More raps for Google on the “fake reviews” front.

Google’s trying to not have its local search initiative devolve into charges and counter-charges of “fake news” à la the most recent U.S. presidential election campaign – but is it trying hard enough?

It’s becoming harder for the reviews that show up on Google’s local search function to be considered anything other than “suspect.”

The latest salvo comes from search expert and author Mike Blumenthal, whose recent blog posts on the subject question Google’s willingness to level with its customers.

Mr. Blumenthal could be considered one of the premiere experts on local search, and he’s been studying the phenomenon of fake information online for nearly a decade.

The gist of Blumenthal’s argument is that Google isn’t taking sufficient action to clean up fake reviews (and related service industry and affiliate spam) that appear on Google Maps search results, which is one of the most important utilities for local businesses and their customers.

Not only that, but Blumenthal also contends that Google is publishing reports which represent “weak research” that “misleads the public” about the extent of the fake reviews problem.

Mike Blumenthal

Google contends that the problem isn’t a large one. Blumenthal feels differently – in fact, he claims the problem as growing worse, not getting better.

In a blog article published this week, Blumenthal outlines how he’s built out spreadsheets of reviewers and the businesses on which they have commented.

From this exercise, he sees a pattern of fake reviews being written for overlapping businesses, and that somehow these telltale signs have been missed by Google’s algorithms.

A case in point: three “reviewers” — “Charlz Alexon,” “Ginger Karime” and “Jen Mathieu” — have all “reviewed” three very different businesses in completely different areas of the United States:  Bedoy Brothers Lawn & Maintenance (Nevada), Texas Car Mechanics (Texas), and The Joint Chiropractic (Arizona, California, Colorado, Florida, Minnesota, North Carolina).

They’re all 5-star reviews, of course.

It doesn’t take a genius to figure out that “Charlz Alexon,” “Ginger Karime” and “Jen Mathieu” won’t be found in the local telephone directories where these businesses are located. That’s because they’re figments of some spammer-for-hire’s imagination.

The question is, why doesn’t Google develop procedures to figure out the same obvious answers Blumenthal can see plain as day?

And the follow-up question: How soon will Google get serious about banning reviewers who post fake reviews on local search results?  (And not just targeting the “usual suspect” types of businesses, but also professional sites such as physicians and attorneys.)

“If their advanced verification [technology] is what it takes to solve the problem, then stop testing it and start using it,” Blumenthal concludes.

To my mind, it would be in Google’s own interest to get to the bottom of these nefarious practices. If the general public comes to view reviews as “fake, faux and phony,” that’s just one step before ceasing to use local search results at all – which would hurt Google in the pocketbook.

Might it get Google’s attention then?

United Airlines’ four miscalculations — and the $200 million impact.

Just how many mistakes did United Airlines make in “re-accommodating” four of its booked passengers recently? Oh, let us count the ways …

Miscalculation #1

Despite some reports to the contrary, technically United Airlines wasn’t in an overbooking or oversold situation. The flight boarded full; then some crew assigned to a future flight from the destination city turned up suddenly.

The airline’s first mistake was failure by its managers or staff to correctly anticipate the crew that needed to travel on this flight.

 Miscalculation #2

Their second mistake was to implement an operating procedure which gives crew higher priority than paying customers.

Because all customers had already taken their seats on the airplane, and no more seats were available, this meant that the airline’s staff had to ask — or coerce — some seated customers to leave.

Miscalculation #3

United’s third mistake was management’s failure to empower the airline’s gate agents to offer higher compensation in order to entice customers to leave voluntarily.

This miscalculation guaranteed that the victims would be “paying customers” who had done nothing wrong, rather than the airline’s managers and staff who had made all the mistakes.

Miscalculation #4

When choosing its victims, everything else being equal apparently, United Airlines and its regional partners like United Express go after the lowest-paying customers first. That too is a miscalculation.

Let’s explore this a bit further. According to the latest published data I could find, on average around 40% of passengers on the typical flight are traveling using heavily-discounted tickets.  Most of those tickets are non-refundable, and prepaid.  They can be changed ahead of time, but only if the customer pays change fees which can be very costly.

This means:

  • If the passenger doesn’t change his or her booking early enough, and doesn’t show up for the flight, the airline keeps all the revenue – and has the possibility of re-selling the seat to a different passenger.
  • Otherwise, the airline keeps the original revenue, plus the change fee. For United, this amounted to $800 million of additional revenue in the year 2015 alone.

Phony Risk?

Airlines justify their overbooking and overselling tactics as a way of reducing the risk of revenue lost from no-shows. Published data indicates that approximately 15% of confirmed reservations are no-shows. Assuming that the airline bears the full risk of revenue lost from no-shows, overbooking mitigates that risk by allowing other passengers to claim and pay for seats that would otherwise fly empty.

Airlines typically overbook about 12% of their seats, counting on no-shows to match load-to-seats, or later cancellations to reduce bookings. (Failure to correctly anticipate the number of no-shows would also qualify as a mistake by the airline’s management or staff.)

All that being said, however, in most discounting situations there is no “risk” to reduce, because most customers who buy discounted tickets already bear all the financial risks from a failure to show up for flights. If passengers are unable to fly when originally planned, they must either pay steep change fees … or they forfeit the entire fare paid.

The Real Risk

In fact, the airlines’ biggest risk of revenue loss from no-shows arises from passengers paying first class, business class or full-fare economy.

These types of tickets account for approximately 25% of passengers and 50% of ticket revenues.  Yet those passengers typically incur few if any cancellation fees or penalties if or when they don’t show up.

When enterprises like United try to have it both ways – by putting themselves ahead of their customers and gaming the system to maximize revenues without incurring any apparent financial risks – is it any wonder the end result is ghastly spectacles like passengers being forcibly dragged off airplanes?

Scenes like that are the predictable consequences of greed overtaking sound business management and ethics. You don’t have to think too hard to come up with other examples of precisely the same thing — Wells Fargo’s “faux” bank account setups being another recent corporate black-eye.

I’m sure if United Airlines had it to do all over again, it would have cheerfully offered up to $10,000 per ticketed passenger to get its four flight crew members off to Louisville, rather than suffer more than a $200 million net loss in share value of its company stock over the past week.

But instead, United Airlines decided on a pennywise/pound-foolish approach.

How wonderful that turned out to be for everyone.

Limp Fries: Restaurants Join Brick-and-Mortar Retailing in Facing Economic Challenges

Press reports about the state of the retail industry have focused quite naturally on the travails of the retail segment, chronicling high-profile bankruptcies (most recently hhgregg) along with store closings by such big names as Macy’s, Sears, and even Target.

Less covered, but just as challenging, is the restaurant environment, where a number of high-profile chains have suffered over the past year, along with a general malaise experienced by the industry across-the-board.

This has now been quantified in a benchmarking report issued last month by accounting and business consulting firm BDO USA covering the operating results of publicly traded restaurants in 2016.

The BDO report found that same-store sales were flat overall, with many restaurants facing lower traffic counts.

The “fast casual” segment, which had experienced robust growth in 2015, experienced the largest loss of any restaurant segment in same-store sales in 2016 (nearly 1.5%), along with the highest cost of sales (nearly 31%).

Chipotle’s poor showing, thanks to persistent food contamination problems, didn’t help the category at all, but those results were counterbalanced by several other establishments which beat the category averages significantly (Shake Shack, Wingstop and Panera Bread).

The “casual dining” segment didn’t perform much better, with same-store sales declining nearly 1% over the year. By contrast, “upscale casual” restaurants reported an ever-so-slight same-store sales gain of 0.2%.

Better sales increases were charted at quick serve (fast food) restaurants, with same-store increases of nearly 1%. Even better results were experienced at pizza restaurants, where same-store sales were up nearly 5%.  This category was led by Domino’s with over 10% same-store sales growth, thanks in part to its Tweet-To-Order rollout and other digital innovations.  Well more than half of the Domino’s orders now come through digital channels.

What are some of the broader currents contributing to the mediocre performance of restaurant chains? Unlike retailing, where it’s easy to see how purchasing practices are migrating online from physical stores, people can hardly eat digitally.  And with “time” at an all-time premium in an economy that’s no longer in recession, it would seem that preparing meals at home hasn’t suddenly becoming easier.

The BDO analysis contends that the convenience economy and the continued attractive savings offered by dining at home combine to slow restaurant foot traffic: “To remain afloat, restaurants will need to drive sales by leveraging the very trends that are shaping this evolving consumer behaviors.”

Tactics cited by BDO as lucrative steps for restaurants include expanding delivery options, and embracing digital channels in a major way.  BDO reports that in 2016, digital food ordering accounted for nearly 2 billion restaurant transactions, and this figure is expected to continue to rise significantly.

Speaking personally, I think there is a glut of dining options presented to consumers across the various segments of the restaurant trade. One local example:  In one stretch of highway on the outskirts of a county seat just 20 miles from where I live (population ~20,000), no fewer than six national chain restaurant locations have opened up in the past 24 months strung out along the main highway, joining several others in a string of options like exhibit booths at a trade show

There’s no way that market demand can satisfy the new restaurant capacity in that town.  Something’s gotta give.

What are your thoughts about which chains are doing things right in the highly competitive restaurant environment today – and which ones are stumbling?

PR Practices: WOM Still Wins in the End

These days, there are more ways than ever to publicize a product or service so as to increase its popularity and its sales.

And yet … the type of thing most likely to convince someone to try a new product – or to change a brand – is a reference or endorsement from someone they know and trust.

Omnichannel marketing promotions firm YA conducted research in 2016 with ~1,000 American adults (age 18+) that quantifies what many have long suspected: ~85% of respondents reported that they are more likely to purchase a product or service if it is recommended by someone they know.

A similarly high percentage — 76% — reported that an endorsement from such a person would cause them to choose one brand over another.

Most important of all, ~38% of respondents reported that when researching product or services, a referral from a friend is the source of information they trust the most.  No other source comes close.

This means that online reviews, news reports and advertising – all of which have some impact – aren’t nearly as important as the opinions of friends, colleagues or family members.

… Even if those friends aren’t experts in the topic!

It boils down to this:  The level of trust between people has a greater bearing on purchase decisions because consumers value the opinion of people they know.

Likewise, the survey respondents exhibited a willingness to make referrals of products and services, with more than 90% reporting that they give referrals when they like a product. But a far lower percentage — ~22% — have actually participated in formal refer-a-friend programs.

This seems like it could be an opportunity for brands to create dedicated referral programs, wherein those who participate are rewarded for their involvement.

The key here is harnessing the referrers as “troops” in the campaign, so as to attract a larger share of referral business and where the opportunities are strongest — and tracking the results carefully, of course.

B-to-B content marketers: Not exactly a confident bunch.

In the world of business-to-business marketing, all that really matters is producing a constant flow of quality sales leads.  According to Clickback CEO Kyle Tkachuk, three-fourths of B-to-B marketers cite their most significant objective as lead generation.  Pretty much everything else pales in significance.

This is why content marketing is such an important aspect of commercial marketing campaigns.  Customers in the commercial world are always on the lookout for information and insights to help them solve the variety of challenges they face on the manufacturing line, in their product development, quality assurance, customer service and any number of other critical functions.

Suppliers and brands that offer a steady diet of valuable and actionable information are often the ones that end up on a customer’s “short-list” of suppliers when the need to make a purchase finally rolls around.

Thus, the role of content marketers continues to grow – along with the pressures on them to deliver high-quality, targeted leads to their sales forces.

The problem is … a large number of content marketers aren’t all that confident about the effectiveness of their campaigns.

It’s a key takeaway finding from a survey conducted for content marketing software provider SnapApp by research firm Demand Gen.  The survey was conducted during the summer and fall of 2016 and published recently in SnapApp’s Campaign Confidence Gap report.

The survey revealed that more than 80% of the content marketers queried reported being just “somewhat” or “not very” confident regarding the effectiveness of their campaigns.

Among the concerns voiced by these content marketers is that the B-to-B audience is becoming less enamored of white papers and other static, lead-gated PDF documents to generate leads.

And yet, those are precisely the vehicles that continue to be used most often used to deliver informational content.

According to the survey respondents, B-to-B customers not only expect to be given content that is relevant, they’re also less tolerant of resources that fail to speak to their specific areas of interest.

For this reason, one-third of the content managers surveyed reported that they are struggling to come up with effective calls-to-action that capture attention, interest and action instead of being just “noise.”

The inevitable conclusion is that traditional B-to-B marketing strategies and similar “seller-centric” tactics have become stale for buyers.

Some content marketers are attempting to move beyond these conventional approaches and embrace more “content-enabled” campaigns that can address interest points based on a customer’s specific need and facilitate engagement accordingly.

Where such tactics have been attempted, content marketers report somewhat improved results, including more open-rate activity and an in increase in clickthrough rates.

However, the degree of improvement doesn’t appear to be all that impressive. Only about half of the survey respondents reported experiencing improved open rates.  Also, two-thirds reported experiencing an increase in clickthrough rates – but only by 5% or less.

Those aren’t exactly eye-popping improvements.

But here’s the thing: Engagement levels with traditional “static” content marketing vehicles are likely to actually decline … so if content-enabled campaigns can arrest the drop-off and even notch improvements in audience engagement, that’s at least something.

Among the tactics content marketers consider for their creating more robust content-enabled campaigns are:

  • Video
  • Surveys
  • Interactive infographics
  • ROI calculators
  • Assessments/audits

The hope is that these and other tools will increase customer engagement, allow customers to “self-quality,” and generate better-quality leads that are a few steps closer to an actual sale.

If all goes well, these content-enabled campaigns will also collect data that helps sales personnel accelerate the entire process.

Cross-Currents in the Minimum Wage Debate

usmap-minimum-wages-2017This past November, there were increased minimum wage measures on the ballet in four states – Arizona, Colorado, Maine and Washington. They were approved by voters in every instance.

But are views about the minimum wage actually that universally positive?

A survey of ~1,500 U.S. consumers conducted by Cincinnati-based customer loyalty research firm Colloquy around the same time as the election reveals some contradictory data.

Currently, the federal minimum wage rate is set a $7.25 per hour. The Colloquy research asked respondents for their views in a world where the minimum wage would $15 per hour — a figure which is at the upper limit of where a number of cities and counties are now pegging their local minimum wage rates.

The survey asked consumers if they’d expect to receive better customer service and have a better overall customer experience if the minimum wage were raised to $15 per hour.

Nearly 60% of the respondents felt that they’d be justified in expecting to receive better service and a better overall experience if the minimum wage were raised to that level.  On the other hand, nearly 70% believed that they wouldn’t actually receive better service.

The results show pretty clearly that consumers don’t see a direct connection between workers receiving a substantially increased minimum wage and improvements in the quality of service those workers would provide to their consumers.

Men feel even less this way than women: More than 70% of men said they wouldn’t expect to receive better service, versus around 65% of women.

Younger consumers in the 25-34 age group, who could well be among the workers more likely to benefit from an increased minimum wage, are just as likely to expect little or no improvement in service quality. Nearly 70% responded as such to the Colloquy survey.

One concern some respondents had was the possibility that a dramatic rise in the minimum wage to $15 per hour could lead retailers to add more automation, resulting in an even less satisfying overall experience. (For men, it was ~44% who feel that way, while for women it was ~33%.)

Along those lines, we’re seeing that for some stores, labor-saving alternatives such as installing self-service checkout lanes have negative ramifications to such a degree that any labor savings are more than offset by incidences of merchandise “leaving the store” without having been paid for properly.

Significant numbers of consumers aren’t particularly thrilled with the “forced march” to self-serve checkout lines at some retail outlets, either.

Perhaps the most surprising finding of all in the Colloquy research was that only a minority of the survey respondents were actually in support of raising the minimum wage to $15 per hour. In stark contrast to the state ballot measures which were supported by clear majorities of voters, the survey found that just ~38% of the respondents were in favor.

The discrepancy is likely due to several factors. Most significantly, the November ballot measures were not stipulating such a dramatic monetary increase, but rather minimum wage rates that would increase to only $12 or $13 – and only by the year 2020 rather than immediately.

That, coupled with concerns about automation and little expectation of improved service quality, and it means that this issue isn’t quite as “black-and-white” as some might presume.

All those narratives about Amazon? They’re not exactly accurate.

abI doubt I know a single person under the age of 75 who hasn’t purchased at least one item of merchandise from Amazon over the years. And I know quite a few people whose only shopping experience for the holidays is a date with the Amazon website.

Still, some of the breathless stories and statistics that are put forward about Amazon and its business model seem almost too impressive to be true.

I’m not just talking about news reports of drone deliveries (a whole lot of “hat” and far less “cattle” there) or the idea that fully-robotic warehouses are just around the corner – although these stories do make for attention-grabbing headlines.  (Despite the continued need for human involvement, the way that robots are being used inside Amazon warehouses is still quite impressive.)

Moreover, a study published recently by BloomReach based on a survey of ~2,200 U.S. online consumers finds that Amazon is involved in most online shopping excursions, with nine out of ten online shoppers reporting that they check Amazon’s site even if they end up finding the product they want via another e-commerce resource.

More than half of the BloomReach survey respondents reports that they check on the Amazon site first — which is a new high for the company.

But are all of the reports about Amazon as credible?

Doug Garnett
Doug Garnett

Recently Doug Garnett, CEO of advertising agency Atomic Direct, penned a piece that was published in the December 2016 edition of Response Magazine. In it, he threw a dose of cold-water reality on some of the narratives surrounding Amazon and its business accomplishments.

Here are several of them that seem to contradict some of the commonly held perceptions:

“Amazon is a $100 billion retailer.”

Garnett notes that once subtracting Amazon’s non-retail revenue for 2015 (the last year for which financial data is available), the worldwide figure is more like half of that.

In the United States, Amazon’s retail sales are closer to $25 billion, which means it makes up approximately 6% of total retail sales.

That’s still very significant, but it isn’t the dominating presence as it might seem from all of the press hype.

“Amazon is profitable now.”

Yes, it is – and that’s after many years when the company wasn’t. However, approximately three-fourths of Amazon’s profits are due to selling cloud-based services, and the vast majority of the remaining profit dollars come from content delivery such as e-books plus music and video downloads.  So traditional retail hard-goods still aren’t generating profits for Amazon.

It turns out, just as retailers like Wal-Mart, Target and K-Mart have discovered, that replicating a retail store online is almost always a money-losing proposition.

To underscore this point, Garnett references this example of a merchandising campaign in 2016 as typical:

“When one unit was sold on Amazon, eight were sold at the retailer’s website and 80 were sold in the brick-and-mortar stores. The profit is in the store. 

For mass-market products, brick-and-mortar still dominates. Amazon is a nice incremental revenue stream, [but] not a valid alternative when you’re playing in the big game.”

It also means that companies that are looking to Amazon as a way to push their products into the marketplace should probably think twice.

At the very least, they should keep their expectations realistically modest.