E-commerce and marketing guru Jeffrey Rayport talked to TRUE about the evolving relationship between brands and customers in which engagement alone is no longer good enough.
Q: How would you describe the relationship between brands and the customer of 2014?
Rayport: The customer of 2014 is going to be a customer who has more power than customers have had ever before in the history of economic life in this country or any country in the developed world. Because there is way too much product and not enough demand and not enough customers to go around, we see an increasingly empowered customer. This represents a dramatic shift that has been taking place over the past 50 years. Of course, you add the impacts of technology to the macroeconomic balance of power, and we’re going to see customers in a sense ruling the day and defining how they relate to brands as never before.
It’s a cliché to say this at this point, but we obviously live in a world that’s relentlessly social, and whether it’s social media or social networking this is one of the principal ways in which customers are wielding their enormous amount of newly acquired power. Customers are essentially not going to just be demanding conversations with brands, but in effect setting the agenda for these conversations. We’re already seeing this, but it’s going to become deafening. To that extent we are looking at a world where it’s not about companies figuring out how to manage their relationships with customers, but really putting the onus on brands to figure out how to create a world in which we can have customer-managed relationships. Here we’re talking about peer-to-peer interaction and user generated content. Everyone is a media company, and in that world, consumers are going to be defining brands more than the brands define either themselves or their relationship with consumers.
Q: What are the characteristics of good customer engagement?
Rayport: Good customer engagement is becoming not just a nice to have but a need to have. In this war for customer time, attention, and ultimately spending power engagement is something that we used to think about as, “gee, it would be nice if we could have engagement, but influence is just fine.” I think we’re dealing with a world now that is so competitive that we have to think about engagement on multiple levels and while engagement must be front and center for marketers, it is a new form of engagement that really is the ultimate goal. If customer engagement used to be a left-brain feature, function, performance, price-related activity, ultimately a judgment of value and leading to a purchase decision, now I’d argue that the engagement that really matters is right-brain engagement. It’s engagement with the heart. It’s engagement that involves emotion. Without emotional regard, powerful emotional regard, I don’t think brands will have a future.
Q: How does the goal of customer engagement affect brand building?
Rayport: When we think about customer engagement as the ultimate goal for marketers, inevitably that comes back to the question of “so what is a brand.” As brands again compete in a world that’s more and more competitive from a media perspective or a share of voice perspective with every passing day, it argues for a different conception of brand. It argues for a brand that doesn’t talk or tell, but actually shows and behaves. It argues for a conception of brand as something that is about designing experiences that are ultimately engaging to consumers, which then can be associated with a brand. Bottom line, I see brand as moving from something that describes a communications or a messaging or an awareness building program to something very, very different. Instead it is becoming the notion of a very distinctive message associated with a mission and a set of values, a value proposition related to the underlying products and services, but first and foremost a call not to action initially but a call to relevance—how relevant is this brand to me, how aligned is it with my values, how much do I admire its mission, how much do I understand the story that the brand implicitly or explicitly represents. This is about bringing a corporate name, a corporate reputation right down to a product name or a service line to build awareness of it in a way that is integrated into the lives of consumers. The brand actually is an actor in the lives of consumers and it makes their lives better. It adds value to how they live and how they relate to one another and how they relate to the world.
Q: Can you give me an example of a business that you feel has achieved this kind of higher-level customer engagement?
Rayport: One quintessential example of a new approach to branding that is not about telling, but about doing, not about delivering a corporate message, but about creating value in the lives of consumers is what Citi has done in sponsoring the bike-sharing program in New York City. It’s a municipal program, and credit has to go to Mayor Bloomberg for initiating this. But Citi has subsidized it in exchange for the ability to paint the bikes with Citi’s iconic blue color with its logo. What Citi has done is positioned itself as a brand that is actually making the lives of denizens of Manhattan better by providing modes of transportation that are eco-friendly. They’re economically efficient. They are ubiquitous. In a sense, it is a triumph if you consider that the ultimate goal of a brand is to become not just interesting, maybe not even just essential, but powerfully embedded in the lives of consumers in ways that they may expect, but often the most effective ones are in ways that they don’t expect.
Q: You coined the term ‘viral marketing’ in the 1990s. Is it still a good indicator of customer engagement? How has it changed since you first identified it?
Rayport: Viral marketing is still a great example of customer engagement, but it has clearly evolved and changed. The notion of virality and its value to brands has only become more pronounced for the simple reason that we as a society and as a global community are more networked today than ever before. You could argue that the primary driver of that is the move from the desktop, to the laptop, to the smartphone and tablet. We’re now always-on and always-connected nodes in a network. But then the next question has to be what impact that has on customer engagement and ultimately whether that engagement leads to a purchase or even a real connection with the brand. There’s a lot of interesting data floating around right now that says you could have a wonderful viral video catch fire in the digital environment and not necessarily drive any changes in either brand perception or purchasing behavior. It’s an interesting conundrum for marketers. The problem isn’t about engagement because clearly you don’t get viral distribution and messaging if consumers aren’t engaged with the message and want to share it with everyone they know. The question is whether the video, the message, the photo, whatever it is that goes viral is in fact closely enough associated with the brand to drive the behavior the brand is hoping for. I think that is a critical question. In the past the only concern of marketers was about how to get something to go viral. Now we have a second question—Has the message been crafted in such a way that when it goes viral it will change behavior? And that behavior can be about brand perception at the top of the funnel or purchasing at the bottom.
Q: How do companies generate brand loyalty in such a fast-paced, competitive environment?
Rayport: The question of brands winning the loyalty of customers in either a B-to-C or B-to-B setting is clearly the crucial one that marketers need to focus on. I like to think about the fact that everyone values high customer satisfaction ratings. But satisfaction you could argue is a nice to have, and loyalty which describes actual behavior—do I come back, do I purchase, do I purchase more frequently, and do I purchase more every time I come back—is what you really need to measure. Loyalty is where the rubber meets the road. It’s where a company either makes money, gains market share, generates profitability, or it doesn’t. And so in this new world we go back to the notion of brand as a service provider. The brand has got to be a source of value, and not just initially, not just because it created a wonderful meme that went viral, created a wonderful experience that was compelling for an hour or a minute. The brand has to be actually playing a role on a continuing basis in your life that is sustaining engagement over time. That’s much higher hurdle.
In a second interview with TRUE, Rayport looks at the shifting role of the chief marketing officer and the growing significance of technology to the function.
Q: What will marketing look like in 2020?
Rayport: By the time we get to 2020, we will be in a world where we will be looking to products themselves to be channels for distribution of marketing messages and marketing communications. It’s not just an Internet of Things from the standpoint of ubiquitous sensors and the ability to measure everything. It’s an Internet of Things in the sense that every ‘thing’ is capable of having a conversation with a consumer. The things we sell will become very important, if not primarily important, as marketing channels for everything that a brand represents or has to say in terms of values, mission and story to consumers. We will have completed the process we are currently going through of reorganizing the world of commerce around consumers and their needs, putting them firmly in the driver’s seat. That’s a completely different world from the one in which we have lived for decades in which corporations have sat at the center and orchestrated everything around them, and frankly, I think we’re not going to recognize [it] by 2020 based on what we know today.
Q: Like Siris living all over your house and everything you own talking to you?
Rayport: That would be the image.
Q: So will the role of technology in marketing continue to increase at the rate it has been through the decade?
Rayport: By 2020, the role of technology from the standpoint of brands, marketing and communications will have two attributes. Observation one is that it will touch absolutely everything that we do full stop, embedded in everything we do, a platform for everything we do, an enabler for everything we do in terms of the way brands interact with consumers. And observation two: We will no longer be talking about technology. Technology will become ultimately embedded in our lives, ultimately powerful when it actually disappears. Like the way we have come to take electricity coming out of the wall for granted. That may be scary for many, many companies and many, many brands that are today realizing the necessity of running very hard simply to catch up with what is already happening in the lives of their consumers. [They] are really struggling with how to respond to the pace of technological change, and from that point of view, the ability to begin to live a technology story, to be able to manage technology from a marketing standpoint is something big companies need to learn, [so they can] move in the ways startups and famously agile, smaller companies have been able to move. Marketers are going to have to become much more literate than we are today in the new forms of technology—and because of the pace at which technology is changing that’s a very profound challenge.
Q: What will the role of the CMO be in this new marketing universe?
Rayport: Gartner has famously predicted over the last few months that by 2017 chief marketing officers will have larger budgets for technology than the chief information officers and the chief technology officers in their organizations. That is a huge statement in terms of a shift of power in favor of marketers. But it also speaks volumes about what marketers need to learn over the next three years. [It’s] not just about technology’s implications for marketing, but literally [it’s about] how do marketers become managers of technology, become drivers of innovation in technology such that they are setting the technological agenda. Marketers are going to have to master that for the simple reason that if they really go where it looks as if the world is going, CMOs are going to be the czars within corporations who are actually determining the technology agenda for their brands.
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