«You can't just buy CRM»
Consumer preferences are changing, and with them, the requirements for customer loyalty: Ogilvy & Mather invited Swiss marketing executives to a briefing.
Consumer preferences are changing, and with them, the requirements for customer loyalty: Ogilvy & Mather invited Swiss marketing executives to a briefing.
Consumers have changed. They compare products, exchange opinions with other consumers, rate them, and make recommendations. All of these activities run counter to traditional advertising theory. The challenge posed by a new generation of consumers—the «Consumer 2.0,» as trend researchers call this phenomenon—is a major topic of discussion. Advertising agencies, too, have made it their mission to make «social marketing» tangible. Just recently, the Zurich-based advertising agency Ogilvy & Mather invited the marketing heads of local companies to discuss customer loyalty in the age of digitalization. Under the title «A Shift in Relationships? Insights on Customer Loyalty in Today’s Brand Communication,» Larissa Pohl of Ogilvy Brains in Frankfurt explained the new challenges facing brands. Right at the start of her presentation, Pohl addressed the benefits the industry had hoped to gain from customer relationship management (CRM) in the late 1990s. Back then, CRM solutions in the form of clever software were hailed as a magic formula for solving all marketing problems. Thanks to technological power, it was believed possible to improve customer relationships, boost sales, and make marketing more efficient all at once. It was all an illusion. Ten years later, the realization set in: CRM doesn’t work as a technology. The idea of simply cramming customers into a database turned out to be a flop. «In essence, companies were buying expensive sports cars without gas and without a driver,» says Larissa Pohl. Customers were hoarded in databases, but no one knew what to do with them. The widespread expectation among executives that computer-based CRM solutions would deliver quick results turned out to be a fallacy. «You can’t buy CRM. You have to work hard to achieve success,» says Pohl.
Thus, a shift in thinking has taken place. Today, the customer is at the center of attention as a person—not just as a statistical figure. However, this does not make customer loyalty any easier. On the contrary. Today’s customers are constantly redefining themselves at ever-shorter intervals, slipping into new roles at will, and can be classified into consumer stereotypes only with great difficulty. A constant shift in identity is taking place, raising the legitimate question: What is relevant to today’s consumers?
Acquiring customers is a long-distance race. For Larissa Pohl, relevance means that brands must create experiences that go beyond mere product performance. «Brands today have an important role to play in customers» lives and must find the strength to embody their brand identity in their interactions with them,” says Pohl. On the one hand, this requires effective relationship management. On the other hand, in her presentation, Pohl outlined five key points about what constitutes a good customer relationship today.
The first step is to define the target groups even more precisely, because with many products, a small group accounts for the majority of sales. This is why it’s often referred to as the 80/20 rule: if you compare the number of customers with their cumulative revenue, it becomes clear that approximately 20 percent of customers account for about 80 percent of revenue.
Based on this rule of thumb—Pohl’s second key point—he recommends targeting the areas where the «big players» are active. To do this, it’s important to understand customers: what their values are, what guides them, and what motivates them. This must be followed—as the third point—by a contact strategy tailored to the customer segment and guided by the motto: «Don’t count the people you reach; reach the people who count.» Those who follow this guiding principle will never have to raise their voices in the market again. «Communication that is relevant and personal,» said Larissa Pohl regarding the fourth key point of her presentation, «needs only a brand-specific creative idea—but that’s something you always need.» The reason: Rational customer loyalty lasts only as long as there is no emotional alternative.
Larissa Pohl illustrated her points using Deutsche Bahn as an example. Years ago, the company introduced loyalty cards: Passengers who travel frequently and collect points enjoy benefits. The success has been remarkable. The number of rail cards in circulation rose by 40 percent within three years. Larissa Pohl summarized her remarks with the fifth key point, a maxim by David Ogilvy: «Loyalty cannot be bought; you must earn it.»
And what will customer loyalty look like in the future? Larissa Pohl sees the future in the effective use of all available channels as part of a «360-degree communication» strategy. However, she does not dispute that the Internet will continue its triumphant advance. «Everything is going digital,» says Pohl. Consumers are «always online» and demand consistent communication.
The Shift Toward the Capricious Consumer: Today’s new consumer navigates a network of relationships in which opinions, trends, and behaviors spread more widely and more rapidly than ever before. As Pohl explains, for the so-called Web 2.0 generation, the question is not «Who am I?» but «Who do I want to be?» The target audience is becoming complex and diffuse. It will therefore be important to identify the influencers within target groups, as technological upheavals have given them new platforms that allow them to exert influence on brand worlds. Brands cannot control this networked behavior. It is therefore more important to foster a dynamic exchange process in which recognition can take place. The example of Dove demonstrates just how successful such a process can be. Pohl believes that the «Real Beauty» initiative impressively illustrates how brand values will be communicated in the future.
«The consumer has gone from being a dog to a cat,» says Pohl, describing the consumer. This metaphor illustrates how the customer has evolved from a loyal brand advocate to a fickle consumer who no longer believes everything advertising says. This gives rise to new demands on brand communication: «Brands must be inviting, rather than just trying to persuade. They need to tell more stories and embrace and encourage dialogue.»
Pohl’s conclusion: Today, brands must stand out in a sea of uniformity; they need to gather more information about customers, identify opinion leaders, and ultimately embrace change. Ogilvy has humorously summarized this in its own motto: «Dada, Data, Alpha, Beta.»
Christian Lüscher
Dada, Data, Alpha, Beta—With this pithy motto, Ogilvy describes the challenges brands face on the Internet.
Dada:
Dadaism stands for artistic rebellion. Creative work must surprise, whether through words, music, art, or design. How can the advertising industry today create, protect, and influence brands? The motto is: stand out at any cost. Data:
The Internet has become a veritable treasure trove of data. This wealth of data enables new forms of storytelling and facilitates consumer analysis. Alpha:
Stands for thought leadership. Only a few drive word-of-mouth, shape values, and create the necessary differentiation within the target audience that a brand needs today. Beta:
It is synonymous with constant evolution on the web. "Beta" represents the continuous advancement of technology and new ways of thinking.
