The CMO Guide to Marketing in the Digital Social Age

The CMO Guide to Marketing in the Digital Social Age shows how CMOs can The CMO Guide to Marketing in the Digital Social Age image cmo guideThe CMO Guide to Marketing in the Digital Social Agepivot gracefully to address new customer expectations. It reveals how chief marketers can use social media and social business as separate distinct practices that are grounded on different principles and have different benefits.

In 2013, CMOs straddle a familiar past and a rapidly emerging future that questions the fundamental principles of marketing, and the fissure is deeper and wider than most realize. Happily, the “two socials” can help astute CMOs to bridge the gap.

Social media and social business are both important, and they are even more valuable when used together. Social media is the past and present, social business the present and future.

Before turning to the two socials, we need to summarize key forces of disruption that make each of them useful in its particular way.

How Digital Social Is Disrupting Marketing

Numerous cracks have appeared in the bedrock that underlies business and marketing, and they are quickly widening. I am not referring to the conventional-by-now wisdom that “social media gives customers voices.” MENG readers have read ad nauseam about how “digital” changes marketing due to “connected consumers,” so I’ll not repeat those arguments.

Far deeper down, the principles that form the foundation of marketing are being disrupted , so I will summarize them before outlining how to use social media and social business to ease the transition to a “new marketing in the digital social age,” which will be barely recognizable to 20th century marketers.

Customer expectations are changing rapidly, and CMOs risk irrelevance or worse if they don’t transform brands’ attitudes, interactions, and relationships with customers and prospects.

Obviously, the speed at which these changes are unfolding varies significantly according to industry, brand culture, customer characteristics, and the legacy relationship and trust level between the brand and customers. As a three-time chief marketer, I’ll observe these marketing principles and practices that are headed for the recycling bin.

20th Century Marketing and Business Principles

Marketing practices are built on assumptions and principles, just like any human endeavor, but many of these are becoming increasingly maladaptive:

  • Marketing’s role is to charm and educate customers by talking about products and services, so people are apt to buy more.
  • Marketing uses the 4(5) Ps to max/optimize sales of products and services.
  • Marketing (and Public Relations) always strives to show the brand in the most positive light, even when it’s mediocre or worse. To this end, it tries to prevent unsavory things from coming to light.
  • Customer service is a necessary evil; brands carefully calibrate expenses like service to maximize profit. They try to keep customers satisfied within reason.
  • Marketing adds the most value by using technology to maximize reach, by touching the largest number of customers and prospects.
  • Marketing will increase its impact by using big data to make content more precise and tailored.
  • Marketing’s key goal for social media is using content to engage customers and prospects.
  • Customers don’t buy unless products are on sale because competitors have virtually the same products. Customers care less about quality than price.

Why Brands Don’t Realize They Are Out of Touch

Thus far in the 21st century, CMOs have been using digital tools to practice marketing according to 20th century assumptions and principles. Many have yet to feel the full degree of risk they are incurring by not addressing outmoded principles because:

  • Customers have been on a learning curve with digital social technologies, so they are only now starting to expect digital social interactions and attitudes.
  • Other brands are just as out of touch, which keeps customers’ expectations of brands low.

The Digital Social Age Revisited + The Present/Future of Marketing

Revisiting Word of Mouth

By Q4 2013, CMOs are well versed in the significance of “word of mouth” and how it has always been the largest overall influence on buying decisions. However, thought leaders and pundits have yet to grasp why word of mouth is so influential. Moreover, since the digital social age has digitized word of mouth, it’s even more critical to understand. Let’s observe this vignette:

  • Word of mouth usually starts when a person shares something s/he is trying to do (an “outcome”), online or offline.
  • The friend/family/neighbor/group listens to the person, often asks a question or two to clarify his/her understanding of the situation and outcome, and then makes suggestions for how to attain that outcome. This often includes recommending certain products/services, and it sometimes includes guidance for how to use them.

How Brands Communicate

Now let’s contrast the word of mouth situation with how brands communicate:

  • Messages are focused on why that brand is better, how its products’ features are superior, and perhaps on how much the brand cares about certain issues (i.e., green, nutritional).
  • Brands don’t communicate with people, they broadcast messages to demographics.
  • Brands don’t advise people on how to get things done (attain outcomes).
  • Customers and brands have accepted this status quo because it has never been economically feasible to advise individual customers on attaining outcomes.

Why Brand Content Is Fast Becoming Irrelevant

Mass industrialization gave birth to the modern brand during (depending on the region) the 20th century, and economies have been primarily product focused since then. Prior to mass production, the modern product didn’t exist; everything was a service. Product focus was adaptive during an era of material scarcity and high profit manufacturing. The Knowledge Economy and digital social age disrupt this state of affairs:

  • All marketers know that, although some forget, people buy holes (outcomes), not drills (products).
  • People are naturally focused on outcomes; they only buy products and services as means to outcomes.
  • Before digital social, information about individuals’ outcomes was extremely rare and expensive for brands and customers to access, so customers bought products and did the best they could to attain their desired outcomes.
  • As mass adoption of digital social unfolds, detailed information on outcomes is increasingly free, so customers’ expectations of interactions are changing profoundly.
  • Think about yourself as a customer. You are trying to do something important, so you get advice from people who share your sensibilities and interests. Meanwhile, brands have websites that are talking at you about their products.

Brands Need to Pivot Toward Customer Outcomes

Businesses and brands need to revisit their relationships and roles with customers because it is changing. Consider how brands and customers have had opposing attitudes toward purchase:

  • The brand gets value (revenue) when the customer buys a product or service. Unless the brand is also active in the aftermarket, it wants to minimize post-purchase interactions, which reduce profit.
  • The customer realizes an immediate loss and risk when s/he buys a product or service. S/He incurs the cost in the hope that the outcome will represent higher value than the cost. The customer only gets value by using the product to attain the outcome. The customer’s results are based on myriad factors, some of which are: selecting the “right” product, knowing which product features are most relevant to the outcome, or applying the product to the task with good results.

By getting involved online with their highest value customers, brands can help them attain much better outcomes or attain outcomes with less effort and angst.

How Digital Social Makes Supporting Individual Customers Feasible

It is well documented that, when people are in groups, 90% of people observe while 10% interact. Moreover, when people gather in digital social venues, interactions are reused at any time, complete with the outcomes focused social context around the interaction.

  • Brands will increase the quality of their customer relationships and sales by supporting their best customers in digital social venues. Reread the word of mouth vignette above. This is not “marketing” (talking about products and features and trying to influence sales), it is listening and supporting.
  • A key trend in advertising and content marketing is “creating stories” to which customers and prospects can relate; this trend misses the mark; now brands can co-create stories by interacting with customers who realize that customer communications are real while brand communications are unreal.
  • Outcomes focused interactions with select high value customers in public harness the network effect and the annuity effect: interactions are often automatically shared with customers’ networks (network effect), and they are reusable at any time in the present and future (annuity effect).
  • By interacting with the minority with the intent of empowering them to attain their outcomes, brands become aligned with customers for the first time, they influence everyone and their influence accumulates.
  • Think about yourself: would you rather buy from a brand that repeatedly shows that it cares by helping people like you get results?…or a brand that talks about itself and its products all the time?

Twenty-first century “marketing” is grounded in proving brand and product value by interacting with high value customers in digital social venues; talking about products and brands assumes a background role. Brands support customers in using products to get value.

Social Media and Social Business

Social media and social business both use digital social (peer-to-peer) technologies, but their purposes are different. Social media practices are grounded in marketing and promotion and, because they also give individuals the chance to give their opinions, people often prefer social media over other kinds of marketing and communications.

Social business is focused on helping people attain their highest priority outcomes of using products and services. It’s closer to what people used to call “customer service,” with the notable exception that it’s proactive and serves high-priority people whether they are “customers” or not.

The CMO Guide to Marketing in the Digital Social Age image Social Media and Social Business Side by SideThe CMO Guide to Marketing in the Digital Social Age

Why Brands Need to Practice Social Media and Social Business Separately

Brands will increase their relevance and support customers’ affinity by interacting with people when, where, and how people feel most comfortable. Brands and customers are in the process of changing how they communicate, so brands must prove their value during the transition.

Use social media to interact with people in a traditional marketing relationship while you use social business to practice “deep engagement” and collaboration.

Social Media: Communicating in the Past and Present

  • Social media usually focuses on large audiences and popular platforms because practitioners want to project their brand and distribute content far and wide. People expect brands’ presences and to interact when they want.
  • Social media is “interaction light,” and it meets customer expectations in a wide range of situations, so it favorably impacts customer experience. Social media is the bun when it comes to developing trusted relationships.
  • Step one is developing strong in-house expertise in social media, so start taking back work you have long outsourced to social media agencies—as Nike is doing. The goal is developing competency, so do this as quickly as you can while achieving that goal. Stop thinking about social media as “another channel” for content.
  • Look for opportunities to collaborate with operations and customer service to map what the brand’s capabilities are for satisfying customers. You need to be very transparent with what you can do and what you can’t.
  • Want to care. By admitting your gaffes and mistakes in public, you’ll allow people to love you. Exceptionally few people can resist honesty.
  • Don’t silo social media; rotate in team members from sales, operations, customer service, marketing, and R&D/product development/engineering. I recommend a Social Business Competency Team to manage this. They will benefit from real time customer interactions.
  • For step-by-step guidance, see the Upgrade Social Media use case.

Social Business: Communicating in the Present and Future

  • Most brands, businesses, and organizations have yet to discover the power of relating, treating people personally, at scale, in public. They are still trying to “succeed” with social media. Social business is the meat for developing trusted relationships.
  • Realize that agency produced content has less influence than interaction in most cases because interaction is grounded in listening and responding to individuals. Digital interactions are often the most valuable “content” because they are co-created with “people like me,” who have similar outcomes to mine. Agencies will swear up and down that content is the way to “engage,” but this is decreasingly true.
  • Brands increasingly talk about “developing trust,” but it won’t work until they drop the brand-first mantra. Brands that consistently share in open discussions with customers using their products will earn trust and preference. This is absolute: no truth, no trust, no preference. This is a profound shift; it requires deep cultural transformation in most brands.
  • Brands that put customers first will be admired and even loved, so they will dominate their markets. People want to buy from them.
  • Begin social business by picking a business or brand to start work. A good way to determine the best candidate is commissioning an enterprise digital ecosystem audit to identify businesses/brands with customers that are predisposed to having digital social interactions that your brand wants to have. You can also select a business/brand that’s failed with social media and wants to reboot. However you select it, that business conducts a social business strategy and pursues several pilots through which it learns how to interact to increase trust, preference, and business. All these outcomes are measured quantitatively.

Marketing in the Digital Social Age Conclusions

  • The easy first step to transformation is developing in-house social media operations. Social media doesn’t challenge marketing assumptions as much as social business, and many of the operational skills can transfer to social business.
  • Brands are not ready for the present-future until they develop competency in social business. As customer expectations change, brands need to pivot to meet them. This is one of the highest risk-reward opportunities in decades.
  • Social business requires higher order social skills than social media, and agencies will be inappropriate unless they have extremely specialized practices, which will be hard to support economically. Don’t think you can come up the curve quickly by hiring it out.
  • Brands have extensive knowledge about how certain types of customers like to use products. They can add rare value by shifting their principal public focus to customer outcomes.
  • Collaborating with customers and prospects on outcomes will provide brands with a fat pipeline of new innovation opportunities, real time.
  • Social media and social business operations begin with separate teams, but they grow together over time. See Herd the Cats for a step-by-step approach.

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