Published March 2-14, 2023
For those who have read Tolkien’s “Lord of the Rings”, the word “orcs” is a familiar term. They were the bad-looking, goblin-like scary warriors of the dark forces. As Wikipedia puts it, “Orcs are a brutish, aggressive, ugly and malevolent race of monsters, contrasting with the benevolent Elves and serving an evil power.”
I chose the word ORC to mean “OR Conundrum” – more like an AND/OR conundrum. As a business leader, my day is about meetings and choices I have to constantly make. Some decisions are trivial, while others are critical; some are inconsequential and reversible, a few are not. In most cases, the leader does not have a map but a compass, and thus the series of paths taken (or not taken) determine the final destination. Success or failure is an outcome of the choices one makes.
Growth or profitability? Emerging markets or Developed markets? Organic growth or acquisitions? Short-term or long-term? Hunting or farming? Best Customers or Rest Customers? Depth or breadth? Do inhouse or outsource? Replace or retrain? Office or hybrid? Pipeline or PO (purchase orders)? MQLs or SQLs? Discount or full-price? Private or public? Centralise or delegate? Hire or reject? Product or service? Family or professional? Point solution or full-stack? Branding or performance? Stay or sell? PE or IPO? Work or family? And so they go on – the OR Conundrums. ORCs. They are the make or break of a business.
Jim Collins wrote about OR in his book, “Built to Last”: “Instead of being oppressed by the “Tyranny of the OR,” highly visionary companies liberate themselves with the “Genius of the AND”—the ability to embrace both extremes of a number of dimensions at the same time. Instead of choosing between A OR B, they figure out a way to have both A AND B.” He added:
We’re not talking about mere balance here. “Balance” implies going to the midpoint, fifty-fifty, half and half. A visionary company doesn’t seek balance between short-term and long-term, for example. It seeks to do very well in the short-term and very well in the long-term. A visionary company doesn’t simply balance between idealism and profitability; it seeks to be highly idealistic and highly profitable. A visionary company doesn’t simply balance between preserving a tightly held core ideology and stimulating vigorous change and movement; it does both to an extreme. In short, a highly visionary company doesn’t want to blend yin and yang into a gray, indistinguishable circle that is neither highly yin nor highly yang; it aims to be distinctly yin and distinctly yang—both at the same time, all the time.
Irrational? Perhaps. Rare? Yes. Difficult? Absolutely. But as F. Scott Fitzgerald pointed out, “The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” This is exactly what the visionary companies are able to do.
Jim Collins calls upon leaders to reject the “Tyranny of the OR” and embrace the “Genius of the AND”. He writes: “Builders of greatness … embrace both extremes across a number of dimensions at the same time—purpose AND profit, continuity AND change, freedom AND responsibility, discipline AND creativity, humility AND will, empirical analysis AND decisive action, etc.”
As leaders, AND is the preferred choice – have the cake and eat it too. It can work for the big picture, but daily decisions are about trade-offs. And that is where the OR Conundrum needs to be faced and addressed – in business, with family, and with oneself.
In this series, I will focus on the ORCs faced by marketers.
There are two memorable quotes about marketing.
Peter Drucker: “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 the distinguishing, unique function of the business.”
Theodore Levitt: “The difference between marketing and selling is more than semantic. Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the cluster of things associated with creating, delivering, and finally consuming it.”
The soul of a business is marketing. Whether it is B2B or B2C, marketing is about conveying the value provided by the product, which in turn makes a customer decide that an exchange of money in return for the product is a transaction that’s worth doing. A marketer’s role thus becomes to create the conditions for such a trade.
Traditional consumer marketing was about creating the demand via media: memorable ads in print or TV, and then ensuring the distribution for fulfilment of demand. Modern marketing is much more complex with the rise of digital in the past 25 years. Every part of the value chain has changed: from the outreach (marketing via search engines, email, social media, and influencers) to the distribution (marketplaces, direct-to-consumer). Ratings and reviews also now play an important role in the purchase decision.
As Activate explains: “While traditional marketing’s focal point is the company’s product or service, modern marketing is more customer-oriented. Businesses that adopt a modern strategy always put their consumers’ satisfaction above all else, so they’re able to address their audience’s unique wants and needs. Since modern marketing uses a digital platform, it’s more customisable. It can also easily adapt to change, so it has no problem keeping up with the latest marketing trends. Plus, it can be accessed on any device, which means companies have a higher chance of reaching a global audience. All of these factors help build customer loyalty and trust, as well as worldwide brand recognition.”
GeeksforGeeks offers a good explainer on the difference between traditional and modern marketing:
The complexity of modern marketing also raises a lot of conundrums for marketers. Existing customers or new customers? All customers or Best customers? Reacquire or Reactivate? Broadcast or personalise? SMS or Email? Browse or Search? Growth at all costs or profits? Best of breed or Full stack? Build or buy? Work with an incumbent or join an attacker?
When I asked ChatGPT to list a B2C/D2C marketer’s conundrums, this is what I got:
- Balancing the need for short-term sales with the importance of building long-term brand loyalty
- Deciding whether to invest in expensive, high-production-value advertising or to create more cost-effective content
- Prioritizing product innovation vs focusing on customer service
- Choosing between a wide range of products and services or focusing on a specific niche
- Balancing the need to acquire new customers with the importance of retaining existing ones
- Deciding whether to invest in data-driven, targeted marketing or relying on gut instincts
- Deciding whether to create a strong social media presence or focus on email marketing
- Balancing the need for a comprehensive marketing strategy with the need for quick-hit tactics
- Deciding whether to prioritize search engine optimization (SEO) or paid search advertising
- Balancing the need for customer acquisition with the need for customer retention and growth.
In this series, I will consider the modern marketer’s ORCs (OR conundrums). Of course, the preferred option is an AND but because of limits on budget, time and other resources, marketing – like life – is about choices and trade-offs. In many cases, the answer may be obvious, but the execution is not so.
I started listing out the Marketing OR Conundrums (ORCs) and came up with this list:
- New customers or existing customers
- Adtech or martech
- All customers or Best customers
- Pull or push
- Browse or search
- Reacquire or reactivate
- Same experience or differentiate
- Broadcast or personalise
- Engagement or conversion
- Multi-channel or omnichannel
- SMS or email
- Short-term or long-term
- Growth at all costs or profits
- Best of breed or full stack
- Marketing cloud or modern stack
- Data or gut
- First-party or zero-party
- Human or AI
- Build or buy
- Inhouse or agency
- Marketplaces or direct
- Incumbent or attacker
I put this list into ChatGPT and asked for more marketing conundrums. Here’s what I got:
- Product-centric or customer-centric approach
- Quantity or quality leads
- Inbound or outbound marketing
- Cost-per-acquisition (CPA) or return on investment (ROI)
- Branding or direct response
- Local or global marketing
- Organic or paid growth
- Compliance or innovation
- Quality or quantity of content
- Influencer or celebrity endorsements
- A/B testing or multivariate testing
- User-generated content or branded content
- Guerrilla marketing or traditional advertising
- Virtual or in-person events
- Owned, earned or paid media
- Targeting a specific demographic or targeting a broad audience
- Product or service differentiation
- Growth hacking or sustainable growth
I then asked ChatGPT for ten more to get the list to 50.
- Short-form or long-form content
- Automation or human touch
- Mobile-first or desktop-first approach
- Public relations or advertising
- Guerrilla or ambush marketing
- Content or context-based targeting
- In-app or in-browser notifications
- Product or market-centric approach
- Brand or performance marketing
- Virtual or augmented reality-based marketing
So, plenty of choices to be made. Let’s get started with some of the ones I consider as the most important ones.
ORC #1: New or Existing Customers
Marketers have fallen into what I call the “Forever / Repeated Acquisition Trap.” [FAT/RAT] Because of the constant pressure to show growth and the ease of spending money on the digital adtech platforms like Google and Meta, most marketers have chosen the path of least resistance. A lot of money is being spent on acquiring (and in many cases re-acquiring) customers. Every other business is doing it, so it just seems the right thing to do. And every acquired customer is being bought via an auction – with the click sold to the highest bidder. Little wonder that customer acquisition costs have spiralled out of control. Anecdotal evidence is that in the past few years, the CAGR for CAC is 40%. This means that costs are doubling every two years – with little sign of it slowing down. Google and Meta’s share of the aggregate spend has been coming down but newer platforms like Amazon, Tiktok, Snap, Microsoft and Apple are rising rapidly.
While there is some spending on digital branding, most of the focus is on acquisition of new customers. These aggregate into the shiny new numbers that marketers show to their bosses every week in review meetings. There is little or no discussion on existing customers – how did their spending grow, how many churned, how many more are likely to churn, and how close the spend is to the lifetime potential. This is because attracting new customers via new spending is easy, while working with existing customers is hard. And yet no business and brand can be built with a leaky bucket. This is the conundrum marketers face.
As I wrote earlier in Marketing: Disrupted and Simplified: “…Marketers made a big and costly mistake. Seduced by the ease of spending on Google and Facebook, and the excitement of continuously acquiring new customers, they missed deepening relationships with existing customers. It is not just marketers but even CEOs who are at fault. The question that gets asked is: how many new customers did we acquire? There is little discussion about retention and revenue expansion from existing customers. (This is true for B2C and B2B brands.) In a competitive market, the focus shifts to landgrab and leads to an arms race of spending investor money or retained profits to show perpetual growth of website traffic or app installs. The rise of ad revenues of Google and Facebook testify to the marketers’ folly. By not building deep relationships with existing customers and by bombarding them with irrelevant messages, marketers have trained their customers to ignore their communications, thus reducing the efficacy of the only method of bringing existing customers back to their website or app for transactions. Once customers start ignoring the messages, the marketer has little or no choice but to spend 10X more on re-acquiring that same customer via the tech giants. With everyone doing the same, the only winners are the attention sellers (Google and Facebook), who in turn create even more powerful data hoses by giving consumers even more free utilities. The irony is that as marketers did not pay attention to their customer needs, they are paying even more dearly to the attention intermediaries to reach their own ex-customers.”
Marketers need to shift focus and budgets to existing customers, using Earned Growth (revenue growth from existing customers and new revenue from referrals) as the metric. Ensuring existing customers come back for more and bring their friends is the only way to build a sustainable profitable business. This conundrum thus has an obvious solution: flip the funnel, with existing customers at the top and new acquisitions at the bottom (and these ideally coming via referrals rather than ad spending).
Conundrum: To focus on continuous new customer acquisition or nurturing relationships with existing customers
Insight: Rising CAC is hurting profits; new acquisition is an unwinnable arms race
Solution: Shift to existing customers and Earned Growth as the North Star Metric
ORC #2: Adtech or Martech
Wall Street Journal wrote recently (Jan 3): “Alphabet Inc.’s Google and Facebook parent Meta Platforms Inc. accounted for a combined 48.4% of U.S. digital-ad spending in 2022, according to estimates from research firm Insider Intelligence Inc. Their combined U.S. market share hadn’t been under 50% since 2014, said Insider Intelligence, which expects that number to drop to 44.9% this year. The ad businesses of Google and Meta are still growing, but Insider’s data suggest the pace is slower than the rest of the U.S. digital-advertising market. Insider forecasting analyst Zachary Goldner said the erosion of their combined market share was the result of brands having access to more advertising formats… Despite the expectations of slowing growth, digital-advertising platforms will take in an ever-larger share of ad dollars this year, GroupM said: Nearly two-thirds of total U.S. ad spending is expected to go to digital advertising in 2023, compared with less than half in 2019, the last year before the pandemic.”
Here is a chart from Insider Intelligence:
GroupM’s “This Year Next Year” report estimates in 2022 that $187 billion was spent on search advertising and $243 billion on non-search, non-retail – a total of $430 billion. This is close to the $400 billion figure that I have mentioned multiple times in the past. My belief after multiple conversations with marketers is that half of this spend is being wasted – AdWaste, as I term it. This is because of wrong acquisition and reacquisition. This is the marketer’s conundrum” adtech or martech, with 85-90% spending sucked away by Adtech. It is closely linked with the decision to acquire new customers or spend more on deepening relationships with existing customers.
My recommendation is that marketers need to shift budgets from adtech or martech – the 50% AdWaste can be better used to incentivise and gamify interactions with existing customers to win over their attention and get them to volunteer personal (“zero-party”) data which can lead to more personalised experiences. The marketer’s mantra should be: pay customers, not the adtech platforms.
The AdWaste spending is also the opportunity for martech companies to change the narrative in their pitch to marketers. As I wrote in Solving the $200 Billion AdWaste Problem: “For martech companies, the $200 billion AdWaste can become the new pool of money which multiplies their TAM (total addressable market). Today, most martech companies play in the 10% spending pool (about $50 billion). Newer solutions can substantially expand the available market. But to do this, it is not about adding new features to the martech stack but about taking a very different approach with a fundamentally new insight: attention and data are upstream of transactions, and “Atomic Rewards” (micro-incentives) can help marketers get more attention and data. In other words, persuade marketers to pay their existing customers rather than Big AdTech.”
The metric marketers should track in what I call Martech Spend Ratio: what percentage of the digital marketing budget is spent on existing customers. To build a sustainable business, marketers will need to get MSR to 50 or higher.
Conundrum: Spend on adtech (acquisition) solutions of martech (solutions for push channels and properties)
Insight: Half of acquisition spending on Big Adtech platforms is being wasted (AdWaste)
Solution: Create a healthier balance between adtech and martech; get MSR closer to 50
ORC #3: All or Best Customers
Other than airlines, banks and hotels, which verticals provide differentiated experiences to some of their customers? We, as customers, will be hard pressed to come up with answers. Yes, many brands have loyalty programs but they are more for giving discounts on future purchases rather than crafting extraordinary experiences for those customers with the highest customer lifetime value (CLV). In fact, few marketers would be able to predict CLV for their customers, and without CLV it is difficult to segment their customers, and without segmentation, it is impossible to go the extra mile for some customers.
A few quotes from Peter Fader: ““The Customer” does not exist because every customer is different…The customer is not always right. The right customers are always right…In the world of customer-centricity, there are good customers…And then there is everybody else.” And this from Sunil Gupta: “According to the familiar 80-20 rule, 20 percent of the customers provide 80 percent of the revenue. However, research shows that if we focus on profitability instead of revenues, the rule would be 200-20, where 20 percent of the customers provide almost 200 percent of the profit! How is that possible? Because the remaining 80 percent of customers actually destroy profitability.”
Just think about our own experiences with brands where we are loyal and thus very likely to be among their Best customers. Have they done anything special for us – other than (in some cases) running a loyalty program with rewards linked proportionate to our spending? Book publishers, multiplex owners, restaurants, retailers, online marketplaces – almost every business treats us all the same. In most cases, they have no idea about us. But isn’t that what a marketer should do? Convert the anonymous into the identified, and the identified into intimate. Our digital devices and footprint can make all this possible. And once the data is available, algorithms can predict CLV and lay the ground for what I have termed “Velvet Rope Marketing.” VRM is the answer to the marketer’s conundrum of separating the Best from the mass, the profit drivers from the lossy engagers.
As I wrote in Velvet Rope Marketing: “Velvet Rope Marketing (VRM) is much more than a loyalty program. In a loyalty program, anyone can sign-up and collect points. In a VRM program, it is the brand that decides which customers are eligible for the differentiated experience. Many companies have a loyalty program, but very few do VRM. By missing out on deepening relationships with their best customers, they are losing out on opportunities to increase their profits – because Best Customers can be many times more valuable than the median customers.” I added in Best Customers and Velvet Rope Marketing: “[Brands] have the data, and yet they treat everyone the same. Not just same, it is like everyone is visiting their site or store for the first time and will never come back. Brands are thus missing on the most obvious opportunity to grow revenue and profits – in fact, create a flywheel that can lead to accelerated growth. Because Best Customers (top 10-20%) are many times more valuable than the Rest Customers (long tail). The lifetime value of the Best Customers, their lesser propensity to switch, their ability to get more customers like them – all can become high value generators for brands. And yet, few brands do this in practice. This is the big mystery in the modern marketplace.”
This conundrum has a simple answer: create a separate business unit for Best Customers. As I wrote: “VRM needs to become much more than a marketing initiative – it is a powerful weapon the CEO can deploy for boosting profits. By getting more from existing customers who have the highest spend, the business also takes away revenue and profits from competition – thus denying them the oxygen needed for growth. This can create a profits flywheel – Best Customers spend more because of the great experiences they get, which in turn can help beget more Best Customers (either from the Rest, referrals or targeted new customer acquisition), which in turn drives even more profits. This lays the foundation for building an invincible business – with the twin moats of extreme customer loyalty and maximising industry profits.”
Conundrum: Focus on all customers or create differentiated experiences for a few
Insight: 20% customers bring in 60% revenue and 200% of profits
Solution: Velvet Rope Marketing to use customer lifetime value to craft extraordinary experiences for Best Customers
ORC #4: Pull or Push
There are two ways existing customers return to a brand’s properties (website and app): they are pulled by the brand power and do it on their own, or they see the push messages sent by brands and then click on a link. The latter has four options: email, SMS, push notifications, and increasingly, WhatsApp.
The conundrum for marketers has been about the balance between push and pull: brand marketing versus push marketing. Brand marketing is about the emotional connection and becoming a utility in the customer’s life, so they return to the property whenever they have a need. Push marketing is about crafting the right content and creatives to ensure the messages sent are opened and acted on. In both scenarios, the objective is the same: ensure a visit because the conversion takes place on the brand’s property.
The problem is that the vast majority of push messages sent are largely ignored by customers. Email open rates are low, SMS read rates (in India) are even lower, and push notifications are blocked by many. Marketers too have overdone the push messaging in their desire for clickthroughs. If consumers do not react to the push messages and don’t have the brand pull, then the only path left to the marketer is to retarget the customer on the adtech platforms – a very expensive proposition considering that an acquisition cost was probably already paid for. This problem of attention recession and limited activity on the brand’s property also limits the data marketers have about the customer to do personalisation.
Good news is on the way. In many markets, WhatsApp has opened up for business. Its primacy in the end customer’s life for personal messaging allows brands (for a fee) to insert themselves into the message flow. In markets like the US, pricing changes on SMS have increased its popularity, especially because 2-way interaction is possible. The biggest bang is coming via email, with the power of interactivity (AMP with Email 2.0) and gamification (Atomic Rewards with Loyalty 2.0). Interactivity is also coming to notifications. In short, the 1-way push channels are becoming 2-way conversion funnels. This transformation into “hotlines” is the big shift marketers have to prepare for.
I had previously written in Hotline: The Crux of the Brand-Customer Relationship: “Building the hotline with existing customers is the only way brands can get their attention and solve for data. It is one of two ways to bring customers back to the properties (app and website) – the second method being big spends on branding. The hotline is the trick marketers have missed in the two other obsessions – new customer acquisition and adding bells and whistles to the app and website.”
As I wrote in Of Hotlines and Properties: “Hotlines are the antidote to AdWaste. Smart marketers would have known that half their spending is being frittered away, but without the ability to make their push channels work, they had no alternative. This is why Email 2.0 is so important. It gives marketers control over their own budgets, rather than relegating them to becoming collection agents for the likes of Google and Meta. They can rechannelise the AdWaste spend towards their own customers and delight them. In other words, pay customers, not Big Adtech.”
So, marketers need to make the switch not just from Adtech but also from brand marketing to converting their push channels to hotlines, and strengthening their customer relationships by solving the twin problems of attention recession and data poverty.
Conundrum: spend more on brand marketing or push channels to bring existing customers back to the properties
Insight: Push channels are becoming 2-way enabling conversions closer to the customer
Solution: Email 2.0 hotlines with innovations like AMP and Atomic Rewards
ORC #5: Browse or Search
In the early days of the Internet, Yahoo had a directory format enabling visitors to browse categories in their quest for websites. This is how it looked in 1997 (sourced from Version Museum).
And then along came Google with its search box interface (courtesy UXdesign):
And we know who won!
A similar conundrum awaits marketers managing ecommerce sites. Product discovery is the key for conversions. A product may be in the catalog but if it doesn’t show up in front of the customer, it is not going to get sold. As consumers, our typical behaviour consists of a mix of browsing the category pages or using the search bar. Google has taught us through the years the power and delight of good search results. Yet many ecommerce sites do not have good search results – meaning that an item is in the catalog and possibly visible via page browsing but does not show up in the search. The conundrum for marketers is whether to stick to the default search engines that come up with many commerce platforms, try and build their own, or use an off-the-shelf SaaS solution (like Unbxd, a Netcore company). A good site search engine can enhance product discovery and thus deliver revenue uplift almost immediately.
As an Unbxd blog writes: “Not all shoppers on your eCommerce website come looking for a product they have already thought of. While many shoppers know what they want, some are impulsive shoppers. Some of them just finished chatting with a friend who’s referred you, and that’s why they are on your site out of curiosity. Some love browsing through your product categories, while others simply compare products (which means they might have come from a competitor or clicked through an ad or a banner within Google or Amazon.) 30% of all shoppers use the site search within your eCommerce store. Interestingly, half of the people who use site search end up buying something on your Site – which means a conversion rate of 50% for the cohort of people who search. This makes it more vital for you to retain your shoppers and have them coming back for more. These numbers indicate that shoppers who use the inbuilt search system are more likely to buy from your store because searching for a product shows a higher inclination to buy. Hence, as an eCommerce store owner, your search results page must display products they are looking for or are more likely to buy.” Relevancy is what matters most in a good site search engine.
Marketers need to take site search seriously to avoid the fate that befell Yahoo.
Conundrum: how best to solve product discovery – category pages and default search software, or a very good site search engine
Insight: a good site search engine can lead to big increases in conversions
Solution: switching to a better product (like Unbxd) can improve shopper experience dramatically
ORC #6: Reacquire or Reactivate
As marketers seek to grow their active customer base, they do a lot of paid acquisition. Over time, a large percentage of these customers become inactive. The question that marketers face is whether to try and reactivate them through existing push channels (owned by the brand) or reacquire them via retargeting campaigns on paid media (Big Adtech). The cost of using owned media is a fraction of paid media, but most marketers opt for the latter because they are unable to get their customers to listen to them on the push channels. These reacquisition campaigns can be a big drain on marketing budgets.
Ironically, the inactivity of existing channels is in part a result of marketers not building better relationships with them. Because push channels have remained largely unchanged in their capabilities, marketers have been unable to get past the twin problems of attention recession and data poverty. Also, with 85-90% of the budget being directed towards new customer acquisition and retargeting of inactive existing customers, the focus on existing customers and keeping them interested is low. Thus, marketers get trapped into a negative feedback loop with the worst possible spending – reacquiring and retargeting existing customers on expensive paid media.
There are two solutions which can address the reactivation problem: hotlines and Progency (product-led agency). Hotlines can help marketers build two-way interactions, while Progency can make reactivation like performance marketing where payouts are linked to outcomes.
As I wrote in The Coming Martech Era: Driving Exponential Forever Profitable Growth: “Reactivation is the missing link in the customer engagement chain. The reality is that customers do become inactive. They start ignoring brand messages and are as good as lost. But the brand still has a hotline to them in the form of an email address, a mobile number or a still installed app. How can this connection be used to reactivate the customer? Instead of a laundry list of offers, perhaps some interesting content can ignite interest. Instead of treating the customer as part of a big segment, a narrowcast message based on specific affinities could do the trick. Reactivation is hard, so allowing customers to become dormant should be avoided. But it is still cheaper than reacquisition which entails using Google-Facebook and spending many times more.”
I then added: “The progency can…work on the “Test” customers and reactivate them by using push messaging, rewards, affinity-based content, the full stack DXP (digital experience platform), and a touch of paid media if needed. The key point is that the progency takes complete responsibility for the dormant database and delivers activated customers at a lower price point than what reacquisition would cost.”
A metric to track is the reacquisition ratio. I wrote in Martech’s Magicians: Microns, Micronbox and µniverse: “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.”
To summarise: reacquisition via Big Adtech should be a last resort, not the first port of call. Ideas like hotlines and Progency can help marketers reduce dormancy and in the event that it happens, lower the cost of bringing the relationship back to life.
Conundrum: what to do with inactive customers – try and reactive them with push messages or reacquire them via paid media
Insight: reactivation can cost a fraction of reacquisition
Solution: use hotlines (using AMP for interactivity in emails and Atomic Rewards as incentives) and Progency (product-led agency) to help drive reactivation
ORC #7: Same experience or differentiate
While there is data to help create differentiated experiences online, it can be much harder in the offline world. We have all seen this in our interactions with brands. It is only when we reach the checkout counter that they can really know who we are – and that too, only if there is a loyalty program where we identify ourselves with a membership card or our mobile number. Until then, through the entire shopping (or dining) experience, the store (or restaurant) has no idea who we are and what our lifetime value is. Servers thus have no way to create special and memorable experiences for us.
This is different for airlines. Right from when we arrive at the airport to receiving our baggage, they can create better experiences for their loyal customers based on the membership tier. From priority check-in to possible upgrade to better inflight service to quicker delivery of baggage, airlines can wow their Best customers. Hotels and banks can also do that in some scenarios once we identify ourselves.
Brands would obviously like to create differentiated experiences because there is an awareness that Best customers do make a substantial contribution to revenues and profitability. The question is how.
Help is at hand with eXtreme Retention Tokens (XRTs). I wrote in Extreme Retention = Profit-centric Marketing: “Extreme Retention builds on the blockchain to ensure complete transparency. The Mu token rewards attention and data, with the marketer in complete control on who to incentivise. The XRT can be thought of as an NFT which opens a world of privileged experiences for the Best Customers – so they can keep coming back for more and bring their friends, thus maximising their category spend with the brand…The Brand XRT is stored in a mobile wallet and cannot be transferred or traded. It uniquely identifies the specific customer and bestows rights and privileges for fostering differentiated and exclusive experiences.…Let us imagine how our lives as customers will be different in the XR world…I go to the nearby electronics store looking to upgrade my phone. At the entrance, I scan the brand XRT and I am immediately identified as a Best customer. The store manager walks up to me, welcomes me, and immediately connects me to the best salesperson who can guide me through my purchase. I don’t have to wait in line at the checkout counter. All in all, a delightful experience which makes me want to come back for my next purchase…The XRT enables offline stores to bring that same level of personalisation and elevated experience that their Best customers deserve.”
Conundrum: how can offline retailers identify their Best customers and create unique experiences for them
Insight: customers need to be identified when they enter a store and not when they are ready to pay and exit
Solution: an NFT on the customer’s mobile – the XRT
ORC #8: Broadcast or Personalise
Brands collect a huge array of information on us – from what we tell them when we sign-up on their assets (website and app) to the actions that we take on the push channels (opens and clicks) to how we behave on these properties (search and browse) to the transactions we do. All of this data goes into one or more customer databases and gets connected together to create a unique persona, a sort of “digital twin.” All this info can be processed by AI engines to craft unique messages and journeys for us, with recommendations on what to buy next and personalised digital boutiques awaiting when we visit the digital properties.
This is the theory. And yet, even after all these years of scanning our digital footprints, brands are still unable to do the hyper-personalisation that treats us as uniquely rather than part of a mass or even a segment. We still get blasted with irrelevant messages broadcast to the entire base. At times, even the personalised messages do not account for our actions on other parts of the site. I recently bought a physical copy of a fiction book from Amazon. A few days later, I was sent an email to buy the Kindle version of the same book! I cannot think of too many people who would buy a physical AND digital copy of the same fiction book.
While the first step in the process is a customer data platform (CDP), the second step is gathering zero-party data (ZPD) – information volunteered by customers.
I wrote in How Velvet Rope Marketing can transform Customer Loyalty: “The first step in using VRM to anchor a transformation in customer loyalty is to collect all the customer data into a single unified database. Data can come from multiple sources – one needs to look at all the touchpoints that a customer has with the brand… The key point is to collect all the data to help build a unified view of a customer which is the foundation for all customer engagement activities. With a CDP in place, the next action of calculating CLV can be done.”
I wrote recently in Martech in 2023 will be the Year of 4PO: “As customers, we love content and experiences curated just for us. And yet, there is a big gap in what brands offer. What’s missing is the data and analytics which are at the heart of crafting unique experiences for every customer… Zero-party data can improve personalisation which first-party data simply cannot.” I had written previously in Loyalty 2.0: How Brands can Tokenise Customer Attention and Data: “Every customer is different. While segmentation is better than mass communication, what’s even better is hyper-personalisation. For this, brands need to aggregate data and then use AI-ML to discern patterns to recommend the next best action to customers. Data today is collected from actions done by customers on the brand’s communications (push messages) and properties (website and app). A trick that marketers have missed is the simplest one: asking customers directly.”
Zero-party data gathered via incentives and interactive hotlines combined with a CDP to centralise all collected data to ensure AI-ML engines can work effectively is the foundation to predict next best actions and create 1:1 personalised experiences which delight customers and drive more transactions.
Conundrum: how to collect enough data to personalise digital experiences
Insight: zero-party data is the best because customers tell the brand about their likes and wants
Solution: combine ZPD and CDP with machine learning for hyper-personalisation at scale
ORC #9: Engagement or Conversion
Marketers have thus far thought of engagement and conversion as two distinctive activities: engagement is done via messaging on push channels (SMS, email, notifications – largely via promotional communications) and conversion happening on the brand’s properties once the customer is persuaded to clickthrough. The problem has been that customers are not particularly fond of the incoming messages and tend to ignore them. This creates a problem for marketers: how then do they get the customers to their properties for the eventual transaction? This dichotomy is now ready to be solved – thanks to innovations on two of the push channels.
WhatsApp is very popular in some countries, especially in Asia and Latin America. India is one of WhatsApp’s largest markets. A year ago, WhatsApp (owned by Meta) opened up its channels for brand messages and interactions. The flow below shows the capabilities of how WhatsApp can drive engagement and lead to conversion. Combined with chatbots and WhatsApp Pay, it can become an end-to-end engagement and conversion channel.
The second push channel that is being transformed is Email. With Email 2.0 (combining interactivity via AMP and micro-incentives via Atomic Rewards), it too is bringing the full funnel closer to the customer and blurring the distinction between engagement and conversion. AMP is software in email, enabling the creation of a new type of app which can do almost everything in the inbox that a mobile app can do. It is simpler to create, and it relies on push – rather than waiting for a pull from the customer. I wrote in AMP’s Magic: Coming Soon to Your Email Inbox: “AMP in Email accelerates the conversion funnel. In fact, it does better: it brings the conversion funnel into email. Currently, for brands to convert customers, they need to bring them to their website or app. That is where all the interactions happen. The interactivity of AMP ensures that brands can work towards closure right inside the email by coding mini-apps. These actions do not need a clickthrough to a landing page. An item can be added to cart with a single click. An interactive calculator can show results right inside the email. In fact, with search and payments integration, a transaction could even be completed without the need to go to the brand’s properties. From early campaigns that Netcore has done, the uplift from the elimination of the clickthrough to the landing page can result in 3-10 times more actions. Less friction means more engagement. AMP does exactly that.”
WhatsApp and Email 2.0 are beginning to bring in frictionless conversion into the push channels. For a decade, the push channels remained static. And then, in the past year, a flurry of innovations now hold the promise of new end-to-end experiences in the customer’s inbox. These hotlines are the next new properties and assets for marketers.
Conundrum: how to bridge the chasm between engagement in push channels and conversions on the brand’s website and app
Insight: interactivity being enabled by WhatsApp and Email 2.0
Solution: think frictionless hotlines and move the conversion funnel closer to the customer – right inside the inbox
ORC #10: Multi-channel or Omnichannel
As customers, our touchpoints with brands have exploded: from in-store to website to app, from the push channel like email, SMS, app notifications, WhatsApp to social media platforms like Facebook, Instagram and Tiktok. Then there are the marketplaces where we can also buy products from our favourite brands. For a brand, the traditional approach of building demand through print and TV ads and then using distribution excellence to ensure availability to a retailer near us – that’s a world long gone. This is the multi-channel world: brands have to be present where we as consumers are. In fact, shoppers don’t think of distinctive channels. For them, it is a continuum: a search on Google followed by a website visit and then perhaps a purchase in a nearby store. This is the omnichannel world – the same customer across multiple touchpoints. How does a marketer deal with the modern customer?
A post on Talkative explains: “Multichannel refers to the use of more than one channel to market and communicate information about a brand. These multiple channels are not integrated with one another. A billboard, for example, is not directly connected to a business’ website – they are separate channels used to increase awareness of a brand. Omnichannel also refers to the use of more than one channel to communicate with customers. However, in this case the multiple channels are integrated to create a seamless experience for the customer. In other words, a customer can pick up on one channel where they left off on another.”
I wrote in Building the Hotline Right: “Gone are the days when there was a single channel that brands used to engage with customers. The digital customer of today is omnichannel. While each of us may have our preferred channels, interaction goes across channels. Brand properties now encompass not just websites and apps, but also the social media channels. From Facebook to WhatsApp to Twitter to Instagram to YouTube, all are creating ways to enable commerce. Communications are leading to conversations which in turn shows the way to commerce. The primary push channels are also becoming 2-way: email to Email 2.0 and SMS to RCS. WhatsApp is opening up rapidly for business enablement. Push notifications are being enriched with media. Across all these channels, brands need to create a unified view of each customer by feeding data into a CDP (customer data platform) and then building AI-powered journeys and next best actions for segments (of one).”
The future of marketing is omnichannel personalisation. Success means creating a unified customer view and then making predictions on next best actions and providing continuity in experiences across channels. This will need marketers to shift from point solutions focused on specific channels to a unified martech stack – a transition from Martech 1.0 to Martech 2.0. As I wrote in Digital Marketing and its Discontents and Disruptions: “The past few years have seen marketers implement various opportunistic point solutions on their website and in their apps for marketing automation and journey orchestration. The multitude of solutions has created a suboptimal customer experience. It has fragmented data, rendered AI less effective and limited the availability of a unified customer view. What marketers now need to upgrade to is a Martech 2.0 solution which provides a single stack to do it all and provide a superior customer experience with differentiation for Best customers and thus drive more stickiness – and eventually transactions.”
While some brands will seek out best-of-breed solutions, for most brands the future lies in having a single integrated stack which extends from offering hotlines to automation to improved site search (like the kind that Netcore does). Every single customer’s needs can only be met with a platform that combines data from all touchpoints, uses hotlines to move conversions funnels to the inbox, and creates differentiated experiences in-store and online. At its heart needs to be the thinking that a customer’s lifetime value is what should become the revenue stream for a brand. Only then can marketers become supersize profits rather than leading the loss brigade in transferring good money to “Badtech”.
Conundrum: customers today have a choice of multiple touchpoints – how does the marketer get a single view across all the channels
Insight: siloed point solutions of Martech 1.0 fragment the customer experience
Solution: the need for a unified Martech 2.0 stack to create frictionless shopper experiences