Marketing: Disrupted and Simplified (Part 26)


This has been a long series. It has taken many hyperlinks en route to create a story about how marketing is getting disrupted and needs to be simplified. I will end with a short summary of the key points in the narrative:

  1. Marketers are overinvesting in acquisition and underinvesting in building engagement with existing customers. In fact, they are in a negative spiral where the lesser they invest in retention, the more they are forced to spend on re-acquisition (and re-re-acquisition) of those who become dormant.
  2. Google and Apple, under pressure on privacy, are changing the rules of acquisition and engagement. Third-party cookies on Chrome are going to get deprecated, Apple is making big changes to the use of device identifiers, and is introducing a new privacy framework to limit tracking. The only way around the trap of dependency on the tech giants and other intermediaries is for brands to build direct, deep, data-driven relationships.
  3. These are then the two disruptions marketing faces: ever-increasing costs of new customer acquisition and changing rules of engagement with their existing customers. Instead of letting these disruptions overwhelm them, marketers need to go back to basics.
  4. To simplify marketing, marketers need to focus on three things: protecting the profits from the Best customers (top 20%), retaining the revenues from the Mid-value customers (next 30%), and controlling costs of servicing the Long Tail (the remaining 50%).
  5. The starting point for this is segmenting customers by CLV (Customer Lifetime Value), decoding the BCG (Best Customer Genome) and then focusing on providing differentiated experiences via VRM (Velvet Rope Marketing) for the Best Customers.
  6. To build equations with their customers, marketers either need to spend on building top-of-mind recall or use push messaging to draw customers to their owned properties (website, app) for transactions. Push messaging channels include SMS, email, PN and WhatsApp.
  7. The problem that brands face is that customers are ignoring the push messages. Since attention and action is upstream of a transaction, the most important problem that marketers need to solve is to get customers to pay attention.
  8. To get customers to pay attention, marketers need to pay for In fact, they need to pay customers directly for their attention because otherwise they end up paying the media and tech intermediaries who have the attention. Marketers need to consider rewards for attention: this is the idea of ARM (Attention Rewards Marketing).
  9. This is where the idea of Microns comes in. Microns are messages with rewards via a virtual currency (Mu). Marketers can incentivise specific actions and make reading their messages a habit in customers’ lives.
  10. To make VRM and ARM successful, marketers need to re-allocate their budgets from a 90:10 split in favour of new customer acquisition to a more equitable distribution across new acquisition, VRM and ARM. Marketers also need to create two new teams to focus on Best customers (for VRM) and Rest customers (for ARM).
  11. The more brands can open hotlines to their customers, the lesser they will need to spend in the acquisition arms race underway on Google and Facebook. This is the choice CEO and marketers have to make: contribute to increasing profits of the tech giants, or create a profits monopoly (profipoly) by building the best business moat possible: maximising extremely loyal and attentive customers.

And to capture it all in a single sentence: “Disrupt and simplify your own marketing program: make attention the new acquisition, and rewards the new experience.”

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.