance­ment in tech­nol­ogy, these first air­line-based loy­alty pro­grammes ac­tu­ally came to be largely a re­sponse to in­creas­ing com­pet­i­tive pres­sures that were thrown on the in­dus­try via dereg­u­la­tion in 1978. Des­per­ate to woo and re­tain high-value cus­tomers in a sud­denly white-hot com­pet­i­tive sec­tor, mar­keters be­gan ex­per­i­ment­ing with new ways of in­cen­tivis­ing pos­i­tive be­hav­iour change be­yond price dis­counts and short-run pro­mo­tional ac­tiv­ity. As part of this in­no­va­tion-out-of-ne­ces­sity, AA’s most fre­quently fly­ing 130,000 cus­tomers were dis­cov­ered and pre-en­rolled in a pro­gramme de­signed to re­ward re­peat pur­chase be­hav­iour, via up­grades and dis­counts on fares. The air­line felt that by recog­nis­ing and re­ward­ing the best cus­tomers, brand loy­alty could be cre­ated and long-term bonds forged.

In a move that would an­tic­i­pate a lot of think­ing that was to fol­low in the con­sumer mar­ket­ing world, the mar­ket­ing em­pha­sis was switched from sim­ply win­ning a cus­tomer once in a trans­ac­tion, to con­sid­er­ing the value of a re­tained and im­proved re­la­tion­ship over the longer run.

This idea of the value of the re­tained and nur­tured cus­tomer is im­por­tant to stop and con­sider, be­cause it rep­re­sents not only the key­stone con­cept for the first loy­alty

McKin­sey anal­y­sis of loy­alty pro­grammes, when fo­cused in on those ex­am­ples that ac­tu­ally drove rev­enue growth for busi­nesses, showed they all shared an ap­proach, which looked to deepen the emo­tional con­nec­tion present with cus­tomers. They typ­i­cally used cus­tomer data col­lected from the pro­gramme very ef­fec­tively to im­prove un­der­stand­ing of the in­di­vid­ual cus­tomer’s needs and pref­er­ences. They use this in­for­ma­tion to sharpen not only the in­di­vid­ual in­cen­tives that were of­fered, but also how the whole prod­uct or ser­vice of­fer was shaped for that cus­tomer.

Tesco does this cus­tomi­sa­tion ex­tremely well with its pro­gramme, and this is a big part of what has driven its suc­cess. Each month they mail out over ten mil­lion dif­fer­ent ver­sions of its coupon mail­ers to house­holds in the UK, each fea­tur­ing a tai­lored set of of­fers based on the things in­di­vid­ual cus­tomers buy. It emails cus­tomers di­rectly to in­form them when favoured prod­ucts are go­ing on pro­mo­tion. And it uses cus­tomer data in ag­gre­gate to im­prove its range in par­tic­u­lar store lo­ca­tions and what they look to put on pro­mo­tion at dif­fer­ent times. The re­sult is that it feels like Tesco knows you. And when we look at the level of emo­tional con­nec­tion that it re­ceives rel­a­tive to com­peti­tor Sains­bury’s in a WPP-run global brand study, it is more than dou­ble at the very high­est lev­els of con­nec­tion.

Another suc­cess­ful player in the loy­alty game, Star­bucks, goes even fur­ther with its pro­gramme, us­ing it as a way of trans­form­ing the whole ser­vice ex­pe­ri­ence for the bet­ter. Its pro­gramme utilises mo­bile pay­ments tech­nol­ogy to al­low mem­bers to or­der and pay for their cof­fee via a spe­cial phone app to cre­ate a more seam­less store ex­pe­ri­ence. It doesn’t just re­ward the cus­tomer for loy­alty; it cre­ates loy­alty by im­prov­ing the core of­fer.

Suc­cess­ful loy­alty pro­grammes go a lot fur­ther than just try­ing to buy a be­hav­iour change. They cre­ate rea­sons for cus­tomers to re-eval­u­ate their re­la­tion­ship with the brand by im­prov­ing the ex­pe­ri­ence of us­ing them. In essence, what they are ac­tu­ally do­ing is re­shap­ing how cus­tomers ex­pe­ri­ence the prod­uct or ser­vice for the bet­ter. And what we know from all of the lon­gi­tu­di­nal be­havioural work con­ducted by Ehren­berg is that when these sort of fun­da­men­tal im­prove­ments to the brand oc­cur, that is when we see growth. And in the words of John Scul­ley: “As a brand mar­keter, I’m a big be­liever in ‘brand­ing the cus­tomer ex­pe­ri­ence,’ not just selling the ser­vice.”

There is also a much more pri­mal way that loy­alty pro­grammes achieve suc­cess via emo­tional con­nec­tion that is clear across all the em­pir­i­cal re­sults avail­able on the cat­e­gory. And that is by pro­vid­ing cus­tomers with sta­tus. Some­thing that the travel in­dus­try and casi­nos have known for some time is that iden­ti­fy­ing key cus­tomers and con­fer­ring on them a la­belled sta­tus that is only avail­able for a priv­i­leged few drives mas­sive im­prove­ments in loy­alty and re­ten­tion. This is where pro­grammes like Air New Zealand’s Air­points scheme are so suc­cess­ful.

And while part of the value of sta­tus is about the re­wards you re­ceive, the idea of be­ing sin­gled out as im­por­tant, with­out any real ben­e­fits, should not be un­der­val­ued. A great ex­am­ple of this comes from Shell in Europe, which es­tab­lished its Vpower Club for the high­est spend­ing fuel card cus­tomers. Es­sen­tially, all that this in­volved was giv­ing these cus­tomers a spe­cial coloured card, a free mag­a­zine and telling them that they were elite cus­tomers. That’s it. By hold­ing back in­tro­duc­tion of the scheme from some el­i­gi­ble cus­tomers, they were able to test the im­pact of the pro­gramme with a con­trol group, and amaz­ingly spend shot up sig­nif­i­cantly with those who were given sta­tus.

It shouldn’t come as a sur­prise that we like to be recog­nised and neu­ro­science ably demon­strates how our brains light up when we re­ceive recog­ni­tion and our sta­tus is ac­knowl­edged. It cre­ates a sense of be­long­ing that ap­peals to both men and women.

It’s like when you go to a res­tau­rant you haven’t been to for a while and they say ‘Hi, good to see you again’, it makes you feel good to know they no­ticed and re­mem­ber you.

So where does all this in­for­ma­tion leave us? First we should ac­knowl­edge that most loy­alty schemes op­er­at­ing right now don’t work to pro­vide any real gains for their busi­nesses. The rea­son for this is that they are sim­ply try­ing to buy a be­hav­iour change that cus­tomers don’t de­sire to make. If we want to im­prove cus­tomer loy­alty, we have to fo­cus on cre­at­ing a stronger emo­tional re­la­tion­ship by de­mon­strat­ing that we know and value our cus­tomers. What that means for most busi­nesses al­ready op­er­at­ing in this space is us­ing the data we are col­lect­ing on cus­tomers to im­prove the value in­her­ent in the prod­uct or ex­pe­ri­ence we pro­vide, whether by cus­tomis­ing com­mu­ni­ca­tion and of­fers, stream­lin­ing ex­pe­ri­ences and con­fer­ring sta­tus on those who de­serve it.

In many ways the lex­i­con it­self is a clear in­di­ca­tor of where we are go­ing wrong in the loy­alty space. Of­ten we see these as ‘re­wards pro­grammes’, but at best they’re re­ally CRM pro­grammes. Ul­ti­mately it’s love, not money, that buys loy­alty.

Per­haps, it’s time then to re­assess the ef­fec­tive­ness of your weekly email blasts and in­stead start to take a longer-term view of your cus­tomer re­la­tion­ships with a more per­son­alised loy­alty pro­gramme.

At Aimia, we view loy­alty pro­grammes as the foun­da­tion for grow­ing real re­la­tion­ships with cus­tomers. We aim to build sus­tain­able, sym­bi­otic re­la­tion­ships and brand trust with your most valu­able cus­tomers through a fair and trans­par­ent data-value ex­change and highly per­son­alised com­mu­ni­ca­tions. Be­yond this, loy­alty pro­grammes also of­fer a wealth of data in­sights that can rev­o­lu­tionise de­ci­sion­mak­ing on your mar­ket­ing in­vest­ments. These could in­clude un­der­stand­ing more about the in­cre­men­tal shop­pers that a par­tic­u­lar SKU brings to a cat­e­gory or be­ing able to make more in­formed and tar­geted de­ci­sions on cus­tomer com­mu­ni­ca­tions to max­imise pen­e­tra­tion.

“Glob­ally we see many clients with large high-pro­file loy­alty pro­grammes that just aren’t get­ting the trac­tion they should in the mar­ket or within their or­gan­i­sa­tion”, says Aimia New Zealand’s man­ag­ing di­rec­tor Si­mon Rowles. “Us­ing our global ex­per­tise from run­ning over 1,250 large loy­alty pro­grammes across air­lines, re­tail, bank­ing and own­ing our own coali­tions in the UK, Italy and South Amer­ica, we have de­vel­oped a well-tested Loy­alty Healthcheck frame­work. This tool en­sures you un­der­stand the real value your scheme is pro­duc­ing, and what’s miss­ing. It also helps as­sess whether the pro­gramme is fit for pur­pose and on the right path for the next stage in its evo­lu­tion.”

Rowles adds: “We are ex­cited to bring this Loy­alty Healthcheck to the New Zealand mar­ket and for New Zealand com­pa­nies to see how they can max­imise the prof­itabil­ity of their loy­alty pro­gramme and com­mu­ni­ca­tions, as well as hav­ing ac­cess to our global ex­per­tise and ex­pe­ri­ence across sev­eral in­dus­tries.”

At Aimia, we re­alise hav­ing a ro­bust strat­egy is just the first part of the jour­ney of get­ting the most out of your loy­alty pro­gramme. Our range of loy­alty and com­mu­ni­ca­tions plat­forms, when com­bined with our ba­sic to ad­vanced an­a­lyt­ics ca­pa­bil­i­ties, mean we’re well placed to an­swer your busi­ness ques­tions quickly with a ded­i­cated team that will help you build even closer re­la­tion­ships with your cus­tomers.

Be­fore 1870, di­a­monds were a very scarce re­source and were only found by the hand­ful in Brazil and In­dia. But af­ter the dis­cov­ery of diamond pipes in South Africa, there was a sud­den glut, which meant their in­trin­sic value was likely to de­crease. To limit that, a car­tel (now called De Beers) was cre­ated in 1888 to con­trol the global sup­ply and main­tain the per­cep­tion of scarcity. But the car­tel also needed to in­crease de­mand for di­a­monds. So in the late 1930s, it set its so­cial en­gi­neer­ing plan in mo­tion in the US with the help of ad agency NW Ayer.

Over the next few years, the car­tel paid movie pro­duc­ers to in­clude scenes fea­tur­ing lead­ing men giv­ing women di­a­monds, it helped cre­ate the fa­mous song about di­a­monds be­ing a girl’s best friend, it pro­vided so­ci­ety photos to news­pa­pers and mag­a­zines that fo­cused on the stars and their large stones, it de­vel­oped the ad cam­paign ‘a diamond is for­ever’ (and, so, shouldn’t be sold), it had fash­ion de­sign­ers talk about the trend to­wards di­a­monds and it even gave lec­tures about di­a­monds in high schools. So by rig­ging the game and ma­nip­u­lat­ing cul­ture in its favour, the idea that di­a­monds equalled ro­mance—and that the big­ger the diamond, the big­ger the love—took root.

If you look at it ra­tio­nally, it’s a man­u­fac­tured con. But hu­mans are, as Dan Ariely’s book sug­gests, pre­dictably ir­ra­tional crea­tures and the strat­egy to play on our emo­tions and cre­ate so­cial norms worked bril­liantly. As in­ves­tiga­tive re­porter Ed­ward Jay Ep­stein wrote in his fa­mous At­lantic story of 1982, the ‘diamond in­ven­tion’ man­aged to con­vert “tiny crys­tals of car­bon into uni­ver­sally recog­nised to­kens of wealth, power, and ro­mance” all around the world and, as of last year, 75 per­cent of Amer­i­can brides wore a diamond en­gage­ment ring at an av­er­age of US$4,000. For many, these var­i­ous ‘nudges’, a phrase coined by Richard Thaler and Cass Sun­stein in their 2008 book, have made buy­ing a diamond for a loved one an al­most sub-con­scious short-cut; a tan­gi­ble—and close to in­evitable—man­i­fes­ta­tion of love. And, depend­ing on your view of the world, it’s ei­ther one of the great­est or most ma­nip­u­la­tive ex­am­ples of con­sumer in­flu­ence the world has ever seen.

World-renowned ad man Rory Suther­land is a vo­cal pro­po­nent of gov­ern­ments and busi­nesses us­ing the prin­ci­ples of be­havioural eco­nom­ics (BE) to im­prove hu­man well-be­ing and eco­nomic progress and he helped set up a spe­cific busi­ness unit called #ogilvy­change to help its clients do just that. And while this area is com­plex, con­fus­ing and of­ten con­tra­dic­tory, he of­fers a con­cise run­down on what those main prin­ci­ples are: “1) Small changes can have large ef­fects, 2) Psy­chol­ogy is re­ally im­por­tant. 3) Peo­ple can’t al­ways ex­plain why they do what they do, or what they want. 4) Pref­er­ence is rel­a­tive and so­cial and con­tex­tual, not ab­so­lute. 5) Trust is never a given; com­mit­ment re­ally mat­ters. And 6) Peo­ple sat­is­fice [a port­man­teau of sat­isfy and suf­fice].”

He says these six things are not widely as­sumed in de­ci­sion mak­ing and the the­ory of the ra­tio­nal man that al­ways op­ti­mises his util­ity has held sway in eco­nom­ics for decades. But most agree the so-called ‘homo eco­nomi­cus’ is largely myth­i­cal and Suther­land be­lieves the neo-clas­si­cal model of eco­nom­ics is largely dis­parag­ing of mar­ket­ing and doesn’t re­ally fac­tor in ir­ra­tional­ity and the im­por­tance of sub-con­scious think­ing. Of course, mar­keters and ad­ver­tis­ers have been at­tempt­ing to in­flu­ence con­sumer be­hav­iour in sub­tle and not-so-sub­tle ways for decades, per­haps even cen­turies. And one of the crit­i­cisms of­ten lev­elled at the in­dus­try—and par­tic­u­larly the re­tail sec­tor—is the idea that it’s prac­tis­ing some form of mind con­trol. What those crit­ics tend to for­get is that the world is full of in­flu­ence. The ar­chi­tec­turally de­signed spa­ces we in­habit, the signs on the road, the mu­sic in a res­tau­rant, the most-read sto­ries on a web­site, the av­er­age-use ta­ble on your wa­ter bill, the type of floor you’re stand­ing on, the wine list you re­ceive when you sit down at a res­tau­rant, the sto­ries you hear in the media, the uni­forms worn by those in au­thor­ity, the val­ues in­stilled by your fam­ily, the rec­om­mended re­tail price … they are all sub­tle cues that con­di­tion us to a cer­tain mode of be­hav­iour.

Sim­i­lar be­havioural prin­ci­ples were also ap­plied to the Elec­tric­ity Au­thor­ity’s ‘What’s My Num­ber’ cam­paign, which en­cour­aged them to take the first step with­out men­tion­ing the trick­ier steps that fol­lowed and the showed other peo­ple’s sav­ings, and The Jour­nal, a step-by-step online pro­gramme that aimed to help those with de­pres­sion.

“It’s about mak­ing de­ci­sions easy,” says Thomason. “… Au­thor­ity is a short­cut, ads are a short­cut, what that brand says about me is sort of a short­cut.”

This can also be seen in ac­tion when you look at rec­om­mended set­tings, be­cause the more un­sure we are about some­thing, the more likely we are to go with the de­fault op­tion (we’re also less likely to add op­tions than to delete them, hence dodgy air­lines adding var­i­ous fees online).

So does knowl­edge mean power? Can we beat the sys­tem if we know we’re be­ing per­suaded and make a ra­tio­nal de­ci­sion based on the in­for­ma­tion at hand? Sort of, although Kap­i­tan says that while you may think you’re find­ing the best deal, fru­gal peo­ple have been proven to be more sus­cep­ti­ble to mes­sages about sales, so you’re prob­a­bly still be­ing in­flu­enced. Some ra­tio­nal­ists be­lieve that be­cause in­for­ma­tion is now so freely avail­able, the power of brand is de­clin­ing and ra­tio­nal choices can be more easily made. But Thomason there’s very lit­tle talk

Jeff Malone

about what hap­pens be­fore that search­ing starts. Why did you de­cide to go to Fiji? Why did you put Subaru on yout list when think­ing about a new sta­tion wagon? Why do you think of Mitre 10 when you need a ham­mer? And that’s why Kap­i­tan says plant­ing the seed in some­one’s mind is so im­por­tant.

“The idea is that once you’re on the ‘cus­tomer de­ci­sion jour­ney’ we’ll in­flu­ence you along the way, but most of the stuff that’s in­flu­enced your de­ci­sion hap­pened to you be­fore you had a kid or needed nap­pies. You just hap­pen to know that Hug­gies is a good brand.”

There are no sim­ple an­swers here. And as Thomason says, one of the big­gest is­sues with BE is fig­ur­ing out the be­hav­iour you’re try­ing to change.

“One of the things that’s been con­cluded about BE is there’s not much con­sis­tency in which prin­ci­ple will ap­ply in dif­fer­ent con­texts.”

And mak­ing it even more dif­fi­cult is that for ev­ery rule (eg. make it easy, some­thing mar­keters have been taught to do for years), there are of­ten con­tra­dic­tions (eg. make it dif­fi­cult so you cre­ate a sense of scarcity or ex­clu­siv­ity, as can be seen with many lux­ury brands, ivy league schools or the ca­ble com­pany that made cus­tomers dig their own trench).

“Some­times if you put hur­dles in front of them it makes it more ap­peal­ing, more of a chal­lenge and it makes it more sticky,” Thomason says. So are mar­keters us­ing be­havioural eco­nom­ics prin­ci­ples well? Thomason be­lieves we’re un­der­stand­ing more about it, but a lot are get­ting worse at it by mak­ing things dif­fi­cult and ask­ing cus­tomers to in­ter­act with them on a va­ri­ety of dif­fer­ent chan­nels. And the rise of per­son­alised com­mu­ni­ca­tions, while cool to a point, does have its draw­backs.

“You don’t want to choose a brand that no-one knows about. That’s a big dan­ger for di­rect. We want to talk to the one guy who wants to buy a brand new 5 se­ries BMW and no-one else, but he wants ev­ery­one else to know what this is about … Es­sen­tially we want to be talk­ing about the same movie, or the same brand. Of course there are ex­cep­tions, but we are a herd­ing an­i­mal. And I think most peo­ple would say this has the big­gest im­pact on our be­hav­iour.”

Of course, BE isn’t just advertising or com­mu­ni­ca­tions. That’s just one lit­tle piece of the equa­tion. But Malone says most ad agen­cies are guilty of talk­ing about at­ti­tude change or aware­ness rather than us­ing these prin­ci­ples to cre­ate ac­tual be­hav­iour change, some­thing #ogilvy­change hopes to ad­dress in this mar­ket. Thomason ad­mits shift­ing at­ti­tudes doesn’t nec­es­sar­ily shift be­hav­iour, but some­times it’s a pre­cur­sor to that, some­thing that NZTA has shown over the years with its Safer Jour­neys work.

“When you’re a ham­mer, ev­ery prob­lem looks like a nail,” says Malone. “Con­versely, when oth­ers see you as a ham­mer, they’ll only give you more nails. It’s why mar­keters of­ten only give agen­cies prob­lems they’ve al­ready de­cided can be fixed with an ad.”

If you’re em­brac­ing BE whole­heart­edly, Thomason says it has to be used in the call cen­tre, in IT, in mer­chan­dise and in all the other ar­eas of a busi­ness, “oth­er­wise you’re just talk­ing about some­thing rather than chang­ing the ex­pe­ri­ence”.

He says the mod­ern agency is in a rush to say ‘we’re not just comms’, “but if we’re hon­est the vast ma­jor­ity is still comms and it will be for some time.” He also says many agen­cies have a bias to­wards big ideas that are crafted un­til they’re per­fect, so it’s dif­fi­cult for them to em­brace the trial and er­ror men­tal­ity that’s re­quired to make the most of be­havioural science.

Iron­i­cally, re­tail advertising, which is of­ten maligned for its quick and dirty na­ture, has long em­ployed be­havioural tac­tics, whether it be 50 per­cent off, while stocks last, or as seen on TV. Re­tail­ers have also been ex­per­i­ment­ing with in­store tech­niques for decades. And while some of the tac­tics have been used so much that they’re bor­der­line cliché, they still work.

So should mar­keters fo­cus on the emo­tional or the ra­tio­nal? A pa­per writ­ten by one of his col­leagues in South Africa called ‘The Big Easy’ talks about tar­get­ing ev­ery­one to make it look like ev­ery­one’s do­ing it and then mak­ing it easy to do what­ever it is you want peo­ple to do.

“That’s the fun­da­men­tals of all be­havioural think­ing.” Thomason be­lieves there is cur­rently a ten­sion be­tween short- and long-term ef­fec­tive­ness and it ap­pears as if the short term is win­ning that bat­tle be­cause re­sults can be seen al­most in­stantly.

“If you’re try­ing to get a short-term re­sult, then you prob­a­bly are more to­wards the ra­tio­nal end of things, but you still use scarcity and it’s less about cre­ative. But even a re­tailer needs to be po­si­tioned as the go-to op­tion. Think of John Lewis and their Christ­mas ads. [Ef­fec­tive­ness ex­pert] Peter Field’s magic num­ber is you should be do­ing 60 per­cent brand, 40 per­cent re­tail. It be­comes very dif­fi­cult to sep­a­rate them, and I don’t know what the method­ol­ogy was, but that’s their for­mula.”

In­ter­est­ingly, he says stud­ies from the IPA and AdMark say that un­der six months (ish), cre­ative, award-win­ning cam­paigns are ac­tu­ally less ef­fec­tive and over six months they’re more ef­fec­tive.

“That’s a fuck­ing huge is­sue, be­cause in­creas­ingly a lot of the cam­paigns we’re do­ing and win­ning awards for don’t even run for six months. It’s got to be a ma­jor gen­er­al­i­sa­tion, and there has to be some stuff that gets more at­ten­tion in the short term be­cause it’s cool and cre­ative, but for real brand build­ing stuff, that’s a cor­re­la­tion.” It may seem like a cop out to pro­mote both ap­proaches. But that’s what the re­search shows— and, as Daniel Kah­ne­man’s book Think­ing, Fast and

es­ign har­nesses cre­ativ­ity to im­prove cus­tomer ex­pe­ri­ences. But with tra­di­tional forms of man­u­fac­ture, de­sign­ers waited months for gen­uine con­sumer feed­back on their work. The ad­van­tage of the dig­i­tal world, how­ever, has al­ways been its abil­ity to be mea­sured and tracked in real time. Now we’re able to ap­ply that same mea­sure­ment to de­sign. De­ci­sions’ im­pacts are mea­sured in days, not months; and cy­cles of re­fine­ment are pos­si­ble in ever shorter in­cre­ments. An­a­lyt­ics and real-time op­ti­mi­sa­tion tools are driv­ing a rapid shift in de­sign prac­tice to­wards an ap­proach that is si­mul­ta­ne­ously more ex­per­i­men­tal and more rig­or­ous than in the past. In ef­fect, these tools have en­abled de­sign think­ing to em­brace the sci­en­tific method.

De­sign is an in­cred­i­ble fount of prod­uct and ser­vice in­no­va­tion ideas. Tra­di­tion­ally the process of sift­ing through those ideas to find the nuggets that will drive real busi­ness value has re­sisted quan­tifi­ca­tion; opin­ion and ex­pe­ri­ence have held sway.

Dig­i­tal tech­nol­ogy has changed that, en­abling real-time mea­sure­ment of cus­tomer be­hav­iour in dig­i­tal chan­nels and live test­ing of de­sign vari­a­tions with thou­sands of real users.

Ac­cess­ing this feed­back loop al­lows a new kind of cre­ative process, with more in­formed de­ci­sion-mak­ing and bet­ter busi­ness out­comes. It’s an ap­proach most pow­er­fully seen in the Dar­winian world of tech star­tups, where re­al­time mea­sure­ment feeds into rapid re­lease cy­cles that ac­cel­er­ate in­no­va­tion.

That cy­cle of rapid it­er­a­tion is leak­ing out of the startup world to be em­braced by es­tab­lished busi­nesses seek­ing to im­prove their cus­tomer ex­pe­ri­ence, and their re­turn on de­sign in­vest­ment. With its de­sign prac­tice grounded in dig­i­tal chan­nels, Dig­i­tal Arts Net­work is at the fore­front of ap­ply­ing this new rigour to the cre­ative process. While cre­ative prob­lem-solv­ing re­mains at its heart, it is now in­te­grated with a hy­poth­e­sis driven ap­proach.

It all starts with mea­sure­ment. We be­gin by work­ing with clients to en­sure their an­a­lyt­ics im­ple­men­ta­tion of­fers in­sight into the per­for­mance of their dig­i­tal touch­points; you can’t im­prove what you aren’t mea­sur­ing.

Next, ex­pe­ri­ence re­searchers com­bine those an­a­lyt­ics mea­sures with ob­ser­va­tion-based in­sights to de­velop hy­pothe­ses for what is driv­ing cus­tomer be­hav­iour online.

These hy­pothe­ses in­form the de­sign­ers’ cre­ative ap­proach, en­abling more fo­cused think­ing. But, be­cause the hy­pothe­ses are ex­plicit, they are also testable. Rather than de­sign­ing a sin­gle so­lu­tion, we con­duct mul­ti­ple rounds of ex­per­i­ments with users in the lab or online to eval­u­ate mul­ti­ple so­lu­tions. Does this lead to less cre­ativ­ity? Not at all. Highly cre­ative con­cepts can be tri­aled in the court of user be­hav­iour. Cre­ativ­ity’s con­tri­bu­tion to the bot­tom line is quan­ti­fied and val­ued.

In­creas­ingly ef­fi­cient test­ing al­lows a greater range of op­tions to be eval­u­ated – from the con­ser­va­tive to the out­landish. If more cre­ative so­lu­tions are se­lected, it’s be­cause they were more suc­cess­ful.

At Dig­i­tal Arts Net­work, we’ve moved from guess­ing the value of cre­ativ­ity, to mea­sur­ing it di­rectly. Cre­ativ­ity be­comes ac­count­able to the bot­tom line, en­abling our de­sign­ers to con­fi­dently–and demon­stra­bly–drive real re­turns for clients.

Jeremy Moon

that the de­signer is the ar­biter of qual­ity. Ul­ti­mately the user is the ar­biter of qual­ity.”

De­sign ev­ery­where

Sharpen up those CVs be­cause, ac­cord­ing to Mark Curtis, chief client of­fi­cer at multi­na­tional de­sign agency Fjord, chief mar­ket­ing of­fi­cers are about to be­come ob­so­lete—all thanks to de­sign. Curtis’ rea­son­ing is that as con­sumers re­spond less to tra­di­tional mar­ket­ing, and more to well-de­signed prod­ucts and ex­pe­ri­ences, busi­nesses will align ac­cord­ingly.

It’s not yet clear how ac­cu­rate that pre­dic­tion will turn out to be – but de­sign is in­creas­ingly recog­nised as es­sen­tial for busi­nesses. Ris­ing stars like Airbnb and Uber were birthed by de­sign­ers and in an ef­fort to re­make them­selves into suc­cess­ful ‘de­sign-led’, or­gan­i­sa­tions, and many es­tab­lished busi­nesses are for­mal­is­ing a com­mit­ment to de­sign by ap­point­ments at the C-level. John­son & John­son has hired a chief de­sign of­fi­cer, so has Pep­siCo, and the only thing sur­pris­ing about Ap­ple’s re­cent pro­mo­tion of Jony Ive to the po­si­tion is that he wasn’t al­ready there.

Be­ing de­sign-led means putting the user and that user’s ex­pe­ri­ence first. That’s where things like user test­ing and rapid it­er­a­tion come into play, where the belief is it’s bet­ter to get a min­i­mum vi­able prod­uct out into the hands of users and use feed­back to re­fine it, rather than spend­ing a lengthy de­vel­op­ment pe­riod in­side a bub­ble.

The idea is pick­ing up steam in New Zealand too, with some of the lead singers of our ‘rock­star’ econ­omy— Ice­breaker, Xero, Air New Zealand—plac­ing cus­tomer de­sign at their hearts and in­spir­ing oth­ers to fol­low. Ice­breaker founder Jeremy Moon es­tab­lished his com­pany in the early 2000s, and says de­sign has been cen­tral to the com­pany’s “sense of pur­pose” since its in­cep­tion. To­day that phi­los­o­phy is re­flected in a work­place en­vi­ron­ment that en­cour­ages cre­ativ­ity, a prod­uct line that is 50 per­cent re­freshed ev­ery six months and a two-year lead on a con­stant de­vel­op­ment cy­cle.

“The big prize is un­lock­ing the cre­ativ­ity of the peo­ple in your or­gan­i­sa­tion. It makes busi­ness a lot more ex­cit­ing and in­ter­est­ing,” says Moon. “That energy you cre­ate within your teams be­comes ob­vi­ous to your cus­tomers and that grows sales, so it’s a vir­tu­ous cy­cle.”

At In­sight Cre­ative, cre­ative di­rec­tor Brian Slade says he doesn’t be­lieve bud­get should be an in­hibitor to great de­sign. “De­sign comes from the idea... it’s where the gold is, where the real spark is. But the big­ger flame or re­al­i­sa­tion, that takes time.”

The UK De­sign Coun­cil ob­vi­ously has an in­ter­est in prov­ing the eco­nomic im­pact of de­sign, and it has some nice hard num­bers to help make its case. The Coun­cil can tell you that for ev­ery £100 ($215NZ) a “de­sign alert” busi­ness in­vests into de­sign, it re­alises a 125 per­cent re­turn, and that

Re­jig­ging your whole ap­proach seems fine and dandy for multi­na­tion­als and en­ter­prise class busi­nesses, but what about your av­er­age Kiwi SME? We asked Bet­ter by De­sign’s di­rec­tor Suzie Mars­den for some ex­am­ples of com­pa­nies they and NZTE have worked with to see how the prin­ci­ples of de­sign think­ing paid off. GAL­LAGHER This Hamil­ton-based agribusi­ness worked with Bet­ter by De­sign to de­fine its pur­pose and branch out into se­cu­rity. Sub­se­quently, Gal­lagher has taken this knowl­edge and ap­plied it to the re­mod­el­ing of its pig­tail elec­tric post sys­tems. Us­ing de­sign think­ing prin­ci­ples, Gal­lagher sur­veyed farm­ers and found the pig­tails were ac­tu­ally quite hard to use. The con­se­quent new ring­top post de­sign has re­duced cost and in­creased mar­gins, says Mars­den. RIN­NAI The Kiwi wa­ter heat­ing com­pany has been on a five-year jour­ney to em­bed de­sign as a core strate­gic part of its busi­ness. AERO­QUAL An out­door air qual­ity mon­i­tor­ing com­pany strug­gling with cash flow, the cur­rent chief ex­ec­u­tive was brought in to turn things around. De­spite the hard­ships, Aero­qual main­tained a great in­ter­nal cul­ture with em­ploy­ees who be­lieved in the prod­uct. With the help of a spe­cial­ist coach, Bet­ter by De­sign and NZTE, Aero­qual was able to re­duce the cost of pro­duc­tion by 20 per­cent and in­crease mar­gins by ten per­cent. It’s even bro­ken even six months ahead of tar­get.

Bet­ter by De­sign’s pro­gramme is open to NZTE cus­tomers only, but its CEO sum­mit and master class ac­cel­er­a­tors are open be­yond that. Re­gard­less, Mars­den rec­om­mends first for­ays start with some­thing small. “Take some­thing you’re al­ready work­ing on and give it a go. Don’t bet the busi­ness on it, take a skunkworks ap­proach and carve off a few peo­ple to take a punt. Just start,” she says. “It ab­so­lutely is a learn-by-do­ing process.” Ev­ery­one’s got an opin­ion about the flag these days. It’s ei­ther long over­due to shed the shack­les of colo­nial­ism or a huge waste of money (or both). But with the gov­ern­ment shelling out $26 mil­lion for the process, it hasn’t es­caped no­tice that no one’s ac­tu­ally get­ting paid for the re­design. Well, no de­sign­ers any­way. A crowd­sourced sub­mis­sion process and all the win­ner stands to get is a sen­tence in the history books. Twit­ter user Ty­po­graph­ica packed a lot of snark into a tweet: “New Zealand has un­paid flag con­test ask­ing ‘what do we stand for?’ The an­swer is: de­valu­ing pro­fes­sional de­sign.” We asked pro­fes­sional de­sign­ers what they thought.

Brian Slade – In­sight Cre­ative Si­mon Wedde & Donna McCort – Dow De­sign McCort: I don’t think the politi­cians would want to do their job for noth­ing. I don’t re­ally see the dis­tinc­tion there. Wedde: I don’t nec­es­sar­ily think they [the gov­ern­ment] get the best so­lu­tion ei­ther. You need to re­ally in­vest the time to re­search and in­ter­view. There’s ev­ery rea­son to be­lieve who­ever got com­mis­sioned to de­sign the flag would have gone around the coun­try and talked to New Zealan­ders and in­ter­viewed kau­matua and Maori, would have in­ter­viewed dif­fer­ent eth­nic groups. I don’t think they’re do­ing it be­cause they want to get a free so­lu­tion, I think they’re do­ing it as part of a po­lit­i­cal process … to demon­strate that it’s demo­cratic and that peo­ple are in­volved and New Zealan­ders have a chance to speak about it… It’s hard to sep­a­rate pol­i­tics from the de­sign so­lu­tion.

n terms of busi­ness, the Dar­winian the­ory of “sur­vival of the fittest” of­ten ap­plies. It’s a dog-eat-dog world out there and the de­sign in­dus­try in par­tic­u­lar has a lot of com­pe­ti­tion. But sit­ting down with Dow De­sign founder An­nie Dow cre­ative di­rec­tor Donna McCort and group ac­count di­rec­tor Si­mon Wedde it quickly be­comes ap­par­ent as to why Dow re­mains ahead of the game.

McCort says Dow’s method is prag­matic and in­volves a solid foun­da­tion of re­search to en­sure re­sults are car­ried through. The Dow team take an ‘out­side view in’ ap­proach, us­ing a re­search method dubbed ‘dis­cov­ery’ which be­comes a rock solid foun­da­tion on which to build the brand iden­tity or so­lu­tion.

“A key part of us adding value is not just fol­low­ing or­ders but to be think­ing and bring­ing some­thing to the ta­ble. Dis­cov­ery is an au­dit of our clients’ brand, ser­vice or prod­uct and a look at the con­sumers’ point of view and where it sits in its en­vi­ron­ment. We find out what their com­peti­tors are do­ing and through­out the process of that anal­y­sis, we might un­cover some­thing that’s not in the brief. So if you do that sort of think­ing up front rather than fol­low­ing, you achieve much more pow­er­ful de­sign.”

Dow group ac­count di­rec­tor Si­mon Wedde says be­ing prag­matic also ex­tends to the way the com­pany op­er­ates. He says it doesn’t get tied up or lost in brand­ing and de­sign jar­gon, but re­mains trans­par­ent with­out push­ing any kind of ego.

“That’s another ob­ser­va­tion I’ve made as a new­comer, is the open­ness. You won’t get any ar­ro­gance here. We are com­pletely open to lis­ten­ing. We will come back with an opin­ion, but with an opin­ion that is in­formed from our de­sign per­spec­tive,” he says. “As soon as you start think­ing you know or start as­sum­ing, that’s when it gets you into trou­ble.” And the ev­i­dence of the ef­fi­ciency of Dow’s pro­ce­dure is clear, with founder An­nie Dow point­ing out that av­er­age client ten­ure is 10-plus years, with some clients like Fon­terra Brands stick­ing with Dow since its in­cep­tion.

“Dow re­ally de­liv­ers, from a sales level and a busi­ness level as well. Cou­pled with the ex­pe­ri­enced team build­ing close re­la­tion­ships, hence the longevity of some of the re­la­tion­ships of 10, 15, 20 years,” she says.

The com­pany also has a point of dif­fer­ence, it is led by two women, with An­nie Dow lead­ing

Evan­gel­i­cal ra­dio broad­caster Harold Camp­ing has gone down in in­famy for hav­ing in­cor­rectly pre­dicted the end of the world on nu­mer­ous oc­ca­sions lead­ing back to 1994. “I’m like the boy who cried wolf again and again, and the wolf didn’t come,” Camp­ing said to the San Fran­cisco Chron­i­cle in 1995.

In­ci­den­tally, the chan­nel Camp­ing used to broad­cast his thoughts has also had its share of dooms­day prophets, with jour­nal­ists in­ter­mit­tently pre­dict­ing that its run was due to ex­pire.

“Ra­dio has been around for a hun­dred years, and when­ever new tech­nol­ogy comes along some­one makes the com­ment that this will spell the end of ra­dio,” Me­di­a­Works Ra­dio chief ex­ec­u­tive Wendy Palmer re­cently pointed out at the an­nual Ra­dio Rewired event.

And mur­mur­ings and spec­u­la­tions of the end times once again emerged on the pages of many in­ter­na­tional publi­ca­tions ear­lier this year when the gov­ern­ment of Nor­way an­nounced that it’s mov­ing to­ward switch­ing off FM ra­dio trans­mit­ters by 2017—or 2019, if pre­req­ui­sites aren’t met—on ac­count of au­di­ences shift­ing their con­sump­tion to dig­i­tal broad­casts.

These en­quiries into the pos­si­ble end of ra­dio aren’t with­out merit. With the rapid growth of dig­i­tal stream­ing ser­vices, the re­duc­tion in the cost of data plans and the in­creased con­nec­tiv­ity of ve­hi­cles, tra­di­tional ra­dio as we know it is cer­tainly un­der threat.

But, be­fore reach­ing across for the tis­sues in melan­cholic yearn­ing for Span­dau Bal­let clas­sics, Bon Jovi rock an­thems and Leighton Smith’s cli­mat­e­change de­nial, it’s worth not­ing that ra­dio in New Zealand isn’t in bad shape.

Yes, lis­ten­er­ship is go­ing down, but the chan­nel is far from be­ing a bar­ren waste­land.

“[Lis­ten­er­ship] is at 75 per­cent at the mo­ment,” says Ra­dio New Zealand chief ex­ec­u­tive Paul Thompson com­ment­ing on the down­ward trend that has seen the pro­por­tion of New Zealan­ders aged 15-plus lis­ten­ing to ra­dio on a weekly ba­sis drop an­nu­ally from 96 per­cent in 2000.

While this de­cline isn’t great news— and by Thompson’s es­ti­mates is set to con­tinue—ra­dio has re­mained one of the most sta­ble among the media chan­nels in terms of at­tract­ing ad spend.

At a time when news­pa­pers, mag­a­zines and tele­vi­sion are los­ing mar­ket share, ra­dio has bucked the trend and en­joyed an in­crease in its cut of the pie, en­joy­ing an in­crease in ad spend of $13 mil­lion be­tween 2013 and 2014 (only the in­ter­ac­tive chan­nel was higher, with an in­crease of $117 mil­lion, although TV says adding dig­i­tal video would add $23 mil­lion to its num­ber).

“Ra­dio is still de­liv­er­ing 12 per­cent of advertising spend and it’s still show­ing growth ahead of to­tal mar­ket,” Palmer says.

But this doesn’t mean that all is well in radioland. As ev­i­denced by the slew of changes over the course of the last year, the in­dus­try is clearly look­ing at how it can adapt to some of the most sig­nif­i­cant dis­rup­tion the in­dus­try has ever faced. The Kiwi ra­dio in­dus­try has al­ways been fiercely com­pet­i­tive. And nowhere has this tra­di­tion­ally been more ev­i­dent than in the par­ti­san press re­leases that are sent out fol­low­ing the bian­nual sur­vey re­sults.

This year, the sur­vey was again at the cen­tre of the com­pet­i­tive back-and-forth be­tween NZME and Me­di­a­Works, but for very dif­fer­ent rea­sons. It started with news that 2015’s T1 sur­vey was to be can­celled

ap­prox­i­mately 50 per­cent of ra­dio lis­ten­ing— has un­til now ex­isted un­der the rule of FM (and to a lesser de­gree AM) trans­mis­sion.

“Auto is a re­ally im­por­tant strate­gic pil­lar for us,” says Reece. “Our re­cent New Zealand re­search shows that 80 per­cent of Pan­dora lis­ten­ers want Pan­dora in their next car. We are in seven ma­jor car brands in New Zealand al­ready and work­ing with oth­ers to launch in-dash this year.” Far from wait­ing around for the likes of Pan­dora and Spo­tify to slice away sliv­ers of ra­dio’s ad spend, Me­di­a­Works and NZME have over the course of the last year made some im­por­tant moves in terms of mod­ernising their busi­ness mod­els.

Both net­works are look­ing be­yond ra­dio and find­ing ways to de­liver con­tent across all their avail­able chan­nels. The most ex­treme ex­am­ple of this would be the multi-chan­nel Paul Henry Show, but it’s also seen with the likes of Mike Hosk­ing pre­sent­ing a New­stalk ZB ra­dio show, writ­ing for the Her­ald and ap­pear­ing in online clips across sev­eral NZME web­sites.

In fact, part of the rea­son why TRB’s po­si­tion was brought into ques­tion ear­lier this year was be­cause clients and agen­cies are in­creas­ingly buy­ing multi-plat­form pack­ages di­rectly from the media own­ers.

The net­works have since con­firmed that TRB will con­tinue to func­tion, but its scope has now been lim­ited to pro­vid­ing sin­gle-source ra­dio so­lu­tions.

“The big­gest change was the dis­es­tab­lish­ment of the branded con­tent and dig­i­tal teams,” says TRB act­ing gen­eral man­ager Peter Richard­son on the re­struc­ture of the in­dus­try body. “This has re­sulted in TRB fo­cus­ing on its core com­pe­tency of de­liv­er­ing im­par­tial ra­dio plan­ning so­lu­tions.”

What this means is that big­ger, in­te­grated cam­paigns will con­tinue to be sold by the net­works di­rectly to clients.

“[Clients can ben­e­fit] hugely from pro­mo­tional work that goes across ra­dio, TV into our web­sites and so­cial,” says Palmer. “It’s cer­tainly our area of growth, par­tic­u­larly for agency clients and the larger na­tional ad­ver­tis­ers.”

In many ways, lo­cal ra­dio brands act well be­yond the lim­ited online re­mit oc­cu­pied by the likes of Pan­dora and Spo­tify—and this is an ad­van­tage that they’re try­ing to cap­i­talise on through these bun­dled deals. How­ever, to sell these pack­ages, the ra­dio in­dus­try needs to pro­vide proof that com­mer­cial mes­sages de­liv­ered across all the chan­nels are reach­ing their in­tended tar­gets. A ma­jor prob­lem faced by the tra­di­tional chan­nels is that mea­sur­ing them is

dif­fi­cult, and this is quite pro­nounced in the ‘ra­dio vs. online’ stream­ing con­text. While Pan­dora and Spo­tify can iden­tify ex­actly who is lis­ten­ing via their plat­forms and for how long (with such ac­cu­racy that they are able to in­cor­po­rate videos that only play when lis­ten­ers are look­ing at their mo­biles or desk­tops), ra­dio has un­til now re­lied on an an­ti­quated di­ary sys­tem of mea­sure­ment that only took two six-week pe­ri­ods into ac­count ev­ery year.

To rec­tify this prob­lem and up­date the re­search method­olo­gies, the ra­dio in­dus­try ap­pointed ra­dio re­search con­sul­tants Peter Don and Eriks Celmins to look into an al­ter­na­tive. The rec­om­men­da­tions were then put to sev­eral re­search agen­cies, which are cur­rently in­volved in a ten­der process (the in­cum­bent is TNS and a de­ci­sion is set to be made in June).

“This process was re­ally about fig­ur­ing out whether there was a way that the au­di­ence mea­sure­ment sys­tem could be im­proved,” said Don in video played dur­ing Ra­dio Rewired.

Don said the re­searchers looked at var­i­ous in­ter­na­tional ex­am­ples and found the method­ol­ogy be­ing used in the United King­dom, which in­cor­po­rates a mix of pa­per and e-di­aries, as most adapt­able to the lo­cal mar­ket.

“We took that base of in­ter­views that had been hap­pen­ing over the course of two six-week sur­veys and mod­elled it to see what we might be able to do over a much longer pe­riod,” Don said.

The new sys­tem would in­cor­po­rate 40 weeks of data cap­ture, bring on Ra­dio New Zealand as a part­ner and ex­tend the foot­print of mea­sure­ment from the cur­rent 2.9 mil­lion to 3.9 mil­lion—thereby pro­vid­ing a more holis­tic anal­y­sis of the ra­dio mar­ket (Nielsen’s sur­vey for Ra­dio New Zealand al­ready runs over 40 weeks).

“We [also] had to change the fre­quency of de­liv­ery of re­sults,” said Don. “[And] on the ba­sis of the [pro­posed] model, we could end up with four re­sults per year for some mar­kets, two re­sults per year for other mar­kets and maybe one re­sult per year on a na­tional ba­sis.”

This is still not quite as ap­peal­ing as the sub­scriber-based anal­y­sis em­ployed by the likes of Pan­dora or Spo­tify, but it is a marked im­prove­ment on what has come be­fore.

When viewed along­side all the other re­cent ac­tion, the ra­dio in­dus­try seems cer­ti­fi­ably manic at the mo­ment, but it’s worth not­ing that the old cliché de­fines in­san­ity as do­ing the same thing over and over again and ex­pect­ing dif­fer­ent re­sults—and this is an ac­cu­sa­tion that no one could level at the likes of Me­di­a­Works, NZME, Ra­dio New Zealand or any of the in­de­pen­dents that pop­u­late the al­waysfeisty world of ra­dio broad­cast­ing.

tasks to check in on the news, “says Gillespie. “We aim to cater for this.”

Through One News Now they will have ac­cess to un­fil­tered break­ing news and cu­rated fea­tures through three chan­nels: latest, fea­tured, and pop­u­lar. The ‘latest’ chan­nel is a never-end­ing feed of news as-it-hap­pens; ‘fea­tured’ in­cludes cu­rated sto­ries of in­ter­est, and ‘pop­u­lar’ shows the most viewed con­tent. The for­mat takes ad­van­tage of users’ ‘snack­ing be­hav­iour’ to serve bite-sized news on the go. The One News Now launch is backed by a cul­mi­na­tion of changes in the news­room that al­low TVNZ jour­nal­ists to make full use of mo­bile and dig­i­tal tech­nol­ogy to re­port on news quickly.

That’s in­cluded new desk­top pub­lish­ing tools and train­ing for jour­nal­ists on shoot­ing and de­liv­er­ing news from the field with their smart­phones, to com­ple­ment more tra­di­tional broad­cast tools. These changes mean TVNZ can pub­lish con­tent more quickly and across mul­ti­ple plat­forms.

TVNZ’s dig­i­tal stream­ing num­bers are climb­ing fast and ONE News Now will cap­i­talise

John Gillespie

on grow­ing con­sumer de­sire for video. “We’re hit­ting num­bers we didn’t think we’d hit so quickly, even be­fore the launch of the new plat­form,” Gillespie says. Last month that num­ber was 3.7 mil­lion video views, but he’s con­fi­dent that will dou­ble af­ter the launch of ONE News Now. With the launch of the ONE News Now web­site and app, users will have a con­sis­tent ex­pe­ri­ence across all plat­forms – and so will ad­ver­tis­ers, who will have more op­por­tu­ni­ties to ex­tend cam­paigns dig­i­tally and tar­get con­sumers on the go.

“We’ve greatly en­hanced the advertising ex­pe­ri­ence by pro­vid­ing user-friendly for­mats for view­ers to en­gage with it,” says Jeremy O’Brien, TVNZ’s head of sales and mar­ket­ing.

New fea­tures in­clude an ‘Ad­vert Stream’ side­bar and bill­board op­por­tu­ni­ties to re­place the old home­page takeovers.

“By en­hanc­ing the user ex­pe­ri­ence for our view­ers we will in turn be able to de­liver a more op­ti­mal mo­bile en­vi­ron­ment for ad­ver­tis­ers,” says O’Brien. “Given the rapid in­crease in mo­bile screen video con­sump­tion, we be­lieve advertising in­ter­est from clients will be sig­nif­i­cant.”

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