Understanding the New Customer Journey

ENLIGHTENMENT SERIES

Understanding the New Customer Journey How leading brands are creating fanatical followings and ludicrous loyalty.

Chris Kneeland CEO, Cult Collective

Chris Kneeland CEO, Cult Collective

[email protected] @CultIdeas

I graduated with Master’s degree in marketing communications from Northwestern University and worked client-side at John Deere and The Home Depot prior to selling my soul to join an ad agency (Rapp) in Dallas, Texas. In 2010, I moved to Calgary to run Watermark Advertising Design. Then, in September 2012, I resigned to join a Cult.

Paradigm

Shift A paradigm shift is a fundamental change in our assumptions.

Imagine the impact on society when people learned that their fundamental belief about the planet they lived on was wrong.

Paradigm

Shift This paradigm shift destroyed the notion that the earth was flat and sent a shock wave across a host of institutions that resulted in many exciting endeavours that led to the discovery of new lands, new people and new fortunes.

Paradigm

Shift There is another common paradigm that most marketers believe that is equally as false as the world being flat.

© 2013 Cult Collec.ve Ltd. 7

There is growing consensus among marketing strategists that this popular marketing paradigm – most often referred to as the purchase funnel or buying cycle – is flawed.


Consider that this marketing theory was first published in 1898. And the last major refinement to it was in 1924. It hasn’t been improved upon much since, despite all the advances in technology and media and demographics and the global economy.


Most Corporate executives– especially those with marketing degrees – are taught to believe this so-called truth.

But we’re now faced with a new marketing paradigm. Despite a ton of evidence to prove its validity, companies are filled with a lot of old dogs with little interest in learning new tricks.


Some marketing leaders are too risk averse. Others are in denial. Others are just too complacent and uninterested in championing change.


Leadership at Blockbuster Video failed to comprehend the disruptive impact that alternative business models and different types of marketing would have on their business.

They believed their #1 enemy was Hollywood Video, and they used very traditional marketing strategies to combat them. They should have been more worried about their outdated marketing practices.


By contrast, in 2009 when Starbucks was getting clobbered by the recession, the CMO literally threw his annual marketing plan against the wall and insisted they rethink everything and build a plan from scratch that capitalizes on the new realities of the 21st century consumer and marketplace.


I am going to share with you some core principles that, if properly applied, should radically change what you do on a daily basis as sales and marketing professionals.


I am going to share with you some core principles that, if properly applied, should radically change what you do on a daily basis as sales and marketing professionals.

1 Advertising has one goal: Reach consumers when they can most influence their decisions.

4 Moments That Matter



Here is the first truth: There are really only 4 moments that really matter.



Instead of the 7 steps outlined in the traditional purchase funnel, a team of Harvard researchers have confirmed we should divert all our energy to 4 critical tasks.


Summarize the HBR ar.cle about the purchase funnel



In 2009, these researchers studied 20,000 consumers across three different countries shopping for five different categories – cars, electronics, cosmetics, insurance, and telephone services. They then diagramed their findings into this new framework.



First, the consumer considers an initial set of options, based on brand perceptions and exposure to recent stimuli and touch points. We most often refer to this stage as awareness, and mass advertising remains a viable option for brands that want to always be top of mind.



But the new news here is that far fewer brands are considered than initially believed. This idea was explained in a book by Barry Schwartz called the Paradox of Choice. Given the proliferation and commoditization of products and services, we actually want to consider fewer, not more, options at the onset of our buying behaviour.



The second new idea introduced here is that of recency. Gone are the days of seeing a commercial months ago, or getting something in the mail weeks ago, or seeing a banner ad days ago and us remembering it. We’re now bombarded with over 2,000 marketing stimuli a day and we can’t process it all. So we don’t retain information like we used to.



Only once a person is ‘in market’ to buy something should we turn our messaging on. Everything else is waste. But that is easier said than done. It’s also why Google is now one of the most profitable companies on the planet. They excel at identifying buyers when they are ready to buy.



But there are other ways to go about this. I worked with Select Comfort, makers of the Sleep Number® bed, trying to identify when people are bed shopping. Most mattress competitors simply bombard the air waves and weekly newspapers with ads hoping that someone listening was in the market for a bed, but Select Comfort got really smart leveraging data to identify purchasing triggers like someone is moving, or getting married, or getting divorced, or pregnant, or suffering from back pain, etc.



The second component of the new purchase pathway is a concept totally counter to the original paradigm. It states that consumers add and subtract brand as they evaluate what they want.



They discovered that as we enter into consideration mode, we actually add contenders instead of narrow them down. So the whole visual metaphor of a funnel that starts wide and grows more narrow is completely false.



For example, they learned that with cars we start by considering on average 2-3 models, and by the end of the evaluation phase we end up with over 6 possible makes or models that we’re seriously evaluating.



Also, given the amount and type of information now available to us, we tend to re-consider what we thought was most important. So, for example, we might have begun the process by thinking all we wanted a simple 4-door mid priced sedan, but as we do our research we start to consider other things that become really important, like warranty, financing, or safety rating, or resell value, or fuel economy. This new reality has birthed a whole new marketing discipline most often called Inbound Marketing which we’ll talk more about in a minute.



Stage 3 of the purchase pathway has changed the least, because at some point we all have to buy something. But the way we pay, and how we buy, has certainly evolved over the years. Perhaps the most dramatic difference is the fact that in the old model people believed that consumers made up our minds during the consideration phase and the act of shopping was mostly transactional so we could pick up the items we want.



But researchers now say anywhere from 30-50% of our purchase decisions are made at the point of sale. That means we didn’t really come to any decisive conclusions during the Evaluation phase and opt instead to just go to the store and make a decision on the spot.



This knowledge makes point of sale material and merchandising and customer service and sales training as vital as the billions we spend on TV and print ads to get people into the store in the first place.



Finally, the fourth stage didn’t even exist in the original purchase funnel model. That model ended with purchase. But as we all know, once we own an item, or bought a service, our opinions about the brand are just beginning.



Our experience with the product or services determines whether or not we’ll purchase it again, and our ongoing interactions with the brand dictates if we will become brand ambassadors and find excuses to tell our friends about it.



If brands can excel at making the ownership experience exceptional, then those customers, as well as everyone they influence, are more likely to bypass the first two phases the next time they’re in market and remain loyal to the brand they bought the first time.

2 Customer’s outreach to brands is more important than brands outreach to customers

Pull vs. Push


Pull vs. Push

If we accept this new paradigm, we need to radically reconsider the Evaluation phase. The original model was heavily focused on Awareness and trying to fill the funnel with prospects. Under that scenario most marketing effort goes into targeted media buying - that’s why McDonalds buys radio during the lunch hour, retailers spend 50% of their budgets in Nov & December for holiday shopping, youth brands clamour to buy ads on programs like American Idol because they know their audiences will be watching.


Pull vs. Push

But in this new paradigm, marketing it’s less about trying to guess when your audience is ready to buy and more about being there and over-delivering when they reach out to you. It more inbound than outbound. Its about always being on – 24/7 in a pull vs. push environment – and having amazing content to convert shoppers when they come to check you out.



Zappos is a great example of this. They do every little mass advertising. Instead, they create what they call “WOW” experiences – both online and through their call center – designed to impress those who are considering new shoes.


For example, If you type Born Sandals into Google, Zappos doesn’t pay for the key word, but their website is built in such a way that it is optimized for the search engines so that Zappos’s very targeted key words and copy show up near the top. When people see this search result and click on it, it costs Zappos nothing.



And when people get to Zappos page, they not only have over 200 sandals to choose from, but they are surrounded by all this amazing content.


In addition to investing in world-class customer service agents and a very attractive shipping policies. They invest in promotional giveaways, trend videos, ratings and reviews, and cross-selling alternative brands and complementary outfits.


Zappos paid for nothing to get women to want Born sandals, but once they identify you are in the market, they overwhelm you with so many positive experiences you can’t help yourself but buy from them.



What I’m really talking about is Inbound marketing. Inbound marketing includes everything from search engine marketing to pod casts. Online videos to blogs. Virtual open houses to real time Q&A. Compelling visuals in the form of infographics and interesting white papers that position the publishers as experts.


These types of channels and content strategies are hugely impactful during the customer journey. I needed more customer testimonials, more ratings and reviews, more online video, more salesmanship throughout the process to alleviate my concerns.


These are the new tricks of the trade for which marketers need a. You don’t have to do them all, but you need to do some of them, and you need to do them as well as you do your highly polished brochures and and carefully crafted print ads. Too many marketing professionals mistakenly believe their job is to create awareness instead of improve conversion. These types of tactics converts browsers into buyers.

3 Cult brands cater to active loyalists and let them tell their story to prospects

Advocacy vs. Acquisition



The goal of every marketer should be advocacy, not just acquisition. Any business can get customers, but great brands attract cult-like followings. Cult-like brands understand that the ownership experience is so vital that they prioritize retention and referral over prospecting and mass advertising.



The original purchase funnel didn’t even mention word of mouth or post-purchase behavior, yet that is 25% of Harvard’s new model. An Engagement Agency helps brands cater to active loyalists by helping them tell your story to prospects, and we also understand that great customer experiences require so much more than great marketing communications.


Say something interes.ng

Be interested in what they’re saying

Be interes.ng so they say something about you

Adver.sing CRM/Loyalty/Social Engagement






Here’s the problem. Most marketers are very good at coming up with clever messages and then buying media that shouts their message at people. That is appropriate if your goal is to say one thing to as many people as possible. This is the oldest form of advertising and was most effective when the TV was the primary marketing channel.






Then, about 20 years ago, CRM, loyalty marketing and (more recently) social media are getting very good at listening and responding. We have bcome interested In what people are saying – either with their words or actions – and responding accordingly. This is certainly better than the first option, but there is now a fundamental challenge.






People are talking to each other more and more about brands and products and services while at the same time tuning out the brands themselves. They’re literally talking about us behind our backs and we can’t get a word in.






Most of the traditional tactics are failing because people fast forward past our commercials, opt out of our mailing lists, unsubscribe from the newspaper, and ignore our banner ads. And if we are lucky enough to get one of our messages through, research has proven that they don’t believe us.






In fact, they will believe a complete stranger’s online rating of our product more than the print ad we spent 4 weeks working on. So no matter how awesome you tell people your offering is, a 1-star review by a consumer is damaging. So brands must become so interesting, so relevant and so meaningful that core customers can’t help themselves but think and say positive things.

Pepsi tried this with their Pepsi Refresh initiative. They shifted $20MM from advertising that was earmarked to pay for Super Bowl commercials, and instead invested it in various community outreach programs.

Pepsi backed all sorts of philanthropic activities that their customers said were important to them. Overall the campaign received tremendous buzz and the Refresh website reportedly received over 8 billion page views. But overall the marketing community gave it mixed reviews.

We applaud Pepsi for trying something different, but they made two mistakes.

First, while 20 million dollars sounds like a lot of money to most of us, that’s a rounding error for their total advertising and promotional budget. The Refresh campaign did not receive the kind of ‘all in’ investment that brands like Patagonia or Under Armour do with their cult-like marketing efforts.

Secondly, the Pepsi Refresh Project wasn’t very authentic. It was something Pepsi did, but it wasn’t who they are. When a brand like LuluLemon does something related to health and fitness it seems normal, but then Sears tries it, it seems forced and fake. You need to be true to who who really are, and shine a spotlight on what you really stands for.

4 Don’t pay for impressions. Make an impression.

Owned Brand Assets

4 Don’t pay for impressions. Make an impression.

Owned Brand Assets

The majority of ad budgets today go towards buying eyeballs. Brands want to get in front of as many of their target audience as often as possible. But cult-like brands are more interested in making an impression than buying impressions. For them there is a demonstrable shift from paid media to owned media.


THEN NOW

Store

Website

Mobile Video

Social Experien.al

Product/Service


THEN NOW

Store

Website

Mobile Video

Social Experien.al

Product/Service

The challenge is that the number of owned media assets has grown significantly. It used to be pretty easy for marketers to manage their product, in-store presence or their website. But now there are over a dozen potential owned media assets that marketers not only have to build, but maintain as well.


THEN NOW

Store

Website

Mobile Video

Social Experien.al

Product/Service

It can be a daunting task. But in my opinion the juice is worth the squeeze. The secret to success is not trying to do everything. Pick a few and do them really well.


THEN NOW

Store

Website

Mobile Video

Social Experien.al

Product/Service

In my experience, there are four that I would prioritize - Mobile, Video, Social, and what I call Experiential (sometimes referred to as events or stunts). I’ll elaborate on each.

Mobile

Mobile marketing is exploding. Smart phones are being adopted at an unprecedented pace. 43 Americans just switched to a smart phone in the time it took you to read this slide. By this time next year nearly half of the entire population will be using smart phones.

Their adoption is huge, but so is their capability. Smart phones are going to be bigger game changers for marketers than the TV or personal computer was. These devices allow for all the multi-media capabilities of those other devices, such as audio and video and dynamic content delivery, but better yet they are with us all the time. That makes them the holy grail of marketing tools.

And luckily for marketers consumers are using their phones for research and shopping like never before. In particular, phones are critical search tools for real time information, so not only should our websites be mobile friendly, but we may even start to see qualifying questions like, “Are you shopping right now?” so we can better capitalize on people literally living in the moment. And our phones are becoming portable cash registers because people aren’t just browsing but buying exclusively through their mobile device.

Corporations are scrambling to keep up with consumer demand for mobile friendly content. When Forbes asked corporate executives what technologies will have the most revolutionary change on their business, the #1 answer was mobile applications. So that begs the question: What should you be doing to capitalize on mobile apps?

In my opinion, three specific strategies seem to be emerging.


We’re Easy To Work With



First and foremost is practical apps that provide mobile friendly solutions that improve operations or the customer experience. Walgreens knows that one of the biggest customer pain points is dropping off a prescription and then waiting 15-30 minutes for it to be filled.



So they leverage cameras on the smart phones to scan prescriptions and allow customer to send in refill requests electronically so all they have to do is swing by and pick it up. And if anyone has every been to Chipotle at lunch time, you know the wait times can be a bit excessive because everything is made to order, so they built a very user friendly app that lets people build their burrito online and then just swing by and pick it up.


We Care As Much As You Do



The second mobile strategy that is very popular is to use smart phones to make your brand more relevant by providing content that engenders loyalty and helps people understand you care about their life and their lifestyle as much as they do.



Pampers has a pregnancy app that helps expecting mothers understand what is happening with her unborn child every step of the way. Pampers knows if they can win over mom before the baby is even born, than they increase their odds of having a customer for life.



And lots of outdoor enthusiasts brands, like REI, or Oakley or North Face, have different apps to mark hiking trails, or determine snow fall in the mountains, or find the best ways to go surfing.


Have fun – Play With Me



Finally, people and brands like to have fun. In fact, more than half of the top 100 downloaded apps are games. And its not just teenage boys that like to play games. One of the biggest gamer segments is "soccer moms".



So brands should create mobile experiences that are fun and create some buzz. Coca-Cola does that with their ‘spin the bottle’ app, its simple and inexpensive and speaks to the social aspect of their product. Ford at the most recent auto show had an app that if you hold your phone or tablet up to a Ford logo, it launches a bunch of virtual content, including a racing game.



If you do something for fun, make sure you have proper expectations about what you hope to get in return. What you’re really looking for getting people to give you permission to be in their puruse or in their pocket. That can be a powerful thing. Once you’re there you can build a relationship over time that his mutually beneficial.



Recent research from Digby reveals that 3 out of the top 5 retailers’ mobile apps ask for location-based services, and 4 out of the top 5 retailers’ mobile apps ask permission to send push notifications. This means they now have the ability to know who you are, where you are, and send you messages based on location and time of day (a concept is known as location-based marketing).

Video

Video

Most people have seen K-Mart’s ‘Ship My Pants’ ad on YouTube. In just a couple weeks, it received over 16MM views and has sparked a conversation about K-Mart that is nothing short of remarkable.

Video

Consider that I’m here today talking with top marketing executives from across North American discussing innovative marketing strategies and I’m using K-Mart as an example. Their last big idea was in 1965 when they introduced the blue light special. But they shocked the world with 30 seconds of dirty humour in a YouTube video and got us all wondering if K-Mart is now cool.

The reality is YouTube is the biggest video content publisher in the universe, ever. More video is uploaded to YouTube in a month than all the major networks have produced in the last 60 years combined. Your customers are flocking to YouTube, and other online video players like it, by the millions.

Also interesting to note is over half a million videos are uplaoded to Facebook each day, about a third of which are low quality video shot from mobile devices. People don’t care as much about the production quality. They’re more interested in recency and having something cool to watch. Online video is quickly becoming consumers’ preferred means of digesting content.


Increase business calls by 18%

Increase website visits by 55%

Increase physical store visits by 30%

Increase incidence of purchase by 24%

Source: PRWeb (hXp://www.prweb.com/releases/2012/1/prweb9151852.htm


Increase business calls by 18%

Increase website visits by 55%

Increase physical store visits by 30%

Increase incidence of purchase by 24%

Source: PRWeb (hXp://www.prweb.com/releases/2012/1/prweb9151852.htm

The net takeaway is that video is a big deal. It is compelling and motivating and results in meaningful business results. In head to head comparisons of content with and without video, PRWeb found that use of video… (see stats on this slide).

Brands need to figure out how to produce much more if it, far cheaper and faster than they are doing today with their highly-produced TV commercials

Social

Social

Most people realize by now that social media has permanently changed consumer behavior, but most brands are still struggling with figuring out what do in social spaces.

Social

I think e-Marketer is onto something when their survey regarding how to improve loyalty programs revealed that 64% of respondents said they want better social media engagement. To me, Facebook isn’t a media outlet for buying banner ads. Rather, it’s the 21st century’s version of a loyalty program.

Social

Instead of the plastic cards we all carry in our wallets to earn points when we shop, loyalty programs of the future will leverage fans and friends in an online community where membership has meaningful privileges.

But eMarketer’s survey also revealed something very interesting. On the left is a list of things which marketers say are the most effective tactics happening within social media. Stuff like blogs, whitepapers, video, etc.

On the right is a list of things marketers say are the most difficult to do, which includes the exact same things – blogs, whitepapers, videos. Most businesses haven’t invested sufficient resources to figure this out. We’re still too busy doing traditional marketing instead of shifting more resources and freeing up bandwidth and dollars to get good at learning new tricks of the trade.

And we need to have some patience. We can try one thing and declare it a success or failure and move on. These are new muscles marketers are learning to flex and we need time to let them develop.


Cultivator


Cultivator

One of the things my agency has done to facilitate this learning curve for clients is invest in social media management technology. We’ve partnered with Expion to measure and enable social marketing campaigns across a variety of platforms.


Cultivator

This slide shows a quick snapshot of one of our dashboards where we are benchmarking social media engagement within the fast food hamburger industry. From this we not only see which brands are doing the most in the social space, but we can also drill down and see which posts are most popular, which are responded to our reposted, and then we can use that intelligence to inform our own content strategies about what we should be talking about each day.

Experiential

“Stores must become more theatrical, more immersive, and more of a life experience rather than simply a place to get something. As much as they are selling products they will be selling a good =me, a lifestyle.”

-‐ Best Retail Brands Report; 2013

Experiential


-‐ Best Retail Brands Report; 2013 There is so much being written about and discussed regarding social media, let me move on and discuss one last area that I don’t think get as much love and attention as it should by brand. I refer to this area as Experiential, meaning how do we create better branded experiences beyond just using our products?

Experiential


-‐ Best Retail Brands Report; 2013 For the past several years the idea of re-inventing retail spaces has been very popular. As stores complete more and more with online shopping, the consensus seems to be to make the store shopping experience more experiential.

Experiential


-‐ Best Retail Brands Report; 2013 The new news here is that it’s not just your store environment, it’s your entire marketing mix. People want more show and less tell.

•  8MM concurrent views on YouTube (most ever)

•  Shared 700k .mes in first 3 hours

•  40 TV sta.ons and 130 digital outlets picked up the footage

•  50% of trending topics on TwiXer were about the stunt

•  82% of social conversa.ons about Red Bull were posi.ve

•  2MM new Red Bull email subscribers


Red Bull Gives You Wings (Literally)









Nobody has done this better in recent memory than Red Bull. When they sent Felix Baumgartner into space in October of last year, they executed what I believe to be a flawless experiential brand campaign.









This stunt was perfectly aligned with Red Bull’s brand of extreme energy. It was properly executed and marketed, receiving the most ever concurrent YouTube views and picked up by dozens of large media networks for free. And they leveraged the stunt to capture customer data, adding over 2MM new email subscribers and millions of new Facebook followers.









I couldn't find out how much Red Bull spent on this stunt, but I’m sure it was far less expensive than producing some commercial spots and buying media that would have delivered over 20MM eyeballs like this stunt did.


If you’re going to do a stunt, there are three things you need to do to help it be successful.

First, it must align perfectly with your brand. Make it very authentic and brand relevant. 3MM did that well when they used their super glue to hold up a giant truck in the middle of their parking lot. KFC’s attempt to have a manmade ad visible from space was nothing to do with chicken.


Secondly, good stunts most often requires some paid media and PR to support it. Jell-o’s pudding drop after the Superbowl didn’t just happen in San Francisco, it was supported by a TV commercial that aired following the game. And remember that while everyone likes to think of Old Spice’s Smells like a man as a viral video success, it was supported by millions of dollars of cinema and TV advertising as well.


Finally, I’m not sure if you’re one of the 44 million people who have viewed this video from TNT, but it was pretty awesome. What made the difference of it being a super cool idea executed in a small Belguim town to being a Youtube sensation was how well it was recorded and edited so it could be shared with the rest of the world. I strongly suggest including a good videographer and editor in all your stunts and events so they can be easily shared with others.


We’ve had over 50 years to figure out how mass advertising works – the rules and regulations as well as people’s attitudes about what’s appropriate and what’s not. For the most part, with these new owned media assets like mobile, social, video and events, we’re still living in the wild west. Which means there are some inherent risks involved. If a multi-million dollar TV campaign doesn’t work as well as you’d hope, it’s regrettable, but largely private and stays within the company. But when you screw up in the digital space, bad things can happen….


2 Arrests, 1 Resignation, $2MM Fine

Like when Adult Swim thought it would be a good idea to launch their new ‘Aqua Teen Hunger Force Movie by hiding brite LED displays of their main robot throughout Boston a couple years ago. That resulted in a bomb scare, as well as 2 arrests, the CEO resigned, and the company got a $2MM fine.


2 Arrests, 1 Resignation, $2MM Fine

We can’t let some bad examples deter our enthusiasm. But we have to have realistic expectations about what’s possible. And we must encourage experimentation as we challenge status quo. Because if we stay the same, we’ll wake up one day soon and realize the rest of the world has passed us by.

Business

Understanding the New Customer Journey