Experiences- the 7th Era of Marketing

by Robert Rose

  Perhaps no other communication strategy exemplifies this era more than Apple’s iconic 1984 Super Bowl ad that featured a dystopian look at the future, and how Apple was “breaking us free” of the world of that dystopia. The ad was created by one of the new super agencies—Chiat/Day, based in Los Angeles—and the world of marketing became a competitive war to see who could best capture the feelings and emotions of a public ready to embrace what a company stood for.

  Apple’s 1984 advertisement wasn’t about a product at all, but how an innovative company would set us free.

  Then, in perhaps what might be considered “too neat” of a demarcation line, the year 1989 happened. We forget how transformative that year actually was. Time magazine called it “the year that changed the world.” Consider that in just 12 months:

  • The politics of Europe changed almost overnight. The Berlin Wall came down, partial democratic elections were held in the Soviet Union for the first time, and full elections in Poland and Czechoslovakia completely transformed the political landscape of those countries.

  • Tens of thousands of Chinese students took over Beijing’s Tiananmen Square in a rally for democracy. More than 1 million would eventually take part in the protests that would pave the way for democratic reforms and China entering the World Trade Organization 10 years later.

  • Tim Berners-Lee and Robert Cailliau began work at the European Organization for Nuclear Research (CERN) on a new computer language for formatting, storing, locating, and retrieving information over the fledgling Internet. They would eventually devise what they called a “web browser” that could access the new “worldwide web.”

  • The Japanese stock market was at an all-time high, culminating a decade of Japanese economic expansion. Less than six months later, it would collapse and begin what the Japanese would later call “the lost decade.”

  Indeed, the world became much “flatter,” to borrow from economist Thomas Friedman’s metaphor that he popularized in the book, The World Is Flat. Along with globalization came outsourcing and offshoring, as the world itself became a more common marketplace. With this, differentiation across product, place, price, and promotion became even more complex as now, arguably, ALL of the four P’s were replicable across the globe.

  But a new trend was beginning to emerge: the move toward a more personalized relationship with the customer. Businesses were using customer databases for more direct marketing efforts in the 1980s. But, as the decade turned, a new technology phenomenon began to take hold of marketing: Customer Relationship Management (CRM).

  While some argue that it was analyst firm Gartner that brought the acronym about, some credit Tom Siebel, the Oracle executive who would leave the company to form Siebel Systems, one of the first companies to truly focus on sales force automation and managing customer relationships. It was the dawn of what is widely known as the era we are now moving out of: the Relationship Era.

  THE RELATIONSHIP ERA: 1990s–2015

  In 1993, Don Peppers and Martha Rogers, Ph.D., wrote The One to One Future, a book that would change the landscape of marketing. In a 1996 reissue of the book, the authors ask (and answer) some of the seminal questions that would define the next 18 years of marketing strategy. They said:

  “More and more companies have realized that interacting with customers is no longer an option, but a competitive necessity. And now they have questions: How should an interactive company treat its customers? What objectives should a business set for the interactions that take place at its site? How can it measure success? Should different customers be treated differently? Is it sometimes necessary to reward customers for participating in Internet dialogue?”

  Isn’t it fascinating to see how many of those questions are still plaguing businesses almost two decades later?

  Then, in 1999, Rick Levine, Christopher Locke, Doc Searls, and David Weinberger put forward a set of 95 theses and organized The Cluetrain Manifesto. This was during the time when the Internet and electronic disruption of the web was just getting its legs. In that book, the authors presented the notion of “markets as conversations.” As Searls would state 15 years later in a conversation with Robert Rose:

  “The Cluetrain Manifesto wasn’t about marketing, it was about markets, and about how the power of consumers would fundamentally shift the relationship between buyer and seller.”

  Remember, they were writing this before the Internet and the web had erupted in any meaningful way.

  But then, the dot-com boom made things, well, weird.

  The Sock Puppet ad from Pets.com helped define the entire dot-com boom.

  The late 1990s kicked off a wave of what could be called “postmodern” marketing. The dot-com bubble that lasted from 1998 to 2002 was marked by advertising and marketing content that seemed on one end to ridicule itself, with a blatant “over-the-top” self-referential style of brand messaging. One Super Bowl advertiser that became the symbol of the excess of that period was Pets.com and their spokes-sock puppet. What disco music and bell-bottomed jeans brought to the 1970s, the Pets.com sock puppet brought to this period. As Salon.com pointed out about this style of advertising in its after-market report in the early 2000s:

  “The bottom line looks a bit like a gawking press coverage and a temporary surge in site traffic, but nothing so lasting that it could be called brand building, and nothing so irrefutably valuable that it could possibly justify the huge expenses for a whole patch of unprofitable companies.”20

  The over-the-top approach to marketing during the dot-com phase might have done more to hurt the practice of marketing than almost anything that preceded it. It’s still a sore spot (sometimes quite literally) with companies, especially those that are heavily engineering-driven. The “Super Bowl commercial” is a running metaphor about the superficiality of marketing and how the marketer doesn’t really focus on important things. Getting the dot-com “stink” off of marketing is one of the biggest challenges that marketing teams in larger organizations face today.

  But still, like the Sales Era, the Relationship Era wasn’t without its explosive success stories. In their follow-up book, The One to One Manager, Peppers and Rogers go through a number of case studies including one from First USA Bank, which was then the nation’s largest issuer of VISA and MasterCard credit cards. Chase Bank acquired the company in 1997.

  In that case study, the authors interview Richard Vague, then CEO of the bank, about his innovative customer acquisition program, “At Your Request.” As Vague put it, the program was a “personal assistant, concierge, researcher, and travel agent, all in one.” Vague’s goal for First USA was that it would become a “trusted agent” for customers. It would do this by developing extended and personalized services that would make it hard to walk away when other credit card companies came knocking with lower interest rates. The company also added a reminder service called “Just-In-Time.” This service allowed customers to fill out profile information for members of their family, including birthdays, anniversaries, doctor’s appointments, and car repairs. The service would then send an email or fax to remind the customer.21

  Remember, this program was being rolled out in the mid-90s. What seems to be “table stakes” for CRM these days was cutting edge for that time. Its goal was to develop more interactions with customers, so that the relationship would be closer and more intimate than with other credit card companies.

  But, ironically, the First USA story also is a sign of just how difficult establishing “relationships” with customers can be. Once the “shining star” of a family of banks under parent company Bank One, First USA learned the hard way that simply establishing a relationship at the “acquisition” stage of the customer’s journey doesn’t always translate into great relationships after they become customers. By 2000, First USA’s customer-service issues had resulted in a drop in stock price of more than 50%. By 2003, Bank One retired the brand.

  Yes, even then, we began to see the importance of the experience across the ent
irety of the customer’s journey. To paraphrase Jerry Seinfeld in an old episode of Seinfeld—in CRM, it’s not only acquiring the customer relationship, it’s maintaining it as well.

  AND TODAY?

  Of course, the Relationship Era continued after the dot-com bubble exploded, and some would say this era still survives. The early 2000s was marked profoundly by the rise of CRM software and a focus on delivering the “right message to the right person at the right time.”

  To supplement the CRM database, email relationship tools exploded onto the market in the mid-2000s. Social media began to get its feet wet with sites like MySpace and Friendster—each with tens of millions of members. There were books written on how to create marketing strategies for both of them.

  Marketing automation software, built to leverage email and address delivery of content to known visitors to digital content channels, became the newest “must-have” capability of relationship marketers.

  Then, as social media gained a real foothold toward the end of the first decade of the 21st century, the new focus became conversations with customers across the myriad media that they might be consuming. Social media became a key marketing function, as brands desperately tried to figure out how to deepen the relationship with an increasingly fragmented audience and a customer that was becoming more and more concerned about his or her data privacy and anonymity.

  And that, of course, brings us to today—the early days of 2015.

  EXPERIENCES: THE NEW ERA OF MARKETING

  As we mentioned in the introduction, there can be no mistake now that over the last few years, content (and how a brand uses it) has begun to transform marketing strategies. Over the last five years, early-adopter companies such as Red Bull, Coca-Cola, Nike, American Express, and Marriott have made big bets—to the tune of tens of millions of dollars—on the idea that content-driven experiences will move their business forward.

  It is in this context that we believe we are moving into yet a new era of marketing. It’s what we call the Experiences Era. With hindsight, it’s easy to see how each era moved into the next, and how some of them were doomed to be as short-lived as they were. So, while it’s tempting to say that this new era will be better than the last, or any of the previous, the truth is that the Experiences Era may be as short as the Relationship Era, or it may, itself, be a transition to something completely different. The future is unknowable, of course, but by understanding where we’ve been we can better navigate where we’re going.

  So, when we claim to be moving into this new era of marketing, our contention is based on three fundamental arguments:

  1. Customer Relationships are More Complicated than Ever

  Similar to what happened during the transition from the Production Era to the Marketing Department Era, the ability of companies to differentiate based solely on the value and quality of their products has largely disappeared.

  Now more than ever before, companies can easily reverse-engineer, produce, and/or copy features of existing products. These days, every industry seems to be going through some level of product and/or service disruption. From manufacturing, to consumer-packaged goods, to retail, to professional services, to healthcare, and so on, disruptive forces are reshaping the landscape for companies at the product and service levels.

  Consider some examples:

  - Banks: Lending Club, a new startup where customers lend each other money (as opposed to going to banks), has already brokered more than $5 billion worth of loans in five years.22

  - Light manufacturing: Online marketplaces for 3D-printed designs already exist, and it is estimated that within five to seven years the minimum volume of production needed to enter a market will drop by 90%.

  - Taxi services: New shared-car services such as Uber and Lyft have created better, easier experiences for consumers. In San Francisco, the taxi business has suffered a 65% loss in rides in less than three years.23 Other cities such as Washington, DC, and Boston show similar declines.

  It’s a company’s approach to solving customer needs or wants that differentiates the brand. Brand differentiation is no longer about product or service excellence—customers expect that. Today, it’s the experiential gap that has widened. It’s not enough to simply get the customer from A to B in a smelly old car. These days, the customer expects to be delighted at every interaction.

  Now, whether Uber can actually continue to deliver that delight is another story. As this book goes to print, its competitors are already threatening to deliver better experiences.

  Red Bull is a great example of a company that provides experiences. It doesn’t differentiate on price (it’s the most expensive energy drink on the market), product, place, or promotion (in fact, it has relatively standard distribution methods, advertising, and promotion budgets).

  Where they spend their money and focus most of their effort is in creating differentiating, content-driven experiences that sear their brand and their approach into the minds of their customers. Whether it’s extreme sports events, guys jumping out of space ships, a television network, or simply a magazine devoted to all things sports (which people pay to get), Red Bull creates valuable entertainment experiences that bond them to their audiences.

  Companies such as Uber are disrupting the marketplace by providing the same service, but offer a more valuable approach and experience.

  The real magic in the Red Bull strategy is that they could probably sell anything they want. They have such a strong brand and bond with their audience that if they started selling clothes, surfboards, or even bicycles, they’d probably succeed.

  So now it is up to marketers to go beyond the relationship that a customer has with a product or service, and instead develop deeper, more meaningful experiences for them, whether or not they have an existing relationship.

  2. The Democratization of Content and Experiences

  As mentioned earlier, it’s not only products that can be created and duplicated, it is content as well. Publishing and distribution tools now make anyone a mass publisher and brand that must be dealt with.

  Much has been written about our human capacity to absorb the vast amounts of content that are being produced on a microsecond basis. But from the invention of the printing press, there has always been more content than any human could consume. The “consumption ceiling” was reached long, long ago. However, as technology enables more powerful and better “filters” to the content aimed at buyers, the marketer must develop something more compelling in order to rise above the noise. Yes, a brand can pay for an ability to rise above the noise, but it cannot pay to have more relevance and value.

  This is not simply an advertising mandate; this is an everything-the-company-communicates mandate. Simply paying for attention will no longer do. We, as marketers, have to hold it long enough so that WE matter to them.

  Consider investment company, TDAmeritrade, which focuses on clients that are interested in trading stocks. Once the customer is acquired, the company provides them with access to their thinkorswim.com community and signs them up for thinkMoney, a print magazine. The goal of this content-driven experience is to continually engage traders (after they become customers) and empower them with the right tools, tips, research, and capabilities to trade more effectively. They’ve learned that subscribers to the magazine trade five times more than non-subscribers.24 That’s something that will never be delivered with a paid advertisement. It’s a valuable experience, separate from the product that creates a more engaged and frequent customer.

  3. The Adaptation of the Marketing Department

  Businesses tend to look at the developments of marketing trends with a focus on both hardware and software development. In other words, we look at the development of tablets, or mobile phones, or refrigerators with screens as yet another platform that we need to account for. Or, we see new customer aggregation points, such as broadcast television, cable TV, Facebook, Twitter, LinkedIn, Snapchat, or even Ello as software platforms to which we need to assign specia
l content teams and content strategies.

  The result over the last 15 years has been the creation of silos, even within marketing departments. We now have social teams, mobile teams, social CRM teams, e-business teams, web teams, PR teams, brand teams, and so on.

  It’s simple: businesses must realize that there will be no possible way to scale to every channel on which they must ensure the brand story is being told.

  It is vital for marketing departments to stretch and create valuable content across the entirety of the funnel, because that content can (and will) be shared by customers. That’s the only way a brand can ever hope to be on as many channels as is necessary. Every valuable experience or content that is shared by audiences across a social network reduces the need of that brand to maintain presence on that channel.

  Thus, the only way to scale is to adapt the marketing department’s structure and purpose around the creation, management, and ultimate flow of information (i.e., content) to both describe and, more importantly, create value for customers.