Category Archives: Sales strategy

The Lucrative Black Market for Customer Trust

“Free travel.”

A combination of words that grabs my attention, and stirs my soul. When? . . . How? . . . I’m thinking Machu Pichu! The Galapagos! High adventure, or a cheap way to satisfy an obligatory visit to a friend or relative. Sign me up!

A Fly Delta Facebook Event promises two free tickets on Delta by joining a fan page. All you have to do is invite 300 people, add a comment on the fan page, and click a box labeled “confirm tickets.” Alas, at 173 Friends, my community of Facebook acquaintances is so paltry, it will be difficult to capture this coveted prize. Not without me having to get a whole lot friendlier. Fat chance! Besides, the final statement in the offer makes me skittish: “After successful participation of an offer, your download will begin automatically.”

If that enigmatic sentence doesn’t pique your fraud antennae, maybe the name of the fan page will: Delta Air. All part of a choreographed online scam, according to the website Hoax-slayer.

In March, 2015, a similar Facebook scam took off, this one riding on the Qantas Airlines brand:

Today we at Qantas Australia are proud that we have seated over 3 Million passengers since January 1, 2015! So to celebrate this record setting accomplishment we will be giving out FREE first class flights for the rest of this year! That’s an entire year of FREE flights! To win, simply complete the step’s below. [sic]

A persuasive ploy that my finicky high school English teacher, Mrs. Gimmelblatz, would have immediately dismissed. “A grammatical catastrophe!” as she often exclaimed. But in less than 24 hours, this shoddy ruse hijacked over 130,000 Facebook Likes, and more than 153,000 shares – a runaway success by any marketing measure. If only it weren’t fraudulent. The imposter pages were shut down, but not before damage was done.

Expect to see more imposters. “The intention of these scammer like-farmers is to increase the value of the bogus Facebook pages they create so that they can be sold on the black market to other scammers and/or used to market dubious products and services, and distribute further scams. The more likes a page has, the more resale and marketing value it commands,” said Hoax-slayer.com. Fraudsters know that customer trust is highly fungible, and the black market is thriving.

Many scammers assume that consumers don’t pay close attention to the intricate branding and product details that designers, marketers and trademark attorneys obsess over. Delta Air Lines uses Delta as its official name, not Delta Air. Qantas doesn’t embellish its brand name with the company’s country of origin. A kangaroo, the proud centerpiece of its red logo, provides graphic confirmation. “One of the ways firms signal their integrity is branding; it makes little sense to invest vast sums in building a distinct reputation only to allow that reputation to be besmirched by fraud,” William K. Black wrote in an article, How Trust is Abused in Free Markets: Enron’s Crooked ‘E’.

Today, fraud can be astonishingly easy to pull off. Why commit messier crimes when you can just cut and paste a logo, or, if you’re working from inside, just use the one printed on your business card? And nailing the impostors is like a legal version of whack-a-mole. One manufacturer, Saddleback Bags, went the other way on fraud protection, taking a novel if-you-can’t-beat-them-join-them approach. The company’s YouTube video has the ostensible purpose of teaching people how to produce a knock-off of one of its leather bags.

Fraud techniques are often learned from others, and they are easily shared. An insight that Edwin H. Sutherland gave the world in 1939, when he coined the term “white collar crime.” He deserves credit for bravery. At the time, the notion that wealthy aristocrats could be criminally corrupt was as heretic as Galileo’s heliocentricism. And today, there’s no better channel for incubating and spreading white-collar fraud than social media. Whether committed externally or internally, fraud has five characteristics:

1. It works by mimicking an existing signal (e.g. brand name, product design, marketing message, or other communication)
2. It exploits trust
3. It relies on an imbalance of information that favors the party committing the fraud
4. It provides the perpetrator a direct or indirect financial benefit
5. It erodes the value of corporate brand assets, and present and future revenue streams

So while companies vigorously play whack-a-mole to thwart outside brand imposters, many are less aggressive about protecting against internal fraud. “Insiders cause the vast majority of theft losses,” according to Black. And, in a recent review of regulatory filings The Wall Street Journal conducted, “more than 300 companies, with a combined market value of more than $450 billion [maintain] internal-control guidelines that were written more than two decades ago.” In fact, The Wall Street Journal reported that “more than 180 companies disclosed ‘material weaknesses’ in their internal controls in 2013 – the latest year for which data were available – an 11% increase from the prior year, according to data tracker Audit Analytics.” (For further information on this topic, please see the updated 2013 COSO framework for fraud risk assessments.)

Absent adequate corporate governance, inside fraud makes travel fakery and similar scams seem like chump change. In March, 2015, over 200,000 protesters took to the streets of Sao Paolo, Brazil to protest billions of dollars that the national energy company, BNP Paribas, stole from consumers, and funneled to corrupt government officials. That’s about the same number of people involved in the historic August 28, 1963 civil rights march on Washington.

Fraud doesn’t spontaneously ignite. Companies must first understand the combination of circumstances that creates fraud before they can effectively fight it. The Fraud Triangle, described by Donald Cressey in a paper titled, Other People’s Money: A Study in the Social Psychology of Embezzlement provides three contributing forces:

1. Financial pressure, or other motivation to steal
2. Opportunity to engage in deceit
3. Rationalization for why it’s acceptable

While companies often can’t control or reduce motivation to commit fraud, they can reduce their risks by decreasing opportunities for abuse, and by monitoring its symptoms:

1. Accounting anomalies – including irregular or missing invoices, an unusually high number of voided transactions, GL journal entries without any supporting documentation, account details that don’t reconcile to the General Ledger, back-dated or post-dated transactions, unexplained variances between tax returns and the General Ledger, excessive number of late payment penalties from vendors

2. Weak internal controls – including missing documentation, no separation between accounting and audit functions, evidence of frequent overrides of transaction procedures, lack of authorization for transactions, lack of integration between accounting and information systems, lack of accounting oversight on departmental transactions, lack of internal conformity on records retention, inadequate protection for valuable assets such as intellectual property and product designs

3. Analytical anomalies – including ratios that are suddenly inconsistent with historical patterns, (e.g. increases in inventory accompanied by a decrease in Payables and/or carrying costs, increases in receivables accompanied by a decrease in bad debt expense), ratios that don’t make sense, excessive Accounts Payable late charges, excessive credit card charges

4. Lifestyle and behavior – an employee who has unusually expensive jewelry, clothing or cars, an employee who rarely uses direct eye contact. In a 2003 scandal at the Washington, DC Teacher’s Union, prosecutors said that union funds were used for “to buy tickets to sporting and entertainment events, plus luxury items including clothing, electronics and art.”

Many executives in smaller companies believe they are immune the risks of stolen trust. “We’re not a very compelling a target,” some tell me. But then I remind them that everyday email fraud flourishes through the same techniques. Who hasn’t received at least one email with a friend or colleague’s name as the “sender,” that contains a short, cryptic message like “You gotta see this!!!” followed by a squirrely-looking weblink? Trust in someone’s good name, exploited through social media. It’s been going on ever since the ‘90’s.

“A generation or two ago, strategic risks were largely confined to anticipating competitors’ next moves and focusing on solutions that could beat them at the same game. Financial risks were hinged on the strength of the US economy and banks’ credit capacity. There were no cyber-threats, no data breaches, fewer regulatory impediments and very short supply chains,” wrote Russ Banham in an article, Emerging Risk: Managing Threats in an Evolving Business World.

All true. And it was a lot less common – and less rewarding – to steal an asset like customer trust, and sell it on the black market.

The Magical Power of 73%

“57% of the purchase decision is complete before a customer even calls a supplier.”

Gosh. That seems like a lot. Anyone going higher?

“Technology buyers are two-thirds of the way through their buying process before they engage with tech vendors’ sales teams.”

I like it. Do I hear 73?

“SiriusDecisions predicts that by 2020, 73% of the B2B sales process will be complete before a sales person is ever engaged.”

. . . 90?

“Although it varies greatly with product complexity and market maturity, today’s buyers might be anywhere from two-thirds to 90% of the way through their journey before they reach out to the vendor. For many product categories, buyers now put off talking with salespeople until they are ready for price quotes.”

It’s apparent that we’re edging toward 100%, at which point, the venerable salesperson will quietly slink from corporate org charts, tail tucked. An anachronism, squeezed out of a job, along with coopers, wheelwrights, and telephone operators. Press delete. Good. That wasn’t very messy. Now, where were we? Oh yes – generating revenue. Please, let’s continue.

These statements could not proliferate without idealizations of B2B buyers as intellectual superheroes – infallibly rational, knowledgeable, no-nonsense, process-oriented decision makers. Numbers-driven C-Somethings who are never, ever persuaded unless there’s a strong business case. The right business case. Behold, surviving salespeople, The Buyer’s Journey Workflow! Understand it. Accept it. Hold it close, for it is sacred.

A fantasy that Hans Christian Andersen could have spun into a fairy tale, The Paved Pathway to Purchasing Perfection. On PowerPoint, the buyer’s journey always progresses left-to-right, or top-to-bottom. Nested, colorful arrows represent the steps, each one distinct and clearly labeled. Some journeys have three steps: awareness-consideration-purchase. Some have seven. There are other versions, too. I like the one with seven.

For me, a better, albeit darker, title for the buyer’s journey would be Lost in the Woods. I haven’t published my flowchart, but I offer the Tokyo subway map as a useful approximation. A twisted convolution of overlapping lines pointing in every direction. Some going off the page, others coming back on. I’ve carefully labeled each node: Fits and starts, Squabbles, Indecision, Indifference, Infighting, Infatuation, Inaction, Firm Commitment, More indecision, Hidden agendas, Misunderstanding, Reconsideration. At the terminus of this mess – assuming a terminus exists – is a box labeled Just do Something. So, if you’re into mapping out buying steps, go ahead. Pick out some milestone events and plug them into a schema. Just remember that they are often imaginary, and they rarely happen in the order rendered.

If you subscribe to a less-linear, more imperfect notion of the buyer’s journey, then it seems a stretch to assign a percentage to how much can be complete before engaging with sales. Or the reciprocal, how much of the sales process is complete before engaging with a buyer. Complete and engaging are themselves imprecise terms, subject to rancorous debate in Philosophy 101. I won’t even go there. So when I read precise-sounding predictions like 73%, I start to wonder. Not 72%? Not 74? A rounder, friendlier number, perhaps? Whoa, buddy! Time out! I’m more comfortable with honest vagueness like pretty much all, or darn near every bit.

To me, asserting such hair-splitting numbers to processes as poorly defined and understood as selling or purchasing a complex B2B solution is the statistical equivalent of dropping a raw egg on the floor, then, after using only a fork, boasting to the world that you successfully collected very bit of what splattered. In fact, I’m fine with, “We got most of it, and the dog took care of the rest.”

When I dug into the provenance of the 73% prediction for seller engagement, this story took an interesting and quite unexpected detour. Turns out, in business development, 73% is a wildly popular finding. For example, I learned that,

73% of all CEOs feel that their CMO lacks credibility with regard to generating revenue.

73% of IT executives are influenced by social networks in decision making.

73% of [b2b customers] have engaged with a vendor on a social network.

73% of B2B marketers are producing more #content than they did a year ago.

73% of B2B organizations have a person dedicated to overseeing content marketing strategy.

73% of sales enablement teams share best practices for sales techniques and tactics.

73% of companies have no process for requalifying leads.

73% of marketing executives use spreadsheets for analytics.

73% of companies currently use, or plan to use, buyer personas.

73% of B2B marketers are not even measuring mobile traffic by device.

73% of B2B marketers use video as a content marketing tactic.

This, just a partial list, culled from my new-found collection. Coincidence? As I read through these findings, it’s hard not to suspect a hidden purpose for this alleged precision. A revenue purpose. After all, in a persuasive argument, 73% has more gravitas than its homelier cousin, around ¾. 73% connotes that the provider has paid rigorous attention to detail, and has the chops to grant statistical granularity. I’d use it with my teenaged son regarding how we interact when I ask him to clean his room. “Over the past three months when I made this request, you acted sullen 73% of the time.” He might just reply, “You know, Dad, no need to fact-check. You must be right. Again.”

In this age of lauding data analytics, performance and productivity measurements, and statistical exactitude, no one wants to say, “A whole bunch of the time it seems like . . .” – at least not among peers. But often, I think vagueness is more reasonable and appropriate. Maybe, even more credible. In the meantime, if anyone asks me to speculate on what percentage of CMO’s will leave their jobs for better pay in the year 2020, I know what number I’m using. And I’m guessing there’s a 73% probability I’ll be correct.

Oh – one final note that I promise to keep brief: The SiriusDecisions prediction that by 2020, 73% of the B2B sales process will be complete before a sales person is ever engaged? I never did find the detail that became the genesis of this article. If anyone knows of a study that was conducted, please send an email to arudin (at) contrarydomino (dot) com.

Can Your Sales Contracts Withstand Misfortune, Mishandling and Mistake?

By Andrew Rudin and Aileen A. Pisciotta, Esq.

For many sales practitioners, Legal has earned a reputation as the Sales Prevention Department. “Look – to close this deal, the last thing we want to do is get lawyers involved . . .”

As you will see, it should be the first thing.

The mere mention of “Legal” causes business developers to break into a cold, clammy sweat. Images of lengthy contracts and forms, chock full of fine print. Paragraphs saturated with intimidating words like indemnities, liquidated damages, limitations of liability and force majeure. Recollections of prospects on the delicate cusp of buying, becoming irreversibly baffled and skittish. Purchase delays, followed by more delays. Oh, the agony!

The Legal Department plays a crucial role in making B2B sales transactions successful. As fanatical as you or your company are when it comes to ensuring quality or having a state-of-the-art product, as meticulous as you are about being transparent and following through on promises, there are still many uncertainties. Things go wrong between vendors and customers. [Stuff] happens. Misunderstandings occur. Products don’t work according to specification. Occasionally, customers believe they have been misled. Same for vendors. When these situations happen, the problems can escalate into contentious litigation – even when they might seem minor or trivial. “But I thought . . .” – an ominous phrase that frequently occurs at the leading edge of customer relationship catastrophes. A preamble that most of us would rather not hear.

Salespeople have a significant stake in every transaction, called compensation at risk. And that stake can be protected by legal review. But the animus Sales often directs toward Legal adds to the risk by inviting customer relationship complications that can spiral out of control. So, before anyone signs on the dotted line, remember that legal review can be a life saver, or at least a commission saver.

When legal mistakes are big, careers are jeopardized. You may have to pack up your desk. Or your entire company. Here’s the problem: how can you ensure that a deal closes on terms that preserve the expected revenue and profit? Put another way, how can you prevent transactions from unraveling, and discovering that revenue and commissions you thought you had in the bank have, instead, evaporated?

Each of the following examples illustrate how a seemingly-profitable deal can be undone by sloppy contracting:

1. A sales representative for a telecommunications company used his customer’s purchase order template when executing a large order, not realizing that it incorporated the customer’s contract terms. Those terms obligated his company to compensate the customer, a financial services company, for lost revenue and profits (otherwise referred to as indirect or consequential damages) in the event of a service interruption. The terms and conditions that the two parties had painstakingly negotiated prior to purchase limited the vendor’s liability to a credit of the monthly recurring charges for the period of the interruption. But the customer’s terms embedded in the purchase order template included an “Entire Agreement” clause, precluding evidence of any agreements outside of those terms. Subsequently, a bug in the vendor’s software caused a catastrophic failure of the telecommunications system. The telecommunications company will owe its customer consequential damages for the failure.

Misfortune: The customer’s terms embedded in the purchase order template control the transaction, and the separately negotiated limitation of liability is irrelevant. Consequently, the telecommunications company will not only lose the recurring charges for the three days of interrupted service, but will be liable for the customer’s consequential damages for its loss of financial services revenue over the same period.

2. Carlos Quinones, a sales rep for MegaCorp, needed a $200,000 order to make his quarterly bonus level. On the last day of the quarter, Carlos emailed his largest customer an offer for the sale of his company’s widgets at a price that would put him over the top. His email specified that the widgets would be delivered FOB Origin (making the customer is responsible for all transport and insurance costs). The customer responded by email accepting the products and price, but countering with delivery FOB Destination, which made MegaCorp responsible. Anxious to make his bonus, Carlos hurriedly entered the order for same day shipment, but failed to specify the modified shipping terms, assuming that he and his customer would “work out the details” later.

Misunderstanding: Unaware that he had actually “accepted” the counter-offer delivery terms, Carlos committed his company to terms of the contract that were not what he intended. He exposed his company to greater risk and himself to a loss of commissions in the event his company cannot take the risk, or otherwise breaches the enforceable terms of the agreement.

3. Disruptacorp sold a CRM system to Company X. Disruptacorp made no explicit promises about the results Company X would achieve, but in the meetings leading up to the purchase, the sales rep repeatedly claimed that Company X would “improve its effectiveness.” Disruptacorp’s standard contract did not include an exclusion of implied warranties, including warranties of fitness for a particular purpose. After just three months, Company X became disappointed with the product, pulled the plug on the project, and sued for damages. Company X argued that Disruptacorp breached its implied obligation to ensure that the CRM system was suited to Company X’s specific requirements.

Mistake: Legal review would have ensured that implied warranties were excluded. Without the exclusion, Disruptacorp is liable for promises they did not realize they had made.

These cases illustrate legal issues that every sales executive needs to know: are the sales subject to an enforceable contract? If so, are you certain that all of the terms of that contract best serve your interests, or have you actually agreed to terms that better serve the other party’s interests? Have you successfully included all terms necessary to protect your interests within the “four corners,” or confines, of the contract, or can the other party produce evidence of preliminary discussions or implied terms that expose you to substantial liability? Finally, does the contract give you the recourse you need to collect from a customer that doesn’t pay, or that terminates early?

Each of these issues bears on a most important consideration for any company: cash flow. When trading partners have contractual difficulties, payments are commonly delayed, shunting receivables off into distant aging periods. Over-aged receivables eventually must be written off as bad debts. As any CFO will attest, when cash flow problems are especially large, the results can be strategically catastrophic.

Anytime a customer defaults on payment, the seller may be between a rock and a hard place, having to choose between foregoing payments, or incurring substantial legal fees to litigate the claim. In addition, when invoices are unpaid, CFO’s have little alternative to reversing revenue transactions, and asking sales management claw back commissions. When resolving these issues, it’s never good for sales morale when you’re continually stuck vetting the “least-worst” choice.

As with sports, the best defense is a good offense. That means training your sales force to get more finicky about sales terms, and to appreciate that close attention to contractual legal issues up front is the most effective way to lock in revenue from the sales that everyone worked so hard to close. “We won the Jackson account! We’re celebrating this Friday in the main conference room!” But without good contracts with effective recourse, sales revenue can evaporate. To ensure your bacchanal doesn’t turn into a post-mortem, make time to have legal counsel help cover the following with everyone on your business development team:

1. Have an enforceable contract.

  • Be sure there has been clear offer and acceptance of specific commercial terms.
  • Include an “Entire Agreement” clause to confine the agreement to the “4 corners” of the written contract, and preclude the other party from relying upon prior notes, phone calls or emails to contradict the terms of the written contract.
  • Be sure the person who signs the contract (signatory) has authority to bind his or her company to a promise.
  • If you rely exclusively upon terms and conditions posted on your website, be sure to require the other party to “click through” and accept, or provide evidence of affirmative assent, otherwise the digital terms may not be binding.

2. Have the right contract.

  • If the other party’s document is used, make sure you have thoroughly reviewed it and understand the terms you are agreeing to.
  • Be sure all important terms are addressed, otherwise, the law may provide “implied” terms, including facts required for a deal to be reasonable such as rates, timeframes or specific preconditions; or terms implied by law such as warranties of fitness for a particular purpose, reasonable notice requirements or duties of cooperation.
  • If purchase orders or other ordering documents refer to terms and conditions in another document or posted on a website, be sure to review them because they may be binding on you – even if you believe you have negotiated other terms.

3. Limit your liabilities.

  • Clearly circumscribe your warranties and effectively exclude any implied warranties that you don’t intend to provide. Be especially careful about implied warranties of non-infringement of intellectual property and, where possible, provide alternative remedies for infringement such as the right to substitute a non-infringing product.
  • Limit the possible ways in which the other party can argue that you have breached the contract. Include adequate periods for notice of any breach and the opportunity to cure the breach before the other party can terminate the agreement or sue for damages.
  • If possible, include a dollar limit for direct damages or include a liquidated damages clause for specific breaches. Be sure to exclude or limit both parties’ rights to claim consequential damages.
  • Limit indemnities to narrowly defined third party claims and avoid indemnities for direct claims by the other party.
  • Be careful to pass through to your customer any penalties that you have to pay to your underlying suppliers.
  • Include a “force majeure” clause to excuse non-performance or delay in the event of disasters beyond your reasonable control.

4. Have adequate recourse if the other party breaches.

  • Be sure that you have the right to mitigate your damages by such actions as suspending or terminating service, recovering possession of goods, or off-setting your costs against amounts you may owe to the other party.,
  • Include effective penalties for non-payment such as requiring pre-payments or deposits, late payment penalties and the right to recover collection costs and legal fees.

5. Provide for least-cost dispute resolution procedures.

  • I nclude your choice of law and venue and waiver of jury trial if appropriate, and consider requiring mediation before litigation or arbitration. Make provisions to require that claims that fit within “small claims” limits can be resolved in the most expeditious proceedings
  • Be aware that many jurisdictions will not award attorneys’ fees in litigation unless the contract is crystal clear about the parties’ agreement on the subject.

Consulting your in-house counsel or trusted legal advisor, maintaining a good set of contracts, and ensuring that your sales force is informed about your legal obligations and responsibilities are indispensable for protecting your revenue stream. These steps will help prevent transactions you thought you had in the bag from going sour, and will give you effective recourse if they do.

This article was co-written by Aileen A. Pisciotta, Esq. of Executive Counsel PLC. She can be contacted at apisciotta (at) exec-counsel (dot) com.

Note: This article is offered only for general informational and educational purposes. It is not offered as a comprehensive review of the issues, and does not constitute legal advice or a legal opinion. In any specific contractual or commercial transactional issues you should seek the advice of a qualified attorney.

This article was first published on CustomerThink. To view the original article, please click here.

This article first published on CustomerThink. To view the original article, please click here.

“Science” Sells. But Is It Science?

Goodbye cold rain and snow, hello warm weather! With spring approaching, people will slowly emerge from their winter domiciles, and mosey into the great outdoors. The season gives us new opportunities to walk, hike, bike, picnic, fish, and play golf. But for most, one unpleasant inevitability accompanies these active pleasures: itchy mosquito bites.

Walmart offers salvation in a product you can buy online, the Viatek Mosquito Shield Band. A box of ten will set you back 20 bucks, less one copper penny. And here’s the pitch:

“Enjoy your time outdoors more this summer with the Viatek BUGBANDS10 Bug Repellant Band. It has been scientifically proven to keep annoying bugs, such as mosquitoes, ticks, flies and gnats, away. The Viatek mosquito shield band is ideal for use when you want to entertain guests in your back yard. The item is 100 percent natural and lasts up to 120 hours. All you have to do is put it on your wrist, ankle, bag or stroller to keep the bugs away. The band continues to work for up to five days even when it gets wet. It can also help protect your family from lime disease and other health concerns that result from getting bit by insects.”

Impressed?

Before you shell out for your supply, you should know something about the scientifically-proven part: it’s pure hokum. Never mind that Walmart misspelled Lyme. The manufacturer, Viatek, “said that their wristbands would protect you from mosquito bites, but their claims weren’t backed up by scientific evidence,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Those claims violate the law and a 2003 FTC order against the defendants.”

In the suit that the FTC brought against Viatek, the agency alleged that the “defendants do not possess, and did not possess at the time they made the representations, competent and reliable scientific evidence to substantiate the claims they made in advertisements.” The case is pending a court ruling. No scientific evidence? But Viatek said scientifically proven! So did Walmart! And 75% percent of the people who spoke up online at Walmart said they would recommend this product to a friend. Maybe all of this is getting too . . . unscientific. Hmmmm. I’m glad the nannies at the FTC have my back.

“Brain training” services have also raised hackles for gratuitously invoking science in their product promotions and advertising. Lumosity, a service that has over 50 million subscribers – about the same number as Netflix – uses the tagline, “Challenge memory and attention with scientific brain games.” The company’s 46-second promotional video, accessible on its homepage, mentions science three times. Competitors such as Cogmed, and BrainHQ have taken similar approaches, mixing shovelfuls of science gravitas into their online content.

But it seems that not everyone cozies to the industry’s marketing schtick. An article in Scientific American (Brain Training Doesn’t Make You Smarter, December 2, 2014) gave a scathing rebuke to their methods. “Cogmed claims to be ‘a computer-based solution for attention problems caused by poor working memory,’ and BrainHQ will help you ‘make the most of your unique brain.’ The promise of all of these products, implied or explicit, is that brain training can make you smarter—and make your life better.”

The article referenced a press release from The Stanford University Center on Longevity and the Berlin Max Planck Institute for Human Development:

“It is customary for advertising to highlight the benefits and overstate potential advantages of their products. In the brain-game market, however, advertisements also assure consumers that claims and promises are based on solid scientific evidence, as the games are ‘designed by neuroscientists’ at top universities and research centers. These claims are reinforced through paid advertising and distributed by trusted news sources.”

The formal statement from these two organizations was signed by seventy of the world’s leading cognitive psychologists and neuroscientists, and included this paragraph:

“We object to the claim that brain games offer consumers a scientifically grounded avenue to reduce or reverse cognitive decline when there is no compelling scientific evidence to date that they do . . . The strong consensus of this group is that the scientific literature does not support claims that the use of software-based ‘brain games’ alters neural functioning in ways that improve general cognitive performance in everyday life, or prevent cognitive slowing and brain disease.”

The statement further explains that although some brain training companies “present lists of credentialed scientific consultants and keep registries of scientific studies pertinent to cognitive training . . . the cited research is [often] only tangentially related to the scientific claims of the company, and to the games they sell.”

Society needs more highly-principled scientists to rat out similar cases of misleading product marketing hype. Beyond bug bands and brain games, many industries misuse science as a selling tool. In hawking their products and services, vendors exploit its persuasive power, and capitalize on its insidious ability to help them shortcut any obligation to offer deeper explanations.

“Backed by science,” “based on science,” “supported by scientific evidence,” and “scientifically proven.” It’s embedded in much of the media that comes our way. Science this and science that, breathlessly delivered to inboxes through email marketing blasts, RSS, and Tweeted from Twitter. Hard-hitting hype from the social media content team! We can’t get enough science. Just added to the mix: data science, and data scientists. We’ve become jaded. Little wonder that people regularly punt their rights to being skeptical. “Why bother? Everybody shouts this stuff.”

For me, all of this science lingo once conjured benign and reassuring images. Smart, slightly geeky-looking people wearing glasses, dressed in pristine starched white lab coats, holding clipboards or tablet computers. Brows furrowed in deep thought, they tirelessly ponder mind-numbing tables of numbers, while asking penetrating questions, and extracting clarity from the inscrutable. All for the purpose of bringing us a step closer to the truth.

But today, when I hear science juxtaposed to a product category, name or brand, I’m just as likely to envision a slickly-dressed huckster with a bank account, wearing an expensive watch and Gucci shoes. A modern-day “Doctor” John R. Brinkley, whose self-promoted quack science in the early 1900’s for restoring male virility was eventually exposed by the dogged Morris Fishbein of the American Medical Association. But not before Brinkley became very, very wealthy through his cleverly-marketed services. “Sales is all about giving customers what they want!” Yes . . . but . . . well, gosh. It’s easy to stray off the ethical road when you’re making a beeline toward Positive Cash Flow City.

“Well, I’m not a scientist.” – Florida governor Rick Scott

What makes the widespread use of science messages in advertising and promotion perplexing is that in America, views on science are decidedly mixed. Governor Scott just banned using the words global warming and climate change in any official state communication. Hard to imagine anything more anti-science, except banning science textbooks from Florida’s classrooms. “Maybe that’s coming! . . .” Worried sarcasm, coming from the office right next door.

Elsewhere, in 2013, residents of the City of Portland, Oregon, nixed adding fluoride to the local drinking water. And a 2014 Pew Research Survey showed a sizable gap between the views held by scientists and those held by US adults on several key issues. For example, 88% of scientists believe that genetically modified foods are safe to eat, compared to 37% of US adults. And 98% of scientists believe that humans and other living things have evolved over time, compared to 65% of US adults. (Yes, I typed the latter percentage correctly.) Clearly, not everyone trusts scientists, or what they say.

On the other hand, many people, including me, hold an abiding appreciation for science. “Science appeals to our rational brain,” wrote Joel Achenbach in The Washington Post (Why Americans are So Dubious about Science, February 15, 2015). This should give marketers pause. Science messaging might turn a prospective customer on, or send him or her running hysterically in the opposite direction.

Either way, we’re plagued with enough science naiveté to fill a room, which makes conditions ripe for fakery and truth-stretching. In a book review of Vitamania (The Wall Street Journal, March 19, 2015), Trevor Butterworth wrote, “They are avatars of vitality, better taken than understood.” He was referring to vitamins, herbal remedies, and other dietary supplements, but his comment speaks to the problems that emanate from science hype. Fortunately, organizations have been established in response to the profound need for better public education. Sense about Science was among the best I found. “We are a charitable trust that equips people to make sense of scientific and medical claims in public discussion.” A great resource – if you have a computer and a web connection. (The last I checked, 60% of the world’s population do not.)

Science is a social construct, and we entrust it to reveal the truth. According to Marcia McNutt, former head of the US Geological Survey, and now editor of the magazine, Science, “science is a method for deciding whether what we choose to believe has a basis on the laws of nature, or not.” Which is why it’s destructive when people misuse the term in a marketing or sales context. Often, their authoritative assertions come from far less rigorous investigation. Or worse, simply from what they think. Or even worse, from what they want us to think.

Where should the line be drawn, then? Fair question. In their case against Viatek, the regulators at the FTC placed it right about here:

“For purposes of this order, the following definitions shall apply: ‘Competent and reliable scientific evidence’ shall mean tests, analyses, research, studies, or other evidence based on the expertise of professionals in the relevant area, that have been conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.”

The definition still allows considerable legal wiggle room. To borrow from the familiar proverb, Science is in the eye of the beholder. Which is why it’s important to differentiate good science from bad science / pseudo-science.

Good science

Good science begins with using the modern scientific method:

• Ask a Question
• Do Background Research
• Construct a Hypothesis
• Test Your Hypothesis by Doing an Experiment
• Analyze Your Data and Draw a Conclusion
• Communicate Your Results

The scientific method has democratized science in our time, and makes scientific discovery accessible to anyone – from kindergarteners to great-grandparents. You don’t need an advanced degree to engage in scientific research, just a commitment to approach the experiment through the scientific method. This method galvanizes communities of knowledge, and helps people cohere the experimental conclusions of others, expanding our learning opportunities. In our society, what matters most in vetting the believability of science is the basis for the experiment, and the integrity of the methods used.

Good science uses experimental methods that are clearly documented and open to a peer community. Good science develops experiments that can be replicated by others, enabling the results to be independently verified. Good science has explanatory and predictive power. But this does not mean that good science cannot be disproven. Good science accepts reasonable challenges to its findings, and encourages peer review.

Bad science and pseudo-science

According to Wikipedia, “Pseudoscience is often characterized by the use of vague, contradictory, exaggerated or unprovable claims, an over-reliance on confirmation rather than rigorous attempts at refutation, a lack of openness to evaluation by other experts, and a general absence of systematic processes to rationally develop theories.” Often, the experimenter has an ulterior motive for conducting the experiment, such as personal financial gain, or power and influence. The experimental method does not conform to the modern scientific method, and there’s often pressure to confirm what the researchers (or the study’s sponsors) already believe. The variables are often not controlled. Most notably, bad science lacks community. The results cannot be reliably tested by others, and are rarely, if ever, embedded in other research, cited in academic journals, or re-used in any way. The results are often self-proclaimed as “inerrant,” or “beyond debate.”

What’s the best antidote to being suckered by scientific hokum? Constant skepticism. And a sharp eye for finding holes, gaps and anomalies in things that others claim as fact. Something to keep in mind the next time you read or hear anything claiming indisputable evidence or scientific proof.

“Scientific results are always provisional, susceptible to being overturned by some future experiment or observation.” Joel Achenbach wrote. “Scientists rarely proclaim an absolute truth or an absolute certainty. Uncertainty is inevitable at the frontiers of knowledge.”

Further reading: Guidelines for Evaluating Scientific Studies

Constructive Paranoia: Coming Soon to a Sales Organization Near You!

Admiral Hyman Rickover, who pioneered the US nuclear-powered navy, famously required job candidates to sit on a chair that he intentionally made awkwardly lopsided. He felt anyone who could deal with the aggravation was likelier to succeed on his team.

“Sure it’s uncomfortable working without a firm underpinning of stability. That’s why we need to be comfortable with being uncomfortable.” Thompson Morrison wrote in a blog, The Uses of Discomfort.

Strange as this idea seems, it exposes a great truth. We all need to be comfy. We all like to be comfy. But we can’t exist without some discomfort, and the paranoia that comes with it. Turns out, just like caffeine and “bad” cholesterol, there’s a healthy side to paranoia, as Intel’s Andy Grove explained in his book, Only the Paranoid Survive.

In 2013, cultural anthropologist and author Jared Diamond wrote about paranoia and risk in an essay in The New York Times, That Daily Shower Can be a Killer. In the article, Diamond reasoned that if he wanted to achieve his statistical quota of 15 more years of life (he was 75 at the time he wrote his essay), that meant taking 5,475 (15 x 365) more showers. “But if I were so careless that my risk of slipping in the shower each time were as high as 1 in 1,000, I’d die or become crippled about five times before reaching my life expectancy. I have to reduce my risk of shower accidents to much, much less than 1 in 5,475. This calculation illustrates the biggest single lesson that I’ve learned from 50 years of field work on the island of New Guinea: the importance of being attentive to hazards that carry a low risk each time but are encountered frequently [emphasis mine].” He coined a quirky term, “constructive paranoia,” to explain why New Guineans are effective at avoiding routine hazards, such as getting crushed under falling trees.

In the developed world, we don’t normally get all jittery when walking under foliage. But in the area of New Guinea where Diamond studied, medical clinics and 911 emergency call centers don’t exist. For Diamond, constructive paranoia, which he defines as a hyper-vigilant attitude toward repeated low risks, makes complete sense. By comparison, he warns that “Americans’ thinking about dangers is confused. We obsess about the wrong things, and we fail to watch for real dangers . . . Studies have compared Americans’ perceived ranking of dangers with the rankings of real dangers, measured either by actual accident figures or by estimated numbers of averted accidents. It turns out that we exaggerate the risks of events that are beyond our control, that cause many deaths at once or that kill in spectacular ways — crazy gunmen, terrorists, plane crashes, nuclear radiation, genetically modified crops. At the same time, we underestimate the risks of events that we can control [emphasis mine].”

In business development, risks from what we can’t control command great attention. In 2010, I conducted a sales risk perception study with CustomerThink in which the two most concerning risks sales executives identified were economic and competitive. Yet, prosaic, everyday risks that could be considered controllable were not cited: the customer’s technical question that was answered incorrectly, the proposal that was presented but didn’t fully match the prospect’s stated needs, the problem resolution that took longer than promised, the price discount that was offered to a buyer but inadvertently was not applied, the Tweet or social media post that pushed just over the boundary of good taste.

All of these are discrete incidents that, individually, aren’t horribly risky or catastrophic. But when they spread into patterns – as they often do – they insidiously aggregate to huge risks that undermine positive outcomes, and erode value. Are we obsessing about the wrong things, and failing to be vigilant for visceral dangers that are closer to home? Are marketers and salespeople numb to constructive paranoia?

Emphatically, yes. At least, anecdotally. Little gaffes and service hiccups from situations that we can control go viral, spiraling into larger risks. United Airlines broke my guitar. One incident, and anyone in United corporate marketing can tell you how many people heard the story on YouTube: 14.6 million, and counting. Sure, the economy is iffy. Go pump up your sales pipeline. 3X seems pretty safe in this market. Just let your claims department know not to enforce your 24-hour incident-report policy so strenuously. Better still, change the policy.

In a recent CustomerThink column by Christine Crandell, What Causes B2B Customers to Churn? Three Things, and “Price” Isn’t One of Them, a commenter, John Ragsdale, wrote, “If customers are receiving value, i.e., the outcomes they anticipated, they will stick with you through missing features and occasional lapses in support levels. However, I think very few tech companies are capable of assessing customer outcomes, and are not sure what to do to improve them. Renaming your customer support organization as “customer success” is not solving the problem.”

His statement exposes a curious paradox that infects customer service organizations around the globe: we expect customers to put up with ambient, low-level, vendor misfires. But that tolerance insulates us from understanding the gravity of the outcomes. In effect, it insulates us from customers. And we don’t know the point at which those absent features and service lapses will create a former customer out of a current customer. What’s needed is an NSUS – Net Screw-up Score – so we can watch customer relationships melt down from a convenient dashboard. So, yes, I think constructive paranoia is a good thing. As Brian Tracy said about selling, “everything counts.” A difficult standard, but he makes a valuable point.

According to Crandell, “. . . large and small businesses often change the products [they use] . . . to the bewilderment of the vendor’s sales, marketing, and customer success teams.” Her use of “bewilderment” grabbed me, because it underscores the problem that Diamond pointed out: that we obsess about the wrong things and fail to watch for the real dangers.

Bewilderment? Really? Hazards will always occur, customers will still jump ship from time to time, but when you’re constructively paranoid about repeated low risks, bewilderment will be – should be – a very rare reaction.