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

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

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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 it. It’s clear that digital has a profound impact on relationships between brands and people. It’s more than another channel that marketers must consider when optimizing their spend. In fact, digital channels have caused significant changes to the fundamental ways that consumers interact with brands, their expectations of brands, and ultimately the role of marketing in today’s world. In the past, marketers pushed messages to consumers, disrupting their TV shows and inserting themselves into newspapers and magazines with one-way advertising. With the advent of digital marketing in the ’90s, many marketers simply saw a new way to interrupt consumers and began searching for the best mechanisms to barge into their online experience. 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. [...]... do? • What about the concepts presented here—including a new era in marketing, the Brand Sustainability Map, and Winning in the Relationship Era—resonates most with you? What doesn’t? We will continue to foster dialogue on winning in the Relationship Era Several things you can look for in the future: • Additional research using the Brand Sustainability Map We’ll both broaden the list of industries and... implications for marketers and brands This initial research and exploration formed the foundation for Doug s thinking on the rise of the Relationship Era and the new marketing model described in this book Beyond the challenge of leading an agency in this exciting time in the history of marketing, Doug s passions are his wife and children; raising money on and off his bike for the National MS Society; the Conscious... plot in particularly extreme points on the map, all with the intent of fine-tuning the approach and demonstrating the model s value Results from the initial research are included on the following pages to provide context and examples of how brands are currently faring in the Relationship Era Some brands are already clearly winning, while others have significant work to do to succeed in this new era The. .. WILL WIN BIG WHAT SPECIFICALLY WILL BE BEHIND THE BREAKTHROUGH SUCCESS OF THE TRIUMPHANT BRANDS IN THE RELATIONSHIP ERA? Principled action Following are five principles for breakthrough success in the Relationship Era, based on ideas that are already being applied in market With each principle, you will find examples of companies and brands that embody each principle and map to the Sustainable Relationship. .. and stronger relationships Chapter 4: Getting Involved This book started with a question in essence, it asked, “Is there a better path for marketing? ” I provided a perspective on the new era in marketing, introduced a way to measure and plot brands based on the sustainability of their customer relationships, and presented five specific principles on how to win in the Relationship Era I INTRODUCED WHAT... the brands that flourish over time? • How has the practice of marketing changed? What will be most important to successful marketing in the future? • How would you define trust, in the context of a relationship between a brand and a person? What makes for a sustainable brand relationship? • Given the changes to the practice of marketing, what specifically should brands focus on? What will the winning. .. 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... other leading brands appear on the Brand Sustainability Map, visit www.relationshipera.com Chapter 3: Breakthrough Success in the Relationship Era We’ve introduced the Relationship Era, a new era in marketing where the most successful marketers build sustainable relationships—ones that have high levels of both trust and transactions We examined the Brand Sustainability Map as a way to understand the. .. marketing, using a variety of tools to reach consumers In the Relationship Era, that idea of tapping into multiple communication vehicles holds, but the orientation of these tools is subtlety—and meaningfully—different Marketers who win in the Relationship Era employ a variety of vehicles, including social, mobile, direct, and mass marketing, all working together to create interaction that improves relationships... untrusting customers buying their products They may advertise heavily, discount, or continually invent new products that add little customer value but enable them to maintain mindshare • Limited Relationships: Brands with relationships in the lower-left quadrant may be entering a market or may be struggling to gain traction Clearly, limited relationships between brands and people are not sustainable Placing . 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. 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. 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

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