The Brand View
One of the biggest challenges brands have is communication with their existing customers. While some customers are very receptive to the incoming messages, with the passage of time many start ignoring and become dormant. For a brand, this is an expensive loss since there was a significant cost paid to acquire them. While brands can wait for these customers to ‘wake up’ and re-engage, more often than not they will end up as lost or churned customers and the enthusiastic acquisition teams will, unknowingly, re-acquire these customers! And thus starts the viral waste loop – acquisition, dormancy, re-acquisition, and so on.
If only brands could keep the communications channel to their less active customer base, if only their messages get good through to these customers, if only brands could engage better with the Rest customers – then the actual media spends on acquisition could be cut sharply and reinvested for the larger existing customer base. There hasn’t been an easy way to make this happen – until now.
This is where one of the most fundamental ideas of economics (and our world) comes into play: Incentives. Writes Art Carden: “Why are you reading this instead of doing something else? You’re reading this in response to an incentive, which is a reward or punishment that motivates your behavior. An incentive encourages you to do one thing and not another, and when the incentives change, people’s actions change. Economics has a lot of big ideas, but “incentives matter” is the biggest.”
Ipovi John Gitonga adds: “An incentive is a motivation that encourages someone to do something enthusiastically. As we all know, a motivation is a desire to do something — the willingness or the drive. The desire can be internal (intrinsic motivation) or external (extrinsic motivation) but their main purpose is to encourage people to achieve a goal or an objective.”
Russ Roberts writes: “When an economist says that incentives matter, the non-economist sometimes hears only that people respond to prices. But what the economist really means is that holding everything else constant—the amount of fame or shame, glory or humiliation—and increase the monetary reward, and people will do more of it. Lower the monetary reward while holding those non-monetary factors constant and people will do less of it. Economists often focus on monetary incentives because they are observable and usually easier to change than non-monetary incentives.”
Let’s apply the idea of incentives to brand communications with their existing customers. Many brands do offer incentives for transactions – points one can earn as part of a loyalty program, discounts, cashback, freebies. But no brand offers incentives for attention and pre-transaction actions. Brands can offer their existing customers incentives for opening their messages, clicking through to the website or app to know more about specific products, filling in surveys, and for preferences that can be a win-win for both sides.
How will brands fund it? Easy. From the huge ad budgets that are spent on the acquisition and re-acquisition continuum. By knowing and retaining customers, brands can pay their existing customers for their attention rather than intermediaries to re-acquire them. This is where Mu comes in. Mu wrapped in a messaging micron lets brands offer incentives to their customers to take the actions the brand desires.
Of course, there are many questions. Will this lead to an arms race in terms of incentives being paid to customers? (There already is – in the ad spends, and especially on Google and Facebook via auctions. So, this is nothing new. Here, at least, the payment is being made to the brand’s customers and not the intermediaries.) Will it really lead to sticky behaviour? Or will it only lead to a specific type of bottom-fishing customer? (We will like rewards – small or big. Gamification brings some degree of fun into our lives. Brands can differentiate the Mu they offer thus rewarding specific types of customers and behaviours – the choice is theirs.)
And finally, the big question — will it work? I believe so. We all respond to incentives. It is just that brands have not been able to do this so far at a micro scale (in terms of the quantum of incentives offered to make it financially affordable) and a macro scale (to their large customer base) simultaneously. It is time for brands to think outside the box – literally –and open up their messages to the world of microns, micronbox, mu and MyToday.