Published November 18-29, 2021
Adtech to Martech
Martech (short for “marketing technology”) as a recognised software vertical is just over 7 years old. The first Martech conference was held in August 2014 in Boston. (I attended it.) By contrast, adtech is more than two decades old. These are the two pillars of modern marketing: adtech is about customer acquisition, while martech is about customer retention, growth and cross-sell. Martech begins where adtech stops; martech focuses on today’s customers, while adtech brings in tomorrow’s customers.
Gartner defines martech as “a set of software solutions used by marketing leaders to support mission-critical business objectives and drive innovation within their organizations. Martech solutions focus on content and customer experience, advertising, direct marketing, marketing management and marketing data and analytics.”
Marketing Evolution: “MarTech may sometimes be confused with Adtech. The difference between these programs is similar to the difference between marketing and advertising. While martech refers to technology that helps to create, communicate, and deliver offerings, adtech is strictly used to influence buyer behavior by promoting offerings. For example, Customer Relationship Management (CRM) software is martech, while social ad platforms are adtech.”
My focus here is on B2C Martech. It is about using customer data to build deep digital relationships. While CRM systems have been around for a long time, martech is about doing much more – aggregating customer behaviour on websites and apps, orchestrating journeys, creating segments, targeting communications across multiple channels (emails, SMS, push notifications), personalising offers, crafting next best actions, and engineering experience on the brand’s properties. Marketing departments, growth hackers and product managers can use martech tools towards the common goal of maximising customer lifetime value (CLV). This in turn means focusing on retention, reactivation (of dormant customers), and referrals. Martech is at the heart of driving revenues for B2C companies, because not all customers will return to a brand’s properties of their volition for their next purchases. They need to be brought back – that is the job of martech.
And yet, 80-90% of budgets are spent on customer acquisition (adtech). This is what I call the “doom loop” of spending: in the race to acquire new customers, brands are overspending and wasting precious resources. Besides facing rising ad costs and acquiring low value customers, brands are also now facing the prospect of disruption in the form of the coming death of third-party cookies and privacy restraints being introduced by the adtech platforms. In addition, my estimate is that a third of adtech spends are on reacquisition of churned customers. This continuous and spiralling spend is unsustainable and will end once easy investor money dries up. Martech will come to the fore once there is a demand for profitable growth rather than growth at all costs.
Coming Martech Era
The coming martech era will be different from the early days of martech. The first-generation martech tools were primarily point solutions solving specific needs. A few marketing clouds did emerge but they were built mainly out of components stitched together from acquisitions by the big players rather than natively built. The second generation will be about full stack solutions that solve the ABCDE problems of martech: attention (recession), branding (for retention), churn (of Best customers), data (silos), and engagement. These solutions will drive a rebalancing of the budget as marketers realise that a bird (customer) in hand is worth two in the bush! A new martech era is coming. Companies who can deploy its power appropriately will emerge winners and lay the foundation for exponential forever profitable growth and become “profipolies” of the future.
I wrote on the coming martech era in a recent series:
The Martech era will be characterised by a focus on 4Rs: retention, rewards, reactivation, and referrals. It will need marketers to think about segmentation based on customer lifetime value. Marketers will need to combine tech, data and analytical skills to make the most of all the demographic, behavioural and transactional data that will flow into a Customer Data Platform (CDP). They will need to integrate different tech solutions together to get a unified view of the customer. What will matter is not just a one-time acquisition but the customer journey, with the right nudges at the right time to ensure timely transactions. AI will assist the marketer at every stage but the questions and creativity will need to come from the marketer. Art and science is what will make martech work like magic.
This will need a new bag of tricks for marketers. It will be much more than just saying, “Oh – that’s what our CRM department does.” The Martech era is in fact the second coming of CRM. Only this time, marketers will be armed with much more data and have a wider arsenal of tools to create myriad magical moments for their customers, rather than just one-time offers. The way marketers have prioritised and perfected ad spending for new customer retention is what they will need to do with existing customers. As of today, most CMOs have a limited focus on this because adtech sucks away 80-90% of budgets and attention of marketers. In the years to come, in a world where the profitable pool of customers for a category is finite, marketers will need to switch time and money to martech to drive customer communications, engagement and experience and ensure they grow profitable customers who stay with them forever. Martech done right will help them optimise their adtech spends, create the space for profits, and lay the foundation for winning the customer moments that will drive exponential forever profitable growth.
…By using the secrets outlined here (smart segmentation, 4 Rs, full stack, progency and rebudgeting), brands can drive up the profitability in their business by ensuring the Best customers stay forever, the Rest customers are moved along the customer journey to become tomorrow’s Best, the Test customers are reactivated instead of being reacquired, and the Next customers come from referrals and a higher profitability pool of customers.
By working to maximise and then monopolise the profits in a category, brands create a profits flywheel to lead to a “profipoly”. This works as a double moat in the coming Martech era: the most profitable customers are retained to maximise lifetime revenues, and competitors are deprived oxygen of growth capital in the form of profits. The profipoly is thus the endgame. It also works as the beginning – because the profits can power the expansion into new categories – either organically or via acquisitions. Creating a profipoly is the real secret of creating a model that can power the “rinse and repeat” of exponential forever profitable growth.
Martech is at a strategic inflection point. The old will give way to the new, the first-generation to the second-generation, point solutions to the full stack.
Generation Shift – 1
We are seeing the emergence of Web3. As FreeCodeCamp explains:
Web 1.0 was the first iteration of the web. Most participants were consumers of content, and the creators were typically developers who build websites that contained information served up mainly in text or image format. Web 1.0 lasted approximately from 1991 to 2004.
Most of us have primarily experienced the web in its current form, commonly referred to as web2. You can think of web2 as the interactive and social web. In the web2 world, you don’t have to be a developer to participate in the creation process. Many apps are built in a way that easily allows anyone to be a creator.
Web3 has decentralization at its core. [It] enhances the internet as we know it today with a few other added characteristics. Web3 is verifiable, trustless, self-governing, permissionless, distributed and robust, stateful, [and has] native built-in payments. In web3, developers don’t usually build and deploy applications that run on a single server or that store their data in a single database (usually hosted on and managed by a single cloud provider).
Similarly, we are seeing the emergence of Martech 2.0. The first 20-25 years of the Internet were about Adtech – as consumers came online, they left a digital trail which businesses could use to target them via intermediaries like Google and Facebook. Then came the first generation of Martech, which helped companies build relationships with their existing customers to drive transactions. We will now see the second generation of Martech, where the focus will be on the upstream of transactions – attention, engagement and habits – to create hooked customers.
Here are some additional transformations between Martech 1.0 and Martech 2.0:
Purchase-centric to Complete Lifecycle: Martech 1.0 is about driving towards the transaction. All messages are in the “see this / buy this” mode. Martech 2.0 goes beyond that to consider pre-purchase, post-purchase and the journey beyond. It will be about creating mental availability for the brands – informative content which becomes a utility in the recipient’s life. Martech 1.0 messages felt like spam that one wanted to delete; Martech 2.0 will offer moments that will delight.
One-offs to Retention and Subscriptions: Martech 2.0 will shift the focus from discrete transactions to driving subscriptions, thus reducing the need to persuade each time a desire needs to be fulfilled. This is what creates the “forever transaction”, thus focusing not on the short-term but the long-term.
Reacquisition to Reactivation: In Martech 1.0, customers who became dormant or inactive ended up being reacquired via the ad platforms. In Martech 2.0, the focus will be on reactivation at a fraction of the cost.
Any New Acquisition to Referrals: In Martech 2.0, the focus will be targeted acquisition by driving referrals, especially from Best customers. This brings down the cost of new acquisition sharply.
Generation Shift – 2
Continuing with the transformations from Martech 1.0 to Martech 2.0:
All Customers to Best Customers: Martech 1.0 has been about targeting all customers with little regard to their lifetime value. Martech 2.0 will be about identifying the Best customers and creating differentiated experiences for them (think Velvet Rope Marketing). It will be about creating a separate business unit and shift from trying to foster loyalty in everyone to ensuring Best customers are treated like royalty and never churn.
1-way Broadcast Messages to 2-way Conversations: Martech 1.0 is about sending a huge number of broadcast messages via email, SMS and push notifications. Martech 2.0 will be about conversations. Email with AMP, SMS with SoIP (SMS over IP) and RCS, and WhatsApp are making these messaging channels interactive. Think of this shift as going from Messaging to Messaging+.
Loyalty Points to Atomic Rewards: Martech 1.0, with its transaction-centric view of the customer, incentivises the purchase. Martech 2.0, with its attention and time-centric focus, offers micro-incentives for micro-moments (“atomic rewards”) not necessarily linked to the transaction.
Point Solutions to Full Stack: Martech 1.0 is about stitching together various martech solutions as the need arises. Martech 2.0 will be about thinking full stack – from the CDP to analytics to engagement to personalisation to product experience to omnichannel communications. This is what will power the unified customer view that marketers need.
Data Silos to CDP: Martech 1.0’s point solutions ended up creating data silos which were broken down by the deployment of a Customer Data Platform (CDP) embedded in the Martech 2.0 full stack. The CDP will combine all customer data into a single repository.
Marketer Actions to Machine Predictions: Martech 1.0 is about the marketer making decisions on campaigns and journeys. Martech 2.0 will be about AI-ML using the customer data to drive the next best action for each customer, and continuously learn to improve the experience and outcomes.
Internal Teams to Progency: Martech 1.0 has been about staffing cross-functional talent within the marketing teams. Martech 2.0 will be about making use of a progency (product-led agency) which combines right- and left-brain skills to deliver the outcomes for retention, reactivation and referrals that marketers want.
10% of Budget to 50% of Budget: With adtech and new acquisition gobbling up most of the marketing budgets, Martech 1.0 spending has been at just about 10%. Martech 2.0 will drive a rebalancing as the importance of retention, growth and cross-sell becomes clear to CEOs. The “one rupee solution” will allocate a relationship and rewards spend for every customer every month.
Here is a table which summarises the transformations:
In short, Martech 2.0 will be the “real thing” – what marketing should always have been with its focus on maximising lifetime value by building deep, engaging and rewarding customer relationships. The transaction is an outcome, rather than the only goal. With the focus on retention, reactivation and referrals incentivised at the right times with rewards, revenues will rise and so will profits.
Strategic Inflection Point
In a world of digital customers and relationships, martech, not adtech, is the secret to customer delight and business success. The second generation of martech solutions will create their own ecology: full stack rather than point solutions to provide a unified customer view, CDP to create a single vast repository from the data hose, AI engines to predict behaviour from the actions of the many, APIs to glue different components, and new avatars of the digital agency which are built on proprietary martech products and deliver results for retention, reactivation and referrals. These new martech platforms, along with the upheavals in the adtech world, are creating a strategic inflection point for businesses.
An inflection point, according to Investopedia, is “an event that results in a significant change in the progress of a company, industry, sector, economy, or geopolitical situation and can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result. Companies, industries, sectors, and economies are dynamic and constantly evolving. Inflection points are more significant than the small day-to-day progress typically made, and the effects of the change are often well known and widespread.”
Rita McGrath wrote in Fortune: “Strategic inflection points—changes that alter the taken-for-granted assumptions underlying a business model—can feel sudden. In reality, however, they tend to build up slowly, gathering momentum until a transformative shift becomes clear. Andy Grove, who coined the term, said it referred to change that was 10 times more significant than a typical change encountered by a business.” She adds that companies tend to fall in three categories when these shifts occur: “The first are those that have missed the inflection point entirely. These firms often shrink or disappear … The second group comprises those that realize an inflection point is underway and place a huge, last-minute bet on catching the wave … The third set of companies are ones that have placed a number of small bets over time to position themselves to take advantage of shifts when they happen.”
Marketers obsessed with new customers will miss the seismic shift that is taking place. In a post-pandemic world where digital consumption has risen sharply, compressing many years of growth into one, it is easy to go after the next new customer. But if that is not accompanied with an equally strong focus on customer retention, what marketers will end up with is a leaky bucket of constant churn. It is easy to spend money on Google and Facebook and get “Gooked”. What marketers need to think of is “Hooked” – how to create hooked customers who have a net retention rate of greater than 100% and who work as micro-influencers to drive referrals from their family and friends to create the exponential growth that is so central to creating a profits monopoly in the category. A central idea that marketers need to understand is “jobs to be done” – that customers hire products to get something done in their life.
The theory of “Jobs To Be Done” comes from Clay Christensen. He wrote in Harvard Business Review:
After decades of watching great companies fail, we’ve come to the conclusion that the focus on correlation—and on knowing more and more about customers—is taking firms in the wrong direction. What they really need to home in on is the progress that the customer is trying to make in a given circumstance—what the customer hopes to accomplish. This is what we’ve come to call the job to be done.
We all have many jobs to be done in our lives. Some are little (pass the time while waiting in line); some are big (find a more fulfilling career). Some surface unpredictably (dress for an out-of-town business meeting after the airline lost my suitcase); some regularly (pack a healthful lunch for my daughter to take to school). When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we “fire” it and look for an alternative. (We’re using the word “product” here as shorthand for any solution that companies can sell; of course, the full set of “candidates” we consider hiring can often go well beyond just offerings from companies.)
… [D]isruption theory doesn’t tell you how to create products and services that customers want to buy. Jobs-to-be-done theory does. It transforms our understanding of customer choice in a way that no amount of data ever could, because it gets at the causal driver behind a purchase.
Alan Klement defines it thus: “A Job to be Done is the process a consumer goes through whenever she aims to change her existing life-situation into a preferred one, but cannot because there are constraints that stop her.” He writes about the thinking behind JTBD:
Ten thousand years ago, we were hunter gatherers and used our feet to roam the earth. Today, we have fast food restaurants and autonomous cars. Why did we change? Because we have an intrinsic desire to evolve ourselves. We do this by remaking and adapting to the world around us.
The desire to evolve is in our DNA. It’s what makes us human. Moreover, we do this evolution with purpose. We purposefully use the arts to evolve ourselves emotionally; the sciences to evolve ourselves intellectually; and engineering to evolve how we interact with the world. Purposeful evolution is why we are different from animals:
- A bear trying to catch food by the river may think, I wish fishing could be made better, faster, or easier.
- But only a human will think, Fishing is no good. If I could transform that lagoon over there into a place where I can breed fish, then I’d never have to go fishing again.
The bear thinks only about what is. Today, it may come up with a better, faster, or easier way to fish. But tomorrow, it is still a bear that fishes. The human, on the other hand, thinks about what ought to be. Today, she fishes, but tomorrow that can change. If she could figure out a way to no longer fish, then she can focus on improving herself in other ways — like building a hut so she could move out of that dank cave.
The bear does not think about evolving itself and its world. It never has a Job to be Done. The human, on the other hand, does think about evolving herself. And every time she begins the process of evolving herself, she has a Job to be Done.
JTBD is an idea that is central to the brand-customer relationship and the coming martech era. Marketers have focused too much on either acquiring new customers or pushing them to completing the transaction. They need to look beyond this world of adtech and Martech 1.0.
Here is a short summary of my ideas about winning in the coming martech era, that I spoke about at two industry events a few weeks ago: IAMAI Marketing Conclave and ET Martech Asia. Many of these are themes I have covered in my writings on marketing over the past couple years. There are many new ideas that I have connected together. When implemented as a whole, they can give businesses a definitive edge.
- Huge Growth of Digital Customers
- Adtech –> Gooked Brands –> Doom Loop –> Profipoly (for BigTech)
- Martech –> Hooked Customers –> EPFG –> Profipoly (for Brands)
- Martech’s 3Rs: Retention, Reactivation, Referrals
- To create Hooked Customers, focus on upstream of Transactions
- Attention, Engagement, Habits
- Martech’s 5 Problems and Solutions
- Attention: Messaging+
- Branding: Email Moments (Ems)
- Churn: Velvet Rope Marketing (VRM)
- Data: Full Stack
- Engagement: Atomic Rewards
- Needed: Progency and Rebudgeting
What it boils down to is a sea change in customer experience and that is what will be the differentiator going forward. Consider our own behaviour and preferences. There are many options for us to buy the products we desire. Why do we choose certain brands over others? While price and convenience are important determinants, we are not always scanning for the cheapest and speedy delivery has now come to be taken for granted. Intangibles like branding and experience also matter. This is where the next-generation of martech tools and ideas come in with the realisation that attention, engagement and habits are upstream of transactions. The next set of challenges are before and after the transaction: the pre-purchase persuasion and the post-purchase pandering to create moments and memories that drive the next actions (future transactions and word of mouth spread).
Martech 1.0 was all about driving the transaction through a collection of point solutions; Martech 2.0 will be about addressing the much wider customer experience through a full stack that is natively integrated. Martech 2.0 is not about broadcast messaging; it is about encouraging conversations. Martech 2.0 is about thinking through the value of each customer and ensuring that the Best and most valuable customers get differentiated experiences. Martech 2.0 is about building mental availability for the brand – these 15-30 seconds of daily delight that inform and educate, and not just shout and sell. Martech 2.0 is about making the customer journey fun and exciting – which is why there is a need for atomic rewards: micro-incentives to win micro-moments.
It is these innovations that are all coming together to create the strategic inflection point for brands. By doing Martech 2.0 right, it becomes possible to think of the customer relationship as that of a “subscription” – a steady stream of predictable continuing purchases for long periods of time. By doing so, brands eliminate the openings that competitors need to grow their own business and thus deprive them of the oxygen of profits. Martech 2.0 is about understanding the jobs customers want done. Martech 2.0 is about creating unique moments to savour for each of us in our brand engagements – starting from the personalised email in our inbox to being greeted when we enter a physical store. Martech 2.0 is about the experiences and moments that lead to the transactions – moments which create memories, stickiness and lifetime loyalty. Bringing this new world to life are Martech 2.0’s magicians: microns, micronbox and µniverse.
The Magical Trio
Microns are push messages with rewards that create moments of delight. The micronbox is a single repository for microns – think of it as a Gmail or WhatsApp for brand communications. The µniverse is a futuristic world – metaverse – where the physical and virtual worlds come together – where our digital avatars interact with virtual manifestations of brands to create unique experiences. This is the trio which can come together to transform the brand-customer relationship, much like social networks and messaging apps have transformed our personal relationships.
Over the past year, I have written extensively about microns, micronbox and µniverse:
- Microns: Making B2C Emails Better [Ems]
- Microns: Theory and Economics [Ems]
- Microns and Brands: Made for Each Other [Ems]
- Micron-verse: The New World of Brand-Customer Communications
- Microns: Solving the Customer Reactivation Problem
- Microns and AMP: A Powerful Combo
- Microns and Loyalty: Gamifying and Rewarding Attention
- Micronbox: A New Inbox
- Imagining Mus: An Attention-Action Currency
- Micron-verse: Making It Happen
- Marketing: Disrupted and Simplified
- Attention Messaging: Bridging Adtech, CPaaS and Martech
- Stop Loss: The Power of Attention Messaging
- Imagining µniverse: The B2C Metaverse
- Atomic Rewards: The Solution to Attention Recession
- The Coming Martech Era: Driving Exponential Forever Profitable Growth
While each of them is a big step forward, the real magic will happen when the triad works together as one. Brand messages stream into the micronbox – all with our permission and personalised with the preferences we have chosen to give. These microns value our time and reward us to pay attention. Most microns are not “salesy”; instead they are informative, interactive and fun. They fit on a single mobile screen and are consumed quickly. They come into our life daily – becoming a habit and utility, offering something useful. We look forward to them – much as we once looked forward to (and some of us still do) to reading the comics or solving the crossword in the morning newspaper.
The rewards earned provide entry into a new world, the µniverse. With the metaverse now becoming a buzzword and a possible future after the mobile internet, it borrows from the world of gaming, AR and VR to create experiences that create a deeper connection with brands. Buy a book, answer a few questions, and get invited for a virtual session with the author. Sign up for a movie and get behind the scenes to its making. Buy a product and become part of a community. Of course, not every purchase and brand needs to be thought of like this, but just as Zoom bridged distances for employees and kept business humming during the pandemic lockdowns, the µniverse will open doors to passionate advocates who want more. Many of these ideas have been done in the 2D world of the Internet, but what the metaverse will do is to make it come alive in the way watching an IMAX movie does.
This is of course out of my imagination and extrapolation from reading and thinking about what can be done differently in the brand-customer relationship. Much the way Isaac Asimov imagined the “Foundation” world many decades ago and Apple TV brought it (or at least a version of it) to life in its web series, it is our imagination working with the three magicians – microns, micronbox and µniverse – than can bring forth new experiences. Central to this world is thinking about the power of moments.
During the pre-Diwali cleaning at home, Bhavana (my wife) brought down from one of the storage compartments many of our son Abhishek’s firsts: his first shawl, his first set of clothes, the first toys, the first books. Each of them brought back memories – still images of a world I had almost forgotten. (Abhishek is now 17 years old.) Many moments from my past life flashed by – playing with Abhishek, reading to him, wrapping him up in that towel after a bath.
Another afternoon around the same time, I was clearing up a lot of old magazines at home from 2018-2020. Many cover stories brought back memories, especially the political ones when I was working on Nayi Disha.
And then, I got an email from Dan Heath (sent to his mailing list) to a webinar about his book, “The Power of Moments.”
All this, as I was putting the finishing touches to my IAMAI and ET Martech Asia presentations on the coming Martech era.
And that is when it struck me: Martech 1.0 was about transactions, Martech 2.0 is about Moments. Moments are upstream of transactions. Moments are what capture our attention, drive our engagement, and make up our habits. And moments are where microns, micronbox and the µniverse work their magic.
Think about the moments we remember in our engagement with brands. The “It’s a Small World” ride at Disneyland. Sitting in the cockpit and watching the tricky landing at Hong Kong airport. The always welcoming smiles at Shangri-La Apartments in Singapore. Visiting Swati Snacks at Nariman Point for the first time after the pandemic and being greeted by the manager. When we sit and start to think, many moments will flash by. Some joyful, others not so.
Dan and Chip Heath write that a “defining moment” is one that is meaningful and memorable. They are the ones that endure in our memories. Such moments comprise one of more of four elements: elevation, insight, pride and connection.
ELEVATION: Defining moments rise above the everyday. They provoke not just transient happiness, like laughing at a friend’s joke, but memorable delight.
INSIGHT: Defining moments rewire our understanding of ourselves or the world. In a few seconds or minutes, we realize something that might influence our lives for decades.
PRIDE: Defining moments capture us at our best—moments of achievement, moments of courage.
CONNECTION: Defining moments are social: weddings, graduations, baptisms, vacations, work triumphs, bar and bat mitzvahs, speeches, sporting events. These moments are strengthened because we share them with others.
They add: “When people assess an experience, they tend to forget or ignore its length—a phenomenon called “duration neglect.” Instead, they seem to rate the experience based on two key moments: (1) the best or worst moment, known as the “peak”; and (2) the ending. Psychologists call it the “peak-end rule.” … What’s indisputable is that when we assess our experiences, we don’t average our minute-by-minute sensations. Rather, we tend to remember flagship moments: the peaks, the pits, and the transitions.”
They elaborate in an interview in Forbes: “Great experiences hinge on “peak” moments. Think of the way you might recall a vacation to Disney World. You don’t tend to remember the long lines and the sweatiness and the irritability. You remember the special moments: The adrenaline rush after riding Space Mountain. Or the time your kid beamed with delight because Goofy gave him a hug. Those peak moments dominate our memory of the experience. But those moments don’t make themselves! To improve the experience of others, we must create moments that matter.”
So, when brands think of experiences, they should think of creating defining moments – “peak” moments. And this is where they can get help from martech’s magicians.
Let us reimagine how our shopping experiences can change in the coming Martech 2.0 era.
Consider buying a book. Today, Amazon is the sole arbiter of what gets recommended to us and the reviews. But there is a world beyond Amazon. We don’t explore it because of the friction involved. Imagine being able to see the book on a shelf in a virtual library – so one can see other similarly themed books nearby. That is what one tends to see in a physical bookstore. When I am at Strand Book Store in New York City, I spend a lot of time going through shelf by shelf of books on a specific topic. (The Dewey Decimal System does a great job of allocating a unique number for each book which determines its place on the infinite shelf.) If I show interest, then for the next few days, a daily micron into my micronbox brings forth additional information – table of contents, reviews, author background, excerpts, and more, with each message a carrier of atomic rewards to nudge me towards the purchase.
Consider buying a phone. The post-purchase period is a void where the phone manufacturer is losing an opportunity to know me and engage me. Imagine offering me an incentive to register the phone and then opt-in to a 20-day micron series telling me the new features about the phone. The manufacturer would then also know the date of my purchase and could at a later point of time offer me an upgrade, thus building a longer relationship. Given that phones are also becoming windows to services, the manufacturer could get additional revenue once the relationship is activated.
Consider booking a movie ticket. The multiplex or the booking platform could drive excitement by sending me snippets about the movie. It could also create an interactive chat once I reach the multiplex with the food menu, remembering what I ordered the last time. After the movie, it could offer me incentives to rate the movie and share the experience on social media. It could also let me know what movies will be releasing the next weekend, and offer to book the same seats at a similar show time for one of those movies. By doing so, the multiplex is making me into a “subscriber” – driving repeat purchases in a frictionless manner.
Consider buying a dress. The µniverse would offer an AR view of me in that dress, and I could solicit feedback from close friends if I chose to. For Best customers, there could be a hassle-free returns policy. For ethnic wear, there could be a back story on the making of the dress. Post-purchase, suggestions of accessories could be sent to me.
These are just a few examples. The combination of microns, micronbox and µniverse open up a new world of brand-customer engagement possibilities. It is like the early days of the Internet – what could be created was only limited by our imagination. The digital world is our future, and we are all just getting started. Businesses which can wipe the slate clean and rethink customer experiences in the Martech 2.0 will end up with a significant competitive advantage in the future.
How can marketers measure success in the Martech 2.0 era? The Martech 1.0 had the Net Promoter Score (NPS). What are similar metrics for Martech 2.0? There are three metrics we can consider: hooked score, reacquisition ratio, and earned growth rate.
Hooked score: As we discussed earlier, one of the key objectives is to win the transaction upstream game. This means focusing on attention, engagement and habits. A simple way to measure this is to track all the actions that a customer does with the brand communications and properties. Add 1 point for every open and click done by customers over the past 30 days to arrive at the Hooked score. The higher the score, the greater the attention. This can then be correlated with transactions and the forward-looking customer lifetime value (CLV). The Hooked score is a simple metric and easy to track. The software for doing it already exists. Email opens and clicks are already tracked, SMS and push notifications clicks can be tracked via custom links. Code on the website and in the app can track the actions. What’s missing is the scoring. Brands can then even test if offering low or high atomic rewards changes user behaviour.
Reacquisition ratio: My belief is that a third of all acquisition is actually reacquisition. No brand that I have spoken to is actually tracking this. It is not difficult to track. For every new paid acquisition, a brand needs to simply look at its database and see if that email ID or mobile number was in the customer database. The reacquisition ratio is the number of reacquired churned customers to the total acquisitions being done. The higher the number, the greater the waste. Brands should then use reactivation techniques as an alternative to reacquisition via ad platforms.
Earned growth rate: This is an idea that combines the power of retention and referrals. It is mathematically represented as Net Revenue Retention + Earned New Customers (ENC) – 100. Reichheld, Darnell and Burns discuss this in a recent article in Harvard Business Review: “Once you have organized revenues by customer, you can determine your NRR. Simply tally this year’s revenues from customers who were with you last year, divide that amount by last year’s total revenues, and express that figure as a percentage. ENC is the percentage of spending from new customers you’ve earned through referrals (as opposed to bought through promotional channels).” They offer an example: “Company A’s revenues grew from $100 in 2020 to $130 during 2021, or 30%. In 2021 customers who were on the books in 2020 accounted for $85 of revenues. Some of them expanded their purchases by a total of $5, but that growth was more than offset by other customers who reduced purchases by a total of $20, resulting in an NRR of 85%. New customers accounted for $45 in revenues—$25 from earned new customers (referrals) and $20 from bought new customers. Adding the NRR (85%) and ENC (25%) and then subtracting 100% results in a 10% earned growth rate.”
Taken together, these three metrics are at the core of Martech 2.0 – they measure attention, retention, reactivation (or non-reacquisition), and referrals.
Business is about customers, revenues, profits and growth. In recent times, as investors splurge money on B2C and D2C companies, it is easy to forget about the “profits” bit! But eventually, every enduring business grows on the back of profits, not an infinite supply of investor capital. Given that one of the largest costs for most businesses after staff salaries is cost of new customer acquisition, it becomes imperative to start thinking about customer retention, growth, cross-sell and referrals if a path to profitability has to be found.
This is where the ideas of Martech come into play. Martech is about existing customers and building deep relationships with them. In the pre-digital world, this was much harder. It was difficult to identify individual customers (that’s how loyalty programs got started), it was expensive to reach them individually (only option was physical mailers), and it was impossible to do any real-time offers or adjustments. The digital world has changed all this. Data at an individual level is plentiful, storage and computing are not constraints any longer, and the brand’s digital storefronts in the form of websites and apps offer real-time engagement and nudge platforms. Martech software is helping drive the shift from optimising acquisition to maximising customer lifetime value.
Martech 2.0 is upon us and with it comes a view beyond the immediacy of the transaction. Starting with the upstream elements of attention, engagement and habits, Martech 2.0 focuses on creating “hooked customers.” A multitude of innovations are driving Martech 2.0 and solving the ABCDE (attention, branding, churn, data and engagement) problems that plague the customer relationship: Messaging+, Ems, Velvet Rope Marketing, Full-stack and Atomic Rewards. Complemented by the progency and rebudgeting, Martech 2.0 lays the foundation for exponential forever profitable growth and the making of a “profipoly.” It is a strategic inflection point in marketing.
The basis for competition is changing. Marketplaces will create private labels out of categories that are successful. Brands will realise that they will need to create a bypass to marketplaces and build their own websites and apps to own the customer relationship. In a world devoid of third party cookies, first-party (and zero-party) data is the gold that brands must strive for. Sooner or later, every growing business will need its own direct relationship with customers. What marketers need to do is to focus on jobs customers want done and craft defining moments because many of the other levers of competition are going to be less effective in a world where every brand can sell anything to everyone via a ubiquitous and efficient logistics network.
In this world, the three metrics of hooked score, reacquisition ratio, and earned growth rate can be the guiding lights for marketers. Leading the way into this brave new world of Martech 2.0 will be the three magicians: microns, micronbox and muniverse.