The Future of Marketing

The world of marketing is changing. One of the biggest shifts that I see happening is that the extreme focus on adtech (new customer acquisition) will move to martech (customer retention and development). For one, there are only so many new customers to acquire – unless one is starting up. Second, brands are going to realise that there has been limited focus on monetising their current customer base in the mad rush to acquire new customers at any cost. Third, in the post-Covid world companies will find capital hard to come by which means they will need to focus harder on making the most of the customers they already have. That’s where martech will play a very important role going forward. The 80:20 split between adtech and martech will flip in the years to come.

Customer retention and development needs a very different approach. While the temptation is to focus on all customers, CMOs must differentiate. The “best” customers provide disproportionate revenue and profits. Identifying who these best customers are must become a priority. This has become easier with the data trails that customers leave. Analysing transaction data to compute customer lifetime value (CLV) and thus identify the top 20% customers has to be the core of the martech strategy.

The next question is: what to do with the best customers? This is where I want to bring in the idea of “Velvet Rope Marketing” (VRM). One could also term it as red carpet treatment or white glove handling. In all cases, the theme is the same: how to create a differentiated experience for the best customers? VRM combined with omni-channel personalisation is the future of marketing. We will discuss more on this in future posts.

Knowledge@Wharton Interview

Mukul Pandya had interviewed me in Jan when I was at Wharton. In it, I spoke about the future of marketing (omni-channel personalisation, focus on best customers, maximising customer lifetime value), Netcore’s roadmap, the “profi-corn” mindset to build companies, and what India needs to do to counter the current slowdown (which will get worse after Covid-19). All of these are themes I will explore in my future writings. A few excerpts from my interview:

  • What should be the goal of marketing? What would I as a CMO love to do? I’d love to maximize the lifetime value of my customers, which means I need to identify from my current set, from my current cohort, who are my best customers. How can I get them to spend more? How can I engage with them more? Earlier, it was very difficult to do this. Every person was treated pretty much the same. The next question is: What are the characteristics of my best customers? How can I go out and acquire more such customers? A marketer now has the ability to almost craft the perfect company, the perfect organization, with a customer base of the best customers.
  • Twenty percent of your customers account for 200% of your profits, which means there are probably a lot of customers who are actually causing you to lose money. That may not matter today, but at some point in time it will. Companies will start realizing that all customers are not equal and that they need to start analyzing their segments and figure out which customers they should go after. Which are the types of customers they need to attract and engage?
  • Identify and engage with your best customers. That is the differentiated proposition that a company can create. That is the way to create valuation for their own businesses and incredible value for customers via omni-channel personalization. You can’t deliver that to every customer of yours. So focus on your best customers and give them omni-channel personalization.
  • ….how we’ve architected the company…the word I like to use is “profi-corn.” Many of the unicorns have been burning a lot of cash. I felt we needed something new, a new way to build companies, the way we have built Netcore over the last 20 years.
  • A profi-corn has four characteristics. It’s profitable. It is private. It’s bootstrapped — there is no external capital, which ensures that the focus is on employees and customers, and not investors. And it has a baseline valuation — let’s say $100 million. Unicorns have a billion-dollar valuation, but the founding team is probably left with less than 10% of it. So if it’s $100 million (for profi-corns), and the founding team and the employees own 100%, it’s almost the same thing.
  • About a year-and-a-half ago, I put together an idea called Dhan Vapasi, which means wealth return. This is perhaps the most powerful idea to counter what we are seeing in India.
  • Our idea was that you can start monetizing all these assets…bring out all the idle land or idle assets into circulation. As we start generating money from these assets, the idea should be to return it to the people. This is the people’s wealth. The government only controls these assets. It’s the people who are the owners. To counter the slowdown on the demand side, our proposal was that every Indian family can be given back Rs. 100,000 (approximately $1,400) every year. This effectively doubles the median income of a family in India. As they start spending, it starts the virtual cycle of consumption, manufacturing and job creation. I think if the government can do this it will put Indians on an irreversible path to prosperity. Do it for 10, 20, 30 years — that’s the kind of wealth which is locked up in India. That’s how you can replicate the Chinese success. You can pull out a few hundred million people from poverty in the next 10 years.

 

A New Blog Beginning

I am re-starting blogging. For 12 years between 1999 and 2012, I had blogged daily at emergic.org. And then I stopped. It’s time to go back to blogging.

I have never been comfortable with Twitter or the other social media platforms. I was one of the early bloggers. I liked the free-format style of just writing one’s thoughts without the constraints of letters or worries about followers. I wrote for myself. The empty text box of Movable Type first and then WordPress opened me up. And during these trying times of Covid-19 sitting at home in Mumbai, I decided that I needed an outlet once again.

I hope to write daily. Something new everyday. I want to make the blog a mirror for my thoughts – as it once was.

There are three broad themes I hope to cover: the future of marketing (linked with what I am doing at Netcore), my experiences as an entrepreneur and building a profitable business and what India needs to do to be free and rich (the work that I had started – and stopped – at Nayi Disha).

And with these there will also be some diversions – books I read, links to some of my past writings (which will make me read my own thoughts from a decade or two ago), and the occasional surprise!

So, a we start a new financial year under great uncertainty in India, I want to make writing a daily certainty in my life.