Marketers are suffering from PTSOD (post-traumatic shiny object disorder), developed after experiencing too many PowerPoint presentations from ad-tech, mar-tech, whatever-tech companies promising the holy grail of the “right message to the right person at the right time.” Becoming distracted by the shiny objects took our eye off the ball. We forgot to focus on what matters.
Platforms often create new behaviors in the ecosystem by aggregating new markets. Airbnb, for example, created a new behavior among both hosts and guests, encouraging hosts to unlock spare capacity and guests to trust strangers enough to live with them.
Effecting change along the systems dimension is crucial. While traditional firms largely deal with internal systems and leverage supply side economies of scale, digital platforms benefit from externalities and demand side economies of scale. Platforms need to architect new systems and understand the sources of delay and feedback that lead to coordination of the ecosystem and reinforcement of behaviors across the collective.
Culture shapes cohesive action in firms. In ecosystems, culture shapes the trust and implicit contract between participants. Platforms that enable ecosystem interactions involving high risk or sensitive information need to invest in their ecosystem’s culture. While systems enable explicit contract, culture creates the environment for value exchanges to occur repeatedly. Finally, culture is emergent on a platform owing to the lower control that the firm has in shaping culture outside its boundaries. To create culture, platforms must constantly track patterns of usage in order to detect early signs of collective emergent behavior. MySpace, while a successful social network, failed to scale because it failed to create a culture of trust and security. Facebook, and more recently Snapchat, have successfully created a more secure culture.
There will be increasing complexity in consumer purchasing decisions. Consumers use all kinds of media to make shopping decisions – from YouTube to Facebook – and it’s becoming increasingly harder to put the people that buy certain products into a box than it used to be. Consumer categories like mainstream, or high and low end, are starting to disappear. Segmentation is getting more and more complex. The same customer can buy one high end product and one low end product at the same time. These days you could easily find someone who could take an EasyJet flight from London to Milan to buy a Gucci bag. People select which consumer products they want to buy with an unbalanced mix of emotions and rationale. They might not have any emotional connection to aviation and thus the cheapest product will do. But when it comes to a luxury bag they might value tradition and craftsmanship.
Personalization in product design and communications will be more prevalent. Thanks to big data, social media and flexible manufacturing, more companies are learning to offer customized products and designs. This trend is reaching a growing number of industries including the health sector. While pharma companies continue to treat all patients in more or less the same way, they will soon be moving towards personalized medication based on our differences such as age, sex, weight, and medical history. Watch out for many other industries to start following suit.
Mobile communications are becoming the center of marketing. There have been rumblings in the press recently about WhatsApp giving Facebook its users’ phone numbers to deliver targeted ads. Although getting a text message about one of your favorite products may seem intrusive, so is telemarketing and that hasn’t gone away. Look out for companies to communicate with consumers more and more via their mobile devices.
Transparency will dictate brand-customer relationships. From Wells Fargo to Volkswagen, the list of disgraced companies keeps getting longer. Businesses are realizing that they cannot escape the transparency offered by social media. More companies are learning the lesson that if they aren’t truthful, they will pay the price: Not only hefty fines from the authorities, but also in lost loyalty and business from their customers.
Personalized data-driven marketing will become more friendly. Thanks to big data, companies are learning an awful lot about who you are and what you like. They will get keep getting better at targeting you and communicating with you in the most effective way depending on who you are and what your habits say about you. Don’t say goodbye to spam just yet, but the companies that figure out how to stop casting their one-size-fits all messages less widely, and start targeting people in a more meaningful way, will win.
More accurate metrics will continue to emerge. Until recently, justifying and measuring the impact of their decisions has often been a major challenge for marketers. Today, there are many ways to measure online activity – likes on Facebook, clicks on articles, and so on – but many of them are not fully meaningful yet. Facebook was recently caught amplifying data about how much videos were viewed on its platform. Think about the ramifications for advertisers who thought they were getting more bang for their buck! But this should change soon. Remember when people used to talk about not knowing which half of their advertising budget was wasted? Well this should be approaching somewhere closer to 20% soon. Measurement will probably never be perfect, but digital technology is improving it. Will we ever know the exact trajectory of who views an ad and then opens their wallet to buy a particular product? I’m not so sure. But that is what marketers dream of.
The marketing organization will increasingly move from digital silos to integrated teams. A few years ago you would have the digital team on one side and the marketing team on the other. It can no longer be that way. Digital has to be part of everything now so the two have to be fully integrated. As one marketer recently suggested: Companies do not necessarily need a digital strategy, what they really need to know is how to plug the digital component into the complex process of how consumers make purchasing decisions!
Sometimes brands weaken not with a bang but a whimper. Investors naturally want to see greater financial returns, putting constant pressure on brands to keep growing, expanding, and building profits.
So brands cut costs. They also stretch themselves to include products or markets with which they have not been previously associated. Overextension can result in short-term growth, but often weakens a brand over time. Little by little, positive customer associations fall away, until one day it becomes clear that the brand has lost its foundation altogether.
Originally known for high-quality handbags and other leather goods, over the last 20 years Coach aggressively sought new markets by introducing less expensive items and dramatically expanding its outlet-store presence. For a brief period, business boomed. Then consumers started to question the brand’s value. When everybody has a Coach bag, it isn’t so special to have a Coach bag. But because the negative effects of these choices are cumulative and incremental, brand erosion often evades early diagnosis.
There are some steps that companies can take to prevent brand erosion.
First, a company must maintain clarity about what its brand stands for. Who are the core customers? What is the brand’s value proposition? If you can lay this out, then it makes it much easier to remain true to the brand—and to avoid weakening it.
A company should also continuously monitor the health of its brand. This isn’t so much monitoring financial results. Instead, companies should ask questions such as: Is my brand healthy? What are people thinking about it? What are they saying about it? Is it relevant?
Asking consumers open-ended questions such as these, he says, can reveal valuable qualitative information about the associations a brand conjures. For a quantitative perspective, consider a tool called Net Promoter Score, which measures customers’ willingness to recommend a product or service. Other metrics like brand awareness and intent to purchase are also worth analyzing.
Finally, companies should take brand health into account when setting employee financial expectations and incentives.
In many cases, brands get in trouble because the financial expectations are simply too high. If you give somebody big financial expectations and big incentives, they will do everything they can to meet those expectations. The problem is that while meeting them, they may do things that are going to damage the brand in the long run.
Such a pressure-cooker atmosphere may have been what led Wells Fargo employees to make fraudulent customer charges. The banking and financial services behemoth is facing a $185 million regulatory fine after years of charging customers for accounts they had not opened, services they had not requested, and credit cards they had not ordered. If companies are put under too much pressure to meet their numbers, employees start thinking: I can always worry about the brand next quarter. This quarter, I’ve got to keep my job.
Say a brand has already lost its way. How can a company strengthen it again? In 2008, Starbucks found itself in crisis, its stock value having plummeted by 50 percent over the previous year. At least part of the crisis stemmed from its increased emphasis on sweet, frothy beverages, which conflicted with its original reputation as a place to get truly authentic coffee.
To turn things around, CEO Howard Schultz took many drastic steps—including closing every Starbucks location for an afternoon in order to retrain its baristas in the art of espresso. Yes, he also replaced the company’s outdated cash registers and improved its social media presence, among other measures. But at its core, this was about retrenching and rebuilding the Starbucks brand. And it worked.
That’s not to say that any company aiming to revitalize a languishing brand should simply mimic Starbucks’s steps. Rather, there is a basic process that any company with branding problems can follow. It begins, once again, with a deep exploration into what the brand actually means to customers. There’s often a big difference between what you want a brand to stand for and what it actually stands for.
Then comes the often painful process of refocusing the brand on its core business. Take Burberry, which originally gained fame for its trench coats. Over time, the company diluted its brand by overextending itself into a wide range of products. When Angela Ahrendts came on board as CEO in 2006, she refocused the brand on those iconic coats to great success. They first reestablished the base and then began to grow again. This led to an incredible turnaround.
Dedicated marketing staff and senior managers will of course be critical to a brand’s efforts to reestablish itself—but don’t forget about teams from customer service, sales, and operations, too. In many ways, the most important people are the frontline employees. Experiences are incredibly powerful when it comes to building a brand, so if these employees aren’t engaged, it will be tough to revitalize a brand.
Next, brands should highlight any branding shifts publically. In the absence of news, brand associations don’t change. A company might introduce innovative products that embody the essence of the brand; think Apple’s late-nineties launch of its iMac line. Or a company can leverage the power of other brands, often through celebrity partnerships. Take Adidas, which signed Justin Bieber, Katy Perry, and Kanye West as brand ambassadors, in addition to expanding its U.S. athlete sponsorships. You’ve got to find a way to get people’s attention, and celebrities are a great way to do that.
Finally, companies need patience. Revitalizing a brand takes attention, but it also takes time. Companies should resist the temptation to employ strategies such as discounted pricing, brand extensions, and cost cutting. In fact, they must often move in the opposite direction by narrowing their portfolios, reducing discounts, and improving quality.
In some cases, profits go down dramatically when you turn brands around. You could see falls of 30 or 40 percent in the short run. So set modest targets in order to produce positive news—and take comfort in knowing that long-term thinking now will pay off in long-term benefits for your brand later.
Distrust is often based on experience or reliable information, while mistrust is often a general sense of unease toward someone or something. This is the age of distrust. Fake news infiltrates the media daily. It inundates social media feeds and tempts with the most appealing of clickbait headlines. For marketing’s underbelly, it has been a gold mine, but it has come at the cost of trust and consumer confidence.
Never before has the general public been so skeptical of absolutely everything, let alone marketing and advertising. We see the largest-ever drop in trust across the institutions of government, business, media and NGOs. Trust in media took a nosedive and fell to all-time lows in 17 countries. Businesses, from faith in the brand to trust in executive leadership, didn’t fare much better.
For younger generations, millennials in particular, this is hardly surprising. Research and analysis has for years pointed to a lack of trust for advertising and corporate America, with some data suggesting that upwards of 85 percent of younger populations just aren’t buying it. What is surprising is the speed in which gen-xers and even boomers are forming similar sentiments. And so in an era of fake news, high skepticism and low confidence, marketers face perhaps one of their greatest challenges to date, believability.
Fortunately, consumers have, in a way, offered their own solution. As consumer trust decreases, reliance on people increases. More specifically, reliance on the opinions of peers. A person is just as credible for information as academics or experts about a company or brand. Half of all adults are now routinely checking online reviews before making a purchasing decision. 78 percent of people who read online reviews find them reliable.
For marketers, this signals a shift in how dollars should be spent. It’s time to double down on pre-existing customers, as their voices, opinions and beliefs now say much more about a brand than traditional advertising or marketing can. Social media offers the most obvious platform for this kind of marketing, but other forms of social-in-nature content are beginning to take off as well.
For those that have already started down this path, customer review platforms have been checking off all of the right boxes. Brands that utilize a quality customer review tool and proactively seek the feedback of their existing customers are showing results across a wide scope of tangible metrics.
For one, some third-party review tools (they come in many shapes and sizes) have licensing partnerships with Google, making them Google Review Partners. Reviews collected with these platforms can help brands gain Google Seller Ratings, which have been shown to increase the average clickthrough rate for ads by as much as 17 percent. There is also significant SEO and traffic value businesses can attain by collecting reviews.
On the less analytical side, brands that regularly engage with their customers directly through social media, forums, message boards and review platforms end up with a built-in marketing team made up of their own customers. The reviews and feedback consumers leave not only generate brand loyalty but also provide potential customers—those who don’t quite trust traditional marketing methods—with the push they need when a purchasing decision needs to be made.
Responding publicly to those who have had a negative experience with the brand is like winning the marketing lottery in the age of distrust. Research shows increasing customer retention by just 5 percent can lead to a 25 percent to 95 percent increase in company profits. Engaging with customers demonstrates trust and transparency to anyone else looking on.
Regardless of the platform or medium, it’s now more important than ever for marketers and advertisers to invest in trust marketing. The data is concrete and suggests that without a game plan, traditional marketing dollars will start to fall short if they haven’t already.
It’s hard to say when consumer confidence will be restored to its normal levels; sins of the past may make that nearly impossible. But like it or not, distrust is now ubiquitous. Fake news is now part of the world we live in. Each and every time it’s disseminated, brand trust takes another gut punch—and so do today’s marketers.
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