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Bill Lee  |  11/09/2012

Bill Lee’s picture

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The End of Marketing As We Know It

Innovative companies use techniques based on peer influence and community building

Consider for a moment the annoying, interruptive, often obnoxious nature of traditional marketing. Dinnertime phone calls from strangers in noisy telemarketing centers. Glossy pictures of the latest fashions worn by models who barely look human. Store shelves crowded with a head-spinning array when all you need is some toothpaste. Company websites that give us no clue to what the business actually does. Hype. Spin. Pushy salespeople.

 It’s hard to believe these are the methods and tools of a profession designed to attract and persuade us to become customers—especially when “we the buyers” increasingly ignore them.

A number of studies are showing that people no longer pay much attention to traditional marketing as they progress through the “buyer’s decision journey.” Instead, buyers are checking out product and service information in their own way, often through the Internet, their social network, customer reviews, or just plain word of mouth. It seems clear that marketing as is currently practiced is on its way out.

The inability of traditional marketing to engage buyers hasn’t escaped CEOs who approve its budgets. A pair of wake-up call studies by the Fournaise Marketing Group in London during 2011 and 2012 found that more than 70 percent of CEOs think their chief marketing officers lack business credibility, lack the ability to generate acceptable growth, and lack the ability to explain how their programs will lead to increased business. Nearly four in five CEOs complained that chief marketing officers can’t explain how brand equity can be linked to recognized financial measures such as firm equity.

A bitter pill for mainstream marketing executives, perhaps, but you can hardly blame the disgruntled CEOs when you consider the logic behind traditional marketing in light of today’s world.

Think about it: Companies hire people who come from outside the buyer’s world and don’t share his interests—employees, agencies, consultants, and the like—and expect them to persuade buyers to hand over their money. Yeah, right. There is no respected research on group behavior suggesting that such an approach is conducive to influencing people to take action or change.

Of course, not everyone in the marketing world clings to worn out methods. In fact, I work with a group of C-level, forward-thinking marketing executives who are successfully replacing this increasingly dated model with something that customers actually welcome and respond to. For those who’d like to join them, I offer the following advice.

Go retro: Cultivate a local buying experience. It’s a myth that social networks and their technologies are creating new approaches to marketing. At most, they’re doing the opposite. They’re allowing customers to re-create the experience of shopping and buying in their local communities.

Think about it this way: How do buyers prefer to purchase a lawnmower, a haircut, a good dining experience, a movie, a car, the services of a good assistant, or a good doctor? Do they pick up the phone and call a salesperson, or read through a bunch of business websites? No, they’re much more likely to talk to neighbors, friends, colleagues at work, and others in their peer networks and ask what they’ve used, frequented, or who they’ve hired.

Marc Benioff understood this when he was building Salesforce.com to compete against much bigger, entrenched competitors. He was building a better enterprise software product, and to get the word out, he organized “City Tour” events and neighborhood “street teams.” The City Tour events would bring his customers together with prospects and a few other interesting people for presentations and group discussion.

Benioff found that buyers were much less interested in hearing from him than they were in talking to his customers—their peers, other software programmers like themselves. When he studied the numbers, Benioff found that 80 percent of the prospects who attended such events wound up becoming customers themselves—in effect, an 80-percent close rate.

Cultivate customer sales and marketing people. Business spends billions of dollars training salespeople to build relationships with prospects and customers. But no one has to spend a dime training a customer to build a trusting relationship with your prospects. Since they’re peers, they already have a relationship and one they pretty much trust. Microsoft builds on this aspect of human nature when it penetrates new markets, often in foreign countries where they don’t speak the language or understand the culture. The firm will engage with local software users—whom they call Most Valuable Professionals (MVPs)—of which many have built substantial followings of their own through blogging and social networks.

One MVP is known as “Mr. Excel” to his followers, and on some days his website gets more visits than Microsoft’s own Excel page on its corporate website. Many companies, when faced with the same situation, threaten lawsuits. Microsoft embraced Mr. Excel. In fact, they support his activities with “insider knowledge” and the opportunity to get sneak previews and to test new releases. In return, Mr. Excel, and thousands of other Microsoft MVPs, wind up providing invaluable input as the firm develops new releases, and produce its most effective marketing communications, as buyers realize that it comes from a peer they know and trust.

In such ways, the MVPs are helping Microsoft penetrate and grow markets more effectively and cost affordably than the corporation could do using traditional marketing approaches staffed by people outside the company.

Build strong customer communities. Consider Harley-Davidson’s success in creating a sense of community around its bikes. Three decades ago, the public associated Harleys with gangs and outlaws, which turned off consumers. Harley-Davidson worked hard to change the image, first by getting police departments to start using them, and then by working assiduously to build a customer community of middle-class, law-abiding customers that morphed into today’s famous million-person Harley Owners Group (H.O.G.). Today, H.O.G. members position themselves as family: the brothers and sisters you never had.

It’s not just sexy products like Harleys that can create large customer communities, which in turn attract large numbers of buyers. One of the most successful customer communities is Procter & Gamble’s BeingGirl community of teenage girls, formed around feminine care products.

The key to forming customer communities is not to build them around your brand—a common and obvious mistake made by marketing departments. Rather, ask, “What does our product or service mean to our customers?” or, “What could they mean?” Procter & Gamble realized that its feminine care products could symbolize the difficult, scary, exciting transition its teenage customers are making.

Get customers involved in the solution. When LEGO toy maker launched its Mindstorms robot building kits a few years ago, hackers almost immediately started altering the code to allow the robots to do more. In circumstances like this, most firms call their legal departments to issue cease-and-desist orders. Indeed, faced with a similar response when it issued a comparable line of toys, Sony did just that. But LEGO took a smarter approach.

Basically, LEGO executives did the math. About 1,000 hackers—or more to the point, enthused and technically advanced customers—were coming up with robots that could do amazing things that the firm’s seven internal developers had never thought of. One of the hacker-created robots could solve a Rubik’s cube. As the value these hackers were creating was realized, LEGO further embraced them. Now its customer community numbers in the tens of thousands and continues to develop amazing arrays of robotic toys—far beyond anything the company might have developed on its own.

Meanwhile, 3M and other companies are systematizing customer-led innovation. Rather than wait passively for customers to begin altering or hacking its products, 3M learned how to proactively pursue and find customers or “users” most likely to come up with breakthrough innovations. Massachusetts Institute of Technology professor Eric von Hippel has coined the term “lead users” to describe them, and worked with 3M’s healthcare business to develop a system for finding them. The result was an eightfold improvement in revenues from innovations developed with the help of such customers vs. innovations developed through 3M’s internal processes alone. What makes this particularly significant is that 3M’s product developers are among the most innovative in the world.

Help customers build social capital. Why do customers engage so enthusiastically in helping companies develop, market, and sell their products—in effect, growing their businesses? Many pundits think you need an incredibly sexy product like an “iAnything” developed by a once-in-a-century genius like Steve Jobs. But that’s missing the point: All it takes is creating product that changes customers’ lives for the better.

What all these companies—and others I features in my book, The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Asset (Harvard Business Review Press, 2012)—do is help customers build their social capital by helping them affiliate with their peers in customer communities, build their status and reputation, and learn and grow in the process. Often, they also include service to a larger purpose.

Enterprise software maker SAS Canada, for example, addressed an unexpected decline in its customer retention rate by engaging some of its leading customers, called “Customer Champions” in the effort to hold on to customers and bring defectors back. The Customer Champions organized live forums in more than 20 major markets around the country, presented and brought in local speakers, contributed to an e-newsletter that SAS started, and more. The result was to completely restore the firm’s retention rate to its previous high level.

Why did the Customer Champions put forth such an effort? Because it was an opportunity for closer affiliation with other software managers and engineers. The Customer Champions assumed a leadership role, which provided status and recognition from their peers. The project also increased their knowledge and brought a deeper understanding of how to address other SAS customers’ needs.

If this sounds more appealing than the old manipulate-them-into-buying techniques, you’re not alone. When companies commit to engaging authentic customer advocacy to increase business, it not only improves marketing results, it improves the organizations. That’s because it’s hard to mask substandard performance and customer discontent when you rely on your customers to tell the world how great you are.

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About The Author

Bill Lee’s picture

Bill Lee

Bill Lee, president of Lee Consulting Group, helps organizations reinvent customer relationships and accelerate growth through the creation of engaged, passionate customer advocates and communities. He pioneered the concept that return on relationship is the key to organic growth in organizations of any size, public or private. For the last eight years, Lee has built vibrant communities of customer engagement professionals. Lee is the author of the book, The Hidden Wealth of Customers: Realizing the Untapped Value of Your Most Important Assett (Harvard Business Review Press, 2012) and the book, Mavericks in the Workplace: Harnessing the Genius of American Workers (Oxford University Press, 1998).

Comments

Marketing Saurism

Hi, Bill: I regret I had to go too quickly through your piece, yet I think I got your message - that I totally share. Sellers / Suppliers must be in a one-to-one, peer-to-peer relationship with Customers / Buyers, if both want to win; otherwise it would be a carnage, as we all saw in the many past years. The problem is, that still too many Sellers / Suppliers adopt invasive approaches that disturb the already acquired or the potential Customer / Buyer. There's still a lot to do to develop Charlatans' methods to truly professional Marketing and Selling. Thank you.

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