Marketing Transformation or…Shift Happens
At a recent national gathering of marketing gurus representing a broad cross-section of industry segments—CPG, financial services, manufacturing, healthcare and hospitality—it was abundantly clear that marketing is undergoing a momentous transformation. From customer profiling that dives deep into consumers’ psyche (in a big brother, scary kind-of-way) to consumer generated TV spots to new metrics of customer loyalty, the customer has arrived.
As explored in past postings (“It’s The Customer Stupid”, November 2006), whether formulating a marketing plan, developing brand-building communications or forecasting advertising budgets, you can't do it without customers.
Here’s a look at several themes and observations about the future of marketing from some of the country’s leading experts:
New Media—“Your brand isn’t what you say it is; it’s what Google says it is.”
Yes, Google is defining brands, shaping industries, changing sales and influencing just about everything in our lives—2.7 billion searches every month will do that! With 55 million blogs and American households averaging over 100 TV channels (compared to 10 channels in 1990), it’s no wonder we are in the midst of a media revolution.
While mass marketing remains alive and well, it’s constrained in today’s era of cultural fragmentation. Traditional media outlets are quickly being overtaken because of their inability to dial down and focus on niche markets or micro-verticals. Marketing is moving beyond advertising to a focus on building a relationship with the consumer.
Web-savvy amateurs are leveraging the power of information, subverting the power of the corporate brand. Enter the blogosphere and word-of-mouth marketing. Suddenly, every customer has a megaphone to speak to minority interests and ultra-segmented consumers. These approaches bring an ability to narrowcast any debate—political, product or service. Momentum is shifting from institutions to individuals.
Consumer Choice—“People are simply doing different things in different places at different times.”
The exponential growth of choice in today’s marketplace has changed consumer purchasing habits forever. Think about the impact of Amazon, iTunes and Netflix. Amazon offers over 3.7 million book titles whereas the leading mega-bookstores have 100,000. Last year, retailers did not offer over 25% of books sold. The largest music stores carry 55,000 albums compared to online alternatives that offer 3 million. In 2006, 70,000 new albums were released; over 40% of purchased music was not available from music retailers. It’s the convergence of consumers’ love of choice with the reality of limited versus unlimited shelf space.
Similar trends are shaping the future of health care and insurance. Over 120 million people are going online for health and medical information (averaging seven visits per month). They are getting ready for, or drilling down after doctor visits and researching drug information. They’re checking prices and looking for indicators about quality of care and clinical outcomes. One leading health information portal has more than 25 million consumer visits every month. In the insurance sector, 85% of buyers go online before purchase. Unfortunately, among 12 industries studied, insurance ranks the lowest in consumer friendly Web presence—health insurers are at the bottom.
Customer Loyalty—“Trust is the purpose of commercial communication”
In a recent analysis of 1,000 CEO presentations to their respective Wall Street analysts, financial results and growth always received mention. Only 3% of these CEOs addressed customer satisfaction. Shortsighted, yes. Unexpected, no. Many companies don’t want to hear the answers. Or, they don’t know how to ask the questions.
In our “don’t waste my time” and “I’ll call you, don’t call me” world, the effectiveness of lengthy customer satisfaction surveys is dwindling. Response rates are poor and the important answers get lost in a sea of bureaucracy. Asking two (maybe three) questions is all you need. Of course, having an action plan in place to deal with the answers helps. For example:
- Would you recommend us to a friend?
- How would you rate your most recent experience with our company?
- If we’re not meeting your expectations can an officer of our company call you to find out why and try to correct it? (Maybe, just maybe you can win them back).
As it turns out, the real value isn’t quantifying the level of satisfaction but rather it’s answering, "would you recommend us?" Customer loyalty means managing customer expectations and delivering on your promise in terms of your customers’ heads (features, service, price) and their hearts (value me, know me, listen to me). Get this right and they’ll be your best ambassadors.
Create Promoters—“Bring your marketing to the consumer—right place, right time, right message—it’s all about the consumer”
Ahh, the perfect segue—"Would you recommend us?" The hot new marketing metric is your NPS – Net Promoter Score (% of promoters - % of detractors = NPS). On a scale of 1 to 10 you can divide your customer base into three categories:
10–9 = Promoters (loyal brand advocates; actively speaking on your behalf)
8–7 = Passives (OK to neutral but would likely switch for a better offer)
0–6 = Detractors (seeking to switch; will leave in a heartbeat; may be starting a Blog to trash your brand or product).
Most new customers start off as passives. Moving them up the NPS scale is in your hands. Promoters are a coveted customer category that can grow your business because their recommendation is strong—peers trust peers. In fact, one recent study concludes, “When it comes to word-of-mouth recommendations, boomers have both unrivaled influence and rich networks of peer advisors when making purchasing decisions.” This phenomenon, B2F (Boomer-To-Friend) communications is a powerful tool. Promoters are high value, high return customers that can produce long-term results. Listen to them, speak to them, invest in them and work your ass off to keep them happy.
Marketing is changing quickly. It’s moving in new directions on a daily basis. One indicator is the new marketing-speak we’re hearing: hyperlife, diagnostic discourse, culture spying, repriorment, underground selling, authenticity conversations, belongingness, social networking and user-generated content. And, under the category of rapidly becoming overused: disruptive, relevancy and connected appear to be every marketer’s hot go-to phrases these days.
As you think about marketing transformation in the context of your business, I recommend taking six minutes to consider the trends presented in a quick video—Shift Happens
NOTE: A footnote and quick thank you for some stimulating ideas from J. Kumar, S. Wynne, C. Anderson, R. Adams, M. McDonald, D. Pink, F. Reichheld and A. Stefanovich.