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Brand Building

The New Era Of Brands And Customer Relationships

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A full decade into the 21st century and we have witnessed radical transformation and creative destruction of nearly every aspect of the marketing toolbox. Marketing – as we have practiced it over the past 50 years – is obsolete.

Many marketers (and their advertising agencies) still cling to mass communication as the foundation or backbone of their brand building efforts. In the new era of big data and powerful technologies for connecting with customers, marketers must shift their focus from building brands to building customer relationships.

Never before have marketers had such powerful technologies at their disposal to connect and build lasting customer relationships. And never before have customers / consumers / users been able to interact so deeply with brands, and each other in their communities, to influence the very development of the products and services they engage with.

Yet despite this sea change, most marketing organizations are structured pretty much the same as they have always been. Many have not fully grasped the paradigm shift from building brands to building customer relationships. This may explain the short tenure of most CMOs.

To succeed in the interactive digital age of Big Data and transformative technology, marketers much shift their focus from counting transactions to maximizing the lifetime value of their customers. This means profitability of brands will be less important than the profitability of customers.

Planting Seeds And Harvesting Customer Relationships

What separates an old-school marketing organization from a customer-driven organization is one is organized around activities that sell brands, while the other is designed around activities that serve customers and customer segments. In these transformed marketing organizations, marketing communications is nearly a real-time dialogue, hyper-targeted to thinner slices of customer segmentation.

Enlightened marketers have unimaginable access (from abundant sources) to rich customer data, enabling them to be more deliberate and proactive in their tactics for making a customer driven strategy pay off.

But many are still organized around the principle of selling rather than serving.

Serving customers in highly relevant ways requires you to know them and their behavior essentially on a personal level. Competitive advantage is not about features and functions in ever-cheaper products, rather it will be based in serving customers in ways that are unexpected and highly valued.

Customer driven marketing organizations are structured to engage narrow segments with two-way communications designed to build trusted relationships through products or services that customer’s will value most at any given time. The customer is at the center of the universe with brands organized around them rather than the conventional model of customers organized around the brand.

Keeping Score In A Whole New Ball Game

It’s a cliché to say you can’t fix what you can’t measure. Marketers are obsessed with ROI and their organizations are rewarded or punished based on their ability to deliver the desired financial result. Indeed, metrics are important. However in the shift from marketing products and brands to actively serving customers / consumers / users, there are different metrics that will determine marketing effectiveness.

In customer-driven marketing organizations the focus is on customer profitability rather than product profitability. Current sales are less important than the lifetime value of the customer. The value (equity) of the brand is less important than the value of all the customers served. And finally, market share (which only measures current competitive sales) is less important than customer equity–which is a measure of the enterprise’s long-term competitiveness within the segment and the category.

Dismantling The Silos

Making the shift from a brand-driven organization to a customer driven organization will require the traditional silos of organizations be dismantled. That is difficult to accomplish and it only happens when the shift is driven from the top down. Overcoming the entrenched interests of various parts of the company is the biggest impediment to this level of marketing transformation.

The fix is already in. The train has left the station. The shift is underway and if your marketing organization doesn’t begin to act on it, you will see your competitive advantage blown away in the winds of change.

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5 Comments

Hilton Barbour
Twitter:
on August 27th, 2013 said

Hard to argue the points in this post. The problem, as you allude to in the final paragraphs, is more systemic than just marketing. Marketing takes its lead from the CEO who is often swayed by a board (and shareholders) more interested in quarterly results – regardless of the cost. Short-term objectives dictate short-term thinking and actions. Of course, that’s a gross simplification but certainly reflective of much of the activity we see in the marketplace. Dismantle the stick of meeting quarterly results and remove the bonus carrot for driving quarterly earnings…and you’ll be on your way. Great writing.

Tony Monda
Twitter:
on August 27th, 2013 said

Thomson, I always enjoy your posts. People buy brands like investors buy stock, they look for payback now and in the future. With brands, that payback is future performance in products and relationships. It is directly to your point of customer driven marketing. Brand communication today is a two way street. Not only must brands listen, they must be responsive and let customer input drive corporate actions including design and service. Successful 21st century firms get it while others are are still marketing like it is 1950 because they have always done it that way.

Konstantinos Giamalis
Twitter:
on August 28th, 2013 said

Great article, Thomson. I agree with you, this is what we call brand engagement, a system of interactions between the customer and the brand, which provide a unique experience and enhance the customer’s loyalty.

Joe McFadden
Twitter:
on August 28th, 2013 said

Tearing down those silos is a lot easier said than done but you have try. One hand needs to know what the other is doing and each department touches the customer in some way. Everything you do, internally and externally, impacts the customer experience. If you want a most customer centric organization you need to understand how each team fits into the big picture.

Maciej
Twitter:
on August 29th, 2013 said

I think many of these relationships are forming through social channels as well which is why it is so important for companies to pay attention to their online voice.

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