Marketing Models That No Longer Work

 of Newmediamarketing.com provides a list of 10 Marketing Principles That Aren’t True Anymore. His core observation is that mass marketing models no longer optimally address the new attitudes and behaviors of the socially connected consumer.  For instance, while TV drives awareness, it is increasingly the Internet that drives conversion.
Of the 10 marketing principles that Rich finds increasingly irrelevant, I will highlight those that I consider to be the top 3.  It is important to consider these consideration points in the context of your own product and marketing environment because principles that work best for one type of product marketing environment may not work as well in others.

3 Marketing Principles To Rethink

1. Mass Segmentation Models – The old mass segmentation models are giving way to micro-segmentation.  Here’s why:  because people have more in common with those they follow on social media than their demographic peers, and because everything happens in real time online. Consequently:

…it’s more a relevant message to a relevant audience at a relevant time.

Customer segmentation is the practice of dividing customers into groups relevant to a particular line of business in order to decide how to relate to customers in each segment. The goal is to maximize the value of each customer to the business.

Micro-segmentation groups small numbers of customers into more precise segments, based on factors, including behavioral predictions in order to direct specific marketing actions to each micro-segment. The goal is to maximize the effectiveness of every contact with each customer.

The Process: For example, customers of an online gaming company might be segmented into Lifestyle Stage Groups, such as: 1) fun; 2) new; 3) active; 3) star; 4) churn; and 5) reengaged. Deeper dives into each Lifestyle Stage Group can be made by segmenting these customers into Segmentation Layers, using cluster analysis on sets of attributes that share a common context, including behavioral and demographic. By associating each customer with a string of different clusters, customers are then grouped together as micro-segments.

Intended Results: Micro-segments, which typically contain very few customers each, allows for highly personalized predictive analysis and marketing action optimization.   Tracking and analyzing how different marketing actions affect the spending behavior of different micro-segments makes it possible to predict the effectiveness levels of different marketing actions on different segments. As a result, marketers can better determine which marketing approaches will have greater impact on each group of customers. Further, since the micro-segments are dynamic, and there is movement through the Lifestyle Stages, dynamism of the customer path can be factored into the analysis. As explained by micro-segmentation company, Micromove:

Most companies  view segmentation as a method of clustering similar customers together at a given point in time, but they completely disregard the path or route that each customer has taken to reach his or her present segment. By analyzing customers based on their movement among segments over time, [micro-segmentation] achieves far more accurate segmentation than any other known method.

Focus on Customer Lifetime Value in segmentation allows for better targeted marketing based on more precise predictive customer behavior models.

2. The Purchase Funnel (Reach and Frequency)

For products where the purchase process is more complex, building awareness through reach and frequency is only a first step. In line with the Consumer Decision Journey as defined by McKinsey, to improve conversion, you need to rethink the “purchase funnel” in favor of a more complex consumer decision model.

My article, The Customer Decision Journey: Research Overturns the Marketing Funnel shows that the old consideration funnel has given way to a decision loop (“the consumer decision journey”) that takes place in a less linear and more complicated purchase environment where there are numerous touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. 

consumer decision journey

McKinsey’s David Court has a presentation showing what this means for marketers. He explains:

You have a trigger of some sort, where people start across the decision journey — they are now going to move towards purchase. The first stage is initial consideration. In many industries, people actually start in their initial consideration of a brand with a relatively narrow list, we believe because of the busy lives and bombardment of media — it’s just very difficult to get through all this clutter in this consumers initial consideration set. However, once the consumer decides they are going to buy a product, they move into a stage that we call active evaluation. It is here that the number of brands they are considering increases. Which is exactly the opposite of the premise of the funnel, going from broad to narrow. This is the stage when the consumer is intent on purchasing and they are actively researching the product.

3. Acquisition Only

Your business model will naturally continue to depend on new customer acquisition goals, but not exclusively. Marketing models based on new customer acquisition alone that do not also have strategies for retention and engagement break down over time, and the reason that pyramid schemes ultimately collapse is that there are a limited number of new customers to be sold.

Brand loyalty is important because brand enthusiasts will reengage and repurchase, and influence others to whom (s)he is socially connected to purchase and engage. So it’s vitally important today to keep the customers you have happy by delivering on all brand touch points, and creating a social context for them to become brand ambassadors.

Apple is the oft-cited example of a company whose brand loyalty-oriented model has been extremely successful. While not the PC market share leader, Apple has leapfrogged other PC makers in profitability because their customers are willing to pay more for a better brand experience. 

Lessons For Marketers In The Age of Socially Driven Conversion

Strategy: Traditional messaging is geared toward trying to get into the consumer’s initial consideration stet. However, rather than continue to push ads and promotions out to broad groups of consumers, marketers need to be sure that their marketing activities are aligned against how their consumers research and buy products.

Consider the likely results if the customer reaches out during the active evaluation stage but is not provided the facts and testimonials that (s)he is looking for to make the purchase decision. The budget spent on gaining recognition and getting into a customer’s initial considerations set will not only fail to result in conversion, but will effectively deliver the client to a competitor who delivers on the customer’s pre-purchase expectations.

In essence, this means that the customer has moved past a brand’s promise to a brand’s value in the consideration phase.  So marketers have to bridge the gap between consideration and conversion sooner by developing ways for people to talk about your product, and making word of mouth work in the age of socially driven conversion.

Social engagement doesn’t mean that, as Rich Meyer puts it, consumers necessarily “want to have a relationship with their salad dressing or butter…You also need to think more about your brand as media than just providing sales information online.”

In other words, since the joy of the purchase itself is often more than that derived from the product itself, what value are you delivering in the customer’s purchase experience? You need to emotionally connect to your customers and give them an emotional reason to select your brand.  The choices consumers make are not rational ones.

Tactics: Tactics include being represented on independent internet sites where people go and research and buy products. If you don’t have enough presence on those types of consumer driven approaches, when the consumer is reaching out during active evaluation, you’re not there for them to find.

Rich Meyer summarizes the customer-centric approach in the age of socially-driven conversion extremely well:

I believe the greatest strength any marketer can have is his, or her, ability to understand the dynamics of their brand/product from a consumers POV.  This means understanding what are the key drivers to conversion and where and when consumers want to interact with the brand.  I love Oreo cookies but I don’t want to friend them on Facebook.   Organizations that prepare for change and implement new marketing thinking will be ready to leverage new business and customers.

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