Profipoly: Marketing’s Fourth Wave and Final Frontier

Published November 21-December 5, 2023

The Delta Change

Mid-September, I got an email from Delta Airlines. (Postscript: Since then, Delta has modified some aspects of their loyalty program.)

For the first time, SkyMiles Members living outside of the U.S. will now earn Medallion Status via Medallion Qualification Dollars (MQDs). Starting January 1, 2024, all you will need are MQDs to achieve Status. No need to keep track of miles (MQMs) or segments (MQSs) flown. All currencies convert to USD at the standard exchange rate at the time of ticketing and/or purchase and will then convert from $1 USD to $1 MQD.

With many more ways to earn MQDs, this is what you will need to achieve in 2024 to earn 2025 Medallion Status:

Silver Medallion: $6,000 MQDs

Gold Medallion: $12,000 MQDs

Platinum Medallion: $18,000 MQDs

Diamond Medallion: $35,000 MQDs

Wall Street Journal explained the move:

Travelers won’t need to step on a plane to earn status in frequent-flier program—if they spend enough money.

Delta had been a holdout in keeping its SkyMiles loyalty program closely tied to flying even as rivals had shifted to reward credit-card spending more richly.

Now, the carrier is shifting to a model that ties status exclusively to how much people spend, either on travel with the airline and its partners, on co-branded credit cards, or by booking hotels, rental cars and vacation packages through Delta channels.

Elite status has long been highly sought after—and hotly pursued—by frequent fliers who cherish perks like early boarding, free checked bags, seat upgrades, and bonus miles to spend on award travel. Delta is the latest carrier to decide that flying is no longer a prerequisite.

Washington Post had this:

While the airline says its revamped system has “simplified” the SkyMiles program for repeat customers, it’s actually dealing a significant blow to the middle class of travelers, inciting outrage on social media and promises from some to quit flying Delta altogether.

… It’s all part of a massive shift from years of luxury travel perks for the masses, repeated status extensions resulting from the pandemic, and credit card acquisition tactics that sold unfettered entry into airport lounges. As airlines continue to benefit from a high volume of travelers, it looks like the beginning of the end for a golden era of status hacking.

By linking rewards and status to spending, Delta is ushering in the next wave in marketing: where customer value isn’t just about loyalty, but about actual monetary contribution, a shift away from simply retention to maximising revenue and profits. Welcome to Profipoly Marketing, where brands don’t just seek to retain customers, but actively strategise to optimise and maximise their revenue streams from existing customers and their networks. Such shifts, while potentially polarising, underscore the evolving nature of brand-consumer relationships in the digital age. As brands prioritise profitability, consumers will need to recalibrate their expectations and loyalties. In this series, we’ll unpack how the transition to profipoly marketing – the fourth wave in marketing and its final frontier – will redefine industries, challenge long-held beliefs, and shape the future of eCommerce.

Crossing the Chasm

Marketing is close to fulfilling its ultimate vision – the maximisation of lifetime revenue and therefore exponential forever profitable growth, resulting in the creation of a profits monopoly (“profipoly”) for the successful implementers. Marketing’s first two three waves focused on brand building, performance marketing (adtech), and retention and growth (martech). The rise of ‘Profipoly Marketing’ is marketing’s fourth wave. Anchored in data, tech, and AI, it will enable businesses to maximise revenue and profits once they’ve built the brand, acquired customers, and retained them.

This wave will bring mutual benefits for brands and customers. Brands will be able to build deep relationships with their existing customers and thus reduce the need for continuous and costly new customer acquisition. Customers will experience omnichannel personalisation and frictionless funnels where their attention is not wasted on generic or useless product recommendations.

This harmonisation of the brand-customer relationship is the promise of profipoly marketing. While we have glimpsed some of its promise, tomorrow’s world of inbox commerce, digital twins, green journeys, atomic rewards, velvet rope marketing, and earned growth will herald a Generative AI-like transformation in marketing by fixing the customer journey frictions that have long plagued brands in their pursuit of sustainable growth and profitability.

Modern marketing’s journey began a century ago with brand building. It then entered the digital world with targeting based on interest (content viewed) and quest (search terms). Martech is helping brands retain and engage customers. It is now set for its next logical and revolutionary leap. Knowing more about one’s own customers, decoding their digital genome, predicting their next actions, maximising their lifetime value, and leveraging their friends and family network for referrals will slash cost of acquisition and grow revenues thus creating a surge in profitability. This is a $200 billion unlock opportunity for brands because that is the spending which is being wasted today on wrong acquisition and reacquisition. This elimination of AdWaste will bring a flywheel of innovation as brands and martech solution providers benefit – brands will be able to invest more in innovation, while martech vendors will be able to create even better platforms for smoothening the brand’s journey into an era of profitable growth.

This is the world I have described over the past three years in my writings. It is a world that can now be brought to life. Just like artificial intelligence progress happened slowly and then suddenly, marketing’s chasm between acquisition and retention is about to be crossed with a flurry of ideas and innovations. Think of this as marketing’s version of the ‘singularity’ concept – where brands can maximise revenue and profitability, and can differentiate between their customers to enable their best customers to get amazing experiences. As customers, we will welcome this world where our time and money are not wasted, where the right products are showcased at the right time on the right channel, and where our experiences match not just our current spending but also long-term potential with brands.

In this series, we will discuss marketing’s past, present, and future. We will delve into the breakthrough technologies which will bring this new world to life. It is a world of interest to all of us. While some of us are marketers and others are vendors, we are all customers.

Marketing 101

At its core, marketing is the bridge between a product or service and its potential customers. It’s both an art and a science, merging creativity with data-driven strategies to communicate, persuade, and provide value. As Peter Drucker aptly put it, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”

Marketing is, first and foremost, about understanding value: the value a product or service brings to a customer and the value a customer brings to a brand. It’s about identifying needs and fulfilling them. As the renowned advertising executive Leo Burnett once said, “Make it simple. Make it memorable. Make it inviting to look at. Make it fun to read.”

In every marketing effort, the central objective is to translate the essence of a product or service into something relatable and desirable for the consumer. This requires an innate understanding of the market, a deep dive into consumer psychology, and an effective communication strategy that resonates with the target audience. To quote Drucker again, “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”

Marketing is as much about listening as it is about communicating. In the words of David Packard, co-founder of Hewlett-Packard, “Marketing is too important to be left to the marketing department.” This quote underscores the pervasive nature of marketing; it isn’t a function that operates in isolation. It’s intertwined with product development, customer service, sales, and virtually every other aspect of a business.

The “listening” part of marketing involves market research, consumer feedback, and trend analysis. By staying attuned to consumer needs and preferences, companies can better position their offerings in the marketplace, innovate more effectively, and pivot when necessary.

One of the constants in marketing is change. With the evolution of technology, especially the rise of digital platforms and social media, marketing strategies have had to continually adapt and evolve. Philip Kotler, often hailed as the “father of modern marketing,” stated, “Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating genuine customer value.” In today’s digital age, creating value means meeting customers where they are, be it on social media, search engines, or email, and providing them with personalised, timely, and relevant content.

More than just transactions, marketing is about building long-term relationships. Maya Angelou’s words offer profound wisdom in this context: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” For brands, this sentiment is crucial. Effective marketing isn’t just about a one-time sale; it’s about creating a lasting impression, fostering loyalty, and building a community of advocates.

Marketing, in essence, is a dynamic dance between brands and their audiences. It’s a multifaceted discipline that requires a balance of creativity, analytics, intuition, and strategy. As Seth Godin, a modern marketing guru, succinctly puts it, “Marketing is a contest for people’s attention.” In an ever-evolving landscape, the brands that truly understand their customers, embrace change, and focus on building genuine relationships are the ones that will thrive. In the grand tapestry of commerce, marketing threads weave narratives, emotions, and value propositions, creating a colourful mosaic of interactions, impressions, and connections.

Marketing Defined

Investopedia: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” == Official definition from the American Marketing Association, approved 2017. Product, price, place, and promotion are the Four Ps of marketing. The Four Ps collectively make up the essential mix a company needs to market a product or service. Neil Borden popularized the idea of the marketing mix and the concept of the Four Ps in the 1950s.

Wikipedia: “Recent definitions of marketing place more emphasis on the consumer relationship, as opposed to a pure exchange process. For instance, prolific marketing author and educator, Philip Kotler has evolved his definition of marketing. In 1980, he defined marketing as “satisfying needs and wants through an exchange process”, and in 2018 defined it as “the process by which companies engage customers, build strong customer relationships, and create customer value in order to capture value from customers in return”. A related definition, from the sales process engineering perspective, defines marketing as “a set of processes that are interconnected and interdependent with other functions of a business aimed at achieving customer interest and satisfaction”.”

Marvin Amm: “Probably one of the most famous quotes in marketing comes from Harvard Business School Professor Theodore Levitt: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” What Professor Levitt wanted to describe with this statement is just as true today as it was when he first said it. In fact it could be argued that it is indeed more true today than ever before. People want “bundles of benefits”. Your marketing mix should not be centred around your product, nor your company not even your customers. It should be centred around your customers’ needs and wants. Every product, no matter what it is, basically provides a service or a solution to a problem a customer is facing.”

Here are some more definitions compiled by Jeff Slater.

Scott Galloway: “The act of creating value for an organization by delivering a unique message to a target audience and building a relationship with them.” He believes marketing is not just about advertising but about creating a relationship with customers and delivering value to them. Galloway’s focus on the importance of customer relationships in marketing sets him apart from many other marketing experts.
Simon Sinek: “Marketing is not the art of finding customers, but the science of creating value for them.”
Steve Jobs: “Marketing is not just about selling what you make, but about making what people want.”
Jerome McCarthy: “Marketing is getting the right goods or services to the right people at the right place and at the right time at a profit.”
Chartered Institute of Marketing: “Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably.”

For me, marketing is the art and strategy of creating a profipoly, a profits monopoly, by identifying the most valuable pool of customers for a product, and maximising revenues from them and their network. I echo this insight expressed by Fred Reichheld in his book, “Winning on Purpose”: “There is only one way to grow a business profitably. You make sure your customers are treated so well that they come back for more and bring their friends.” This should be marketing’s definition and purpose. In light of this, marketers need to rethink themselves as Chief Profipoly Officers.

First Three Waves

I asked ChatGPT (based on my core thesis) to summarise marketing’s first three waves.

Branding: The Birth of Modern Marketing

The first wave of marketing, largely prominent throughout the 20th century, was centred on branding. It was the era of television commercials, billboards, and print advertisements, aiming to ingrain a brand’s image and messaging into the minds of consumers. As TV viewership soared, commercials became the centrepiece for many marketing campaigns, with iconic jingles, mascots, and taglines entering popular culture. Companies like Coca-Cola, Nike, and McDonald’s emerged as giants, largely thanks to their strong brand identities.

Branding was about creating a feeling, a connection between the consumer and the product. The right brand could assure quality, evoke emotions, and drive customer loyalty. Products became more than just commodities; they became statements of personality, class, and choice. With limited channels to communicate, marketers focused on creating impactful and lasting impressions with every advertisement.

Performance Marketing: The Digital Transformation

The turn of the millennium brought about the second wave of marketing: performance marketing, fuelled by adtech. As the internet became ubiquitous, marketing avenues multiplied, giving rise to platforms like Google, Facebook, and Instagram. Performance marketing was characterised by its focus on measurable actions and results. No longer was marketing just about creating an impression; it was about driving a direct response – clicks, shares, purchases.

Tools and platforms started offering precise targeting options, allowing businesses to reach specific demographics or even individuals. The use of cookies and pixels meant that advertisers could track a user’s digital journey, optimize ad spend, and maximize ROI. Automated bidding, real-time analytics, and a plethora of ad formats became standard. The introduction of search engine marketing further enhanced the scope of performance marketing, making advertisers pay only for the tangible results they desired.

Martech: Nurturing Relationships in a Digital Age

While still in its infancy, the third wave of marketing, martech, is poised to redefine the landscape. With the saturation of digital advertising and increased concerns about privacy and data protection, martech emphasises retention, engagement, and growth. It’s no longer about just attracting customers but nurturing and maintaining relationships with them.

Platforms and tools under the martech umbrella provide insights into customer behaviour, segmenting them based on their interactions with brands. Email marketing, CRM systems, and automation platforms enable businesses to send personalized messages at scale, improving customer loyalty and lifetime value. The emphasis is on creating a seamless customer journey, ensuring that each interaction is tailored and relevant.

Martech recognises that in a digital world, consumers are constantly bombarded with messages. The key to standing out isn’t merely attracting attention but cultivating relationships. With the aid of artificial intelligence, predictive analytics, and machine learning, martech platforms can predict future behaviour, allowing businesses to address customer needs proactively.

Conclusion

The progression from branding to martech illustrates the journey of marketing from broad strokes to fine-tuned, data-driven approaches. Each wave has built upon its predecessor, incorporating previous lessons while introducing innovative methods. It’s essential to recognise that these waves don’t entirely replace each other but often coexist, each contributing unique value to the marketing mix. As we transition into the next era of marketing, one thing remains constant: the importance of connecting with customers, whether through memorable branding, direct online interactions, or personalised digital experiences.

Push for Profits

Marketing’s second wave – performance marketing – transferred power and profits from brands to the Big Adtech platforms. In the eternal quest for digital customers, brands outbid each other on auction platforms. Rising customer acquisition cost (CAC) hurts profitability. Adtech is a leaky bucket and a trap from which brands find it hard to escape. While a sub-industry has emerged to optimise the return on ad spend (ROAS), the answer lies elsewhere – in building deep relationships with existing customers so as to obviate the need for incessant new acquisition.

Martech – the third wave – focused on retention, engagement, and growth. But its impact has been limited because marketers still lavish their focus and budgets on adtech and acquisition. As a result, the impact of martech has been muted. It has also not been able to solve the frictions marketers face – attention recession, red journeys in the conversion process, and dormancy and churn. As a result, martech has not been able to impact profitability.

Martech done right is the real solution for brands to regain control of their P&Ls. So far, all marketers could see were unsolvable frictions in the existing customer funnels limiting their gains from marketing’s third wave. A range of new ideas and innovations is about to usher in change and enable marketers to cross the final frontier to exponential forever profitable growth. This is the fourth wave of profipoly marketing.

Here are excerpts from some of my recent writings.

Mystery of the Missing Profits [LINK]: “The Land of Digital promised untold riches for brands. The dreamy vision of eCommerce painted a world without walls, where businesses, no matter their size, could seamlessly transition from local storefronts to global powerhouses. The digital paradigm shift promised the allure of not just vast audiences but also a chance to cultivate intimate relationships with customers. Data analytics tools aggregated every customer action and promised insights into consumers’ desires, habits, and preferences, implying a future where every online shopping experience would feel tailored and unique. The very architecture of online platforms, from their algorithms to user interfaces, was built with the promise of propelling businesses to new heights, buoyed by the promise of limitless reach and scale. With infinite scale would then come exponential profit growth. This was the hope. The reality has turned out to be very different. As the dust settled, the complexity of building digital businesses has become apparent. It’s not that the promises were hollow, but rather that the practicalities of the vast digital market had nuances that weren’t initially apparent. The once blue ocean turned shark-infested as businesses flooded the digital space. The consequence? A heightened race for consumer attention, leading to an escalated marketing arms race. Discounts, once an occasional incentive, became an omnipresent necessity. Flash sales, promotional events, and loyalty programs were no longer value-added strategies but essential tools for survival… Even as digital/B2C/D2C/ecommerce companies are growing rapidly, their profits are not keeping pace. Every B2C/D2C CEO must be thinking: “I’ve integrated every digital facet—from an optimised website and app to a seamless omnichannel experience and prompt delivery. What’s missing in this equation? Why aren’t the profits pouring in?” Even traditional retailers who have invested in digital transformation initiatives would be asking themselves the same question: “Where are the returns on my investment?” The short answer: Elsewhere. The profits are on the balance sheets of the ads sellers, arms sellers, and access sellers. They are just not with the actual sellers!”

eFolly to Profipoly [LINK]: “Lured by the promise of scale and novelty, marketers fall into the all-too-easy trap of constantly seeking new customers. They focus their strategies on the top of the sales funnel and become consumed by the deceptive delight of an ever-expanding customer base. However, in this relentless chase, an essential component of their business falls by the wayside — their existing customers. The quest for new acquisition consumes such a significant share of resources that it eclipses the more sustainable and arguably more profitable segment — existing customers. These are the customers who have already demonstrated their trust and loyalty towards the brand, and who are ignored in favour of new ones. This focus on new customers creates an attention deficit for existing customers, gradually eroding the potential for repeated purchases, brand loyalty, and advocacy. Instead of using these existing relationships as a catalyst for sustainable growth, marketers find themselves in a bidding war for the new, with spirally increasing spending to replenish a leaking customer bucket.”

Solving eCommerce’s Fifth Funnel Friction [LINK]: “[Friction] exists in various forms and has a significant, often underestimated, impact on profits. These frictions have created inefficiencies and roadblocks in online and offline businesses, impeding customer engagement and diluting brand value. ‘Funnel frictions’ in customer journeys are the silent assassin of profits. From unidentified customers slipping through the cracks to inefficient ad spending, these frictions create hurdles in establishing profitable relationships with consumers. They lead to disjointed customer experiences, increased costs, lower conversion rates, and ultimately, eroded profits. The ability to identify and address these frictions, therefore, is not just about improving customer experiences but also about securing a brand’s bottom line.”

So, how is the fourth wave – profipoly marketing – different?

Profipoly Marketing

To summarise the story so far: in the expansive saga of marketing, we have witnessed three formidable waves that have dictated the rhythm of this discipline. The first wave, centred on branding, established the importance of creating a distinct identity in the minds of consumers. This was followed by the performance wave (adtech), which harnessed the potential of digital landscapes to target and capture specific audience segments with precision. The third wave, focusing on retention through martech, recognised that acquiring a customer was only half the battle—keeping them loyal was where long-term value lay.

Emerging on the horizon now is a wave that promises to revolutionise the marketing world: profipoly marketing, a natural progression from branding to performance to retention and finally to profits, in sync with the marketing industry’s evolution and its increasing sophistication. What does this entail?

Profipoly marketing isn’t a departure from the previous waves but rather a synthesis and evolution. The foundational branding efforts ensure that businesses establish trust and identity, while performance marketing builds on this by identifying and acquiring the most suitable audience. Once acquired, martech ensures they stay loyal. Profipoly takes this a step further by emphasising not just loyalty, but profitability. Instead of casting wide nets or even targeted nets, profipoly marketing aims to maximise revenue from the most valuable customer segments and their networks.

The term “final frontier” often conveys a sense of reaching the pinnacle or zenith of a particular journey. In the context of marketing, the profipoly wave stands as the ultimate goal that every brand aspires to achieve—a monopoly on profits. Unlike the previous waves that tackled specific challenges of the marketing journey, profipoly is holistic. It looks at the entire customer lifecycle and optimises it for maximum profitability. It’s not just about making sales but making the most profitable sales.

Moreover, profipoly marketing consolidates lessons from previous waves, integrating branding’s trust-building, performance marketing’s precision, and martech’s retention strategies, all with a razor-sharp focus on profits. This integration makes it a comprehensive approach, leaving little room for another wave to supersede its ambition.

In a profipoly world, brands will become incredibly adept at identifying their Best customers – those who not only bring business but also influence others to do the same. These customers won’t be valued just for their current worth but their entire potential lifecycle value.

With the integration of advanced analytics and AI, brands will forecast buying behaviours, preferences, and even periods of lull in a customer’s journey. They will preemptively address concerns, offer tailored solutions, and constantly recalibrate strategies to ensure that the Best customers stay forever.

A profipoly-driven brand will not expend resources equally on all customers but will invest disproportionately in keeping its highest value customers engaged and satisfied. This doesn’t mean alienating other customers, but rather optimising resources for maximum profit generation. Moreover, the line between loyalty programs and customer experience will blur. Brands will offer unique, hyper-personalised experiences to their top-tier customers, making them not just loyal followers but ardent brand advocates.

Profipoly marketing is not just the next phase but arguably the most pivotal one. As we transition into this new era, brands need to recalibrate their strategies, tools, and mindsets. The goalpost has shifted from mere sales or loyalty to maximising profitability. In this brave new world, the brands that master the art of profipoly will not only survive but thrive.

What is changing for marketers to cross the chasm? A dozen new ideas and innovations.

Ideas and Innovations: Unistack, Generative AI

Could profipoly marketing have emerged earlier? I don’t think so. It needs multiple innovations that have been in the works for some time to come together. Profipoly marketing is not just about taking consumer data and running algorithms to personalise recommendations. It is about a unified experience across channels and brand properties. It is about differentiation in terms of ease, exclusivity, and access for the Best customers. It is about frictionless journeys, perfect predictions, and inbox commerce. All of this requires thought and technology breakthroughs – just like the transformers idea and cheap computing enabled the Generative AI revolution. Twelve ideas and innovations provide the foundation for the profipoly revolution.

1. Unistack

Unistack, or a “unified stack,” aims to address the issue of integrating diverse point solutions. Over time, marketers have leaned on various point solutions for handling distinct facets of their marketing efforts, like data gathering, customer segmentation, and campaign orchestration across different channels. However, this approach has resulted in fragmented data and integration hurdles, obstructing marketers from achieving a comprehensive understanding of their customers.

Attempts to remedy these issues have been made through Customer Data Platforms (CDPs) and Application Programming Interfaces (APIs), but the fundamental problem persists. Marketers are still wrestling with disjointed databases and inadequate AI-ML effectiveness because of the siloed data, which hampers their ability to deliver optimum customer experiences. The first-generation martech solutions contributed aggregation and automation, but inadvertently created data silos and failed to provide a complete, seamless solution. Unistack consolidates customer data, engagement, and experience management, and full channel control into one platform. Adopting a Unistack approach allows marketers to gain a holistic, integrated perspective of their customers, thereby improving the effectiveness of their customer relationships and unlocking the potential of seamless omnichannel personalisation.

[Source: Martech 2.0: A New Profits Paradigm for Marketers and Vendors]

2. Large Customer Model

The first wave of Generative AI in marketing is helping drive content creation. Anna Anisin explains the uses:

Brainstorming and Idea Generation: Coming up with fresh ideas is essential to capturing customer attention. Generative AI models, such as ChatGPT, enable brainstorming sessions, offering creative suggestions and alternative perspectives.

Automating Content Creation: Generative AI can empower marketers to automate various aspects of content creation, saving time and resources for faster time-to-market. From generating social media posts and blog articles to crafting email campaigns, AI models can produce draft content that human marketers can refine and personalize.

Enhancing Existing Content: Generative AI can update existing content by providing valuable insights and suggestions for improvement. By analysing data patterns and user feedback, AI models can identify areas where content such as marketing copy, ad creative and customer messaging can be optimized.

Creating Visuals: Generative AI models can generate stunning visuals, including graphics, images, art forms and videos. Marketers can leverage these AI-generated visuals to enhance their storytelling, create eye-catching social media posts and produce visually engaging presentations.

The real opportunity lies beyond. Generative AI, with its ability to simulate and create data-driven patterns, is poised to revolutionise the marketing landscape. In the realm of predicting customer behaviour, this form of AI can sift through vast amounts of historical data to construct highly accurate models of customer preferences, behaviours, and potential future actions. By identifying subtle patterns and correlations that may elude traditional analytics, Generative AI can anticipate the ‘next best actions’ of customers with unparalleled precision. This not only ensures more personalised customer experiences but also enables marketers to be proactive rather than reactive, crafting campaigns and strategies that align seamlessly with evolving customer desires and needs.

In the world of customer engagement, Gen AI can be used to create a Large Customer Model (LCM), analogous to the LLMs we are seeing and using. From a previous essay:

LCMs…operate in a different ‘language’—the language of customer behaviour. They predict the next action in a customer’s journey by analysing extensive datasets of customer interactions and behaviours. The aim is to recognise patterns and sequences leading to specific outcomes. A prime example would be a good recommendation engine, which predicts what product a customer is likely to be interested in next, based on their browsing history and past purchases.

However, LCMs surpass LLMs in their ‘vocabulary’ breadth. They not only consider individual actions, like browsing a product or making a purchase, but also can consider a wide array of external factors. For instance, factors like the time of day, weather conditions, or significant events like holidays and festivals can influence customer behaviours.

What makes LCMs truly powerful is their ability to fuse learnings from vast datasets with real-time behavioural information. They capture the ‘customer language’ at an individual level, learning from each interaction to refine the predictive models. They anticipate behavioural changes, offering marketers the opportunity to adjust strategies proactively.

Think of the LCMs as next-generation Customer Data Platforms (CDPs) where data comes to life with predictions of next best actions.

Ideas and Innovations: Unistack, Generative AI

1. Unistack

[Source: Martech 2.0: A New Profits Paradigm for Marketers and Vendors]

2. Large Customer Model

The first wave of Generative AI in marketing is helping drive content creation. Anna Anisin explains the uses:

Brainstorming and Idea Generation: Coming up with fresh ideas is essential to capturing customer attention. Generative AI models, such as ChatGPT, enable brainstorming sessions, offering creative suggestions and alternative perspectives.

Automating Content Creation: Generative AI can empower marketers to automate various aspects of content creation, saving time and resources for faster time-to-market. From generating social media posts and blog articles to crafting email campaigns, AI models can produce draft content that human marketers can refine and personalize.

Enhancing Existing Content: Generative AI can update existing content by providing valuable insights and suggestions for improvement. By analysing data patterns and user feedback, AI models can identify areas where content such as marketing copy, ad creative and customer messaging can be optimized.

Creating Visuals: Generative AI models can generate stunning visuals, including graphics, images, art forms and videos. Marketers can leverage these AI-generated visuals to enhance their storytelling, create eye-catching social media posts and produce visually engaging presentations.

In the world of customer engagement, Gen AI can be used to create a Large Customer Model (LCM), analogous to the LLMs we are seeing and using. From a previous essay:

LCMs…operate in a different ‘language’—the language of customer behaviour. They predict the next action in a customer’s journey by analysing extensive datasets of customer interactions and behaviours. The aim is to recognise patterns and sequences leading to specific outcomes. A prime example would be a good recommendation engine, which predicts what product a customer is likely to be interested in next, based on their browsing history and past purchases.

However, LCMs surpass LLMs in their ‘vocabulary’ breadth. They not only consider individual actions, like browsing a product or making a purchase, but also can consider a wide array of external factors. For instance, factors like the time of day, weather conditions, or significant events like holidays and festivals can influence customer behaviours.

What makes LCMs truly powerful is their ability to fuse learnings from vast datasets with real-time behavioural information. They capture the ‘customer language’ at an individual level, learning from each interaction to refine the predictive models. They anticipate behavioural changes, offering marketers the opportunity to adjust strategies proactively.

Think of the LCMs as next-generation Customer Data Platforms (CDPs) where data comes to life with predictions of next best actions.

Ideas and Innovations: Catalog and Customer Data, AI-enabled Catalog Enrichment

5. Catalog and Customer Data

Every eCommerce site is about two elements: the product catalog and the customer’s interactions with the catalog. Search and product discovery is about matching customers to the right products in the catalog. What is needed is a tech stack that combines the inputs from both.

A successful eCommerce platform essentially revolves around two core components: the product catalog and the customer’s interactions with the catalog. Let’s delve deeper into the significance of each and their symbiotic relationship:

The Product Catalog: This isn’t just a list of available products. It’s a dynamic and comprehensive representation of a brand’s offerings. Each product entry is often laden with metadata – descriptions, specifications, images, reviews, and more. This metadata isn’t just informative; it’s crucial for search algorithms to understand the product’s context, relevance, and value proposition.
Customer Interactions: Every click, search query, and purchase made by a customer is a data point. This data, when aggregated and analysed, provides invaluable insights into customer preferences, behaviours, and buying patterns. It sheds light on what customers value, how they navigate the site, and where they face challenges or drop-offs.

The magic lies in the confluence of these two streams. When we speak of search and product discovery, we’re essentially talking about a sophisticated matchmaking process. Customers arrive with specific needs, intentions, or sometimes just vague curiosities. The platform’s role is to guide them, using data-driven insights, to products that best align with their desires, thereby facilitating a potential purchase.

This is where the tech stack plays a pivotal role. A robust tech stack doesn’t just operate these two elements in isolation; it intertwines them. It utilises customer interaction data to continuously refine and tailor the product catalog’s presentation. Moreover, this union of catalog and customer data can drive other functionalities like personalised recommendations, targeted marketing campaigns, and predictive stocking. If the system identifies a rising trend in, based on search and interaction data, it can promote such products more prominently, recommend them to relevant user segments, and even advise the inventory team to stock up based on projected demand.

In essence, the fusion of catalog and customer data, facilitated by a powerful tech stack, is what propels e-commerce platforms from being mere digital storefronts to intelligent, responsive, and highly efficient marketplaces. By understanding both what they have to offer (catalog) and what their users are seeking (interactions), e-commerce platforms can perfect the art of delivering the right product to the right customer at the right time.

6. AI-enabled Catalog Enrichment

The vitality of product discovery hinges on the depth and accuracy of the data associated with each product in an eCommerce catalog. Traditional methods of product listing often include basic details – a standard description and a handful of keywords, usually inputted manually by merchandisers. While this baseline information might be accurate, it’s often not comprehensive enough to fully exploit the capabilities of advanced search algorithms. This is precisely where the power of AI can transform the game.

Deepening Descriptions: AI can delve into product details and, by analysing patterns from similar or related products, expand on the descriptions provided. It can include attributes that human merchandisers might overlook, such as subtle product features, associated uses, or even the contexts in which a product might be beneficial.
Keyword Augmentation: Beyond the basic keywords associated with a product, AI can generate a plethora of related terms, synonyms, or frequently searched phrases. Drawing from vast datasets and understanding user search behaviour, AI can predict and append keywords that potential customers might use, increasing the likelihood of a match.
Contextual Understanding: AI’s ability to comprehend context can be invaluable. Recognising that users might be searching for solutions rather than specific products, AI can associate products with needs.
Continuous Learning and Adaptation: One of the standout features of AI is its ability to learn continuously. As users interact with the platform, AI can understand which product descriptions and keywords resonate most with users, refining and optimizing the catalog in real-time.

The Hindi saying, “Jo Dikhta Hai, Woh Bikta Hai” beautifully encapsulates the essence of this AI-powered transformation. In the vast digital bazaar of eCommerce, visibility is currency. And by enriching product catalogs using AI, products don’t just wait to be found; they proactively reach out, ensuring they’re ‘seen’ by those who would most value them. In this dynamic landscape, AI isn’t just a tool; it’s a bridge, connecting products to their potential customers in meaningful and impactful ways.

[See Unbxd’s page for a glimpse of the possibilities.]

Ideas and Innovations: Unichannel, Email 2.0 powering Inbox Commerce

7. Unichannel

Unichannel can be viewed as a subtle yet significant refinement of the omnichannel concept. While it’s true that customers crave a seamless experience across channels, it’s challenging for marketers to deliver this, as they often work with multiple vendors for various channels. Consequently, customers could be bombarded with an email, SMS, WhatsApp message, and a push notification – all conveying the same message. This redundancy can become extremely irritating, leading some customers to opt out of receiving brand messages. Unichannel rectifies this by (a) identifying each customer’s preferred channel and (b) implementing a journey overlay for message delivery. This means that if I receive a push notification and respond to it, no additional messages with the same theme will be sent to me. If I don’t respond within a specified time, an email can be triggered, and so forth with follow-ups on other channels as needed. Unichannel essentially adheres to the “One Customer, One Message” principle. It is designed to fix another commonly broken customer experience – the repetition of identical offers or alerts.

[Source: Martech 2.0: A New Profits Paradigm for Marketers and Vendors]

8. Email 2.0 powering Inbox Commerce

Unless ecommerce businesses have established a strong brand recall or have become indispensable fixtures in the lives of their customers, push messages are the only tool to entice shoppers to their properties (website and app) completing transactions. Push channels available to marketers are email, SMS, RCS, app notifications, and in some countries, WhatsApp. Each of the channels has their pros and cons, but what’s common is the low clickthrough rate: typically 1%, or 1 in 100. This constitutes a significant friction fraction.

For ecommerce companies, the solution is Inbox Commerce. It is about bringing the conversion funnel closer to the customer – from the website/app to the inbox. It seeks to consolidate the customer’s journey from awareness to purchase within the inbox itself, effectively acting as a micro-ecosystem. This is particularly powerful in an era of overwhelming digital noise, as it provides a streamlined, focused, and more personalised user experience.

Email has emerged as the most promising channel for this strategy due to its widespread use and acceptance, especially in developed markets, where it can account for 20-40% of revenue. I explored the idea of Email Shops in a recent essay: “The transformative solution in eCommerce is to think of websites and apps inside emails – where the entire journey from search and browse to purchase can be completed right inside the inbox. AMP makes this possible. These “email shops” are the next storefronts – and one which marketers can control because they can “push” these messages to their customers rather than relying on them to remember to visit their properties. Combined with Atomic Rewards to incentivise opens and other non-transactional actions, email shops have the potential to increase conversions exponentially, thus reducing the need for expensive and continuous new acquisitions to drive revenue growth. Email shops can thus become the profitability drivers for brands.”

Email 2.0 (powered by AMP in email) can harness data to deliver highly unique content and offers to each subscriber based on their behaviour and preferences – all in the sanctuary of the inbox. It thus has the potential to stand as the fulcrum for resolving all five friction points: Inbox Commerce, Green Journeys, Reactivation Progency, Near Zero Acquisition Cost, and Anon-to-Known.

[Sources: ProfitXL to Profipoly: Solving the Four Funnel Frictions and Email 2.0: The Fulcrum for Fixing Five Funnel Frictions]

Ideas and Innovations: Atomic Rewards, Action Ads

9. Atomic Rewards

Attention and engagement are upstream of transactions. Brands have focused on rewarding transactions either through loyalty programs of their own or partnerships with credit card companies. But what has been missed (or ignored) is what comes before the transaction – our attention. This is where “Atomic Rewards” can be the game changer as the solution to attention recession.

Atomic Rewards work across brands because no single brand engagement will offer enough incentives to become an independent program. These rewards are not linked with transactions. They come in the form of points (Mu) and are thus non-financial. The points aggregated across multiple brand engagements can be redeemed at the Mu Shop.

There are many uses of Atomic Rewards:

Email Actions: Atomic Rewards within Email 2.0 incentivise customers to engage with emails, which can be an effective method for reactivating dormant users. Customers could earn rewards for actions such as opening emails, clicking links, or making purchases, thereby increasing their engagement and likelihood of reactivation.
Progressive Profiling: By incentivising collection of zero-party data in the email itself (as part of the Engaging Footer), Email 2.0 allows for progressive profiling. What better way to know a customer than to ask directly? An ‘atomic reward” can facilitate this exchange by creating a “double thank you” moment.
Referrals incentivised by Atomic Rewards: Brands can leverage Atomic Rewards to incentivise existing customers (especially the most valuable) to refer their friends and family, effectively turning satisfied customers into brand ambassadors.
Atomic Rewards to power Email ID collection and gamification: To close the identity gap and encourage anonymous shoppers to provide their personal information, brands can leverage Atomic Rewards as a universal brand currency.

[Sources: Atomic Rewards: The Solution to Attention Recession and Email 2.0: The Fulcrum for Fixing Five Funnel Frictions]

10. Action Ads

We have always thought of ads as being associated with non-PII information (cookies rather than identities), on pull pages directed by user actions (websites and apps), and clickthroughs to landing pages. What if all of these assumptions were to change? Imagine “Action Ads” inside Email 2.0 messages – ads which can be associated with a PII, on pages pushed by brands, and where the actions are in-place without the need for a redirect?

In the dynamic realm of digital advertising, we’ve become accustomed to certain norms. Ads, as we know them, tend to follow a path influenced by non-PII information, typically relying on cookies and user-driven actions on websites and apps. The end goal? Get the user to click through to a landing page, thereby driving traffic and potentially, conversion. However, the world of advertising is on the brink of a transformative shift, with the introduction of “Action Ads”.

A Paradigm Shift to Push Pages: Traditional ads wait for users to arrive at a certain page, be it through search or direct navigation. Action Ads invert this formula. They reside inside Email 2.0 messages. Instead of the conventional pull mechanism, these ads are pushed to the user, making them proactive marketing tools.
Personalised Interaction with Identified Users: One of the chief attributes of Action Ads is their capability to be linked with Personally Identifiable Information (PII). This means ads are not just directed towards vague, cookie-defined personas but are aimed at identified individuals. The advantage? Tailored ads that resonate with users’ preferences, behaviours, and historical interactions, leading to much higher engagement rates.
Eliminating the Clickthrough Bottleneck: One of the perennial challenges of traditional advertising is the clickthrough rate — only a fraction of users who see an ad will actually click on it. Action Ads break this chain. They permit in-situ interactions, allowing users to perform actions like lead generation or shopping right within the email. The immediate environment keeps the user engaged and eliminates the cumbersome step of redirecting them to a different landing page.
Enhanced Relevancy and Responsiveness: Knowing a user’s email ID and profile paves the way for personalized marketing. Action Ads, residing in the email, can be curated to cater to the exact preferences of the user, making them more responsive and relevant. This also ensures a reduction in ad fatigue, a common outcome of seeing too many irrelevant ads.
Seamless User Experience: Action Ads make the user’s journey seamless. From seeing the ad to taking the desired action, everything happens in one place, the email. This continuity enhances user experience, making it smoother and more intuitive.
Revenue Generation: The transformative nature of Action Ads within Email 2.0 extends to direct monetisation. Brands can now generate revenue from their emails, thus enabling higher profits.

In essence, Action Ads stand at the forefront of a digital advertising evolution. Rather than simply serving as channels for passive engagement, these ads actively drive revenue by enabling in-email transactions. Alongside the incorporation of PII, Action Ads accentuate the personal touch in advertising, tailoring each interaction to the specific needs and preferences of the recipient. Their potential to both engage the user and directly boost revenue signifies a two-fold win for brands.

Ideas and Innovations: Progency, Earned Growth

11. Progency

A Progency (product-led agency) melds product offerings with a streamlined layer of agency services, anchored around the product itself, and adopting a performance-driven pricing model. Operating as an extended and integral arm of the marketing team, a progency doesn’t just deliver results; it thrives on them. Its compensation is tied to performance, transitioning it from a simple service provider to a genuine business ally. In essence, a progency encapsulates the concept of a “profits agency” – a technological ally that collaborates with brands to both guarantee and partake in profit generation.

This product-led agency will combine content and creative skill sets with number-crunching and software capabilities to build on top of a proprietary full-stack martech platform to deliver the outcomes marketers want with a performance (success-based) model. The progency will help marketing teams outsource the outcomes they want – just like is being done with adtech agencies that generate leads, app installs or new customers and are paid based on results.

The progency will be different because for the first time an agency will build solutions on top of its own product. In the past, agencies have not focused on having their own internal products. Adtech agencies have used products provided by Google and Facebook, and then overlaid their creative and analytical skills to deliver results. The progency will be tech-first, owning a martech platform. Ownership is important because only the developers will fully understand the power of what their platform is capable of. This is what will provide a sustainable competitive advantage to the progency – and ultimately benefit brands.

[Source: Progency for Martech: The Missing Link]

12. Earned Growth

Fred Reichheld, a prominent thought leader in loyalty and business growth, introduced many foundational concepts that reshaped our understanding of customer loyalty, most notably the Net Promoter Score (NPS). One of the new ideas associated with his work is the concept of “earned growth.”

Earned growth refers to the organic growth a company experiences due to the actions and recommendations of its loyal customers. In other words, it’s the growth a business achieves not through traditional marketing or sales efforts, but because of both organic growth and revenues generated via referrals and word-of-mouth growth. It is an idea that thus combines the power of retention and referrals.

Earned Growth is mathematically represented as Net Revenue Retention + Earned New Customers (ENC) – 100. Reichheld, Darnell and Burns discuss this in an 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.”

In essence, Reichheld’s concept of earned growth underscores the importance of customer loyalty and the immense value of turning customers into active promoters. It’s a reminder that, in the age of connected consumers and easy access to peer reviews and recommendations, the most potent growth strategy a company can employ is to genuinely satisfy its customers.

These then are the ideas and innovations that are the foundations for profipoly marketing.

Unistack
Large Customer Model
Digital Twins
Velvet Rope Marketing
Catalog and Customer Data
AI-enabled Catalog Enrichment
Unichannel
Email 2.0 powering Inbox Commerce
Atomic Rewards
Action Ads
Progency
Earned Growth

These twelve cornerstone concepts serve as the bedrock for profipoly marketing, sculpting a future where brands go beyond acquisition and retention to maximise customer lifetime value of the category’s Best customers organically and via referrals. They constitute the “poly” in profipoly: the many ideas and innovation that come together in unison to ensure exponential forever profitable growth.

Chief Profipoly Officer

In a blog essay entitled “Chief Profitability Officer” more than three years ago, I had written: “in the post-Covid world, Profit will become the fifth and most important P of marketing. Not just the CMO but every CxO will need to become the Chief Profitability Officer…Profits are oxygen for a business. In the new world that is being created, companies that are on the path to profitability will be the winners. The new marketing ideas that we have discussed…can help businesses lay a solid foundation to emerge victorious in the new future. Are you ready to don the title of Chief Profitability Officer for your business?”

In the time since then, I have come to think of profits as not just a number, but a framework for building a better business, one with exponential forever profitable growth, a profipoly, with the marketing function as central to this transformation.

I’ve laid out the ‘What’—the principles, tools, and strategies that underscore profipoly marketing. However, just as vital as the strategy itself is the ‘Who’—the individual or team that champions, directs, and embodies this shift.

Enter the role of the Chief Profipoly Officer (CPO). This isn’t just another corporate title but represents a paradigm shift in how companies will approach sustained profitability. A CPO’s role isn’t confined to traditional marketing silos. Instead, it is an amalgamation of marketing prowess, digital innovation, and keen business acumen. The leader is not just a visionary who understand that marketing isn’t just about brand visibility or even customer retention, but rather about optimising the entire customer journey for maximum profitability.

The CPO’s tasks are multifaceted. They are responsible for understanding and leveraging the latest in AI, data analytics, and consumer behaviour to craft strategies that not only appeal to the customer but also drive bottom-line results. Moreover, they will navigate the complex digital ecosystem, from email marketing 2.0 to the nuances of Velvet Rope Marketing, ensuring that every touchpoint is an opportunity for profit maximization.

In addition to the technical and strategic components, the CPO will be a unifying force within the company. By bridging departments – marketing, digital, finance, operations, and more – they will ensure that the organization moves cohesively towards its profipoly objectives. The importance of this role can’t be overstated. In a landscape where customer expectations are constantly evolving and where competition is fierce, the CPO’s insights, strategies, and leadership will be pivotal.

As we look ahead, the role of the Chief Profipoly Officers won’t just be another addition to the C-suites. Instead, they will become the lynchpin of business strategy, the navigators guiding companies through the choppy waters of the digital age towards the horizon of consistent profitability. Their influence will resonate through every department, every strategy, and every customer interaction, establishing them as not just essential, but arguably the most critical figures in their company’s future success.

First Steps

Embracing profipoly marketing requires not just a shift in strategy but a fundamental transformation in a company’s approach to growth. Here’s how:

Appoint a Chief Profipoly Officer (CPO): Before embarking on the ‘What’, businesses must address the ‘Who’. Anointing or hiring a CPO is crucial. This individual will be the anchor, ensuring the integration of the 12 innovations discussed earlier into the company’s ethos.
Undertake a Comprehensive Business Audit: Begin by taking stock. An audit will gauge your current position and set the benchmark for growth. Key questions include:
- What’s the existing Earned Growth rate?
- How are the budgets apportioned between retaining existing customers and acquiring new ones?
- What percentage of the customer base can be directly communicated with through identifiable means like mobile numbers or email addresses?
- Which of the 12 profipoly innovations have been implemented or are in the pipeline?
- How expansive and integrated is the current martech stack?
- Is data being collected at every customer touchpoint?
- Is there a robust system to identify the Best customers? If identified, how are experiences tailored for them?
Choose a Tech Stack & Partner Wisely: Post the diagnostic phase, align with a tech stack and, if needed, a profipoly partner (potentially the same entity). This partner should possess the expertise and infrastructure to realise the innovations.
Construct a Phased Implementation Plan: Draft a strategic blueprint detailing milestones over 15, 30, and 90 days. Start by convening a strategy session with all pivotal business stakeholders. Prioritise initial efforts on quick wins like Inbox Commerce complemented by Atomic Rewards and Action Ads, and AI-driven Catalog Enrichment. As momentum builds, progress to more extensive undertakings such as Digital Twins and Velvet Rope Marketing (VRM).

Profipoly is marketing’s fourth and final frontier. It is a continuing journey. By taking an entrepreneurial approach, brands can push the profits bar higher and ensure that profitable growth is sticky and accelerating, a profits flywheel. Embracing profipoly marketing isn’t a one-time endeavour; it’s an ongoing expedition – mountains beyond mountains, always finding the blue oceans in the red oceans. In fact, the profipoly mindset is more than just profits or growth – it’s about exponential forever profitable growth, the best way to building an enduring, great business.

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