How Intuit Drives Innovation (and you can too)

Small companies are often founded by innovative individuals who by design or necessity lead their business into new and unchartered territory.  As a company matures that innovative spirit is often squashed under the weight of a fearsome bureaucracy.  One company that seems to consistently break this pattern is Intuit, extending its product line well beyond Quickbooks and TurboTax with a steady series of innovative offerings including SnapTax, a mobile tax filing app.

Kaaren Hanson, VP of Design Innovation at Intuit, believes that the trick is “creating a culture of rapid experimentation” and is speaking about that very topic at next week’s Columbia Business School’s Brite ’13 Conference. As you will see in my interview below, Kaaren is refreshingly honest, reminding those that want to innovate (at any size business), to “fall in love with the problem, not the solution,” that today “leadership is about experimentation” and “innovation is part of everyone’s job.”  But read on. There’s a lot more to this innovation thing than grabbing a white board and gathering the usual suspects!

Drew: Are we currently in the “innovation age” or is innovation simply an imperative for companies looking to thrive (versus survive) in a rapidly changing global economy?   
Kaaren: We have a long way to go. I would say we are entering the “innovation age.” Changes in how we work and think are beginning to take place, but most of the results and impact are yet to come.

Drew: Can you share a specific recent innovation at Intuit and speak to how it came into being?
Kaaren: How about preparing and filing your taxes in less than 10 minutes on your smart phone? That’s a recent innovation from Intuit we call SnapTax. After announcing mobile as a key priority for the company, Intuit CEO Brad Smith was asked by an engineer in an employee chat: “What the hell does mobile have to do with taxes?” He told them he didn’t know, but he knew they’d figure it out. A few months later a small team had an idea.  Intuit gave this small team the freedom and the resources they needed to dream and develop – and they came up with a mobile app to prepare simple tax returns on an iPhone, easily and accurately. That team’s work became SnapTax, which makes it easy to file a simple tax return on a smartphone in the amount of time it takes to find a parking space at H&R Block.

Drew: Does creating a culture of innovation also require a certain tolerance for failure?  Are there ways to mitigate the risks?
Kaaren: Who likes failure? A string of failures and you’re out of business. You have to learn from failure and use it like road signs that direct you to success. Having a culture where people savor surprises is important.  That surprise could be a big upside or a big downside. Intuit’s co-founder Scott Cook says it well: “If there’s something that’s really a big surprise, upside or downside, that’s generally the real world speaking to you, saying there’s something you don’t yet understand.” It’s less about mitigating risks and more about carving out space for people to experiment and learn from failure. One example from Intuit is our Lean StartINs. These are one or two-day events where small groups of employees come to test their ideas for new products or services.

Drew: What are the other big cultural changes required for companies to become more innovative?
Kaaren: Leadership models need to change, especially when it comes to how decisions get made. In the innovation age leadership is much more about Thomas Edison than Dwight Eisenhower. Leadership is about experimentation. It’s no longer about the boss making the decision or judgment. Instead, we  make the decision based on testing the hypothesis and experimentation. This is moving decision-making from the boss’s opinion to enabling the answer to prove itself with customers voting with their feet.

Drew: Innovation often seems to align with the corporate growth cycle—younger companies tend to innovate more than bigger ones either out of necessity or because the culture is younger and less risk averse.  How does the proverbial old dog learn new tricks?
Kaaren: It starts with having a strategy that will fuel growth through big economic and technological changes. Then give employees the freedom to experiment, and ultimately bring to life those groundbreaking innovations that will inspire more innovation.

Drew: Can the big guys do this without creating “skunkworks” or other splinter operations that are not just empowered to innovate but are really required to do so?
Kaaren: At Intuit innovation is part of everyone’s job. If the big guys want to see new ideas come to life at their company, they should democratize innovation. We offer unstructured time to all employees at Intuit, to give great people with great ideas the time and freedom to pursue them. Having an innovation awards program is also a good way to celebrate successes and reinforce the importance of innovation. When it comes to our innovation awards program, we provide the three things that innovators wanted most: recognition allowing access to leaders and other innovators, time to innovate on a project of their choice and financial reward.

Drew: Henry Ford is famous for saying, “if you asked people what they wanted, they would have said faster horses” and Steve Jobs was also a skeptic of the consumer’s ability to recognize the need for what would become a totally new category. How important is consumer input/feedback in your innovation process?
Kaaren: Just listening to what customers say is a waste of time.  Customer Driven Innovation is one of our core capabilities that differentiates us and allows us to deliver solutions that truly change people’s lives. One of our signature methods is something we can Follow Me Homes, observing customers “in the wild” – it may be their homes, coffee shops, or the train.  We notice what and how they are going about their daily lives and then probe deeply to understand the motivations and emotions that drive their behaviors.  These nuggets provide rich material for our innovations.

Drew: Presumably Intuit has had some failures along the innovation road.  Is it true that you can learn as much from failures as you do successes and if so, what have you learned?  
Kaaren: You can certainly learn from failure. It goes back to my earlier comment about savoring surprises. We recently learned this important lesson: fall in love with the problem, not the solution.

Many of Intuit’s customers are small businesses. We had a team that had been exploring opportunities in adjacencies to our payroll business, and found that health coverage is the most important employee benefit. Yet most small businesses don’t offer this benefit because it’s too expensive and too much work to administrate.  The Intuit team took that customer problem and found a way to create a new, low-cost health insurance plan solution. The insurance plan got positive feedback from customers and good overall results in market testing. However, when the team began offering the plan, they only sold four plans in five months. The team then went back to drawing board. They again examined the learnings from customers and added some new members to the team with different perspectives. This led to the team taking insurance out of the solution. Instead, they created a health debit card product to which employers would contribute an amount that they set for their employees to use for healthcare expenses. So the employer sets the cost, and employees get full choice with pre-tax dollars.

A key learning from the failed low-cost insurance plan was, fall in love with the problem, not the solution. In this case the problem still existed. The team needed to have a mindset that as long as they understood the problem, they could be flexible, iterate further and in the end make a product more likely to succeed. The team continues to iterate, and the Intuit Health Debit Card is performing well in a limited market release.

Spoiler Alert: Mobile Advertising Works (Sometimes)

digitalDigital Display is often considered the homely step-child of the advertising family shown up regularly by its precocious cousin Search. So it would stand to reason that Mobile Display would be equally destained.  Well as the analysts like to say, “data trumps opinion” and according to Professor Miklos Sarvary, Faculty Director, Media Program at Columbia Business School, who studied the impact of Mobile Display ads, this emerging channel does work “but only under certain conditions.”  Sarvary will be presenting his findings next week at the Columbia Business School’s Brite ’13 conference and I am delighted to provide a sneak peak of his report via the following interview:

Drew: I love the title of your presentation “The Truth about Mobile Advertising: Does it Even Work?”  Let’s start there.  Does mobile display advertising work?
Yes, our empirical analysis seems to show that it works but only under certain conditions (for certain products).

Drew:  Digital display advertising has a bad reputation already relative to say Search advertising. Why would or should advertisers expect more from mobile display?
The reason is that it is hard to observe systematic effects for display advertising, which is not the case for search advertising. Search advertising is “self-contained”, in the sense that you can have an independent campaign and if the search words are well chosen it generally works. Our research suggests that display advertising may work but only if it is part of a bigger campaign. The role of the mobile display ad is to remind people of the deeper messages of “higher bandwidth” campaigns. We show that this only works for high involvement and utilitarian products. In other words, it is harder to make the case for mobile display ads.

Drew: For marketers considering mobile display advertising, which success barometers should they focus on in order to most satisfied with this particular medium?
Actually, we found that mobile display ads seem to influence many stages of the decision funnel (we could only verify attitude and purchase intentions but I believe that they may pretty much influence the entire decision funnel). This is consistent with the idea that mobile display ads only remind consumers of another campaign transferring richer information. If this is true, then each stage of that campaign might be affected.

Drew:  Can you provide an example or two of successful mobile display campaigns?
Unfortunately not. We are not allowed to reveal the products that we have studied and I don’t have a good specific case study. Moreover, a really successful campaign might not be attributed to mobile ads alone.

Drew: Are there product/services that tend to do better than others on mobile? Are there products/services that simply don’t work at all on mobile display?
Sure. This is the essence of our findings. Specifically, and somewhat surprisingly, high involvement, utilitarian products work better for mibile display advertisemements (as opposed to low involvement hedonic products). Examples like regular cars, expensive durables, heath insurence, financial services come to mind….

Drew:  In theory, mobile display has the opportunity to be incredibly customized based on user behavior and/or location. Did this level of customization play a role in your study?
No. And you are right that this is where the real power of mobile may actually lie. We only studies simple display advertisements – little banners appearing on the screen. What is surprising however, is that a large proportion of mobile ads are still these simple display ads. And the forecasts don’t seem to indicate that the proportion of spending on these is going to decline.

Drew:  Will the advent of larger mobile phones like the rumored iPhone 6 help the mobile display cause?
Yes, I think that there will be a lot of development here. Ads will do a better job at capturing attention, reminding people of other marketing messages etc. Already now, many people count some rich media ads as display ads.

How to Run a Successful Blogger Outreach Program

So you may have heard talk of blogger outreach programs and wondered exactly how they worked.  Well its actually as easy as 1-2-3-4:

  1. Identify relevant bloggers
  2. Send them a flattering note after reading their work
  3. Provide them interesting content (preferably words and images)
  4. Be patient (your bloggers are probably busy doing other things)
Back in mid-December, I was contacted by Rachel Ramsey of Software Advice who followed these steps and lo and behold, I agreed to allow her associate Ashley Verrill to be a guest blogger on TheDrewBlog.  I typically don’t allow guest bloggers but frankly, I thought the topic was interesting and I was busy writing for other places like FastCompany.com, Social Media Today and iMediaConnection!  BUT since my blog was on hiatus over the holidays and I am just getting to this now, I couldn’t help but wonder what other sites had already shared this content.  Turns out Rachel is quite good at her job and stories about “The Great Social Customer Service Race” appeared on a number of blogs including Social Media Today, WOMMA, Swiftpage,  Happy Customer and many many others.  SO, if you’ve already seen this elsewhere, you can stop now.  If not, I hope you enjoy it.

GUEST POST: The Great Social Customer Service Race by Ashley Verrill

Social media has always been about engagement. It’s a place where conversations, networking and relationship building flourish. Unfortunately for business, this is difficult to scale. So many succumb to using the platform strictly for racking up fans and blasting promotions.

But times have changed. Customers now expect businesses to respond when they send messages, tweets or wall posts. It’s up to each business to take advantage of new technologies that help prioritize, route and address these messages efficiently.

Recently, I conducted an experiment to assess whether 14 of the nation’s top brands employ such technologies to achieve social media responsiveness. The test – dubbed The Great Social Customer Service Race – involved sending 280 tweets from four personal accounts, during a four-week period.

We analyzed the percent of total tweets each brand responded to, as well as the time it took them to write back when they did respond. We designed questions that tested specific listening technology features, as well as social response best practices.

Here’s a few lessons we learned from the race that you can use to improve your own social media response.

Listening Technology Should Catch @, no @ and #BrandName

One of the most striking results was the overwhelming lack of response for tweets that did not include the @ symbol and the company’s Twitter handle.

Even though the customer might not be specifically addressing the brand if they don’t use their handle, these messages sometimes present a chance to surprise and delight the customer. Think of it this way: you either capitalize on an opportunity to create a brand advocate, or you risk a negative message traveling further, faster in the wrong hands.

Consider this tweet that didn’t receive a response:

This left a bad impression on me and my followers. Not only that, but competitors could be listening for your brand and capitalize on negative messages about you. Consider this response to a tweet I sent about Bank of America.

Prioritization is Your Best Friend

For large companies, it’s impossible to expect that they respond to everything. But overall, these brands only replied to about 14 percent of the messages we sent. This is frighteningly low. To tackle this challenge, companies should utilize technology that identifies the most important messages and moves them to the front of the response queue.

This is done primarily through prioritization rules that can be customized and programmed into your listening technology. This should include priority triggers such as “thank you,” “angry,” “mad,” “switching,” “buying” and so on. Your team should also spend time finding other keywords that might be more specific to your industry or company.

McDonalds demonstrated during the race that its team was listening for thank you. This tweet received a response in just 13 minutes:

While these important interactions went unnoticed:

Track Your Responses

It’s critical your team have a process for tracking responses once they are prioritized and routed. At one point during the race, we received two responses to the same tweet, one day apart. The first response seemed robotic, and the second didn’t address the question.

A customer service ticketing-type application is one way to achieve this kind of tracking. When a message is received, it becomes a response ticket that is instantly prioritized and routed. Then once it receives a response, it’s removed from the response queue. This is also helpful if the responder that receives the message is busy. Many social listening technologies can instantly re-route the message if it isn’t touched after a certain amount of time.

Consider Customer Clout

A customer’s social activity level or purchase history might be another measure to consider when prioritizing your response. During the race, each of our four Twitter users tweeted the same brand as many as seven times during the four-week experiment. One goals was to see if any of the brands would identify us as active socializers and improve their response time. Not one of the 14 brands did.

To do this, ensure your software records every Twitter interaction with your brand in the corresponding customer’s profile. This allows the next responding agent to quickly see if that customer is a brand advocate or tweeted negatively in the past. Also, program socially integrated ticketing software to increase response priority if a user emerges as an active socializer.

Are You Really Listening?

Customers social media response expectations will only continue to increase. Now is the time to get a handle on your engagement process with the right technology, used in the right way.

Ashley Verrill is a CRM analyst for Software Advice.

Why the Future of Facebook Looks Bright (part 3)

Just any case any of the digital / social agencies out there are panicking because they aren’t among the 12 Facebook designated as Strategic Marketing Development Partners, I have one word of advice: don’t.  While this designation is a coup for those 12, the rest of us will be just fine and so will our clients when it comes to providing Facebook-related services.  Part of the reason I can say that with such certainty is that these SMDPs offer self-service solutions that are available to all who seek them, including major digital agencies like Resolution Media.

I talked with Erica Barth, VP of Products & Partnerships at Resolution, about this issue, which we will be talking about again and in greater detail at the upcoming Social Media Insider Summit.  Erica remains bullish on Facebook as a powerful advertising vehicle especially if you are customer-centric.  Enjoy.

Drew: First, please provide a brief description of what your company does and how Facebook fits in.
Resolution Media, an Omnicom Media Group company, is a leading digital agency with operations in 40 countries. Resolution helps brands bond with evolving audiences by providing services in the areas of paid search, search engine optimization (SEO), digital behavior analysis, social media, mobile, local and other complimentary services.

Drew: Can you provide a recent success story that you’ve executed on Facebook?
We used Facebook to generate awareness for a client’s new online product by promoting their organic page posts to mobile and desktop Facebook users.  In particular, mobile newsfeed ads were very successful, generating over 60% of all the “Page Likes” for this initiative.  Overall, Facebook was one of the largest drivers of traffic to this client’s new online product.

Drew: Do you think not being a Strategic PMD has hurt your ad buying and or application development skills?
Resolution Media partners with Facebook PMDs to buy Facebook media on a self-serve basis using the PMD’s technology platform to streamline management, optimization and reporting.  We do place importance on the standing of the API vendor with Facebook, but also look at other factors when selecting our technology partners such as technical support, training, global scale, etc. However, speed-to-market on supporting changes to Facebook’s platform and overall innovation in the space are very critical as well.

Drew: Have you noticed a decline in the usage and/or effectiveness of Facebook apps?   
We help our clients support the promotion of their apps from a media perspective and we haven’t seen our advertisers move away from leveraging them.  However, the biggest limitation we see in driving results today is apps that aren’t developed with the consumer at the center to ensure relevance and a great user experience.  In our experience, simple and entertaining apps tend to perform the best.  It’s really important to understand consumers’ behaviors on different channels and make sure your content and advertising strategy align to those in order to drive success.

Drew: Are you bullish on the future of Facebook applications?  
When done well, one of the greatest strengths of apps is that it’s a great way to develop content quickly and with limited investment, as opposed to a microsite or other channel that could be more time intensive. Limited mobile compatibility and Facebook’s focus on Timeline can make it challenging to maximize traffic to an app, but expect this to continue to evolve as Facebook continues to expand its products to reach both mobile and desktop users.

Drew: How do you see Facebook advertising evolving?   
Facebook has moved in the direction of having its ad formats tied very closely to the organic content that is published, which should help increase the relevancy and effectiveness of Facebook advertising as long as advertisers invest in a solid content strategy that is appropriate for this type of channel.  I think understanding how audiences are evolving and want to be engaged with on each social channel is the foundation that is needed to make any sort of paid amplification effective.

Why the Future of Facebook is Bright (part 2)

If you happen to be Patrick Toland, your answer to the question “So Your Facebook Developer Isn’t “Strategic”. Does It Matter?” is likely to be “of course” since he is Chief Revenue Officer at Optimal, one of Facebook’s Strategic Preferred Marketing Developers.  That said, Patrick makes a strong case for why the future of Facebook is bright for just about everyone connected with THE social network in our interview below.  (And pardon the shameless plug but why not join us Feb 9-12 at the Social Media Insider Summit where we’ll be delving into this issue and many more while trying to ignore the sunshine of Captiva Island!)

Drew: Can you provide a brief description of what your company does and how Facebook fits in?
Optimal is the leading social ad buying and analytics platform.  We specialize in helping marketers effectively and efficiently reach audiences in real-time, AND we create tools that help companies evaluate their own social presence + their competitors’.

Drew: Some marketers are beginning to question the efficacy of Facebook.  Can you provide a (brief) recent success story on Facebook that you’ve executed?
Recently, we worked with a Fortune 100 Financial Services company, that wanted to find high-value fans / potential customers through social media.  Using a combination of our analytics products and Custom Audiences, we helped them refine their target demographics and increase their fanbase by 350%, while lowering costs by 60%.  Most importantly, we found them people, who were more likely to be customers.

Drew: How has being a Strategic Preferred Marketing Developer that helped your organization?
To become a PMD, an organization needs to meet a certain level of quality, service, and support.  It also means that we have experience working within the industry we are performing sales in.  Being a PMD has been helpful for us & the entire industry because it gives partners and potential customers the knowledge that we have met a certain level of qualifications.   AND, it gives Facebook a level of quality of control because, unlike the Ad Network space in the 2000’s, we have a set of credentials, and we’re ready to work with you.

Drew: As Facebook applications have proliferated and FB usage has moved to mobile devices that don’t support these apps, have you noticed a decline in the usage and/or effectiveness of FB apps?
The usage on mobile is only natural, and although the current trends might seem to the decline in usage for FB apps, this should only be temporary situation.  In the long run, the rest of the ecosystem should catch up.  As this happens, engagement should continue to rise and occur in real-time!

Drew: Are you bullish on the future of Facebook applications?  If so, why and how do you see them evolving?
Yes, of course.  As you mentioned above, FB usage is moving towards mobile devices, and that is something Facebook understands. Applications are being built to adapt to the environment over time, and the future should continue to be promising overall.

Drew: Can you share how you see Facebook advertising becoming more effective?
Of course – the opportunities on Facebook have always been very interesting given the ability to create targeted segments based on actual information that is updated in real-time.   Custom Audiences, Open Graph Targeting are couple great examples of recent developments.  This is much better than the survey based data making assumptions of what people are interested based on what they are viewing, and we feel that everything can only improve, with better ad units, and communication all around.

Why the Future of Facebook is Bright (part 1)

On February 11th, I will be leading a panel discussion at MediaPost’s Social Media Insider Summit called “So Your Facebook Developer Isn’t “Strategic”. Does It Matter?”  The controversy, if there is one, began a few months ago when Facebook elevated a dozen of the hundreds of Preferred Marketing Developers (PMDs) to that status of Strategic PMDs.  These folks are being granted insider access to all things Facebook leaving clients to ponder if their non-SMPD agency can remain current and still deliver the goods they need.

To get myself up to speed on this issue, I reached out to my fellow panelists including Lucy Jacobs, COO of Spruce Media, one of the freshly minted SMPDs and in the process realized our discussion was less about the role of SPMDs and more about the potential of Facebook.  As you will see in the interview, Ms. Jacobs is quite bullish on the future of Facebook as an effective and efficient advertising channel.  I suspect you will feel the same after reading her responses.

Drew: Can you provide a brief description of Spruce Media and how Facebook fits in?
Spruce Media provides a streamlined social media-marketing platform.  We optimize customer’s Facebook marketing through sophisticated ad creation, bid management, collaboration tools, page post analysis & amplification. Our platform is offered on self-serve basis or combined with a support team of dedicated account managers and media buyers.  Spruce Media integrates the management of organic, viral, and paid distribution on Facebook, which has never been done before across the social ecosystem.

Large budget advertisers have unique problems. In order to scale up spend; they need bulk ad management that goes beyond Facebook’s Power Editor. Large budgets also demand more sophisticated options than a standard Facebook business account, even if it’s bulk enabled. Finally, advertisers are always looking for intelligence that will give them an advantage over the built-in Facebook capabilities.

Drew: How is Facebook doing in the mobile arena?
Newsfeed mobile CPM is down 10% Q3 to Q4 due to increased inventory with iPhone 5, iOS 6 and Facebook’s ramp up of eligible devices and impressions.  Mobile Newsfeed and Desktop Newsfeed CTRs are up 34% and 49%, respectively from Q3 to Q4 2012.  The slight (10%) decrease from Q3 to Q4 in mobile Newsfeed CPM is more than made up for in increased value to advertisers by the significant rise in CTR and drop in Cost per Click.

The 33% drop in CPC from Q3 to Q4 further opens Facebook up to the $1.6+ Billion industry of mobile ad network advertisers.  The 34% increase in CTRs shows that Facebook has been able to improve the formatting and relevancy of ads delivered in their mobile applications confirming Facebook’s ability to focus on both user experience as well as revenue building product development.

The performance of mobile has plenty of room to grow, especially for price. As for user degradation as more mobile ads are populated, users are more tolerable for in-stream ads since they are either expected or wanted. Given the high engagement rates of mobile ads, it’s not an issue. Accidental clicks on FB are low from click back testing.

Drew:  Is Facebook Making Money on Mobile?
The monetization gap that closed on desktop Internet will ultimately close on mobile Internet too. While users were initially skeptical of Facebook’s mobile revenue opportunity, the company is now on track to generate 20% or more of advertising revenue from mobile in 4Q2012, up from just 3% in 2Q. The mobile Newsfeed ads pricing at a significant premium to Facebook’s platform average and believe that over time Newsfeed plus all mobile ad formats may comprise around 60% of total advertising revenue.

Drew: Are you bullish on the future of Facebook applications?  If so, why and how do you see them evolving?  
Yes, I am very bullish on Facebook applications. They are a logical next step in the evolution of the Facebook Marketing cycle into Amplification. Open Graph is proven to work well as well as new ad units such as mobile app installs.

Drew: Are you also bullish on the future of Facebook advertising?  
Yes I am very bullish on Facebook. Spending outlook for 2013 is positive:

  • Advertisers are actively discussing budgets for ’13 and so far the outlook is positive. Most of the brand advertisers expect to increase spending on FB in 2013.
  • The advertising activity appears to be sustainable as the objective is being transitioned from fan acquisitions to engagement and amplification. FB’s new targeting tool, Custom Audiences, is a game-changer since advertisers can match online identity with offline CRM and deliver relevant ads on an individual basis.

Drew: What are some key things to watch for in 2013?
Custom Audience – The game-changer in digital advertising. FB is the only platform that enables accurate individual targeting on a large scale, shifting FB advertising to a very sustainable business model of reach and frequency.

Ad network – This initiative will expand FB’s reach of ad impressions into third-party websites. The social network has a unique advantage since social identities can travel across devices from mobile to desktop. Existing PC cookies cannot be tracked in mobile currently. When users hop from a smartphone to a PC, the tracking gets disconnected.

Multi-touch attribution – This is a longer-term positive industry development for FB. The attribution model is starting to shift from last-click to multi-touch, recognizing the assist social media provides at the early part of the consumer-purchasing journey through awareness. By doing so, social media, especially FB, should get more media allocation in the future.