Relationship Marketing Myopia

In the early days of marketing size, the focus of businesses was very much on successful transactions.  The aim of marketing departments was to grow sales.

Today, that focus has changed.  The market is mature. New customers can be hard to come by and expensive to obtain. So the focus of marketers has shifted to creating and maintaining relationships between a business and its customer base.  This is obviously based on the tenet: The longer you keep a customer, the more you earn from them.

This relationship focus has seen the rise of social media as a marketing tool.  Social media in marketing is an unproven and likely poor sales channel. Businesses should not see it as an aid to successful transactions. Social media is about developing relationships, creating brand communities and moving target consumers from prospects to close business partners.  Social media is also about weaponizing your current customer based as part of your marketing team; through the development of E-WOM (electronic word of mouth).

So much of marketing today is about relationship building.

Piercy (1999) warned that businesses need to avoid relationship marketing myopia; the naïve belief that every consumer wants a deep relationship with their suppliers.  This is why I often laugh when necessary but embarrassing products have social media accounts. For example, who wants to become part of the John Smith haemorrhoid cream community?

Piercy goes further and states that different consumers want different forms of relationship with their suppliers.  Piercy states that to ignore this as a reality is an “expensive indulgence”.

In Piercy’s model, there are four types of relationship that consumers have with a business:

  1.  Relationship seekers:  These consumers want long and close relationships with a supplier.  So a local authority will likely want a close relationship with an ICT supplier.
  2. Relationship Exploiters:  These consumers will grab at all free services and offers provided.  They are also fickle and will move their custom when they feel like it.  They may well be ‘zombie customers’; customers who will cost more to service than you will earn from them.
  3. Loyal Buyers:  These consumers are happy with a long-term relationship but they do not want a close relationship with their suppliers.
  4. Arms-length Transactional Buyers:  These consumers actively avoid long-term relationships with suppliers.  This may well be transactions based on price, technical specification or innovation.

What these four categories highlight is that relationship strategies for marketing MUST be based on market segmentation.

Investing in relationships with profitable relationship seekers is a good thing. Relationship development with exploiters and transactional customers is a waste. You need to develop different marketing strategies to suit different relationship needs.

Some argue that there is a link between customer loyalty and customer satisfaction.  surprisingly there is little evidence to support this. As I have often written customers are fickle and so is their loyalty. What is much more likely is that there is a link between customer dissatisfaction and customer disloyalty.

In many markets, such as utility provision and retail banking, there is significant customer inertia.  Who reading this article has been a customer of their bank since childhood?

Today businesses spend billions on customer relationship management. But is a radical rethink needed?  Should we be looking at managing customer relationships with our business or should we be giving customers options as to the type of relationship on offer? Is it time for the customer management of relationships?

Customer management of relationships  represents a new power balance where customers choose the relationship they want based on:

  • What they are interested in,
  • what information they want,
  • what levels of service they want,
  • what way they want to communicate.

In this process you need to recognise the real value of relationship development tactics and target consumers who are interested in those relationships.  For example, what is the point of a loyalty card scheme if everybody can have one regardless of their level of loyalty?

Building a Brand Community

I am often accused of misunderstanding the role of social media in the modern marketing world.  I refute this allegation.

It is clear that social media is an important promotional tool in the armoury of marketing professionals but I am realistic about it’s attributes.  I have seen presentation after presentation over recent years claiming all kinds of miracles that will happen if marketers prioritise social media.  In particular, any claims that the use of social media alone will massively increase sales and profits must be taken with a strong pinch of salt.

In marketing you need a mix of push and pull marketing.  Social media alone is all pull with no push. So the use of social media should be focused on those attributes where it strengthens your position and not for reasons where it either weakens your position or ineffective.

Research has shown that social media is a poor method for increasing sales.  It strengths lie elsewhere.

Social media is good for micro-targeting (as long as you have good access to demographic data and strong algorithms).  It’s a good signposting tool to direct consumers to websites and other portals. It is good for developing ‘electronic word of mouth’ and it can be used as a customer retention tool.

However, used in isolation, social media will not drive sales and it will not build a brand or brand community.

Social media should be treated as just one communication channel amongst many. Putting all your eggs in the social media basket is unlikely to maximise your communications effectiveness.

In particular, social media on its own will not build and sustain a brand.

In The Definitive Book of Branding, comments from brand managers the following quotes are given about the creation and impact of brand communities upon marketing:

“Community is becoming the marketing plan”

“Community is the customer experience”

“Community will be one of the top business drivers”

But are these statements simply an expression of the latest fad amongst marketing and brand managers?

Building a brand community requires subtle strategies and tactics. Expecting social media alone to create that community is a distinctly unsubtle approach.

Building a brand community requires a strong understanding of the most appropriate communication channels and their respective strengths and weaknesses.

Building a brand community demands that brand managers loosen their control over both imaging and messaging.

The most important aspect of a brand community is developing consumer loyalty. Take these ‘brand fan’ comments about Apple:

“The mother company”

The (Apple) brand is not based around the machine but by a certain way of thinking”

It is clear that Apple have been successful in deriving emotional commitment from its loyal customers.  Such commitment is hard won and hard to shake. However, it takes time to build and as a result requires commitment to a long-term strategy.

Emotional commitment drives customer retention far better and for longer than transactional loyalty.

Transactional loyalty comes through tools like loyalty rewards and points, exclusive offers to existing customer groups, etc.  Creating transactional loyalty can cause real problems in assessing returns on investment.

Transactional loyalty will NEVER be as sticky as emotional loyalty and therefore it will never create as strong a brand community as emotional commitment. If you are solely relying on transactional loyalty, you will not retain customers if they perceive a better offer elsewhere.

The create loyalty through emotion means creating a shared identity between the buyer and the brand. You need to make your brand a part of the consumer’s identity and the consumer becomes part of the brand identity.  You are creating a shared identity between the buyer and the brand.

Harley Davison has a clear understanding of both its brand and its customer base.  It has created such a shared identity to such a level that the Harley Davison Owners’ Club has over one million members.

To create a brand community you must create lots of bonds between the user and the brand.  You also need to create bonds between brand users.

Many new brands are trying to create communities from the outset e.g. AirBnB.

AirBnB is a place where what is inspiring in every person, in every home, in every country on the planet, can be shared”

AirBnB created a community by building its own community forum rather than relying on social media. It has focused on building it’s own community linkages to:

  • Build brand advocacy
  • Build word of mouth communication between brand users
  • Making the customer the brand promoter.

Customer advocacy is often described as the best marketing that exists but it is not easy to create. In building loyalty it is better to have 100 people who love your brand than one million who kind of like it.

To build a brand community, you need to create experiences that make customers love the brand.

You need customer feedback and co-creation (allowing consumers to mould the brand) and both these activities require a rapid and tight feedback loop.

Community building necessitates improved customer experience through allowing community members to swap practical tips and to get emotional support from one another. You get consumers to improve each others experience and thereby creating trust in the brand.  You need a community to be sticky, you need to create ‘social glue’.

The following is a recipe for ‘social glue’:

  1.  Does the product/brand satisfy a real need? Through the brand do consumers have more fun, get more done, get support?
  2. Does the community have a  clear and anticipated purpose?
  3. Is it clear who belongs to the community and who doesn’t?
  4. Do community members feel that they belong?
  5. Is there interaction between members?
  6. Do links between members exist beyond the original reason for joining the community
  7. Is there common purpose between members of the community?
  8. Do members feel responsible for each other and the community?
  9. Are roles, responsibilities and jobs carried out by members of the community?
  10. Is the community self-policing? Does the community eject disruptive members by itself?
  11. Does the community create its own guidelines, rules, norms and behaviours?

Communities are sticky through their people and how they interact with each other.  Community is a contact sport. Interaction leads to bonding; bonding leads to mutual responsibility; mutual responsibility leads to mutual support; which in turn creates social glue.  You need to build a community commitment curve and ramp people up it.

Social media tools are useful for building communities BUT a community is more than social. The terms social media and community are not interchangeable.  Social media forges engagement but real community only comes through building your own platform.

Brand communities:

  • Have members
  • Offer a range of commitment actions (a commitment curve)
  • Members materially contribute to the community
  • Members have mutual responsibility
  • There is rich ‘two-plus’ engagement
  • Members inter-relate
  • There are horizontal relationships between members
  • Are of the members, by the members and for the members
  • Demand slow, steady sticky growth

Social Media:

  • Has fans and followers
  • Has low commitment actions
  • Has updates
  • has likes/comments
  • Relies on broadcast communication
  • Relies on conversations
  • Has vertical integration with a brand
  • Can have rapid growth but there is no set formula for developing social media virality.

So if you invest in building a community, how do you measure your return on that investment:

  1. Through revenue growth from increased loyalty and community advocacy (‘super fans’)
  2. Through cost savings.  For example, if you contact Microsoft customer services you are asked whether a solution can be found from within their community before being put through to customer service staff.
  3. Through innovation and co-creation of the brand e.g. Ugg gets fans to assist in the design of footwear and community members can get work experience at the brand.

To build a brand community you need to identify and communicate things which are shared. You need to know what unites community members.  You need to create a brand manifesto.

Then you need to enable customers to interact, interact and interact.

The best approach is to build your own platform.  Second best is to use existing platforms such as Facebook groups or white label tools such as Jive.  And, of course, you could always look to see if communities already exist and have developed without your input.

Think before jumping on the social media bandwagon

Last Thursday, I attended the regular small business networking meeting arranged by my local branch of the Federation of Small Businesses.  By the end of that meeting, I was fuming.  The focus of my anger, that evening’s talk entitled Five Things You Must Do Now on Social Media.

I was angry at the length of the talk; at these events contributors are supposed to give presentation of around 20 minutes, the speaker talked for over an hour.  However, I was even angrier at the content of the presentation.

The speaker, like me, was a member of the Chartered Institute of Marketing.  Yet in her talk on the latest hot topics in social media marketing there was not a single mention of strategy, of objectives, of monitoring activity or of return on investment.  There was also no mention of the potential hazards of using social media as a marketing communications channel.

I therefore dug out my textbooks and looked at what experts in digital marketing had to say on the subject of social media.  I referred to Dave Chaffey’s book Digital Marketing (Dave also runs the excellent Smart Insights website) and the SOSTAC method advocated by PR Smith.  These two individuals are probably the most renowned academics working in the field of digital marketing.

PR Smith uses the acronym SOSTAC to define the process of creating a digital marketing plan.  In fact, it is such a useful system of planning development, it can be used across marketing planning.  It stands for Situation, Objectives, Strategy, Tactics, Action, Control.

Social Media is a single communications channel.  It is a tactic not a strategy.  It seems that some operating in the field of social media marketing have forgotten this and treat their speciality as an overarching marketing strategy.  It isn’t and it should not be treated as such.  By all means use social media marketing in your business but that activity should be the result of a careful analysis of your businesses market position and the attributes of your target audience.  So,if I was promoting a fashion brand to teenagers, social media would be a priority communications channel and I would likely want to invest heavily in it.  If I was promoting stair lifts to pensioners, I would prioritise more traditional forms of marketing communication.  It seems some marketers operating in the field of social media have developed a myopic view of communications which may be of little use to many small businesses.

Then there was the title of the talk, “Things you MUST do”.  Sorry, but that is plain wrong.  It infers that the activities MUST be carried out by all businesses.  Surely a better approach is to carry out those activities which best fit your business model, your client base and your available resources.

The speaker had previously worked for a major motor car manufacturer and had now set up their own social media consultancy.  The talk was to small businesses most of whom were either one-man-bands or had fewer than five employees.  There seemed to be little recognition from the speaker as to the resources available to the speaker’s former employer than to the attending audience.

I will quickly list the five things the speaker highlighted:

  1. Using Live Video
  2. Becoming a LinkedIn all-star
  3. Asking for emails
  4. Spending some money as organic reach was dying on social media sites
  5. Getting creative.

The idea that small businesses would be able to produce suitable Live Video seemed a stretch.  Having organised press conferences and media events, I can attest to how difficult it can be to produce successful content on a recorded basis, let alone live.  Sometimes the most confident CEO can turn into a blathering idiot the moment a camera is thrust in their face or a microphone pushed under their nose.  If you are planning such an event, it is always best to have someone with sufficient media training to run the event and to prompt nervous participants.  In my old career, I worked with the likes of Lynn Faulds Wood, John Stapleton and Carol Smylie.  These are broadcast journalists and presenters who could expertly direct those not used to such exposure through an interview.  This is an important skill which many small business people will not have.

The live video idea was mentioned for things like product demonstrations and launches.  It is always worth remembering Murphy’s Law; if anything can go wrong, it will.  I have seen hilarious examples of content from product demonstrations that have gone horribly wrong.  At least those will be remembered.  What is far worse are dull, boring demonstrations which do not stick in the mind.

Live video content is not as easy as it appears, particularly if you are doing an activity such as product demonstration.  Channels such as QVC tend to use employed product demonstrators to give a professional gloss to product launches and ‘how to guides’.

Dee et Al. (2007) argued that social media was increasingly important in influencing consumer perceptions about brands.  They argued that there was a big difference in what was appropriate content depending on factors such as age demographics, gender and the type of product.  They found very few product types which had popularity in all market segments e.g. movies, cars and restaurants.  In short, you need to carefully analyse your target customer segments and design appropriate content.

Microsoft, who part own Facebook, increasingly expect businesses using that platform to pay for the promotion of commercial content.  They are also adamant that consumers must be able to interact with the brand content.  They advise:

  1.  You must understand your customers motivations for using social media.  That content must match the topics they already discuss and match the life stage of those networking.
  2. You need to express yourself as a brand.  A logo and a brand name are not enough.  You have to develop a brand personality which includes a side of the brand not normally seen.
  3. You must understand the consumers motivations for the use of social media and mirror motivations.
  4. You need to create and maintain good conversations.  Those discussions must resonate with the audience and once started a conversation must be followed through. I follow a number of small business networking groups on twitter.  the bad ones are where people end up tweeting about their dogs, the weather or their holidays AND DON’T STICK TO THE SUBJECT OF THEIR BUSINESS.
  5. You have to empower participants.  Let those who network with you express themselves through your brand.  This could be through the use of apps or widgets
  6. You need to identify and nurture online brand advocates and use reputation management tools.
  7. You have to follow the golden rules of Social media
    1. Behave like a social networker
    2. Be creative
    3. Be honest
    4. Be individual
    5. Be conscious of your audience
    6. Update regularly

One firm which is at the forefront of the use of social media for marketing is Ugg, the sheepskin boot manufacturer.  They identify brand fans and give them opportunities to work for Ugg.  They use celebrities as brand advocates and they pay a number of bloggers and vloggers to develop a brand community.  These bloggers don’t only write about Ugg products but they discuss wider ‘youth’ issues such as music and wider fashion trends.

Ugg are very careful that the brand advocates match their brand image.  They were furious when Oprah Winfrey promoted their boots on her television channel as she was outside their young fashion-conscious demographic.

In Digital Marketing, Dave Chaffey discusses the advantages and disadvantages of using social media to develop viral marketing campaigns.

He argues that social media, used correctly, can be a relatively inexpensive viral agent to speak to a large audience and that it can be a good tool for developing customer referral through electronic word of mouth.  However, he warns that for that activity to be truly productive you already need to have the ear of major market influencers.  This can be evidenced in Ugg’s use of celebrities and paid bloggers.

Chaffey also argue that social media can be a high risk marketing communications strategy.  It requires significant initial investment to develop the ‘viral agent’ and to seed the communications programme.

He also warns that many users of social media see the use of portals such as Twitter for commercial purposes as a misappropriation.  People use social media to socialise and during such times do not want to be pestered by brands.

It is often difficult to develop appropriate content for social media channels.  It has to engage the audience and encourage sharing.

Then there is the need to seed the viral activity through the use of key influencers,  This can backfire.  For example, several sports personalities have received criticism when they have promoted products through social media without mentioning that they are being paid to do so.

If a piece of social media goes viral, it can break one of two ways.  It can generate a positive reaction or it can be negative.  It is extremely difficult to judge which of these two paths a viral campaign will follow.  There may well be a need for ongoing and vigilant reputation management.

In conclusion, on its own, social media may not be a sufficient strategy for small businesses.  You need to back it up with more traditional marketing communications activities.  You need to look at your customer engagement ladder.  For many businesses, social media should be focussed on the retention of existing customers than on new customer acquisition.  At best, it is a route to turn existing regular customers into brand advocates.

Social media and other online activities only work well when they are part of a wider marketing communications mix AND you have the time and resources to commit to the social media channel.  You need to decide whether social media is going to be a continuous activity or whether it is going to be part of individual campaigns.  If continuous significant ongoing investment is required.  You also need to balance investment between individual online tools and monitor the return that the investment brings in.  There is no point in having a hugely successful piece of online content if nobody buys your product.

I believe many smaller businesses see social media as a quick and easy fix to their promotional activities.  It isn’t.  It is a tactic which requires careful consideration of viral content and you need to attract key social media influencers.  If those things are not achieved, intensive investment in social media can be a huge waste of time, money and effort.

The cult of SEO

Over the last year I have surprised by the number of businesses and consultants offering search engine optimisation and digital marketing management.  Many of these consultants appear to be presenting SEO as a magic bullet; a single step to digital marketing success and many appear to be using extremely out of date tactics to try to place a business website at the top of a search engine results page

Having done some research into the backgrounds of some of the consultants offering these services it also concerns me that many have no formal marketing qualifications.

The process of search engine optimisation is a structured tactical approach to increase the position of a company or its products in search engine natural or organic results listings when selected keywords or phrases are used.  it is the achievement of a high Page ranking (a term used by Google to assess websites out of 10 for their compatibility with their search engine and which is named after Larry Page, one of the founders of Google)

Search engines work using bots (called crawlers) which search the web looking for particular criteria on websites.  These bots use complex algorithms such as Google Pigeon and Google Panda to identify appropriate keywords and content.

In the early days of the internet, crawlers used to search, almost exclusively for meta data.  That is the programming text which sits behind images text and other website content.  This led to an unscrupulous tactic; which I suspect some SEO consultants still use; where the meta data would be filled with regularly repeated keywords.  It was the equivalent of listing your business as AAAAAAAAAAAAA11111111111 plumbers in the yellow pages directory so as to be the first entry read by consumers.

The big search engine firms recognised that this practice was an issue and they changed their algorithms to ignore the use of repeated meta data content.  Today, these algorithms look for geographic data, content, regular site updates, site links, use of social media as well as the use of keywords.  Simply stuffing meta data with repetitive phrases is no an appropriate tactic for SEO and it is unlikely to work.

Another factor is the increasing use of paid advertising on search engines which now tends to be listed above search engine listings.

One concern I have is that many of these consultants, and others who offer to manage a firms social media accounts, do not do so in a consistent way which recognises the wider strategic intention of a company’s internet site.

The digital marketing guru, PR Smith, who developed the SOSTAC digital marketing programme defines this strategic process using the mnemonic TOPPP SITE:

  • Target Markets – which groups of consumers are you trying to reach?  If you are selling fashion to the under-30s, it is imperative that you have an active and high-profile internet and social media presence.  For example Ugg, the sheepskin boot manufacture employs a group of high profile bloggers to create a virtual brand community, where wider youth culture is discussed, not just Ugg products.  If you are selling gardening services to the elderly, traditional promotional media such as direct mail or print media advertising may be a more appropriate promotional channel.  This does not mean that you do not need an internet presence but that traditional media should be used to signpost potential consumers to your site.
  • Objectives – You have to think strategically about why you want to be on the web.  Is your presence to attract new customers or to retain your existing client base?  Are you engaging in Electronic Word of Mouth?
  • Processes – What processes are going to be part of the website?  Is it going to be a retail site?  Is it primarily to be used for promotion or are you going to incorporate electronic customer services?
  • Partnerships – Search engine algorithms look for site links and links to social media sites.  Therefore you should think strategically about what sites you are linking to.  Are you linking to other companies in your sector, are you linking to professional associations or sites where there is improved synergy?
  • Sequence – What is the sequence of your digital marketing strategy? Do you want to develop credibility on the internet before you raise your visibility?  The mnemonic RACE identifies the sequence stages of digital marketing – Reach consumers, Act to get consumers to initiate dialogue, Convert that engagement into sales, Engage post-sale with consumers to get them to repurchase.
  • Integration – Do you want to integrate consumer data, some of which may be online whilst the rest is in traditional non-electronic form.  Do you want to link your social media activity to your CRM database? Do you want to do this with both inbound and outbound activity and campaigns?
  • Tactical tools – Search engine optimisation is but one tool in strategic digital marketing; it is not the only tool.  Do you want to use pay-per-click or pay per view advertising? Do you want to engage in email marketing or do you want to engage in digital public relations or content marketing?
  • Engagement – The customer engagement ladder is a well-respected marketing theory.  It states that consumers move through various stages of engagement with an organisation.  They begin as prospects (who are aware of an organisation but who have not contracted with that organisation) and at the top of the ladder they are brand advocates who use word of mouth to get others to use a particular company.  Ugg refer to their brand advocates as ‘brand fans’ and some get the opportunity to work for Ugg.  Obviously, depending on the position a consumer is on the customer engagement ladder, website content may need to be adapted.  This may involve the creation of secure site access and password protected content for your most valuable and trusted consumers.

There is far more to digital marketing than Search Engine Optimisation.  It is just one strategic tool amongst many in the digital marketing toolbox.  Before deciding whether SEO consultancies are an appropriate resource for your business, you need a comprehensive digital marketing strategy which is consistent with you other marketing activities.  If you are going to involve a third-party consultant please ensure that they have appropriate digital marketing qualifications and that they are a member of a professional body such as the Chartered Institute of Marketing.