Collapse of Civilization Makes Marketers' Jobs Harder

Political situations come and go but trust is the foundation of civilization itself. So I was genuinely shaken to see a report from the Edelman PR agency that trust in U.S. institutions fell last year by a huge margin – 17% for the general public and 34% for the “informed public,” placing us dead last among 27 countries. All four measured institutions (business, media, government, and non-governmental organizations) took similar hits, although government fell the most.

You won’t be surprised to learn that concerns about fake news and social media are especially prominent. What’s less expected is that trust in traditional journalism actually increased in the U.S. The over-all decline in media trust resulted from falling confidence in news from search engines and social media. Similarly, world-wide trust increased in traditional authorities such as technical, academic, and business experts.  So there are rays of hope.

Digging deeper, the sharp fall in U.S. trust levels follows two years when levels were exceptionally high. The current U.S. trust level is roughly the same as the four reports before that. Maybe you shouldn't head for that doomsday cabin quite yet.

Still, other reports also show tremendous doubts about basic questions of truth. A Brand Intelligence study comparing brand attitudes of Democrats vs. Republicans found that eight of top 10 most polarizing brands were news outlets. World-wide, 59% of people told Edelman they were simply not sure what is true and just 36% felt the media were doing a good job of guarding information quality.

The social implications of all this are sadly obvious.  But this blog is about marketing. How can marketers adapt and thrive in a trust-challenged, politically-polarized world?

• Protect privacy. Consumers can be remarkably cavalier in practice about protecting their data: this McAfee report found 41% don’t immediately change default passwords on new devices and 34% don’t limit access to their home network at all. But they are adamant that companies they do business with be more careful: Accenture studies have found that 92% of U.S. consumers feel it’s extremely important for companies to protect their personal information while 80% won’t do business with companies they don’t trust. Similarly, a Pega survey found that 45% of EU respondents said they would require companies to erase their data if they found it had been sold or shared with other companies. 

• Personalize wisely. Accenture also found  that 44% of consumers are frustrated when companies don’t deliver relevant, personalized shopping experiences and 41% had switched companies due to lack of personalization or trust. So there’s clearly a price to be paid for not using the data you do collect. Similarly, an Oracle report found 50% of consumers would be attracted to offers based on personal data while just 29% would find them creepy.  In fact, consumers have a remarkably pragmatic attitude toward their data: 24[7] survey found their number one reason for sharing personal information is to receive discounts. This has two implications: ask consumers whether they want personalized messages (or any messages), and be sure the value of your personalization outweighs its inherent creepiness. 

• Use trusted media. Consumers’ attitudes towards media in general, and social media in particular, are complicated. We’ve already noted that Edelman found growing distrust in online platforms. Other studies by Kantar and Sharethrough found the same. But consumers still spend most of their time on search engines and social media, which GlobalWebindex found remain by far the top research channels. Yet when it comes to building awareness, a different GlobalWebIndex report found that social ranked far behind search engines, TV, and display ads. Further muddying the waters, social and ecommerce companies (Facebook, Amazon, and eBay) topped NetBase’s list of most loved brands while Google ranked just 29th. But love isn’t the same as value: a LivePerson survey of 18-to-34 year olds – presumably the most enthusiastic social media users – found most would delete social apps from their phones before they'd give up practical apps for banking, ride-sharing and shopping. Similarly, The Verge found that Amazon and Google were significantly better liked and trusted than Facebook or Twitter. Taken together, this suggests that marketers need social channels for scale but can’t rely on them for credibility. Indeed, that’s precisely the conclusion of this Trusted Media Brands report about branded video.

• Consider brand safety. The problems with social and display channels extend beyond general mistrust to actively offensive environments. GumGum found that 68% of brands knew their ads have been placed in objectionable environments, with fake news, divisive politics, and disasters heading the list. A Dun & Bradstreet report on programmatic B2B ads similarly found that 66% of brands have found brand safety increasingly important.  Ad fraud is also a major concern – the two are related because they both reflect brands’ loss of control over their ad placements. This Forrester report on mobile advertising found 69% of marketers felt at least 20% of their budgets were exposed to found mobile ad fraud. Yet all three studies found marketers were plunging ahead with just limited efforts at brand safety and fraud prevention. In a world where consumer trust is tenuous to begin with, this is a very high-stakes gamble.

• Be careful about politics.  Edelman found that 64% of people want business CEOs to lead change rather than waiting for government to impose it. Sprout Social reported a similar finding:  65% of U.S. consumers felt brands should take a stand on social/political issues and 59% felt CEOs in particular should step in. But Euclid found the opposite: 78% said brands should avoid making political statements. Even more extreme, Bambu found just 2.3% of consumers said posting political content would make them more likely to buy from a salesperson while 34.9% said posting political content was a deal breaker, regardless of whether they agreed.  Still, the real danger is taking a position the customer dislikes: Bambu, Euclid and Sprout all found consumers are likely to boycott firms based on their positions. Sprout noted some compensating gain from people who agree but the net benefit is questionable at best: people are slightly more likely to praise a brand when they agree (28%) than criticize when they disagree (20%). But fewer will recommend it (35%) than warn friends and family (38%) and, most critically, fewer will purchase more (44%) than purchase less (53%).   In short, the data here are wildly conflicting: people want businesses to lead but they’ll punish behaviors they don’t like as often as they’ll reward choices they agree with. Of course, widely popular positions are still safe but many issues today have large numbers of people on both sides.  And remember it’s still possible to annoy everyone: Brand Intelligence found that Democrats, Independents, and Republicans all had Diet Pepsi (Kendall Jenner commercial, presumably) and Diet Mountain Dew (I don’t know why) on their most disliked lists. The ultimate result is probably that business leaders can justify being as active or inactive as they personally prefer.

So there you have it. Assuming we avoid complete social collapse, marketing in today’s polarized, anxiety-ridden world poses unprecedented challenges. Ironically, the loss of trust is happening at the precise moment when physical products are being replaced by trust-based services such as subscriptions and automated recommendations. The stakes couldn’t be higher.  Choose carefully and good luck.

I Want My LTV Shirt!

I received my custom-printed “LTV RULES!” t-shirts yesterday. Naturally, you buy these over the Internet. The customer experience was painless at www.designashirt.com and I’d highly recommend them.

What’s interesting from a Client X Client point of view is that the company offered a $.50 discount on each shirt if you add their logo. Maybe I shouldn’t be too impressed at their cleverness in recognizing that the product represented an advertising opportunity, since many of their shirts are used as marketing promotions to begin with. Still, it’s a classic example of identifying a “slot” (space on a shirt you printed). converting it into a customer experience (if your logo were not on the shirt, no one would not know you produced it), and attaching a value to it (paying the buyer $.50 per shirt).

How did they come up with $.50? I don’t know and rather doubt it’s based on very precise analysis—after all, it’s tough to measure response to such a promotion. Could they sell the space to someone else, perhaps for more money? Quite likely: many marketers would welcome the opportunity to reach such highly targeted audiences, and many of the shirt buyers would gladly trade a price reduction for adding a logo or two. If the match were made correctly, there could be a mutual halo effect between the organization and the advertiser.

Anyway, I’m looking forward to enjoying my shirts, and will definitely send one to the colleague I mentioned yesterday who didn’t want to run his company by LTV.

BAI Banking Strategies Article Shows Importance of Managing Complexity

Last Thursday’s post on ad hoc analytical systems prompted an interesting set of comments about overcoming product-based organization at banks. As it happens, the BAI’s online Banking Strategies magazine published a related article last November, called Uncovering the Hidden Cost of Complexity.

The article starts by suggesting that customer focus causes the product proliferation that makes good customer experiences so difficult to create: “As banks became more customer-focused over the last decade, they expanded their product set rapidly.”

This is an intriguing thought although it seems like blaming the victim for the crime. But after describing the problems caused by complexity, the authors move in the opposite direction. “The implication is not that banks should limit the variety of options to their customers, but that they should do the following” to ensure complexity adds value:

- Understand what complexity is valued by customers
- Quantify the hidden costs
- Identify the drivers and impacts of complexity
- Design processes to handle variety
- Innovate around advantages

You can read the article for the details. I’m not sure whether complexity is a problem in its own right or just a symptom of other issues. But I do agree with the authors' fundamental point that systems and processes must be designed to deal with complexity effectively. And I definitely agree with the authors’ focus on the quality of customer experience as the primary goal of each business. Any approach that starts from that premise can only lead in a good direction.

Overcoming the Real Roadblock to Customer-Centric Management

A marketer who understands the need for customer-based management told me yesterday that the biggest obstacle to adoption is the intense product orientation of her business. That sounded familiar: I heard exactly the same thing last December at the National Center for Database Marketing in December (see my December 13 post).

Her comments were a useful dose of reality. It’s easy to forget that lack of customer-centric technology and skills are not the main obstacles to customer-based marketing. And, even though I can give you a detailed explanation of why product-centric structures are doomed to collapse, that doesn’t necessarily convince people to adopt a customer-centric approach as the alternative. So I do have to try harder to explain how companies will benefit from the transition.

One positive bit of news is that online marketing operations seem generally more open customer-centric than traditional channels. Maybe this is because the technology itself is so often based on customer profiles. Maybe it’s that initial online ventures often resided outside of the traditional product organization. Maybe it’s that the “free” nature of incremental online messages removes the cost constraints of other media, and thus exposes the need for someone to control the number of messages sent to customers. Whatever the reason, online marketers are more likely to function as gatekeepers of customer access. This puts them in a position to coordinate offers so they meet the needs of customers, not product managers. Maybe the resulting successes will lead other channels to adopt the same approach.

Do New Locations Dilute the Starbucks Brand?

I am not a big fan of Starbucks: the lines are too long, the made-up names are pretentious, and waiting to pick up your coffee from that little table is stressful (when will it come? which one is mine?). But Starbucks was on my mind yesterday as I was thinking about brands and customer experience. In particular, I was wondering whether the Starbucks brand can be meaningfully extended outside of Starbucks stores. Sure I can buy Starbucks-brand coffee at the grocery for home-brewing, at outside locations such as airports or hotels, or in offices through catering. But am I getting the Starbucks brand experience?

These extensions would make sense if the basis of the brand were the superior taste of the coffee itself. Some people would argue it is. But I think the foundation of the Starbucks brand is the in-store experience—a comfortable, civilized atmosphere vaguely similar to a European café (or to Americans’ idealized image of a European café). Maybe drinking a cup of Starbucks while anticipating the misery of today’s air travel will trigger a pleasant memory of more congenial circumstances. But it’s more likely to dilute Starbucks’ brand by associating it with something very ugly. It’s easy to understand why Starbucks would want the incremental revenue of such sales. But you have to wonder whether they’re harming themselves in the long run.

The Starbucks situation also illustrates yesterday’s point about the difference between customers of a brand and customers of a company. People buying at a Starbucks store are both. But someone pulling coffee from a Starbucks-labeled urn during a break at a conference is a customer of the Starbucks brand only. The company they have purchased from is the conference organizer.

Several brands are involved in that simple caffeine injection: Starbucks itself; the conference center that chose Starbucks; and the organizer that chose the conference center. Each picks its suppliers with an eye to associating the experience the supplier provides (i.e., its brand) with their own. This means that every participant is to some degree at the mercy of the others: a bad experience with the coffee will harm all their brands regardless of who is at fault. Thus each participant needs to pay attention to how the others can be expected to perform before agreeing to do business.

As it happens, this morning’s (The New York Times www.nytimes.com) had an article on Starbucks competing with McDonald’s for breakfast customers. (“The Breakfast Wars”, Dining Out, The New York Times, January 10, 2007). It’s an interesting pairing: like Starbucks, McDonalds is really more about a branded experience than the food itself. McDonalds is also a good example of yesterday’s comment about offering different brand faces to different customer segments. Their ads aimed at kids, teens, and adults show very different approaches to the same general theme of McDonalds as a fun place to visit.

But most of the article is about Starbucks. It is focused primarily on the inconsistencies that Starbucks has traditionally tolerated in its food offerings. (The premise of the article—that Starbucks is trying to reach the quality of McDonalds food—is a brutal indication of just how bad Starbucks’ current food must be.) Of course, consistency is the literal definition of quality, and inconsistencies abound: in food from store to store, between the coffee and the food, and between the food and the store ambiance. Clearly Starbucks needs to improve its food to protect its brand. And, once it improves the food in its own stores, it needs to find a way to ensure that food at external locations is consistent with its new in-house standards. Good luck with that.