Winning in the Relationship Era™A New Model for Marketing Success By Doug Levy pptx

Winning in the Relationship Era™A New Model for Marketing Success By Doug Levy Published by Doug Levy at Smashwords Copyright 2010 Doug Levy Table of Contents Introduction Chapter 1: A N

Winning in the Relationship Era™

A New Model for Marketing Success

By Doug Levy Published by Doug Levy at Smashwords

Copyright 2010 Doug Levy

Table of Contents

Introduction

Chapter 1: A New Era in Marketing

Chapter 2: The Brand Sustainability Map™

Chapter 3: Breakthrough Success in the Relationship Era

Chapter 4: Getting Involved

Introduction

I can still remember the day I realized marketing had changed forever It was summer of 2004 I was reading an article about Kryptonite, a manufacturer of bicycle locks Kryptonite had found itself in uncharted territory after a series of forum posts and an online video revealed how the brand’s tubular bike locks could be opened with a simple BIC pen

At first, the company denied the claim’s validity But as word (and ire) spread like wildfire across the Internet’s budding social sphere, Kryptonite soon realized it had to change its way of thinking In a bold move, its leaders adopted a position of transparency and open communication Not only did Kryptonite replace 400,000 locks, but it also took steps to create a true, open dialogue with

customers

It didn’t take long for people to appreciate the brand’s efforts and recognize their shared values Nor did it take long for Kryptonite to earn back the respect of the community and its position of market leadership

I love the Kryptonite story It’s one of the first examples of a company shifting conventional thinking to meet this radically changing marketing environment

Some of my friends and colleagues have gone through a similar shift in thinking Over the years, we’ve helped some of the biggest brands in the world enter and flourish in the digital space But we have come to realize that digital is only part of the equation We have the opportunity to do something bigger and more meaningful

We asked ourselves an ambitious question: “Can we partner with our clients to transform the world of marketing?”

The question soon became a quest, and this new approach to marketing was born—a fundamentally different way to practice marketing that’s both extraordinarily effective and intensely meaningful What this book champions is a bold new direction, yes, but it’s also practical—giving marketers the means to spend less and get more More sales More profit More engaged, loyal customers and

employees Even more benefits for society

Winning in the Relationship Era outlines this new approach, giving business leaders a guide for

leapfrogging competitors in a dramatically different marketing environment

Is the approach controversial? Yes Is it a model that the next generation of successful marketers will adopt? I think so

After reading, I invite you to participate in the dialogue at www.relationshipera.com, and if you’re so compelled, to join us in this movement to make marketing more profitable for everyone

This is a time of extraordinary opportunity Together, we can lead a momentous transformation in one

of the biggest and most powerful industries on the planet

Winning in the Relationship Era includes four sections:

A New Era in Marketing, our perspective on the evolution of marketing

The Brand Sustainability Map™, an introduction to a better tool for assessing relationships Breakthrough Success in the Relationship Era, five keys to victory in the emerging model Getting Involved, an invitation to join us

Chapter 1: A New Era in Marketing

THE SHIFTS IN CONSUMER MEDIA CONSUMPTION HABITS ARE RESHAPING THE WAYS MARKETERS CAN—AND MUST—BUILD RELATIONSHIPS WITH

CONSUMERS MOREOVER, THE EXPANSION OF DIGITAL INTO EVERY ASPECT

OF OUR LIVES HAS CAUSED FUNDAMENTAL CHANGES IN HOW PEOPLE

INTERACT WITH BRANDS, WHAT THEY EXPECT OF BRANDS, AND THE ROLE OF

MARKETING IN THEIR LIVES

Even as brand leaders use new tactics to accomplish their goals, most think of the practice of marketing much as it’s been defined for decades—a way to persuade people to buy something In short, most marketers are applying new tactics within an old model

Today, a new era in marketing is here, and succeeding in it requires an entirely different marketing model

The Product and Consumer Eras

Before introducing this new model, we first provide some context on the evolution of marketing Until recently, there were two eras of marketing—the Product Era and Consumer Era—and each featured

a winning marketing model that distinguished the period

This Product Era ad details Dr Rhodes’ Dandruff Cure and its benefits.

In the Product Era, from the early 1900s through the 1960s, the focus in business was on producing products During this era, marketing was about simply informing people about these products Ads were copy heavy, and the strongest performers did the best job of explaining why their product was superior

In the 1960s, marketers realized that product descriptions reached people at a logical level but failed

to connect on an emotional level As a result, the Consumer Era was born Whereas in the Product Era, the thinking started with the marketer and its products, in the Consumer Era, marketers learned that an understanding of the consumer was paramount Marketers worked to deeply understand consumers’ wants and needs, to reach them at a moment of utmost receptivity with a message most likely to influence them

Although there has been a lot of change in marketing since the Consumer Era began in the 1960s,

the change has largely been within the same model Yes, there are now better approaches for

gathering consumer insights, more techniques and channels for getting messages out to consumers,

and a richer set of analytics tools for assessing what is working, but they’re just more sophisticated

methods for doing the same thing—persuading people to buy

With such an intense focus on creating messages that elicit a specific action, it’s no surprise that people feel persuaded and manipulated by marketers In fact, the practice of marketing has become synonymous with spin and deception

In the Consumer Era, marketers appeared as if they were putting consumers first There was a lot of talk about trust and relationships, but trust in the Consumer Era was one way Marketers persuaded consumers to trust them only as a way to sell more products They were using these words differently than people typically use them in their personal lives, where trust is two-way Successful marketers will discard this shallow approach to trust as they employ a new model of marketing

Changing Within a Model versus Creating a New Model

Although businesses constantly evolve, most change happens within a fundamental paradigm for an industry Truly transformative change, though, results from powerful thinking that brings about an entirely new model

“You cannot solve a problem from the same level of thinking that created the problem.”

—Albert Einstein

As explored in the previous section, there have been many changes in marketing over the past 100+ years But how exactly do you know if it’s a new model or simply changes within an old one? To illustrate the difference, we step away from marketing to consider two examples of companies that embraced a different level of thinking to create a new model within their industries

Apple

In 2001, there was a robust marketplace of MP3 players, with dozens of reputable and experienced manufacturers actively competing to lead the industry When Apple declared its intent to enter the market, most scoffed, dismissing Apple’s lack of skill in building high-feature, low-cost devices

Creating a new model in digital music players

Old model: Create devices with more functionality and lower prices

New model: Offer a simple system for enjoying digital music

But Steve Jobs decided to play a different game He determined that the real need was not cheap, complex devices but rather easy-to-access, legal digital music So Apple invented a device that had few bells and whistles—and a hefty price tag Apple also built a music store, where people could easily buy songs for 99 cents and transfer them to their music devices The iPod and iTunes results are legendary Within a year after iTunes’ launch in April of 2003, Apple owned 92.1 percent market share for hard-disk digital music players and 70 percent market share of all MP3 downloads The company had a value 4.5 times greater than in 2001.1 Apple succeeded unlike any of its rivals by making digital music accessible and enjoyable

Southwest Airlines

Southwest Airlines also changed its industry When co-founders Rollin King and Herb Kelleher came

up with their business idea in the late 1960s (as legend has it, drawn on the back of a cocktail

napkin), only 15 percent of the U.S population had flown in an airplane.2 At that time, the focus was

on constant innovation around providing the most luxurious experience to attract the flying elite

Creating a new model in the airline industry

Old model: Cater to the flying elite

New model: Give people the freedom to fly

Kelleher and King envisioned something new—offering more people the freedom to fly Southwest created a lower-cost structure and made air travel less stuffy and more fun Its advertising focused on providing freedom, still apparent in its ads today that feature the tagline: “DING! You are now free to move about the country.” Now, 85 percent of the U.S population has flown on an airplane,3 and Southwest Airlines stands out as the industry’s clear leader in customer satisfaction and profitability.Apple and Southwest Airlines achieved breakthrough success—both financially and otherwise While others were evolving within their industry’s predominant model, these leaders created a new model

Introducing the Relationship Era

While the Product Era focused on informing people about products and the Consumer Era focused on persuading consumers to buy more, we’re witnessing the emergence of a new era—the Relationship Era The role of marketing in this new era is to foster sustainable relationships between brands and people

The following graphic shows the progression to the Relationship Era and the predominant marketing models in each era:

Just as new ideas from Apple and Southwest Airlines disrupted the digital music player and airline industries, we see a different way of thinking shaking up the marketing industry

The new model of marketing—fostering sustainable relationships—represents a meaningful change

in the role of marketing In the Consumer Era, the starting point was typically the consumer

Marketers worked to understand the buyer and become what consumers wanted them to be Problem

is, what consumers want the brand to be may not be what the brand authentically is This causes a gap between the brand’s true intentions and how the brand presents itself—a gap that can cause mistrust with customers

In the Relationship Era, the starting point is the brand The brand must know its authentic self

before it can engage in sustainable relationships with people (This is similar to other relationships in our lives Many would say that in a healthy adult relationship, it’s essential to know yourself and

what’s important to you before finding a good match.)

Marketers who thrive in the Relationship Era are clear on their purpose, the reason for the brand’s

existence A clear, inspiring purpose defines what the brand or company stands for—in addition to financials—and inspires people to not just buy its product, but to join its movement Brands that are clear on their purpose attract passionate supporters and create loyal customers They accommodate customers’ true needs rather than try to convince them that the brand is right for them This clarity of purpose also provides company leaders with a guiding light to make bold decisions with greater conviction

The winners in the Relationship Era will be those who build trust and transactions, creating

sustainable relationships with people

A Model of Trust and Transactions

Because trust and transactions can have different meanings, we start by defining each term The word “transactions” refers to the amount of money a consumer spends on a particular brand relative

to what might make sense for a person to spend in that category

Specifically, we can define “trust” as having three progressively complex components The level of trust in a consumer-brand relationship stems from the consumer’s perspective on the following topics:

Credibility: Does the brand deliver on its promises?

Care: Does the brand understand my needs?

Congruency: Does the brand resonate with my values?

To further explore the concept of trust and transactions, we connect back to the three eras of

marketing:

Product Era: The focus is solely on transactions

Consumer Era: The focus is still on transactions, but the idea of trust enters the dialogue as a

way to persuade people to transact more

Relationship Era: Trust between a brand and consumer is mutual Trust and transactions are

seen as distinct, and both are important

The distinction between the role of trust in the Consumer and Relationship Eras is important In the Consumer Era, trust was seen as a means to achieve an end, namely a consumer buying more It’s a manipulation

One could certainly question whether “trust” is an appropriate word to use in the context of convincing people to do something The word “trust” has simply been misused in marketing, and we now use the word to describe a concept more in keeping with the depth and importance of its true meaning

Similarly, “relationship marketing” is a term often used to describe a technique for learning as much

as you can about people to more successfully sell them things (Can you imagine a friend always asking you lots of questions so he can do a better job of selling you things?!) As with the word “trust,”

we talk about “relationship” in a way that mirrors its use in common language rather than its use in current marketing vernacular

Whatever words are used, the shift from the Consumer Era to the Relationship Era is a fundamental one—beyond a shift in communication, advertising CPM models, or measurement tools It’s an

entirely new way to think about and practice marketing

Although trust is certainly a topic of conversation in marketing today, we believe no one has brought a precise, brand-level focus to relationships This approach covers both the intangible dimension of trust (including credibility, care, and congruency) and the tangible transactions that marketers need for both short- and long-term sustainability

Having reviewed surveys, studies, and literature such as the Edelman Trust Barometer,

ENGAGEMENTdb, Interbrand’s Best Global Brands series, and Saatchi’s Lovemarks, the trust and

transactions model described here illuminates the brand-person relationship in a new way More importantly, the model is matched by an actionable approach to building enduring relationships that

benefits both the brand AND the consumer.

Why Now

The old model is failing

The traditional tools of mass marketing are clearly no longer working Nor is using a variety of

channels with the same campaign-driven persuasion techniques With CMO tenures now averaging about two years, marketing leaders are under pressure to deliver results quickly Many are spending

an exorbitant amount of money attempting to influence consumers to buy more, with less to show for

For many innovative marketers, though, digital marketing offered more than a way to interrupt an experience Some companies began rudimentary, but evolving, dialogues between their brands and consumers As a result, consumers began expecting more information, choice, and transparency from the brands with which they interacted What was previously not possible in the pre-digital world was now expected by consumers—a relationship built on an active dialogue with the brand

Most marketers, however, continued creating advertising campaigns designed to reach, persuade, and elicit transactions through a mix of product and emotional appeal They were trying to use the old model of marketing from the Consumer Era within a new era—an era that calls for a fundamentally different marketing mind-set

In recent years, with the rapid emergence of social media and almost ubiquitous U.S broadband

Internet adoption, relationships between consumers and brands are expanding beyond dialogue to an

“always-on” marketing ecosystem People now interact with other potential customers, friends, and brands within the ecosystem And, with cell phones now serving as in-pocket mobile computers, people have more frequent access to the ecosystem They no longer interact with brands passively, but instead contribute proactively and help shape a brand’s ecosystem

It’s no longer the marketer’s role to run campaign after campaign to persuade and drive transactions Effective marketers now participate in and nurture an ecosystem of touch points with people, building trust with customers that aligns with the brand values

Following are three specific reasons why trust is more important in this new always-on marketing ecosystem:

• People have more choices In earlier times, consumers were typically limited to a handful of

options at their local store Now, the prevalence of retailers, both online and offline, and the explosion of product choices mean that people can be more selective Zappos, for example, offers more than 3 million options for shoes, including at least 1,100 eco-friendly women’s shoe options.4

• People are more vocal about their level of trust in companies and brands, and they now have the ability to be heard broadly When Dave Carroll’s expensive guitar was damaged

on a United Airlines flight, he tried to get reimbursed but failed So, he produced a video called “United Breaks Guitars,” and posted it on YouTube, where it has been viewed more

than 6 million times People are talking about (or, in Dave’s case, singing about) brand

preference, and others are listening Personal recommendations are the most trusted form of advertising.5 A customer with an opinion, positive or negative, can wield tremendous

influence

• People are choosing to buy from companies they trust A recent study revealed that 91

percent of survey respondents purchased from a trusted company while 77 percent refused

to purchase from a distrusted company.6 Now more than ever, people are more focused on trust in their buying decisions

In this marketing environment—the Relationship Era—persuasion is less effective Trust cannot be used as a tool Instead, successful marketers are fostering trust as a fundamental, essential, and independent pillar of sustainable brand-customer relationships

The Death of Marketing as We Know It

Business is abuzz with talk about marketing’s evolution Yet for all the hyperbole, few are offering more than minor adjustments to the old marketing model, many of which amount to little more than better ways to manipulate

Of course, marketing is changing The change, though, is not one of tools and tactics It’s a

fundamental shift in thinking and practice

I often ask people what marketing is all about At best I hear responses like “persuading people” or

“convincing people to buy things they don’t need.” At worst, I get “manipulating” or “lying.” This is the reputation that Consumer Era marketing has given our industry

In the epic Cold War battle of capitalism versus communism, capitalism won But it was not a

complete victory The institution of business has failed to win over hearts and minds Marketing—and business as a whole—is roundly mistrusted, and the Consumer Era has contributed to the problem Advertising is now a $444 billion global business built to persuade and manipulate.7

The good news? Marketing as we know it is coming to a close, and its demise is giving way to

something better

The Birth of Something Better

Actually, “better” might be too general of a word It’s the birth of something deeper, more profound, and more profitable The Consumer Era model of marketing—persuading people to buy—was built on the idea that people must be convinced to purchase, and that failing to do so is a detriment to one stakeholder, the investor

The new model—fostering sustainable relationships—comes as a refreshing and rewarding change

because it benefits several stakeholders simultaneously: employees, customers, suppliers,

investors, and society

In fact, many leading business thinkers now point to data showing companies that focus on multiple stakeholders deliver superior results to each one.8 Here’s how:

Employees

People are clearly at their best when working toward something bigger than themselves When I look

at companies with a clear, inspiring purpose, I’m not surprised to see more dedicated, motivated employees After all, they’re not just working for a paycheck; they’re working for something they believe in

I’m proud to use my own company, imc², as an example We are an amazing, eclectic bunch of

creatives, strategists, technologists, and account managers But no matter how varied our roles, we’re united by our purpose: to advance relationships Many of us see our purpose as something bigger than just marketing We get to create, foster, and deepen relationships every day Not just between clients and customers, but with our vendors, partners, each other, and society as a whole Having the clarity of “why we do it” makes “what we do” all the more rewarding

Customers

During the Consumer Era, marketers focused on convincing people to buy Obviously, this tact

intones an air of superiority (e.g., brand = smart, consumer = not smart) that will inevitably turn

One example comes to mind I recently spoke with the CEO of a major outdoor retailer that made a sustainable decision with its key suppliers As sales slowed in the recent downturn, the retailer

needed fewer products from these suppliers and would have typically just cut back on purchasing In this case, cutting orders would have likely put the key suppliers out of business Instead of allowing trusted allies to go away—and risk breaking the trust of customers who rely on those products—the retailer kept buying, warehousing the extra inventory By protecting its suppliers, the retailer

advanced its relationship with the suppliers and ensured that it would be able to continue to offer these products, further cementing its competitive advantage

Investors

Business schools teach management as a zero-sum game of controlled trade-offs between

stakeholders Managers learn to focus on employees, customers, suppliers, and society only to the degree that it profits investors

That thinking is now changing, and the numbers prove it out The book Firms of Endearment studied

companies (which it calls “Firms of Endearment”) that have a clear purpose and that focus on multiple stakeholders During the 10-year period from 1996 to 2006, the stock of these companies

outperformed the S&P 500 by an average of 8 to 1 (see chart).9 During the latest recession, the S&P

500 fell 25 percent, while the “Firms of Endearment” only declined by an average of 12 percent.10

(Stock returns for “Firms of Endearment” vs S&P 500 from 1996 to 2006 10 Year Period (’96-’06))

One reason these companies fare better may be that they can spend less on advertising When a brand has engaged, loyal customers who believe in its purpose, it no longer has to spend precious dollars on campaign after campaign to convince people to buy The brand has entered into a

sustainable relationship

Society

One of the greatest ideological shifts in our new model of marketing is that business no longer must choose between building profits and bettering society In the Relationship Era, focusing on both is not

just possible, but necessary People are aligning with brands that follow their same ideals or give them new movements to join Brands that don’t follow a clear purpose that benefits society will

eventually lose out to those that do

One example is Interface, makers of industrial carpet tiles In 1994, founder and CEO Ray Anderson committed his company to manufacturing their carpets sustainably by 2020, taking from the earth only

what can be renewed by the earth The initiative was called Operation Zero Since 1995, Interface

has reduced greenhouse gas emissions 82 percent in absolute tonnage Meanwhile, sales increased

by two-thirds and profits doubled.11

Interface discovered that by focusing on bettering society, it had created a superior business model Profits are up, costs have actually gone down, product innovation and quality is at an all-time high, and Interface employees are galvanized behind the goal of absolute sustainability

By its very name, the Relationship Era suggests that marketing is no longer about simply persuading It’s about fostering sustainable relationships—not just with customers and investors, but with

employees, suppliers, and society as well

The new model is more than a roadmap for winning in the Relationship Era It truly is the birth of something better

Chapter 2: The Brand Sustainability Map

WE’VE INTRODUCED THE RELATIONSHIP ERA AND A DIFFERENT MODEL OF MARKETING THAT CONSIDERS BOTH TRUST AND TRANSACTIONS TO BE CRITICAL IN BUILDING SUSTAINABLE RELATIONSHIPS BETWEEN BRANDS AND PEOPLE TO ASSESS AND MEASURE HOW BRANDS FARE IN THIS NEW MODEL, WE CREATED THE BRAND SUSTAINABILITY MAP, WHICH EXPLORES

THE TERRITORY OF RELATIONSHIPS BETWEEN BRANDS AND PEOPLE.