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Productivity may not depend on who we recruit but what we expect of them.
Nobody knows how to hire. We spend hours combing through resumes, conducting dozens of interviews, deploying psychometric tests, and checking references. And when the bright new hires fail to deliver, we blame them when, at heart, we know we goofed.
Everyone thinks they can spot talent even though all the evidence suggests it's impossible. And maybe even irrelevant.Productivity Secret
A classic psychology paper, Pygmalion in the Classroom, describes a study in which elementary-school students were given a test to identify the most able. Their teachers were told which pupils showed outstanding promise and, lo and behold, by the end of the experiment those children started performing exceptionally well. The catch? The test was nonexistent, and the children had been chosen entirely at random. What made the difference was that their teachers now believed in them.
Twenty-five years later, an Israeli researcher wonders if the same Pygmalion effect might apply to teams. Working with trainee military platoons, some leaders were told that their men had particularly high potential. No individuals were singled out; the leaders simply believed they were working with exceptionally promising material. Raising leaders' expectations caused improved performance of approximately 20 percent. Just imagine a 20 percent productivity improvement--achieved by no other means than by believing in your people.
The Pygmalion studies--and there are hundreds-- indicate the degree to which leadership may matter more than talent. The high achievers weren't special--but their teachers and leaders believed that they were. And when you start to believe that your people are great --or talented or creative--it's amazing how quickly those qualities can surface.
Some of this may be due to priming: You start to find what you're looking for. So when a member of your team shows creativity or energy or resourcefulness, you spot it, praise it, reinforce it. So you get more. This positive feedback cycle may be a lot more powerful than anyone's ability to pick talent.
With so much information available on click-through rates and Web traffic, it can be tempting to put online marketing campaigns on autopilot. But that's a mistake.
We're a long way from the Mad Men days, when advertisers just stood around bouncing ideas off each other before launching campaigns for the masses. Those might be romanticized times, but advances in computing and the sheer volume of data available today mean marketers can use machines to run far more efficient campaigns than ever before.
And yet there's still something incredibly important that online marketers can learn from Don Draper and his ad team. With so much information coming from so many directions--Web traffic, click-through rates, sales transactions, and conversion paths--it's all too easy to put campaigns on autopilot and forget the powerful role that creative people play in the process. The best online marketing campaigns find that sweet spot where technology and human expertise meet, to produce results that go beyond optimization.
Here are four ways that companies should be shaping their campaigns in a data-driven world:
1. Connect campaigns to business goals. Many marketers have a narrow view of lead generation and ROI that focuses on data-driven outcomes that don't help the business grow. For example, a company might want to earn the top spot in organic search rankings for a keyword without knowing how that outcome drives revenue.
Using vanity metrics to define success can lead to campaigns that feel good but don't contribute to the bottom line. Before launching a digital marketing campaign, step back and evaluate the goals of the business. While it may be tempting to choose targets based on what you can achieve using readily available data, not seeing the big picture can be a very costly mistake.
2. Take campaigns to the next level. One of the biggest problems with automation is that it only evaluates existing data and assumes the best advertising copy is already in place, which means it only looks at how well a campaign is performing instead of how well it could be performing. Without human expertise, your campaigns will improve, but they will never grow. The fact that you have so much data at your disposal can cause you to wrongfully believe you have everything you need to be successful.
For example, take a car-insurance company that ranks on the first page of search results for the phrase "car insurance." Though the marketing team might be thrilled, conversions don't follow. As it turns out, most people search for car insurance using geo-specific keywords, such as "California car insurance." A search engine can't figure that out; it takes a team of experts asking smart questions to come up with a better alternative.
A machine can tell you what consumers are doing, but not why they are doing it. In search marketing, the most egregious example of this is in bid management, in which keyword bids are adjusted based solely on their performance. While auto bid management can make existing ads more efficient, it can't use the results to create an even better ad with a different message that will double revenue.
3. Use data insights across channels. An algorithm can optimize ads within one campaign, but it can't tell you how to apply the lessons you learn to other channels. It takes real people to knock down the walls between marketing silos.
Ideally, pay-per-click advertising and SEO should be joined at the hip, but in many cases the two teams never talk. By casting a wide net in paid search and finding a variety of keywords relevant to your business, you can then use that research to set up a better SEO campaign. And as the keywords climb the rankings in Google's organic search results, paid search efforts can be tailored accordingly.
Those lessons in search marketing can then be applied to additional channels, including other display networks, social media ads, and email marketing. It also leads to a robust content-marketing program with sharable stuff created by people for people--which Google generously rewards via better search rankings.
4. Share the data across the whole organization. The lessons learned in digital marketing channels can also be applied offline across the organization. Instead of trapping the data within automated channels, teams should be sharing insights that can help the business grow in other ways.
After the recent data breach at Target, we saw a spike in searches for small business accounting tools that also included security-related phrases. That's the kind of timely information the sales team would love to have while meeting with prospects. Any time new search terms gain popularity, it's an opportunity for a business to use online insights to inform real-world efforts.
At Wpromote, we call the process of combining data-driven decisions and human marketing expertise "intuitive search intelligence." (The concept has been so successful for our clients that we released an e-book that dives deeper into our approach.)
When it comes to marketing, companies don't need to return to the Madison Avenue glory days, but don't forget them as technology takes marketing to places the Mad Men could have never imagined.
OK, so they aren't exactly taxes. But these expected new costs to business courtesy of Washington could be cause for concern.
Small-business confidence remains significantly below pre-recession levels. Why? It isn't just the cold winter, the uncertainty, and the sluggish growth.
Ask any of my more than 500 small and midsize clients and one common theme will come up: taxes.
Most of the business owners I know pay anywhere from 20 to 30 percent of their net income to the federal government, between Social Security, Medicare, and corporate or individual taxes. And this excludes state, local, sales, and other taxes.
It's a big number for all of us. And we're concerned that it's going to only get worse.
There's good reason to be concerned. The past year saw a slew of taxes hitting both individuals and small businesses.
- Social Security taxes were restored to their original rate after years of "stimulus."
- Medicare taxes went up.
- A new tax on unearned income was imposed.
- Rates on higher earners increased to levels not seen in decades.
- Capital-gains taxes went up.
- The ceiling for itemized deductions was raised.
- The tax advantages of certain employee benefits, such as health savings accounts, were reduced.
As I write this, those higher taxes are being calculated by our accountants who are putting together our corporate and personal returns and bringing us bad news: We owe more than before. This hurts.
But we're not done yet.
Are you a business owner? Your money is at stake. Pay close attention to what's going on in Washington this year. The following are four enormous new costs to businesses potentially on the way, particularly if some of President Obama's proposals become law. In my view, they amount to taxes on business. They are:
1. Research and investment costs. OK, these are not compulsory costs, but they're necessary for growing businesses.
At the end of 2013, two enormous business tax benefits effectively went away. The first was the ability for small companies to take accelerated depreciation (or, in other words, write off an asset faster) for capital purchases up to $500,000. That amount is now down to only $25,000 in 2014.
In addition, the popular credit that businesses could earn by spending money on research and development also expired at the end of last year.
The result is a double-edged killer: Businesses have less incentive to invest in capital equipment or spend money on research and development. And the amounts that they do decide to invest are providing much less tax benefit to them than in the past.
2. The proposed minimum-wage increase. In my view, an increase to the federal minimum wage would be a tax. But as taxes go, it isn't a bad one, actually--the money goes straight to the employee instead of to the government.
The President is campaigning hard to increase the federal minimum wage to $10.10 per hour up from $7.25 per hour. Right now, a full-time employee making minimum wage earns about $16,000 per year, which is sadly low.
A person at this income level likely receives welfare, food stamps, and medical help from the government. The government cannot afford to pay more in these tight budgetary times.
What to do? The President is effectively turning to businesses. He wants to require us to pay our people more. Business owners hate to be told what to do by the government. Most business people I know can not only afford to pay this extra amount but concede that no one working 40 hours a week should be earning such a small income in 21st-century America.
Whatever your opinion, the increase is unlikely to happen.
But this potential "tax" is out there. And it erodes business confidence.
3. The federal deficit. The President's proposed budget, released this week, continues the strategy he set out in his State of the Union address of ignoring our growing federal deficit and national debt. Many feel that our deficits are not a political issue in 2014 because they're going down.
But many economists, even the Congressional Budget Office, forecast deficits creeping back up toward $1 trillion a year in the next few years as the cost of entitlement programs comes due. And even deficits that are "going down" are still half a trillion a year (they were "only" $174 billion in 2007) and are adding to our unsustainable level of national debt at a frightening pace.
How will this be solved? The President (and many members of Congress on both sides of the aisle) is counting, among other things, on tax reform and the closing of loopholes that businesses are legally using to save on taxes--in other words, an enormous tax increase.
4. Health care reform. No, it isn't what you think. The employer mandate, which requires any business with more than 50 full-time equivalent employees to provide health insurance to their full-timers starting in 2015, is not a big deal for most of my accounting clients. They already provide health insurance.
The penalty for not providing this insurance is a tax, in my opinion, but it isn't the tax that my clients are concerned about. The concern is that they will be required by law to provide a minimum level (i.e., "bronze") of health insurance going forward.
As rates inevitably go up (and some are predicting significant increases), the ability of the business owner to share these costs with employees is significantly limited because of the federal law.
More taxes are here. More taxes are coming. That doesn't make me (and many other small-business owners) optimistic at all.
Word of mouth is advertising's Holy Grail. How Warby Parker takes an active role in making it happen
When it comes to advertising, nothing packs more selling power than word-of-mouth endorsements. Sure, a print or TV ad can help you build brand awareness, but personal recommendations from friends, family, and colleagues prompt consumers to spend money.
Thanks to the ubiquity of social media, word of mouth is more powerful today than ever before. Not only does digital technology put the sharing of opinions at the fingertips of virtually everyone, but also 38 percent of adults say they aim to influence others when they express their preferences online.
But most of us assume that word of mouth implies some distance between consumers and the brand that’s being talked about. Word of mouth is for the people, by the people, right? It’s supposed to be organic.
Maybe not, suggests Warby Parker, an online vendor of eyewear. As part of its home try-on program, the company sends five pairs of specs to customers to give them a chance to thoroughly assess their options for new frames. Customers are encouraged (via email) to post photos to their social-media accounts of themselves wearing each potential pair. This leads to word-of-mouth advertising. And though it might still be organic growth, the company is the one planting the seed.
“Every picture that we see, we comment and give feedback on,” Tim Riley (@tmrly), Warby Parker’s director of online experience, tells Path.To. “We’re seen as the expert view, but what also ends up happening is that four or five of the customer’s friends also comment. Not only is that person who posted getting really good feedback, but then four or five more people might get introduced to the brand as well.”
As a maker of something people wear, Warby Parker is well suited to get its customers to post photos of its product. But what about companies that sell less personal items? Neil Blumenthal (@NeilBlumenthal), Warby Parker’s co-CEO, tells Build that the question misses the forest for the trees. Using social media to encourage word-of-mouth advertising isn’t merely about getting customers to use social media to post photos or content about the company; it’s about being authentic.
“You’re never going to get people to do [something] that is unnatural or unhelpful,” Blumenthal says. “Companies need to put themselves in consumers’ shoes and ask what’s really relevant to them, not just ‘Will this help me market?’”
For example, Warby Parker knew its social-media efforts would succeed because the home try-on program was already generating word of mouth offline. “People would get the home try-on sent to their office, and they would immediately ask their co-workers [how they looked],” Blumenthal says. “It exposed us to an entire [group].”
Extending the program to Facebook and Twitter simply made sense.
This article was originally published at The Build Network.