…because I believe brands should only invest in marketing
communications through existing users of their brand

this last post from my IPA essay reaffirms what I have come to firmly believe: that we're too wasteful.  we're investing pound after pound in inefficient aqcuistion-based advertising that – at best – does nothing for exsiting customers, and at worst actively alienates them.

enough already.  conversations about our brands are happenning right now.  the tools exist to join that conversation and respond accordingly: by creating and deploying collatoral that adds value to the lives of our existing customers, and then thru using media to tell everyone what we're doing.  I do not believe that this is an add-on; but rather something that should lie at the heart of how any early 21st Century brand behaves…

The role of brands in the early 21st Century

Brands are stubborn things to pin down.  They have been described as metaphors, as
intangible assets, or as codes of conduct and rituals; as the ties that bind us
and the ideas that inspire us.

I believe the role for brands in the early twenty first century
is twofold; that brands give people reasons to be loyal to a product and
service, and that brands provide an affirmation of our purchase decisions.

I believe

I believe brands should only invest in marketing
communications through existing users of their brand.

I believe we will come to look back at our marketing efforts
at the turn of the twenty first century as excessively wasteful; where
marketing was divorced from the products and services to which it pertained.

But most of all I believe we will look back at how we
embraced change.  Not because consumer
behaviour forced us to, but because we collectively saw a better way to nurture
and grow the brands we held so temporarily in our care.

a pdf of my essay can be downloaded here:
Download I believe in existing customers – Chris Stephenson
please note that it is subject to creative commons.  thanks.

…because I believe brands should only invest in marketing
communications through existing users of their brand

Case Study – Relentless

Over the last two weeks Mediation has been outlining why it
thinks brands should only talk to existing customers.  This post takes this theory and applies it to
one particular brand. 

Dual challenges in a growing and competitive sector

Relentless, with its "Give and you shall receive. No
half measures." positioning, was developed by the Coca-Coca Company in
2006 to compete within the highly profitable and expanding energy drinks
market.  The sector has experienced rapid
growth over the last decade and is dominated by Lucozade and Redbull with 50%
and 30% market shares respectively (see note 1).

Competition for consumers is most fierce in the 500ml can
offering, in which Relentless operates. 
In November of 2007 Barr Soft Drinks signed a deal to distribute US
energy drink Rockstar in the UK (see note 2). 
Competition was further ramped up by the US-based Hansen Beverage
Company’s launch of Monster in early 2008 (see note 3).  Relentless faces the dual challenges of
stealing share from market-dominant brands whilst defending its share against
recent newcomers.

For a brand with relatively low penetration in a fast-growing
and competitive sector, the obvious route to growth is to advertise at
potential customers to create awareness and by doing so generate intention to
purchase.

If however we adopt the principles outlined in this essay,
Relentless should instead focus on the share of market it already has.  It should concentrate on identifying the most
relevant consumer touch points.  It
should then create and deploy at those touch points collateral for its existing
customers.

Making it happen (I): Creating collateral

As we identified previously, for a product consumed in the
short-term the four principal touch points are the creation of experiences,
branded retail environments, co-creation, and use of packaging.  Relentless should therefore aim to add value
for existing customers at these touch points.

The opportunity to add value through experiences is in the
creation of exclusive events and secret gigs; experiences that you can only
find out about by signing up to Relentless’ website (see note 4).  At these events Relentless could create
branded retail experiences with pop-up Relentless ‘Recharge Bars’.  Co-creation could take the form of customised
drinks available at the Recharge Bars, developed in association with
mixologists or sports and music artists.

Finally – in keeping with the brand’s ‘No half measures’ positioning
that emerged from the idea that true artists go further and sacrifice more for
their art – Relentless could commission exclusive pack designs by cutting-edge
and emerging artists, collateral that would only be available to existing
customers at events.

Much of this thinking has already been adopted by the
brand.  Relentless has a presence at
action and motor sports events, as well as music events – even hosting its own
‘Wakestock’ event last summer (see note 5). 
But adoption of the principles outlined in this essay would see
Relentless take a crucial step further.

Making it happen (II): Communicating the existence of collateral

It is not enough just to create collateral, Relentless must
communicate the existence of that collateral in broadcast channels to existing
drinkers.  Whilst this could be in the
form of ad space, it would be much more interesting to co-create content that
showcased the events, in the form of a TV show, YouTube channel, or magazine
advertorials.

The desired response from existing customers is “yeah I was
at that gig – it was awesome”.  But
crucially – because of the broadcast nature of the communications – there is an
inherent take out for non-drinkers: “hey that looks awesome – I want me some of
that!”

The perceived inefficiencies of broadcast communications are
eliminated.  Every impact is
relevant.  To existing Relentless
drinkers advertising becomes an extension of the brand – a tool to mitigate
defections and engender loyalty. 
Furthermore brand communications become a validation of existing customers’
decision to purchase.  Attitude follows
purchase behaviour; as opposed to (costly)
change-attitude-with-the-hope-of-funnelling-down-purchase-corridor approach.

Relentless is already investing heavily in the creation of a
broad range of collateral.  It next needs
to plan for Transactions – maximising the potential for word of mouth to both
grow share and defend against aggressive entrants into their market.

Relentless metrics

Relentless must measure the results of its efforts by
tracking the four metrics identified previously.

Firstly, development of customer database (through use of
the website in conjunction with panel data); and secondly, analysis of the
database to identify consumer touch points; marrying purchase patterns with
Relentless drinkers’ passion points (gigs, events, bars etc).

Thirdly, fusion of the customer database to a media
consumption survey (such as TGI or Touchpoints); identifying where the
existence of collateral is best broadcast.  Finally, tracking the advocacy and word of
mouth of Relentless drinkers – who are the most likely to grow the brand via
word of mouth and who within the database wield the most influence?

Notes

1. The Energy drinks sector has seen +85% per capita growth
between 2002-2007.  Source: Canadean, http://www.canadean.com/

2. Source: http://www.talkingretail.com/products/7094/American-energy-drink-Rockstar.ehtml

3. Source: http://www.brandrepublic.com/Marketing/News/765163/Monster-Energy-plots-war-Cokes-Relentless/

4. Indeed Relentless should start with its approach to its
website.  Rather than being a
business-orientated source of information it should instead be a
customer-orientated hub for existing drinkers. 
Energy drink consumers are generally late teen and twenty-somethings
with an active lifestyle and passion for sports and music – the site should
reflect this.

5. For details of Relentless’ Wakestock visit http://www.wakestock.co.uk/

in Monday's final installment: what talking to existing customers means for the
role of brands, and why we all need to embrace change

…because I believe brands should only invest in marketing
communications through existing users of their brand

Barriers to Scientific Measurement

Tim Ambler categorises five stages of sophistication in the
assessment of marketing; from Unaware to Scientific (see note 1).  Different corporations regard themselves as
being at different stages of this evolution (see note 2).  The ideal – based on a database of past and
current metrics, derivatives and diagnostics – is ‘Scientific’ (see note 3)
measurement, barriers to which are twofold.

Firstly, few companies have access to sufficient data, both
in terms of number of metrics but moreover in the consistency of any data over
time.  Secondly, the priorities of
organisations – and especially marketing departments – change over time, mitigating
consistent collection of metrics (see note 4).

The result of which is a further feeding for our collective
addiction for short-term acquisition gains as the primary metric of the result
of marketing effort.  Brands are
measuring and reporting acquisitions as a short-term proxy for longer-term
metrics that should be measured instead.

The right metrics

The creation and deployment of branded collateral to
existing customers and its subsequent communication to existing and potential
customers, requires a set of metrics to ensure success at several stages.

One, we need not just a database of current customers, but a
database capable of being cross-referenced across Ambler’s database of past and
current metrics, derivatives and diagnostics. 
This at its most basic permits us to know the value of our existing
customers; what’s the annual profit pattern and how long before they are likely
to defect? (They always will) (see note 5).

Understanding this is fundamental to addressing one of the
evaluation challenges necessitated by the adoption of the methods proposed in
this essay.  Most evaluation is centred
on acquisition.  To monitor retention you
have to gain an understanding of defection, but customers defect because of a
much broader and comparatively unpredictable set of reasons.

Two, we need to know which consumer touch points are most
relevant for and pertinent to existing customers; a playground for data
strategists with sufficient customer data. 
It is also important to understand the frequency of communication
required.  Every moment is an opportunity
for a customer to defect.  How
consistently or frequently should collateral be deployed?  This informs the brief for the creation of
collateral.

Three, understanding of media consumption; specifically how
it’s consumed by both existing and potential customers.  Cross-referencing of existing and potential
customer data with media consumption panels – both proprietary (see note 6) and
industry standard (namely Touchpoints) – informs the Transaction planning
component of the process.

Four; metrics for advocacy and more specifically for word of
mouth – the most oft cited is the Net Promoter Score (NPS) (see note 7).  Despite initially being widely embraced by
the business community as a simple and comparable measure of loyalty and word
of mouth – which also handily correlated to business growth (see note 8) – its
importance has since been challenged (see note 9).  The debate revolves not however around
whether or not the NPS is a useful metric per se, but rather whether or not it
is the absolute metric for Loyalty. 
Consensus remains more than comfortable with the former; “The NPS has
been added to successful brand trackers … certainly a good use of the metric,
especially if it is presented alongside other word of mouth-related scores,
such as brand reputation or online buzz” (see note 10).

The online conversation is now large enough to significantly
indicate the levels of conversation within the wider population.  Tools for measuring this ‘buzz’ track not
only the extent of the conversations but also their polarity (positive versus
negative) and the relative influence of the conversation points (see note 11).

Difficult is worth doing

Even the best and most appropriate metrics if used
disparately will fail to give as complete an understanding as possible of our
activities and – more crucially – their adherence to any model (see note 12)
against which we base our hypotheses and actions.

Our ambition must be for a new and more holistic model based
on integration of the three data sets of CRM, advocacy (through word of mouth)
and media metrics.  There’s a perception
that our existing – acquisition-based – models of understanding are getting
better.  They’re not.  It’s the data we put into them that has
become consistently better over the last twenty years.

James Northway comments that “moving to this type of model
is going to require people to be a lot braver, because the measurement and
evaluation models don’t yet fully exist. 
‘Let’s put 80% on TV’ has an established formula … measuring
‘Transactions’ necessitates a much more holistic model” (see note 13).

Metrics shouldn’t be an add-on to attribute numbers to what
we produce for the brands upon which we work. 
Rather they should be an ongoing measurement to aid better understanding
of the contribution our efforts and activities make to the brand equity at the
bottom line of the businesses with which we work.

It may sound like a not-insignificant mountain to climb, but
we have a key advantage.  One of the most
important data sets is the one brands are closest to – their existing
customers.  We know – or should know –
more about them than any conceptual demographically-defined group of potential
‘consumers’.  The world is moving in our
direction; as the digital paradigm takes hold, it is facilitating not only the
accumulation but the understanding of that customer data.  It is our choice whether or not we take
advantage of it.

Notes

1. The five stages outline the generalised process through
which most companies develop thinking about assessment of marketing, and are 1.
Unaware, 2. Financial, 3. Many Measures, 4. Market focus and 5. Scientific

2. Nestle regarded them selves as being at the ‘Financial’
stage.  In this stage marketing
assessment is made purely on financial grounds, as opposed to the next ‘Many
Measures’ stage, in which a diversity of additional measures – such as
customer-based metrics – are used. 
Centrica described their organisation as being at this ‘Many Measures’
stage.  Duracell claimed to be moving
from the ‘Many Measures’ stage to the fourth stage; ‘Market Focus’.  In this stage the range of financial and
non-financial measures are consolidated into fewer more meaningful metrics,
which are presented to and assessed by the board.

3. At Ambler’s ‘Scientific’ stage; a “database of past and
current metrics, derivatives and diagnostics is mathematically analysed to
provide the shortest list of sensitive and predictive metrics.  Source: Marketing and the Bottom Line – Tim
Ambler, p79

4. Both of which are suggested by Tim Ambler in Marketing
and the Bottom Line

5. Method for calculating value of existing customers as
outlined by Frederick F Reichheld.  The
Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value.

6. ævolve’s CCS Study routinely asks it’s panel if they have
given or sought advice across twenty eight product and service categories.

7. Justin Kirby & Alain Samson.  Customer advocacy metrics: the NPS theory in
practice.  Admap Magazine, February 2008,
Issue 491.  “The Net Promoter Score is
based on the question 'Would you recommend [Brand/Company X] to afriend or
colleague', answered on a scale between 0 (not at all likely) and 10 (extremely
likely).  The score is computed by
subtracting the percentage of detractors (those giving 0–6 answers) from
promoters (9–10s).  The middle section,
between 7 and 8, is so called passives.”

8. Dr Paul Marsden, Alain Samson, Neville Upton, all London
School of Economics.  Advocacy Drives
Growth: Customer Advocacy Drives UK Business Growth.  05 September 2005.  Research by Marsden et al replicated work by
Bain/Satmetrix (F Reichheld: The one number you need to grow. Harvard Business
Review, December 2003) that demonstrated a correlation between the NPS and
business growth.

9. Tim Keiningham. 
The Net Promoter debate.  Admap
Magazine.  May 2007, Issue 483.  Simply put, we found no support for the
assertions attributed to Net Promoter. 
Our research clearly shows that claims of its superiority in predicting
firm growth, or in predicting customers’ future loyalty behaviours, are false”.

10. Justin Kirby and Alain Samson.  Customer advocacy metrics: the NPS theory in
practice.  Admap Magazine, February 2008,
Issue 491.  They go on to comment that “it
also represents the compromise many companies seem to have reached about the
NPS, namely to consider it one important dimension of a more complex mix of
customer satisfaction or brand health indicators”.

11. For example ævolve’s propriatory ‘onalytica’ tool tracks
online buzz

12. Kuhn – The Structure of Scientific Revolutions.  “There is no such thing as research in the
absence of any paradigm”.

13. Interview with James Northway, Joint Managing Director
of ævolve, part of Aegis Media.

…because I believe brands should only invest in marketing
communications through existing users of their brand

Fragmented thinking: fragmented implementation

Planning for Transactions requires the alignment of three
distinct disciplines – CRM (including where appropriate DM channels), word of
mouth marketing and broadcast media – into one holistic channel plan.  And that requires a whole new force of
agency.

The last decade has seen the emergence of a whole new ball
game.  Media fragmentation; consumers
with less time, little attention and no patience; an infinite amount of
broadcast and on-demand content; digitisation rendering channels irrelevant
(see note 1); technology to control and filter demanded content (see note 2)…

The collective response of the communications industry has
been to diversify into a multitude of different and varied operations (see note
3).  It is this diversification that is
partly behind the lack of cohesion between word of mouth marketing and mass (or
broadcast) advertising (see note 4).

Agency silos generate silos of implementation.  In an interview for this essay a data planner
(see note 5) highlighted the current difficulty he was having aligning CRM and
broadcast timings (let alone the strategic development) for a campaign on which
he was working.  The planning of retention
(loyalty) and mass media are in concept as well as in implementation operating
in different worlds.

This division isn’t however limited to agencies.  Marketing departments within clients operate
in the vast majority of instances separately from their CRM counterparts.  The opinion of Andrew Wythes at Eurostar is
that “in theory, a lot of companies are bringing the two together, with CRM
becoming more aligned with marketing”. 
But he also observed that – for Eurostar – this is predominantly around
specific projects, for example Eurostar’s transfer in 2007 of international
rail operations from Waterloo to St Pancras. 
In that instance “marketing and CRM worked really well together … it is
the day to day where it’s less aligned; CRM needs to break out and do its own
thing over and above the loyalty scheme, and in doing so focus on what our
customers really want” (see note 6).

The Loyalty Agency

Transaction planning – as a solution to our new paradigm –
requires alignment of the three distinct disciplines of CRM, word of mouth and
broadcast media into one holistic channel plan. 
Developing such a plan necessitates the creation of a single agency
offering; an agency whose positioning isn’t articulated around
solution-orientated concepts such as Different, Pioneering, Ideas, or ROI – but
that is instead positioned around a business-orientated concept; the concept of
customer loyalty.  To do so, such an
agency would integrate three key functions.

Figure 4: the three core roles within the Loyalty Agency

• Function one: CRM and data strategists, working with brand
  CRM teams to mine customer databases for information on who customers are, as
  well as the identification of who’s leaving and who’s hanging around.  They’d develop customer retention (loyalty)
  strategies.
• Function two: word of mouth planners, identifying relevant
  consumer touch points and developing, as a result, appropriate collateral with
  which to deploy with the aim of mitigating defections ie, engendering loyalty.
• Function three: Channel neutral planning.  Working closely with the former two
  functions, their role is to develop strategies that use channels and
  specifically mass communication to convey the existence of collateral to
  existing consumers in such a way that it’s overheard by potential customers.

An important point to make on our proposed Loyalty agency is
that their output is first and foremost the creation and deployment of relevant
and equity-generating collateral for a business.  In doing
so it creates an extension of that business’ product or service.  For clients, working with such an agency
would mean working with an agency partner that encouraged marketing effort to be
a part of the business; rather than a signpost to it (see note 7).

Integration with other agencies

Despite the assertion that “Integrated Communications are
like weapons of mass destruction; everyone knows they exist but no one has ever
seen it done” (see note 8), coordination with other agencies will be key.  In particular the role of creative agencies
(see note 9) is fundamental to planning Transactions in two key ways (see
figure 5).  Firstly, along with PR and
other agencies, they’d work with word of mouth planners to help shape the
collateral that is developed.

Figure 5: Loyalty agency integration with clients and other
agencies

Some of the most forward thinking creative agencies are
already operating in this capacity; I’ve already mentioned Mother’s musical for
Pot Noodle.  Last August Bank Holiday
also saw Eurostar’s Ebbsfleet station host a drive-in movie for existing and
potential Eurostar customers (see note 10). 
The creative concept – as well as much of the infrastructure for the
event – was created by Fallon, working alongside experiential agency Space.

Secondly, creative agencies would continue to work to the
more conventional creative brief, but with a key difference.  Rather than communicate a branded product or
service proposition with the intention of recruiting – through awareness et al
– potential customers to that brand; they would instead work with a brief to
communicate the collateral developed earlier in the process.  Their communications would be developed with
the sole aim of communicating to existing customers (but overheard by potential
customers) the existence, use, or consequence of that loyalty-generating
collateral.

Notes

1. Once content is digitised, not only it can exist in any
digital channel, but move seamlessly across channels.  It is this intrinsic that led William Gibson
to first comment that “The remix is the very nature of digital” – ie
digitisation of data and content facilitates transformation – remixing – of
that content.

2. Example of on demand include RSS (Really Simple
Syndication) which automatically relays content deemed relevant to the
consumer, and IPTV (Internet Protocol Television) – TV via broadband, which is
currently seeing substantial investment by UK TV companies.  To quote Rob Norman in his speech Do
Different “In the final analysis the world has gone on demand.  That puts it beyond our control”.

3. And a lot of specialists there now are; WPP Group has 247
companies globally and 194 offices in the UK alone.  All companies relate to communications
services “Through our companies, WPP offers a comprehensive and, when
appropriate, integrated range of communications services”.  Source: http://www.wpp.com/WPP/About/

4. The many and varied agency operations are also behind
failure to join up the dots across a range of other disciplines – but this lies
beyond the scope of this essay.

5. Interview with Tim Noblett, Data Strategist at ævolve,
part of Aegis Media.

6. Interview with Andrew Wythes, Customer Relationship
Management, Eurostar.

7. In 2006 BBH launched Zag. 
Fully funded by the agency it aims to create and develop new brands,
which it will license or sell to third parties in return for a share of ongoing
sales revenue.  More recently New York
agency Anomaly is to open its doors for business in London.  The agency will be run on a model that
divides the agency’s revenue streams into part fees, part IP share.

8. David Jones writing in Contagious Magazine.  Is Your Work Spongeworthty?

9. It is the deliberate intention that creative agencies sit
outside the proposed Loyalty agency, for a very specific reason.  Given the close proximity in which the
Loyalty and Creative agency would work, it would seem logical to align the
operations into one agency.  This is the
move DraftFCB made when it aligned content creators with data analysis in its
2006 merger.  But uniting the silos into
one operation within the Loyalty agency would be a flawed move.

At the time of writing, Endemol is eyeing up a possible
takeover of ITV (Source: Financial Times. 
John de Mol commenting on ITV: “This one is an example of a combination
that could make sense, depending on the numbers.” Full story at: http://www.ft.com/cms/s/0/02d15dca-5110-11dd-b751-000077b07658.html)

Commenting in MediaWeek (19th August 2008; “Being the best
at what you’re best at is surely the best advice”) Richard Eyre observes that
“it’s a trap. … Successful content owners diversify their routes to
market.  Successful distributors source
the best content wherever it can be found. 
Both need a diversity of relationships to stay at the top of their
game”.

Similarly it would be a trap to align our Loyalty agency and
a Creative function into one operation; the former must be able to work with
any and every creative agency that appreciated the value of existing
customers.  Ultimately brands would be in
a better position to benefit from the diversity those creative agencies would
bring to the loyalty table.

10. For more information about Eurostar’s Ebbsfleet drive in
see: http://www.eurostar.com/UK/us/leisure/about_eurostar/press_release/eurostar_host_drive_in_cinema_at_ebbsfleet_international_station_over_august_bank_holiday_weekend.jsp

Tomorrow: a holistic approach to metrics
Friday: Making it happen… Relentless case study