3 Resource Allocation Questions to Ask for Better Returns

Here are three questions data-driven marketers and those in customer-focused functions need to ask in order to evaluate their resource allocation during uncertain times.

These are obviously times of great uncertainty and change. Smart business people know that with change comes new opportunities. Somewhere, entrepreneurial spirits are already making bets and shifting strategies. There is another powerful axiom, however, which rarely gets enough airtime during times of change: In times of uncertainty, focus on what is certain. One certainty in business is that resources can always be better relocated to achieve better returns.

Unless you are one of the lucky businesses booming in these times, there will be budget cuts. This is the perfect time to reevaluate resource allocations using an agile, data-driven picture of your business. Considering that there are few industries untouched by COVID-19, agile decisions will need to be made based on sparse but recent data.

Here are three questions data-driven marketers and those in customer-focused functions need to ask in order to evaluate their resource allocation.

1. Do I know who my best customers are and are they okay? Your best customers should be based on current sales and lifetime value. Yes, your best customers today are important. However, most businesses survive on the 20% to 30% of customers who are consistently loyal and profitable over many years. Once you have identified the most important customers, you should evaluate if their buying behaviors are changing and why? How can you reallocate resources to better serve this segment?

2. Do I know the channels where most of my business comes from and is it under threat? The first step to answer this question should involve a data-driven accounting of your marketing and sales channels. However, some of your most influential channels may be the most difficult to track. Therefore, it is important that you establish or refresh your multi-touch attribution models so that you can better allocate sales to channels. Right now, it might be very tempting to simply rely on direct attribution or easily measurable channels. After all, this approach feels more certain, but it is rarely the right answer.

3. Do I have the data I need to make quick decisions? If your data was messy and hard to work with before COVID-19, then it will be even less helpful now. This might be the right time to think about the minimal data needed to make agile decisions. The word minimal is critical here as the more data you collect, the more complex the solutions become, and agility diminishes. Do you know what measures are most important? Do you need to spend resources on agile data-driven capabilities?

Are You Prepared to Handle the Oncoming Martech Consolidation?

For those marketers who rely on marketing technologies while navigating an industry landscape that changes almost daily, here are four considerations to make when adapting to the oncoming martech consolidation.

In previous posts, I have often referred to the vast martech landscape as the land of shiny objects. This was a term of derision and admiration. The landscape is filled with amazing innovations. It also can overwhelm even the most tech-savvy marketers and cloud strategic thinking.

We marketers were often so enthralled by what we could do, we often lose sight of what we should do. Today, as the economic impact of COVID-19 grows, the effect on marketing technology spend will be significant. The martech landscape has been built on billions of speculative investments from private equity. However, most of these products were barely profitable, if at all, before COVID-19. Most of them are now burning significant cash, and they were never capitalized with a pandemic in mind.

Soon, investors will be making hard choices. Many martech solutions will be sold at huge discounts, some will close. I believe the much-anticipated industry consolidation is around the corner. This is not the way we wanted martech consolidation to happen, but this is the painful reality. For those marketers who rely on these technologies while navigating an industry landscape that changes almost daily, here are four considerations to make when adapting to the oncoming martech consolidation:

  1. Hire “The” technology expert. Many martech companies have implantation consultants; the best ones are often held closely and deployed on the most complex projects. This could be your opportunity to hire them. If new hires are not in the budget, perhaps a contracting agreement might work. In either case, if you have invested in the technology, why not invest a bit more for the right talent who will help you get the most out of your investment?
  2. If you are using a niche technology, reach out to your account rep. Find out how they are doing and what their plans are. If you have a good relationship with your rep, they will hopefully share any changes afoot, availability of on-going product support, the possibility of a sale or even closure.
  3. If you need to invest in new technology, look for solution providers with a broad base of active clients. (Notice the word “Active”). In some cases, one or two large clients can support a solution provider just fine. However, if typical license fees are $60,000 per year and the solution provider has a staff of 20 people, a broad base of clients will be critical for survival. (It’s just math.)
  4. The exceptions to No. 3 are cases where the solution provider has recently been acquired by a larger concern, especially post COVID-19. In such cases, someone with deep pockets thought enough of the technology to buy and invest in its survival. Although deep pockets do not always translate into smart money, it is enough of a reason to consider the technology seriously.

Those of us who have been keeping track of the martech universe know that the growth was unsustainable (There were over seven thousand solutions in the market as of 2019). The hope was that the best products would survive and eventually lead to industry consolidation. It seems that COVID-19 will abruptly end the natural evolution of the industry, for the time being. Innovations and investments will return, but exactly when is anyone’s guess.

In the meantime, we need to be kind and helpful to those who will be affected. In doing so, we may benefit from their wisdom, which was often drowned out in the previously noisy clamor of martech.

How Do We Leverage Data to Drive a Faster Economic Recovery?

As growth leaders, we will be waking to a world with fewer resources and businesses desperate to grow again once we get past the coronavirus pandemic. However, in our struggle to regain our financial footing we will have a very valuable resource that previous generations did not: data and data science.

As growth leaders, we will be waking to a world with fewer resources and businesses desperate to grow again once we get past the coronavirus pandemic. And despite the global hardships that will be felt by many, in our struggle to regain our financial footing we will have a very valuable resource that previous generations did not: data and data science.

When used well, data science will help direct scarce resources to the right opportunities and efficiently drive growth. I am convinced this will be a big differentiator versus previous recoveries of this magnitude.

Over my career, I have consistently encountered inefficient and counter-productive practices in data-driven decision management and have written about them often. They are paralleled in the crisis today. Below are three issues I would like us all to think about when we leverage data science to rebuild the national and world economy.

1. Customer Data Hoarding

Companies collect so much data that many are “drowning in data.” If you have no idea of the value of what you are collecting, then it is digital garbage.

We were led to believe that AI and data mining would help make sense of the data. It does to some extent, but more often it leads to head-scratching conclusions. We can’t leverage what we can’t understand.

As a data-driven consultant, I am amazed at how much time is spent sifting through data just trying to make sense of it all before any valuable insights can be generated. Going forward we cannot afford this luxury. If there are 10 gallons of fuel in the tank, we can’t spend five gallons trying to figure out if the engine works. However, when it comes to mining company data, we often do.

2. It’s About Qualitative, Not Just Quantitative

We can’t be slaves to the data we have. Collecting the right data is often cheap and easily done, if time is taken to plan. This means that measurement strategy can’t be a retrospective exercise. Too often, I have engaged clients in the post-mortem analysis of very important projects. In many cases, my team is often limited to the data that is available and not the data that was needed. Critical answers are sometimes left unanswered. This is a waste of time, resources and most importantly, valuable information.

3. Data Is Not the Solution, It’s the Tool

We must regularly remind ourselves that data does not solve problems or create opportunities. Rather, brave decision making solves problems and creates opportunities. Data is a valuable tool that can only inform the decisions we need to make. It can help lower the risk and provide valuable insights. Sometimes, collecting more data before acting can be wise. Other times it can also be the delay in action that leads to disaster.

What is happening today has no parallel in recent memory. While the 1918 flu pandemic had similar infection rates, the world was a different place then. Today, we have advanced tools and technology to aid our recovery.

Data science will be one of those important tools, especially if we collectively decide to use it to its true potential. As a result, I am hopeful that we can come out of this faster than we realize.

Is Identity Resolution the New, Must-Have Martech Solution?

There’s a bit of growing confusion and buzz in the martech space around the topic of identity resolution. It’s the new elixir being pitched as the critical additive to make your marketing technology stack work better, faster, and deliver better results. But is it?

There’s a bit of growing confusion and buzz in the martech space around the topic of identity resolution. It’s the new elixir being pitched as the critical additive to make your marketing technology stack work better, faster, and deliver better results. But is it?

For those of you familiar with the marketing technology space, every new solution comes with a blend of real value, hyperbole and needless complexity. Identity resolution is no different. Here I will try to unpack this relatively “new” capability and put it into perspective for marketing leaders. (Why did I put new in quotes? Keep reading to find out.)

What is Identity Resolution?

Identity resolution uses artificial intelligence (AI) to connect customer interactions and achieve a single customer view. The concept of capturing all customer interactions (marketing, engagements, sales, post sales), at the individual level, has been around for many years. However, achieving this goal has been very hard.

The reason is that customers interact with your brand across multiple channels (online and offline) while using multiple devices. Additionally, some interactions are anonymous or only provide limited identifiers. This interaction variability results in very complicated, disjointed customer data.

Until recently, most efforts at achieving a single customer view involved creating rules engines by which each interaction could be matched with other interactions and assigned to a single customer. Due to differences in the technology stack, channels employed, and the customer experience, rules engines had to be custom-built for each organization. This was expensive; enter AI.

Identity resolution uses AI in generating matching logic vs. using a team of analysts. The basic idea is to train the AI algorithm using known matches and then validate future correct matches the algorithm makes. This is why I refer to it as a “new” capability. In reality, it is only new because rules engines have been replaced by AI. For most marketers this change is only relevant if the match rates are better and the solution is cheaper than existing efforts are at achieving a Single Customer View.

What’s the Hype and Confusion About Identity Resolution?

While the addition of AI is innovative, it does not always translate into better match rates. Other major challenges with single customer view, such as the accurate collection of relevant data, still remain. AI, like any other analytic solution, also suffers from bad data and can put out spurious results. Therefore, verifying and validating AI matches is a task in and of itself.

The next issue to keep in mind is that identity resolution is probably not going to be sold as a separate solution in the near future. Within a short period of time, it will be integrated into larger martech solutions such as CRM or marketing clouds. Waiting to implement identity resolution could mean leaving the difficult task of systems integration to the cloud solution providers. However, the trade-off will be losing first mover advantage.

What Is the Value?

Single customer view has been the holy grail in marketing for good reason. With it, marketers can better understand the impact of interactions across the full customer experience life cycle. As an added benefit, marketers could also generate data-driven justifications for modifying or redesigning large segments of the customer experience. This will result in significant growth opportunities for your brand.

Despite the hype and confusion, identity resolution presents a great opportunity to finally achieve a single customer view. In theory, the introduction of AI should make identity resolution a desirable solution with better match rates and lowered costs. This means the evaluation of identity resolution tech is somewhat straight forward (though not necessarily easy).

The core evaluation question becomes, “Is the identity resolution solution cheaper and better at creating a single customer view vs. current efforts?”

Influencer Marketing Can Have Great ROI and You can Prove It

In my previous post, I discussed how influencer marketing will become a prominent marketing tactic in 2020. In this post, I would like to share what is working and what influencer marketing needs to do to become a trusted channel.

In my previous post, I discussed how influencer marketing will become a prominent marketing tactic in 2020. In this post, I would like to share what is working and what influencer marketing needs to do to become a trusted channel.

Designing an effective influencer-based campaign must take into account the objectives of the campaign, whether it is a product or service, and the length of the product purchase cycle. As a result, execution varies. However, a clear consensus is emerging that the most successful campaigns focus on co-developing content, where the influencers are given the flexibility to determine the right way to introduce their audience to the sponsor’s brand. In these instances, brands work with influencers to design content that interacts with their product or service in an entertaining or informative way. When done well, the influencer’s credibility transfers onto the sponsor’s brand. A great discussion on this can be found on Scott Guthrie’s podcast.

A Successful Influencer Marketing Campaign

One example of an influencer campaign that I really love is the Liquid- Plumr “Will it clog” campaign. In this campaign, Liquid-Plumr worked with Vat19 to create funny and interesting clogs for Liquid-Plumr to tackle, like a pile of gummy bears. For Vat19’s audience, this was completely aligned with their theme of creating entertaining experiments. For Liquid-Plumr, not only was it great brand exposure, but it also built significant brand trust among viewers. As the challenges became more and more insane, viewers were impressed with how effective the product was at tackling tough clogs. I recently had the opportunity to hear Bryan Clurman, brand manager for Liquid-Plumr, share the team’s experience, and the lift in sales he showed was impressive.

I assume Liquid-Plumr detected the increase in sales because it was an impressive viral campaign lifting historically flat sales. In this aspect, this case is atypical. Many influencer campaigns are effective, but struggle to show it. Ask a typical marketer working on influencer campaigns and they will confess their most pressing challenge is measuring impact. Currently, most common attribution metrics rely on the same pixel/cookie-based tracking that has been used for digital ads over the last two decades. While this method has some clear benefits, we also know that there is usually a non-trivial gap between actual impact and that which can be directly attributed using cookies. (Let’s forget, for the moment, that the industry-wide death of cookies has already begun.) In my experience, this gap increases with longer sales cycles or when driving brand recognition is the primary goal, as opposed to immediate sales. The further the sale is from the ad exposure, the greater the chance that direct attribution will be lost.

The Magic of the Middle Funnel

An important part of the total ROI solution lies in the middle of the sales funnel. Activities here are closer to the initial ad/brand exposure. For example, assume you are looking for a washing machine for a new home, where your actual purchase may not happen for weeks. While conducting research, you come across a recommendation from a trusted influencer. You interact with the content and may click on a link to the brand website. There, you might look at reviews and product features, but you are still not ready to purchase. These engagement activities have economic value. We know this, because as engagement with a brand increases, sales should increase. However, middle of the funnel measurement is often neglected.

While paying more attention to middle funnel metrics is one step, the other is generating more compelling middle funnel activities. If an effective influencer campaign leads to a clickthrough, can the brand extend that co-branded experience on its own digital property? Not only will that cobranded experience keep the viewer engaged, it is also great for ROI tracking. Even if pixel tracking is lost at this stage, a statistical algorithm can now be employed to correlate the increase in co-branded engagement with eventual sales.

The truth of the matter is, influencer marketing does not have a measurement challenge. Influencer marketing ALSO has a measurement challenge.

What that means is there is nothing uniquely perplexing about influencer marketing ROI. However, influencer marketing is still very new and therefore, the burden of proof is higher. As with all successful marketing ROI plans, it requires a focused approach that clearly defines the objectives and actively seeks opportunities to encourage measurable engagement.

Why Influencer Marketing Is Going From Fad to Marketing Trend

I have a prediction for 2020. I think 2020 will be the year when influencer marketing becomes a “big time” tactic. A confluence of factors are driving influencer marketing, including the supporting trends of historically low brand trust and the growing difficulty in getting meaningful brand exposure.

I have a prediction for 2020. I think 2020 will be the year when influencer marketing becomes a “big time” tactic.

A confluence of factors are driving influencer marketing, including the supporting trends of historically low brand trust and the growing difficulty in getting meaningful brand exposure.

Along with this prediction, I would like to make three recommendations for marketers to consider:

  • First, recognize that influencer marketing is still just an ad channel with good and bad exposure opportunities.
  • Second, Influencer takes discipline to manage. Most brands will want to work with multiple influencers to target a broader audience and the process can get unwieldy, quickly.
  • Finally, Influencer marketing will be hard to measure, but measure it you must.

Why I Think Influencer Marketing Is Here to Stay

We are spending an enormous amount of time on our smartphones and the bulk of that time is spent consuming entertaining or informative content. As a result, marketers have been pumping billions into mobile adverts.

One way that marketers have tried to reach consumers is through mobile banner ads. Every advertiser knows that most clickthroughs are accidental outcomes of trying to close the ad.

While video ads have better luck, it is still not stellar. IPG Media brands Media Lab published findings in 2017 that 65% of users commonly skip video ads.

Personally, that number feels low. When legitimate brand exposure does occur, it is dampened by the historically low levels of brand trust. That’s something that I describe as a silent tax on brand exposures.

The solution to this crisis is finding quality exposure. Brands can build trust with content providers, loosely called influencers.

Why Brands Still Need to Be Careful

Before we all start an ad bubble (and it may have already started), there are many reasons to be cautious of influencer marketing.

  • First, not everyone with compelling content is an influencer. But they are all called influencers. Some content providers just have “train wreck” value, and followers see them as part of a digital menagerie — with no credibility.
  • Second, it is also possible that influencers have artificially inflated their follower count. Most social platforms, so far, are not interested in policing follower counts beyond weeding out bots.
  • Third, influencers may not have a relationship with their followers. This limits their ability to influence on behalf of brands.

The full list of cautions around influencer marketing is longer. The larger lesson is this; Influencer marketing is a big opportunity, but it is also full of low-quality opportunities.

Now for the Good News

Influencer marketing works very well when influencers are carefully selected, and the brand content is authentic.

A 2019 report by Mediakix states that 80% of marketers found influencer marketing “effective” or “very effective.” However, to achieve good results takes discipline. This includes a willingness to mine social and other online data to understand the influencer’s own brand and history. Some influencers are not well-known beyond a core following. They sometimes have taken positions or done things that may not associate well with your brand.

A key step should be testing them for brand fit. Good judgment is important, but not enough. There are a growing number of tech and data-driven approaches to scan social history and bring forward potential issues. Making sure you understand how unintended brand traits may transfer onto your brand is also important. A good brand fit study is critical; especially if big dollars are involved.

Once you are comfortable with the brand fit, then comes the fun part. How do you leverage the influencer’s credibility in a way that feels authentic? There are many models for how this is done. One involves sponsoring content with a simple acknowledgment from the influencer. A better model is having the influencer interact with your brand and make it part of their engaging content. For this to work, brands have to cede some creative control to the influencers. A smart influencer will be attuned to actions where they might seem disingenuous — or worse, look like a shill. The advice most successful influencer marketing pros will give is to let the influencer be themselves and don’t over-prescribe.

Influencer Marketing ROI

Finally, we come to measurement. And it is the biggest challenge facing influencer marketing. Not only are the number of views, likes, and followers often over-reported, they are also weak measures of engagement and tough to link with real financial value.

The right approach means making measurement and analytics considerations a part of the content design process.

When thinking about content, everyone should seek out opportunities to make it digitally interactive. Unlike the commercials of old, digital channels provide many opportunities to interact with content, such as forwards, downloads, comments, and shares. These deeper engagement measures tend to be less bloated and better reflect viewer intent.

As a result, you are better able to measure campaign success. I have also found that they correlate better with financial outcomes.

Taming Influencer Marketing

Influencer marketing today is often described as the “Wild West.” Anyone who has heard this analogy knows it really means chaos with immense potential.

The good thing about this channel is there are literally thousands of small influencers with whom brands can experiment to uncover that potential.

Navigating Martech Amid the Land of Shiny Solutions

The marketing technology landscape has seen explosive growth the last couple of decades, but even when the field was a bit smaller, it was a challenge for marketers to clearly understand what all the solutions did.

The martech landscape has seen explosive growth the last couple of decades, but even when the field was a bit smaller, it was a challenge for marketers to clearly understand what all the solutions did.

Firms like CabinetM and others, as well as Scott Brinker’s Chief Marketing Technologist Blog, have tracked the growth of marketing technology solutions, with CabinetM cataloging more than 8,000 products across over 300 categories. And the growth doesn’t show signs of slowing or stopping.

This proposes a major problem, as marketers must decide where to expend their limited time and energy. Even after categorizing martech solutions by function, the job can feel impossible — because there are several hundred solutions per category.

The pressure to keep up with competitors and fear of missing out are strong impediments to developing a successful martech strategy. But rest assured, there is a method to getting through the madness. Let’s first review two steps any marketer needs to take when considering their marketing technology needs, and then dive into some key categories that marketers should be considering first when it comes to martech investments.

Step 1: Square Away Customer Strategy

The first step is to develop a technology-agnostic, but technology-aware customer strategy.

Knowing what technology to invest in really begins by thinking about what your customer strategy is and what it aspires to be. With thousands of solutions in the market, martech is the land of shiny objects. There are really cool innovations, such as augmented reality, geo beacons, IOT, AI, etc.

It’s natural to be attracted to these innovative solutions. However, investing in solutions based primarily on their cool factor generally results in a confusing customer strategy and poor ROI.

The world of retailer apps is a good example: There are countless innovative and helpful branded mobile apps available for download. According to Statista, however, only a handful of apps are used with any real frequency, and most are deleted within 30 days. This is not to say that brands can’t have success with apps. However, solutions also need to be compelling and well-thought-out components of a larger winning customer strategy.

Target’s app, for example, helps drive a better physical in-store experience by helping you find what you need and informing you of relevant sales. Target could have added VR games or other gimmicks, but it chose to stay focused on improving the shopping experience.

By thinking about the brand, customer strategy, and customer pain points first, the martech universe becomes significantly easier to navigate.

Step 2: Decide on Investment vs. Outsource

The next step is to decide what tech solutions you want to invest in and which ones you will outsource. There are three questions to ask:

  • Is the solution essential to my customer strategy? In other words, would your brand be fundamentally
    impacted by the solution? Customer experience solutions would be prime examples, because customer experience has a straight-line relationship to how your brand is perceived today.
  • Does the solution require intense domain expertise? Some capabilities are constantly in flux. SEO, for example, is always a moving target. Staying ahead of search engine algorithms and how digital assistants — such as Alexa and Google Assistant — find information for their users takes some focused dedication.
  • Do I have or can I hire the appropriate talent? This can sometimes be the ultimate arbiter when deciding to invest time and energy on a solution. For example, while analytics and measurement solutions would qualify as essential to customer strategy, the ability to hire, retain, and manage an analytics capability can be very difficult. As a result, brands frequently outsource at least some of their analytical solutions.

Martech Categories Marketers Must Consider

While working through those steps can help to guide martech investments, there are four (plus one) solution categories that merit near-universal attention from marketers.

These solutions not only dominate tech-driven marketing, but also are constantly integrating more specialized solutions under their umbrella to provide end-to-end capabilities. (That said, even these dominant categories do not play in distinct sandboxes, and often overlap.)

Investing time and energy on these larger solutions is a great way to begin forming the foundation of a good marketing technology stack.

Customer Relationship Management (CRM)
This should be the central repository of important customer information and behavioral data. Most CRM
solutions also integrate modules that help make customer decisions based on the data. Some CRM solutions, such as Salesforce, have so many modules that it’s nearly impossible for one person to understand the full ecosystem. Nevertheless, understanding how to manage and utilize CRM systems will continue to be the foundation of managing brands well.

Customer Experience (CX)
These solutions help connect, measure, and improve the customer journey. Today, most brands are defined by their customer experience and less by what they advertise. Most CX solutions enable highly personalized interactions with customers and increase loyalty, making CX tech a critical investment for marketers. What’s more, each interaction increases knowledge of customer preferences and behaviors to be applied in future experiences.

Sales Automation
These solutions are focused on helping marketers complete time-consuming and repetitive tasks, such as sending communications or selecting the next offer based on customer behavior. Today, sales automation solutions make intelligent decisions on millions of marketing interactions at the individual customer level. This is also the technology segment most likely to make certain marketing jobs obsolete. For marketers worried about job security, developing skills in managing and executing automation software will be valuable insurance.

Analytics and Reporting
Data-driven marketing decisions are now the norm, along with measurement and ROI. Most martech solutions have a strong data foundation and generate appropriate reports automatically. That said, there is still a need to understand the larger analytical story and solutions, such as web and social analytics, data visualization, and BI tools, provide a critical view into marketing success. All marketers do not need a degree in data science. However, all marketers should understand the role of analytical solutions in driving marketing decisions from content to budget allocations.

Adtech (the Plus-One)
This category is purposefully separated from the other four. It contains ad buying solutions for programmatic display, search, social, mobile, and digital video advertising. Some large internal marketing departments may choose to invest in building this capability and there are real cost benefits involved. However, the digital ad industry is complex, in constant flux and highly algorithmic. While in-house marketers should be familiar with adtech trends, they should consider adtech investments carefully. In many cases, adtech is probably best left to digital ad agencies.

Navigating the Martech Landscape

By focusing on the dominant martech categories, there are many valuable solutions left on the table: such as content and asset management, SEO, geo and proximity-based marketing, social management, and chatbots. They all have an important role to play but are more likely to be integrated into larger solutions, over time. Unless these solutions are mission-critical to your customer strategy, it is better to outsource solution expertise.

Billions of venture capital dollars have been invested in martech this decade, and most industry insiders agree that there are too many solutions. The expectation is that the landscape will eventually shrink as winners separate from losers, but there is no sign of this happening soon.

Nevertheless, the overwhelming landscape can’t be a deterrent to jumping in and getting comfortable with marketing technology. It is being used by most marketers today and will only grow in influence.
What is important is to keep focused and not let the land of shiny objects distract you from executing your customer strategy.

Revisiting My 3 Marketing Predictions: Climate Change Rose to the Top

I am going to be taking a break from posting for a bit. So, before I start my break, I thought I would revisit some marketing predictions I made earlier in the year.

I am going to be taking a break from posting for a bit. So, before I start my break, I thought I would revisit some marketing predictions I made earlier in the year.

My 3 Predictions

I never expected 2019 to totally transform marketing; but there is a major shift underway, with respect to the last prediction.

In my last post, I wrote about the recommendation from the Business Roundtable that companies think more broadly about the constituents they serve, including the planet. The vast majority of Americans believe that the climate crisis is real and there is a desire for real change. Climate worries are also causing consumers to rethink their consumption habits and businesses are responding.

How Am I Doing?

For me, these trends have not just been academic.

I recently went to a fast-casual style restaurant. My younger daughter likes to order the kid’s meal there, and it comes with a fairly rigid small plastic cup to fill up at the drink station. She has decided she wants less plastic in the world, so she asked for the adult paper cup, instead, and was willing to pay the difference. The cashier mentioned that this request was now very common, and they had let corporate know. My daughter received the paper cup, gratis.

In another example, I was at the airport and stopped at a sandwich chain. As I was handed my drink, I was asked if I wanted the lid and straw.

I am not alone, a recent study by Futera found that 88% of consumers wanted brands to help them live sustainably. The marketing implications for this trend are very interesting. Aside from a physical product or service, consumers are asking and paying for less. While it may not seem like much, a lid and a straw are big conveniences bundled into the price of a meal. Yet at the airport I was asked … do you want to take a small hit for the team? I happily took the hit and kept my drink close, until I finished it.

I generally keep my politics out of business, but climate change is not political to me. It is an existential threat, and most U.S. consumers agree.

Now, It’s Your Turn

As marketers, we need to think of ways to satisfy this growing need; and, fortuitously, consumers are willing to share the burden.

Here is my next prediction: Companies that do not change quickly will soon find themselves out of favor with a big segment of the market.

Social Responsibility New Trend — Marketers Need to Prepare

Social responsibility is the new trend, and marketers need to prepare. I will confess that until recently, the North Star of my professional journey has been growing shareholder value.

Social responsibility is the new trend, and marketers need to prepare. I will confess that until recently, the North Star of my professional journey has been growing shareholder value. On the positive, this prime directive has allowed strange bedfellows to conduct business across ideological, racial, and political lines. In many cases, the drive to grow shareholder returns has broken barriers where cultural change was still trailing. It has also simplified objectives and brought clarity in critical business decisions.

But there seem to be some noticeable cracks developing in the shareholder value model. After all, what good is wealth in a world with growing income disparity (revolution, anyone?), polluted oceans, record heat waves and social isolation? The more we read about current events; the more doomsday prepping seems like a sane activity.

Recently, the Business Roundtable, a grouping of 192 large company CEOs declared that business should take a broader view of who they serve, beyond customers and shareholders, and include employees, suppliers and the communities they operate in. (Before you get overly excited, comrade, let’s not forget that CEO compensation is still primarily liked to profitable growth and stock value.) Nevertheless, businesses are starting to make changes.

Marriott, along with other large hotel chains, is announcing a transition away from single-use plastic toiletry bottles. We have also seen employee pay or benefits increases at Amazon, Walmart, and Target. There are also companies, like Nike and Patagonia, who are taking social stands in very visible ways. For some companies, social responsibility has been a part of their DNA for any years; for others, it is now becoming an existential imperative.

As a result, the statement from the Business Roundtable is not visionary thinking; rather, it is an acceptance of growing consumer discontent. There is a change in the zeitgeist, driven by consumers and citizens, against business as usual.

As marketers, this might feel liberating. We can finally be free of the oppressive “bean counters” who lorded the principle of shareholder value over every creative idea. No, no, we can’t. The marketer’s job has actually gotten harder and even more metrics-based.

While calculating metrics, such as cost per click, costs per conversion have become routine for most marketers, the measurement of marketing and experience decisions will become more complex. Take the simple example of eliminating plastic shampoo bottles in hotels. The ROI of this decision is not just about plastic bottle costs. For some hotel brands, toiletries are an important touchpoint in delivering a premium experience.

  • Does a bulk shampoo dispenser convey the same premium experience?
  • Are there better alternatives and what are their costs?
  • How will it impact brand positioning?
  • Does the average consumer understand the change, and will they see it as a benefit or a loss?

The recommendation from the Business Roundtable will require a business to think more holistically about how they derive profitable growth, but the drive for profitability is not going away. Marketers will now need to speak for more than just the customer and justify the costs of making socially responsible decisions. In some cases, the customer will not be a direct beneficiary of business decisions. Rather, they will be a partner who is asked to pay more or get less in the interest of the “greater good.”

The “easy” news is that customers are asking for these changes. The “tough” news is that profits still matter, and balancing that with the needs of customers and the society at large will be a more complex equation.

Why Brand Teams Need to Stop Pushing Brand Equity as an Asset

Most brand teams are constantly fighting for investment. Their lives would be much easier if they stopped pushing brand equity as a long-term asset when it is becoming more like the cost of goods sold.

Most brand teams are constantly fighting for investment. Their lives would be much easier if they stopped pushing brand equity as a long-term asset when it is becoming more like the cost of goods sold.

It’s almost Independence Day 2019, and I conducted a small consumer focus group session. Actually, it was a small group of friends, gathering to celebrate America, and we ended up talking about old brands.

Brand Equity and ‘Whatever Happened to … ‘

The topic began with WHT, or “whatever happened to … ?”

My candidate for WHT was Fruit Stripe gum; which, it turns out, is still alive and undergoing a small revival. As the conversation drifted toward more recent times, we started talking about the more recent troubles of iconic retail brands, like Barnes and Noble, Sports Authority, and Toys”R”Us.

Because the group consisted mostly of GenXers, there was strong nostalgia associated with these brands, with many happy firsts: first soccer ball, first video game system, first flirtation with a stranger over coffee while trying to look intellectual. There were such emotions and nostalgia, it made me wonder why these businesses had to close or severely reduce their footprint.

Yes, Amazon is the direct reason, in most cases, and there is a new trend to vilify it for killing these now-nostalgic brands. Let’s not forget, however, that B&N and Borders were once considered villains, running the local bookstore out of town. We also rarely hear about the villainy of Walmart and how it destroys local business. In fact, I was surprised to see that Walmart was now listed as a highly trusted brand by GenZers (18 to 21 years old). It is hard to Imagine the day when we will be nostalgic for Amazon; but if history is any indicator, that day will come.

Why Good Brands Go Bad

It is important to understand why we miss some brands when they are gone, but do not come to their aid when they are dying.

I believe the answer is that positive brand associations have a diminishing effect on brand survival. For example, there was a fast food joint I used to frequent and think of fondly when I was a child. Hoping to share that moment with my kids, I took them there. To put it mildly, they were less than impressed. Our family has been trying to eat fresh and healthier food for some time now, and we are part of a growing trend. Simply put, my kids could not relate to the greasy, yummy, and cheap goodness of my youth. I expressed shock, disappointment and called them bourgeois food elitists. This got me sympathy and pity, but not an ounce of guilt on their end. Later, once I got over the hurt, I, too, had to admit it was pretty bad food. This was my last trip to this joint.

Good brands solve current problems, delight customers, and address unmet needs, which build positive associations and create brand affection. However, like any relationship, fond memories do not guarantee that the relationship survives. Brands that survive can no longer rest on brand equity; rather, they are constantly investing in building and maintaining it.

This has implications for how marketers position the brand as an asset in the company.

How Brand Teams Position the Brand as an Asset

Most companies think of brand equity as a long-term asset. While brand equity is not a recognized asset under GAAP rules, brand proxies such as goodwill, brandmark, and trademarks are recognized as long term assets. Long-term assets are investments a company makes which benefit the company over the long term such as property, plant, and equipment and include other assets such as patents, licensing agreements and bonds. This classification makes sense since strong brands used to stand the test of time and had equity with staying power.

However, the new business environment sees new brands come and go and once esteemed brands die off every day. In this environment, there seems limited long-term value to brand associations and positive memories.  More and more, brand equity is reflecting the characteristics of short-term assets, like inventory or working capital, which needs to be constantly replenished. When a company fails to adequately invest in inventory, sales drop quickly. It seems like the brand is drifting in that same short-term direction.

When making the case for brand development, perhaps we marketers need to change our perspective. Generally, the marketing narrative placed brand as a long-term investment because the costs are so high, and the return was measured over a long period. At one point, this argument seemed appropriate. However, today it seems like there is very little long-term component to brand equity. Especially as branding is becoming more aligned with experience and operations and less with advertising. As a critical component of every customer interaction, we may need to understand that brand is becoming part of the cost of goods sold. This means companies should invest in branding frequently like they invest to have enough inventory or working capital. Only then will brand receive the investment flows it needs to survive in today’s market.