ChangeOrder

Starting a Disloyalty Program

I received my dividend check in the mail today from REI -- just as I was retiring my rock climbing harness. Talk about fortuitous circumstances. Right place, right time, right amount of free money to make the trip downtown worthwhile. It's like they knew exactly what I needed.

Then I walked into the store. There must have been hundreds upon hundreds of people just like me. The place was packed full of outdoorsy and not-so-granola types with their arms full of all those little things they'd been waiting until now to purchase. I almost balked at the very long line to check out, but it moved quickly. The woman at the checkout, Raven, thanked me for coming in and for being patient.

This scene was today. March 7, 2009. And it was only made possible because they'd sent me a check and held a sale.

When I got home, I read through the REI year-end report. Their earnings dropped from over $40 million dollars in 2007 to a bit over $14 million in 2008. That kind of shortfall is insane.

There are a large number of publicly-traded and private companies that are boldly suffering in the midst of structuring their businesses on extremely volatile business assumptions and premises. We're being told day after day and shown just how bad things really are. Perhaps your company or design firm has needed to lay off employees to gird themselves for potential failure.

As a result, we need to be honest with ourselves and our clients. We should be telling our clients what we can do to help them beyond fulfilling stopgap, immediate needs. It's time to stop being reactive and start being proactive through the downturn.

How can you start being proactive?

You're going to need to be a little disloyal when it comes to "business as usual" thinking around design business. You're going to have to spend less time worrying about business as usual and more time being present with your clients as people.

A lot of what I'll be talking about in this post is fairly self-evident. But in the midst of so much sturm und drang, it's worthwhile to remind ourselves of some of the fundamental ideas about working relationships that undergird our profession from a business perspective.

Save the Brands! First Up: WaMu

[EDIT, 12/1/08: They announced today that the WaMu brand will be retired and replaced with Chase, so this post is pretty moot.]

There are many sad things about the distress that's currently working its way through our financial system: the loss of jobs for many of our fellow Americans, the threat of implosion of our securities market, the billions of dollars in mortgage (and shareholder) value evaporating like so much smoke from an unfiltered cigarette.

In the aftermath of this threat of financial armageddon in the United States, where none of us know where to go and whom to trust, the question -- painful as it is -- must be asked: who will save the brands?

That's right. With the seizure of my hometown's Washington Mutual, I'm seeing a dark period for some of our nation's top brands.

WaMu had invested countless billions of dollars to paint a perky, friendly face on money. The WaMu marketing machine had been laser-focused on less-sophisticated, higher-risk consumers, putting forth a friendly facade that was dubbed by their former CEO, Kerry Killinger, as the “Wal-Mart of Banking."

If we've learned anything from Wal-Mart, it's that it isn't what your name is, but the following: 1) what you sell, 2) how you sell it, and 3) how you get what you sell to the place where you sell it. Banks are always good at #1 and #3. They take your money, they lend you money, and they give you your money when you need it. #2 is where the magic happens.

So, how did WaMu sell it? WaMu's core offering, from the banking side, has always been about making basic services free, then hyping the quality of service that you'd receive in the branch and online. Underneath that promise of "Free Checking!" and "More Human Interest" and "Another Revolution in Banking" and "The WaMu Way" was a very deep portfolio of shaky mortgages. These products were serviced through their lending arm, which was very adept at hoovering up mortgages from other banks. The mortgage interest, as well as heavy service fees on low- or no-cost accounts, were two of the major sources of revenue for their banking services.

You can get that top-line summary from reading the press on WaMu and sampling some of their campaigns over the years, but I'd like to throw a different perspective in here.

I had serviced them as a creative for a few years while at a large marketing firm, and after eating and sleeping with them as a client full-time for a year -- I mean that figuratively, of course -- I can tell you that this whole "seized and sold by the government" thing may not destroy their brand.

A caveat, however. JPMorganChase may choose to swallow the brand up wholesale and remake them in their own image, but there's also a counter-argument as to why the WaMu name and ethos should stick around. But this would take real risk, and I assume JPMorganChase has already taken on plenty.

For the moment, indulge me in this little dialogue I've concocted:

WaMu. Sir. I'm assuming no one has called you sir until now, but I'm testing it out, so you can get used to it.

Instead of being that happy-go-lucky, a little quirky, PG-13-movie-loving knucklehead we so love and admire, we need you to, well, grow up. Just a little. We need you to acknowledge the reality of what's happened over the past few years between you and I. Yes, I can forgive you for the college years, the dark nights of the soul characterized by the barbaric yawp of "Whoo hoo!" that we could hear from your frat house, where the parties seemed to be endless and the promise of champagne was always buzzing through the thronging crowd.

The sad truth is, those days are over. You've failed out of school -- and at the ripe old age of 119, more or less. Now is the time to forge on, with a sense of optimism, but no longer with that boyish, devil-can-care attitude that carried me through many a night of balancing my checkbook. No, sir. I want to see the scars on your knuckles, as you run them through your sandy blonde hair. I want to hear you speak in a tone of voice that's two notches below sassy. I want you to say the following:

"We've been through some rough times, old friend, and now we can move on to a new phase in our relationship. One where we can whisper real secrets into our ears instead of sweet nothings."

"And the first thing I want to share with you, David, is that I made a big mistake. I didn't listen to you, way back when you closed your account with us because we held your $260 cash deposit for 7 days before crediting it to your account, causing you to bounce two checks, and waive the fees. I didn't try to stop you from closing that account, or stop sending you mail about starting a mortgage with us. I didn't treat your friends very well in their mortgages with us, and many of them refinanced with other providers because we kept losing their mortgage payments and threatening them with foreclosure."

"All of that is in the past now. I've learned my lesson now. No more commercials about day-old sushi and bald men that dream they've grown hair and banks that treat people like cogs in a gigantic machine. From now on, I will put your money where my mouth is. I will treat you with respect and dignity for banking with me, and only spent a small portion of my free time wallowing in base humor to gain people's attention about my Free Checking product. The rest of the time will be focused on your needs, citizen of Seattle. You have my word."

You may consider this a cheap shot. There are billions of dollars and thousands of jobs at stake here. I have friends that work at WaMu whom I want to see happily employed. Our local economy hinges WaMu, which is a cornerstone bank of the Pacific Northwest.

But I've spent enough time with the WaMu brand, and seen the level of thought that goes into its expression through their marketing and advertising, to see that it has a reasonable facsimile of a human voice beneath all that posturing. It's just yearning to come out in a more mature expression, and in a way that can bring a human face to a ruined corporation. Sure, in the past few years, that WaMu brand personality has been trampled and stomped all over, and now the brand will likely be kicked to the curb. But at least let it have its last moment in the limelight, singing its sad song.

So I say, friends, that we allow WaMu its chance at redemption. Much like our Uncle Fred, who has seen his life destroyed by addiction and is now going through his 12-step recovery, WaMu has a chance to heal its wounds, and our own.

Whether this will happen has yet to be seen... but I'm idealistic enough of an American to dream that we could try to afford a teaspoonful of grace to a failed banking institution with a legacy of funny ads.

That's more than we can say for those other banks out there that are, well, banks.

Are You A Non-Profit Designer?

I'm not talking about pro bono work. I'm talking about barely breaking even on existing client work. You can make the most beautiful design work in the world and run yourself right out of business. Here's how.

Bill different rates for different clients, based on how much you like them. Sure, give that classy nonprofit a hefty discount. And that referral you got from your sister, cut them a break too. Pretty soon, everyone's getting a deal, and you're bleeding money. Keep a consistent rate structure and you'll be protected in case of emergencies. Don't bill clients like you're running a retail store. You aren't selling a product. You're providing a service.

Give little extras away for free on every client project. It wasn't in the contract, but it'll just take you a few minutes, so why not make that sticker? And if they need changes to it along with a quick little one-sheet, that'll take only take a half-hour, right? There goes $1,000 out the window. Every time a client asks me for something gratis, I have to weigh the value of the work they've requested against the long-term value of the work we're contributing to their business. With rare exception, extra work always requires compensation. Otherwise, your client will expect the Mercedes-Benz luxury treatment when all you've got is a Toyota hatchback to offer.

Be a killer designer, but don't keep up with technology. Assume that every three years, the technology landscape will change dramatically. Browsers evolve. Markup standards change. Printers upgrade their prepress systems. Software vendors change the fundamentals of their interfaces. Not knowing your tools and implementation methods, or not having a strong support staff that can keep you up to date, can cause you major strife while you're also trying to get out the work. It also plants fear in the hearts of your clients and is a big risk factor for retaining business in the long term.

Do spec work to land every project. Rule of thumb: If you can afford to give away a week of work for free in order to land every new project, you probably shouldn't be doing spec work. You should be taking a vacation due to your extraordinary wealth. Or, as is more often the case, you should be scrambling to improve your cash flow by closing new-business opportunities that only require proposals -- and fewer flaming hoops to jump through. Besides, those flaming hoops usually set your clothes on fire and then you need to run around in circles, waving your hands in a panic until help arrives...

Idea Professionals, Beware of Microconcepting

I was watching Martin Lindstrom's "Brand Flash" this morning on AdAge.com when a thought struck me like a brick. Now I'm going to lob it at you.

The AdAge segment was regarding BootB.com, an online marktetplace a la eBay, where people can post marketing briefs and have people post ideas solving the brief. The best idea receives payment and can be utilized. I have no idea what happens to the other ideas and whether they can also be used by the client without payment.

While Martin Lindstrom believes that this is going to become a trend in the marketing industry -- that sites will spring up to fulfill people's need for concept generation at a price point lower than you'd require from a marketing professional, I kindly disagree.

My wife went to school to get a professional photography degree, and her teachers repeated time and time again the following:

"Yes, there will always be amateur photographers out there in the world that will get a lucky shot that's as good as yours. But you aren't going to be hired to shoot one lucky photograph. Clients will expect you to always shoot good photographs, day in and day out. That's why they pay you the big bucks."

Yes, for the lower-tier corporations and nonprofits, it's likely that these sites will pull away their business from designers and agencies. However, for larger corporations, using this kind of site is like playing roulette. Who's going to shepherd the idea to completion, time and time again? Who's going to be the professional that can spin ideas out over and over again, without fear of luck running out? Sounds easy to bring in the right idea, but still difficult to execute well.

For designers, the danger of having an idea marketplace is that once you've heard a good idea, you'll never forget it. Hear three or four good ideas, and the best attributes of each idea will combine to form an even better idea. This is great for the end clients but terrible for designers. You aren't being paid for that idea being utilized, even in a minor capacity. Ideas have value outside of their execution and need to be acknowledged as such.

I think the smart creative professionals will keep clear of sites like BootB.com. However, much like how iStockPhoto.com has revolutionized the stock photography model and created a new microstock category, BootB.com will definitely create a new category of lower-tier talent servicing lower-tier clients for low numbers of dollars. For now, I will coin it microconcepting.

I'd love to hear your thoughts as to how a designer would position themselves against a site like this. Let's start to sharpen our arguments as to why diversity of thought isn't as good as being a partner with a seasoned creative professional.

While You're At It, Microsoft, Buy Quark

There's been two metric tons of press regarding the proposed Microsoft-Yahoo merger -- henceforth referred to as Microhoo -- so I won't mention it here again... much. But while Microsoft's throwing about vast piles of cash for non-complementary technology that bolsters its market share by reducing choice, why don't they integrate their Expression Suite with the once-mighty QuarkXPress?

As long as Google owns search, they own the Internet. So why not focus on the low-hanging fruit in other markets?

Since the Great Quark Migration of 2003, the customer base and global support for the Quark organization and its suite of page-layout products have been bleeding away like water out of a punctured balloon. In America, especially, the major reductions in customer support and the decline of a rabid, thoughtful user base have completely cannibalized their market capitalization.

Ten years ago, when InDesign was a twinkle in Adobe's eye, this wasn't an issue. If you told me that a program was going to come along and take me out of Quark 3.1, I was going to say, "No, never! This program is amazing!" Of course, today I say the same thing about Adobe CS3. The tables turned so swiftly due to Quark's extraordinarily slow development cycle and lack of clean integration with Adobe's core product set. Add a very high cost of upgrading -- both in terms of time and money -- and people leapt for a program that was bundled with the indispensable Photoshop and Illustrator.

The only hurdle standing in Microsoft's way? That Quark's file foundation is in the Postscript language, licensed from Adobe, Microsoft's arch-nemesis. To that I say: So what? Strip out Quark's web development tools, whose functionality are a mere shadow of what is necessary to pull off an enterprise-level site. Fork over the necessary moolah to Adobe to keep the program running. Discover ways to extend Quark's core functionality into integrating and translating Postscript to XAML and back.

Until Microhoo squares off against the Googlenet, this seems like a surefire way to keep the troops busy and integrate a pretty good product into their design software portfolio. We shall keep our eyes peeled if it comes to pass.

And remember, Microsoft: you always have the option of buying Corel, too...

Great Blog on Economics and Design

Pop on over to the Illinois Institute of Technology's (IIT) Economics of Design blog site and read the 11 things you should have learned in “Economics and Design.” It's a great overview of many things that designers learn the hard way during their careers. The blog also has an introduction to design planning, an aspect of most designer's lives that usually takes a backseat to the actual execution of design work.

A few quotes from the piece:

"We rarely, if ever, consider how to apply an incentive strategy along with our new design, or how our new design may work/not work with an existing incentive strategy. Design of incentives is a powerful new frontier for our profession, and should be integrated into our everyday work."

The design of incentives is a classy term for bringing direct response thinking into other disciplines. In plain language, it's not enough to change people's minds. Incentives make people act, and without more people acting, you won't create results. Even when you're working on an experiential project with tons of moving parts, there should be an incentive strategy in place to reward your audience for wanting to interact with your brand.

"We can’t assume that markets and products will work the same other places as the do here (in North America), we need to design these markets, interactions, and offerings to and for each market."

Some popular examples that come to mind are the Chevy Nova that wouldn't go in Mexico or the much ballyhoo'd and perhaps not true "Pepsi Brings Your Ancestors Back from the Dead."

"As designers, we should pay close attention to this convergence of psychology and economics; it can provide insight into the adoption and use of our offerings."

This is crucial in today's marketing landscape. It's especially painful to watch how purchasing psychology can destroy brand equity.

Many brands sacrifice their longevity of their product offerings in order to make a quick sale, thinking that customers will make a rational choice when confronted with a compelling incentive or campaign. This only holds true in the short term--what Marty Neumeier had termed a "disloyalty program" in the book Zag: The Number One Strategy of High-Performance Brands. If you train your customers to focus on price, your offerings lose value.

A recent example that comes to mind of a "disloyalty program" is the ongoing marketing by Comcast. Their "It's Comcastic!" campaign has had a lot of interesting creative, but it's been dogged by inconsistent messaging across different markets and mediums, as well as "blanket the market with offers" tactics that makes me think the only reason I should switch from Qwest is because they're cheaper, not better. Television or DSL can be almost like a drug--why treat it like a commodity? Couldn't they bring something to the mix that makes them truly different?

A great market position that fulfills this promise is the recent brand launch by Credo Mobile (formerly Working Assets Wireless). At first, I completely disliked the creative for this piece, but after having it sink in over a few weeks in the Seattle market, it's totally spun my head.

The cell phone market full of intense competition. Most of this competition is over selling phones unique to your carrier and competing tit-for-tat over pricing and minutes in 2-year contracts. Credo Mobile changed the rules of the game by making it not about phones or costs, but about how by using their service, they will make donations to lefty causes from their profits. Now that's a position that runs contrary to all the big dogs, and gives Credo a chance to scissor off more progressive, NPR-loving, very well-off customers. (And it doesn't really matter that their phones aren't very good... who cares when you're providing hunger relief in Darfur?)

"...the most potentially devastating risks a company faces (changes in customer preference, market forces, and technological change) can all be managed within the scope of a design project. We need to shift our position from creating risk to managing it.... Designers should be obsessed with creating value; this frame of reference should guide everything we do."

This may be hard for some designers to swallow, but it's true: designers need to hold just as much responsibility as the client when a major design initiative doesn't take future market forces and shifting audience perceptions into account. Design communications depend too much on context to allow lack of forethought. This is most important in technology marketing, where the landscape seems to shift hourly. If you keep the client in business, the client will keep you in business.

"...in order to continue to remain in business, [design] firms have had to shift the bulk of their billings to strategy work, which requires less “horsepower”, and more knowledge and domain expertise."

The flip side of this shift in the marketing landscape: designers don't come equipped with the tools to provide strategy separate of their design education. Designers need to develop methodologies to become strategic partners in business if they want to survive.

Most designers usually gain these methods by working within larger, stable companies that have proven processes. They absorb this thinking and bring it into their own practice when the move onward. It is not actively taught unless it is sought through small programs like the one at IIT or absorbed through reading through as much popular business-thinking as possible -- something that most designers would rather not do. It's very difficult to be a competent commercial artist and a business thinker. When a project requires an even higher level of strategic insight, I know I lean hard on my artistic intuition and then work backward from it to try to find a strategic ground to stand on. It's hard to think that designers will ever find it easy to be strategic partners--but that's part of the fun of the challenge.

The thing that I do love about this shift in the design profession is that designers will, in the future, be seen as the visionaries, providing ideas that propel major change in business. These intangible ideas don't need to be couched as "design work" anymore.

Design will be increasingly viewed as a thought industry that takes ideas and uses stories across different media to create meaning for an audience. We are empowering these tribes to participate in a community with their hearts, minds, and pocketbooks towards a shared goal. Whether that goal is buying a cup of coffee or creating world peace, their actions have to have some kind of meaning. Designers will help shape the paths of people's lives, tangibly and intangibly, by helping align those actions.

The First Point of Failure

The brochure cover design and rough layout were easily approved, you've proceeded to layout and typeset beautiful copy written by a freelance writer, €”and the client hates the copy. It's all wrong.

The changes that he described to you over the phone require the writer to create a new draft. Then you'll need to replace the copy through the brochure with a new content structure that requires redesigning the inside completely. And based on the copywriter "missing the mark," which you don't quite agree with, now the client's thinking the overall concept for the cover may need to change as well. And of course, they don't want to pay for the changes outside of your current estimate...

"But I told him that he needed to read and approve the copy before I'd go to full layout. He said he was too busy / on vacation / (insert client excuse here) and that he trusted me / my staff / my freelancer to do great work..."

More often than not, there is always a first point of failure in a project where an issue like this comes to light. It could be a late approval that influences your delivery date, a round of concepts that the client dislikes, or a misjudgment of exactly how many hours you'll need to deliver that killer Flash advertisement.

These points of failure can be traced back to concerns that rest outside the traditional "design process." Failure is an important and inevitable part of the creative process, often leading to truly breakthrough design solutions. But when major failures occur during the business processes of a project, you can get knocked right out of business.

In this above scenario, the first point of failure was the desire to please a client, no matter what the cost. Wearing your account management hat at the expense of your project process can trump the controls you keep in place to ensure that you don't have to work over your time estimate. While it's tempting to mold your progress to your client's availability, there's always a point of diminishing return (and profit) for the graphic designer. This becomes even more risky in a creative agency setting, where thousands of dollars in staff time can go out the window without client approval at key milestones.

Other common points of failure occur when:

• The creative agency or designer isn't able to enforce boundaries around each phase of a design project. This usually emerges from entering into a project outside their area of expertise without having lived through what it would really take to fulfill the job profitably. In smaller projects in print and online, missteps can result in rework and added time and labor. In large-scale web design and video projects, a lack of boundaries can lead to absolute failure and huge costs amassed to start projects over again.
• The client doesn't want to work within the project boundaries. This can happen because the client didn't disclose there were multiple stakeholders within their company that had to approve each round. If the designer or agency doesn't ask the client about the need for multiple rounds of approvals and changes, they may feel uncomfortable penalizing the client by asking for more money. And like above, the client can feel like they are a hinderance if they aren't available during important approval rounds and want to keep the project moving towards an absolute deadline. There's an endless list here of reasons why the client can strain against an agency's process, and if the designer or agency doesn't stand firm, there's usually no going back.
• The client doesn't understand what they're asking for. They may have never handled a project in the discipline they've been asked to manage. The process you've been tasked to take them through baffles them (branding and web design being the usual suspects). Questions about their business strategy, business process, brand positioning, and sales methodology percolate out of your design work and open new areas they haven't grappled with fully. The design brief may become invalid partially through a project and require scrapping progress and starting over--something every client loves to hear.

While these kinds of situations often seem an inevitable part of a designer's life, they can be eased by making sure that you do the following:

• You have properly researched and digested the business problem in the creative brief. And by digested, I mean that you've thought through, validated, and proposed focused solutions for the client's business problem in advance of any design work. Without the proper context and frame around the business problem, your design won't hold as much weight in the client's mind. In advance of writing the brief, you may need the client to fill out an intake questionnaire that fully examines the kinds of things clients may not have thought through (such as brand positioning and sales process methodologies).
• You devise and keep to a workflow during your entire project--and make your client continually aware of the schedule and their ongoing responsibilities. If the client doesn't know they're on the hook and accountable through the entire creative project, you have no authority to make demands when things go sideways, both in pushing schedules out and in asking for more money. On the flip side, if you haven't properly planned your project out and uncover all the unknown variables, you're on the hook if it impacts your bottom line.
• You keep within the boundaries of the proposal. I have fond memories of developing elaborate pitches at big agencies to try and land projects ($20K time investment). Then, when the work actually came in, we'd show five concepts instead of three at the first round, and then produce an extra brochure design or two if we were feeling nice ($5K). Most smaller creative agencies and solo designers can't afford to throw this kind of money out the window, and it trains clients to have expectations of their design firms that exceed the boundaries of profitability and professionalism.

Strangely, the larger the project, the more that the actual process of designing almost seems to be a mere fraction of the work necessary to make clients happy.

What are points of failure you've had in your design projects? What did you discover in the process that made you a better designer and a better businessperson?