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R E L E A S E T H E P O W E R O F E N TA N G L E D MARKETING Go beyond c u s t o me r e n g a g e me n t t o a long-last ing e n t a n g l e d re l a t i o n s h i p By Stan Rapp & Sebastian Jespersen Chapter 1 MARKETING TAKES A QUANTUM LEAP Our take on the business world of the future began three years ago when Stan was about to board a flight from LGA to Atlanta. Looking over the usual array of magazine titles at the newsstand, Stan’s choice was Scientific American. Just the thing to take his mind off business challenges “The most perplexing phenomenon in the bizarre world of for a while. quantum mechanics is the effect called entanglement. Two Surprise! Reading Scientific American at 30,000 feet above ground level had the opposite effect. An article titled Living in a Quantum World by Professor Vlatko Vedral at the University of Oxford was the instigator. particles that may be very apart, even millions or billions of miles, are mysteriously linked together. What happens to one of them immediately causes a change in the other one. Entanglement is a phenomenon in which two entities are linked forever.” - From the book ENTANGLEMENT by Amir Aczel. What got Stan’s mind racing was what the professor wrote about entanglement, the quintessential quantum Quantum theory is about the laws of nature that govern the realm of the very small. In quantum mechanics, as the quantum theory is called, we deal with the basic building blocks of matter, the constituent particles from which everything in the universe is made. effect. It led to Stan’s realization that closely linked particles in the subatomic world are a powerful metaphor for the entangled relationship between producer and consumer now possible in our postdigital world. At this subatomic level, suddenly all the rules of behavior with which we are familiar no longer hold. Entering this strange new world of the very small is an experience as baffling and bizarre as Alice’s Adventures in Wonderland. Marketing is about to take a quantum leap. Entangled Marketing is the new business model for building an enduring, mutually rewarding relationship between the brand and the consumer. Suddenly all the rules are changed for marketers in the same way everything familiar was overturned for physicists with the revelation of quantum entanglement. The most perplexing phenomenon in the bizarre world of quantum mechanics is the effect called entanglement. Two particles that may be very far apart, even millions or billions of miles, are mysteriously linked together. What happens to one of them immediately causes a change in the other one. Entanglement is a phenomenon in which two entities are linked forever. Metaphors are not meant to be taken literally. Instead, what they do is open the mind to fresh ways of looking at a situation. Metaphorical thinking leads to creating innovative models for dealing with tough challenges. Using quantum particle entanglement has helped make sense of Entangled Marketing: 2 Over the following months, a back and forth exchange of ideas between the two of us resulted in the decision to do this book together. Our purpose is not to compile another set of “how-to” instructions for dealing with the vagaries of a screen-obsessed society. You already know how to get things done across multiple channels in today’s chaotic world. What business management needs is a “think book” that looks at what is shared in common by such pacesetters as Apple, Amazon, Uber, the Cooper Mini, Nike and other ground-breaking innovators. The enduring relationship each has with users of their products or services now can be achieved by almost any business of any size, whether long-established or just starting out. Stan shared with Sebastian Jespersen, CEO at the global Vertic digital agency, how technology’s wild pace of change theoretically can empower marketers to keep customers alive almost indefinitely. Sebastian responded that there was nothing theoretical about the idea. In his view, the move from mere engagement to creating an entangled relationship with the consumer already has begun. He described recent agency campaigns that reinforce the metaphorical association with quantum mechanics. To further illustrate how consumer electronics gave birth to this new business model, Sebastian described a workshop idea the agency had on the drawing board. He was planning to entangle participants in a powerful personal experience. The event would be held simultaneously at the agency’s New York and How to make it happen is what you’ll find in the Copenhagen offices. Attendees would each be handed their own Oculus head-mounted display. pages of Release the Power of Entangled Marketing. With the virtual reality headset in place, anyone in New York could put herself or himself into the picture of what was happening in Copenhagen and visa versa. There would also be an opportunity to select an object seen at the other location in your Oculus and have it cloned via a 3-D printer at your location on a different continent. In the Internet era, anything imaginable becomes possible by digitalization sooner or later. 3 NEVER LE T GO OF ONE ANOTHER The consumer receives an average of 10,000 messages per day. This means the vast majority of what is communicated becomes irrelevant within seconds. In order for brands to have relevance the relationship must go beyond connecting with engaging content. Snapchat generated 700 million photos and videos a day less than three years after launch in 2011. One billion viewers watch 300 million hours of YouTube every day. In 2014 Facebook sold $11.5 billion in ads, up 65 % over 2013. Clickers disengage as fast as they engage. They grasp a post on LinkedIn. They watch a video on YouTube. They “like” a promotion on Facebook. They zip through a favored blog. All of which means that multiplying the number of social media touch points is not going to set a brand apart. “Thinking Big” has never had it so good. Where it once took generations for an analog era startup to attract lots of loyal believers, millions now may become dedicated to a brand in the wink of an eye. How marketers use the power to keep those customers alive is what’s going to separate the winners from the losers in our click-based economy. Engagement in the here and now – the next click, “like,” retweet or uploaded video – is too easily followed by moving on to other intriguing content. Something else is required. Guess what? You don’t have to wait for the future to arrive. You can start a firestorm of your own with what is doable right now. You can build a relationship between your brand and the consumer that never lets go of each other -- something that 95% of marketers fail to achieve. Louisa Guilder, in her fascinating book about quantum mechanics, The Age of Entanglement, writes about two entities so deeply linked they share the same existence. Once entangled they remain inextricably connected. They never let go of one another –- no matter their distance apart. Our name for this phenomenon is Entangled Marketing. Never letting go of an inextricable link to users is what helped create the online behemoths of the Internet era. Billions of people worldwide enjoy a daily entangled existence with what is found on Facebook, Twitter, Google, Instagram, YouTube, Snapchat, Pinterest and other online favorites. The march from mass marketing to one-to-one marketing is moving on to the next big thing. The Entangled Marketing paradigm is likely to prove as impactful for business leaders in this decade as quantum entanglement was to physicists in the 20th century. 4 Entangled Marketing. Entangled Marketing. Entangled Marketing. Sounds a bit strange at first. Keep reading. Discover the payback you can enjoy when your link to customers has the same degree of “stickiness” as pairs of subatomic particles exhibit. Brian Clegg, in Quantum Entanglement – Science’s Strangest Phenomenon, tells us: “Once two particles in the quantum space become entangled, they retain an immediate and powerful connection that can be harnessed to perform seemingly impossible tasks.” Adherence has been a problem pharmaceutical companies seemed unable to do much about solving. At least that was the situation before LEO Pharma broke the mold with a new approach. One of the business categories in need of performing “seemingly impossible tasks” is the pharmaceutical sector. Fortunately, there is a company headquartered in Denmark that has dared to think differently. Year-in, year-out, as many as 40% of users of medications fail to adhere to treatment protocol. Rather than keeping adherence alive, the ties between the pharmaceutical company and the patient often fall apart. Taking pills properly and following doctor’s orders is something folks have trouble doing. 5 RELEASING THE POWER OF RELEASING WH AT’S NEXT THE POWER OF LEO Pharma specializes in dermatology, treating psoriasis and other skin conditions in over a hundred countries. The company has been an industry leader for more than a century. More than 100 million people worldwide have psoriasis – but only half receive proper treatment. QualityCareTM is energized by a behind-the-scenes Customer Entanglement Platform that underlies the mechanics of the relationship. Chief concerns are identified in the enrollment process either online or at the doctor’s office. Response to each patient’s particular situation is conveyed via his or her personal web page, email, text messaging or call center interchange. As more is learned about progress (or lack of it) the postings and content evolve accordingly. Recently LEO Pharma adopted an approach that goes far beyond providing the right medication. Every facet of LEO Pharma’s global operation was mobilized to execute a focus on the day-to-day real world challenges faced by the patient. At any time, the patient’s progress may call for a nurse placing an outbound phone call. What is heard on the call triggers the content of the next contact. There is also a QualityCareTM magazine printed locally and tailored to the specific interests of the patient and the nature of that person’s illness. The first step was getting close enough to acquire a true sense of what it is like to live with psoriasis. Research undertaken by LEO Pharma set its sights on the physical and social discomfort caused by the disease. It included living with patients, monitoring social media, analysis of search key words, running focus groups and much more. LEO Pharma’s revamped business model goes beyond delivering the best available skin condition treatment. This is a company that cares enough for patients to know they are not alone. The close, ongoing relationship adds enormous value to LEO Pharma’s traditional role as a provider of medication. LEO Pharma found that motivating adherence is not solely about tracking why medication is not taken as prescribed. The key issue turned out to be the level of personal support received by each individual. In response to the findings, LEO Pharma devised an array of interactions providing the patient with unprecedented control over the illness. In its first year of operation, QualityCareTM made a difference in the daily existence of thousands of people in the U.S., Canada, Brazil, UK, Germany and Hungary. Twenty more countries expect to launch the program soon. The drug company and the person with psoriasis became so deeply entangled they seemed to share the same existence. Individual attention provided by LEO Pharma is tied to what happens at any given moment in each person’s life. What QualityCareTM does effects the day-to-day life of people living with psoriasis. What patients do effects the day-to-day actions taken by LEO Pharma. A reciprocal, entangled relatonship with the customer is now alive and well in the pharmaceutical world. This ongoing personal involvement is branded QualityCareTM. It is free, confidential and benefits both the patient with a less stressful psoriasis condition and the pharmaceutical company gaining a sharp improvement in adherence. WHAT’S NEXT 6 M ARKE TING WITH A M AGICAL QUANTUM MINDSE T You may be thinking: “Three cheers for LEO Pharma, but health care is a universe of its own with unique attributes. What can be done there may not apply to what a service company, a manufacturer or retailer might confront in other categories”. LEGO brings to life whatever online product proposal gets 10,000 votes from fans who access the Ideas Platform. Michael McNally, the company’s senior director of brand relations, acted on Ms. Kooijman’s suggestion as soon as the voters gave a thumbs up. Wrong thinking. A business in just about every B-to-C and B-to-B category can profit from a quantum mindset. We recently saw LEGO, the toyland titan, put one of the elements of Entangled Marketing to good use. In a matter of months, Toy Research Institute sets with three LEGO female scientist figures were in stores and being sold at its website. Within only a few days the new figures suggested by Ms. Kooijman sold out online and at major retailers. LEGO is an astonishing company that went from being an analog era favorite to becoming an outstanding innovator of the Internet era. In the following chapters, we’ll show what can be learned from LEGO’s entanglement with millions of admirers whose commitment to the brand result in a billion dollar profit annually. Few companies are as adept as LEGO and LEO Pharma at maintaining an entangled relationship with customers, the most important people in their business lives. What that ability does to spread the word about the person’s unique experience is reflected in steady year on year growth of revenue and profitability. Recently, the maker of building blocks was faced with a growing concern. It involved the LEGO product introduced to win over a much larger proportion of female users. A letter from a little girl asked why the “Friends” collection didn’t have figures dressed in anything more inspiring than beach get-ups or baking outfits. The letter quickly went viral. LEGO management had been aware of the problem, thanks to the many customers connected to what happens at its fan-sourced Ideas Platform. An idea submitted by Ellen Kooijman, a geochemist based in Sweden, caught the marketer’s attention. Ms. Kooijman had proposed that LEGO create a Toy Research Institute staffed with female scientists to project a more positive picture of women in modern-day society. 7 PERSONAL + RELEVANT + VALUE-ADDED = ENTANGLED MARKETING These days you know more about the hour-to-hour life of people you want to win over than thought possible a few years back. Thinking that last year’s wildly acclaimed initiative gets to keep customers alive forever is the biggest mistake CMOs make in satisfying self-addicted individuals in the post-digital age. Massive quantities of internal data and still more massive quantities of cloud data are at your fingertips. You can be as personal and relevant as you wish in using what is known about each person on your radar screen. Want a pair of personal made-to-order shoes? Go to Nike ID where customization was a Nike first. Want to be at your best in running your next race? Go to Nike+ where you’ll find coaching to do your best at a local fund-raiser or running in the London marathon. So far so good. But engaging in personal and relevant conversation only goes part way in setting yourself apart from the competition. What is missing far too often is an experience that adds value to something your customer truly values. Personal + relevant + value-added is the winning ticket. When fully applied it’s an intertwined existence that can resist anything your competitors may do to shake it. Over the past decade, if you wanted to measure progress toward fitness goals, you could put the Nike FuelBand on your wrist. The FuelBand and the concept of having movements measured as Nike fuel was one of the earliest, self-help wearable devices. You can’t stay any closer to a customer than encircling her or his wrist with your brand’s monitoring message. An excellent example of how to make such an entangled relationship happen is what Nike continually does to impact the daily lives of loyal followers. The most important word there is “continuing.” An occasional mind-blowing experience won’t do it. 8 Nike is with you every moment of the day. It’s as if the consumer and the FuelBand were a pair of quantum particles in an entangled relationship where what one does immediately effects the other. Before long an “Outdo You in 2015” online campaign was launched to encourage appreciation by Nike+ members of what was accomplished in 2014. A video on the Nike website proclaimed: “We earned 228 billion units of Nike Fuel. We ran 215 million miles -- like running to the moon and back 450 times.” When first introduced for pre-order, the FuelBand sold out in minutes at $149 a pop. At Niketown, customers lined up around the block before doors opened. Demand moved around the world with tens of thousands registering to be notified when it came to their country. Use of the word “we” for the 2014 accomplishments conveys just how tightly Nike is entangled in adding value to shared interests. The degree of separation between the brand and its most committed believers is down to to zero. How the goal of closeness moved from arm’s length to zero is a subject you’ll learn about in the next chapter. Long before wearables became a fad, Nike made a profit selling fitness hardware to grateful runners. With release of the Apple Watch, the Internet of Things ushered in its own revolutionary force for change. Nike announced it was discontinuing making FuelBand hardware and would concentrate on fitness software The “Outdo You” experience turns the location, weather and movement data of active Nike+ users into 100,000 going forward. There was no point in competing with Apple’s product and all those other fitness-tracking smartwatches. unique films. If you make the cut, you can watch your personal 2014 film and you are urged to “outdo you” in your 2015 activity with Nike+. The naysayers were quick to pounce on the Nike announcement. Irate tweeters ranted: “How dare they abandon all those proud people burning Nike fuel.” Of course, as happens so often, it was a case of overreacting before getting all the facts. Whether checking how much Nike fuel you burned today or monitoring your morning run or sharing your moves on the basketball court with a smartphone video, your actual or potential connection to Nike goes far deeper than buying another pair of athletic shoes. Mutually beneficial experiences between brand and customer outpace what 99% of businesses do to keep customers alive and checking in by phone, laptop or desktop computer. As reported on the Re/code blog, here’s what Nike Chief Executive Mark Parker had to say about restructuring the fitness enthusiast’s connection to Nike fuel: “Digital sport as we call it at Nike is incredibly important to us. We think it’s going to be a bigger and bigger factor in the experience consumers have with the products we create. Our goal is to actually increase the number of users. Today we have about 30 million FuelBand users. We’re hoping to push that over 100 million.” 9 A critical element in getting the result you want is how you integrate real-time behavioral data with the input you’ve been using for years (segmentation, targeting, collaborative filtering, etc.). What’s exciting for smaller companies is that the playing field has been leveled in recent years when it comes to analyzing the staggering amount of “hot” knowledge out there. Check Nike’s latest quarterly profit report if you need further justification for asking: “In what way can my company adapt the strategic entanglement Nike maintains with its customers?” Other marketers love to talk about providing personalized engagement to their customers. We’ve been hearing about it for generations – Burger King has been pushing their “Have it your way” slogan since the 70s. So why do so many CMOs fall short in creating a bond that goes beyond what the product or service alone provides? Whatever the size of your company, you can turn to vendors adept at combining data streams from the web, sensors, smartphone clicks, shopping online and at brick and mortar retailers – almost any public or private source -- and deliver fruitful insights to you. One reason is the failure to recognize the difference between “personal” and “personalized.” Serving up relevant content, no matter how well it is personal- You may want to check out what Clearstory Data and Paxata offer. These recent California start-ups have what it takes to make you a data marketing whiz no ized, often falls short of what can be achieved in the post-digital world with an experience a person really values personally. matter what your previous expertise. It’s high time for pundits at conference after conference to transform the “engagement” they talk about so much into the new entanglement business model. Once in place, how well you execute your Entanglement Marketing strategy is as important as the strategy itself. Research shows that 40% of customers buy more from businesses that allow across multiple channels. 10 BE ONE OF THE FIRST TO KN OW WH AT’S NEXT At the start of the twentieth century, the emergence of quantum theory led to new thinking beyond only a narrow circle of physicists. We invited several hundred top professionals to sign on as “Friends of the New Marketing.” The “friends” were asked to review a draft of each chapter before finalization. Comments received, both pro and con, along with recommended new content, proved to be invaluable. Picasso and other artists with radical ideas were fascinated by the newly raised challenge to existing concepts of space and time. Salvador Dali is quoted in Arthur Miller’s “Colliding Worlds” saying: “It is with pi-mesons and the most gelatinous and indeterminate neutrinos that I want to paint the beauty of the angels and of reality.” Our wish is to keep the “friends” website alive as an ongoing resource for business executives. You are welcome to join our group of professionals focused on sharing insights about whatever mind-blowing opportunity is coming next. If you like being among the first to know what’s on the Entangled Marketing horizon, join our community at www.entangledmarketing.com. The more we looked at the behavior of neutrinos that inspired Salvador Dali, the more we saw a likeness to how digital entanglement is transforming our long held business beliefs. Nothing is changing in marketing so much as the growth in its complexity. Each new advance in getting closer to customers can ring a start-over bell. What made sense to us was extending our coverage of the new marketing landscape beyond the coverage provided by ourselves alone. 11 THE QUANTUM COMPUTING FUTURE There is no way we could have known years ago what amazing developments would be here soon. A robot hitchhiking across Canada from Nova Scotia to the other side of the continent. Google’s driverless cars with no brakes or steering wheels taking to the road. The pioneers on the space station making spare parts with 3-D printers. The Oculus turning virtual reality into an everyday reality. We’ll leave the future of computing to Burton Smith, the supercomputer designer who leads the Microsoft quantum group. Our focus is on how all of the facets of a digitized economy come together in a new business model with entangled marketing at its core and an enduring, mutually beneficial experience with customers as its goal. So come along with us to increase the likelihood of coming out on top in the Internet era. We will have more to say in the following pages about the parameters of a successful entangled relationship. You will learn why a brand’s “share of life” now rivals “share of mind” in marketing importance. You will be introduced to the 5Ws – a simplified first move in outdistancing competition. You will be alerted to the menace of “Nonvertising.” You will understand how direct marketing’s 10% of the economy was converted into iDirect Marketing’s 50% share. Any guess is as good as any other when it comes to speculation about where we will be by 2020. All we can do is look at what is in the incubator about to emerge. Among the possibilities at this moment is research into a great leap forward in computing that will leave what was predicted by Moore’s Law far behind. Microsoft and others are devoting sizable resources to perfect quantum computing. While you are looking into releasing the power of Entangled Marketing, engineers at Microsoft are looking into revolutionizing the speed of computing with their own quantum entanglement mindset. All of which just scratches the surface of what’s ahead. Be among the first to put Entangled Marketing into good use with what you will find on the following pages. John Markoff, in a NY Times article, explains how the future may look: “Quantum computing is based on qubits, which simultaneously represent both zero and one values. If they are placed in an entangled state -- physically separated but acting as though they are connected with many other qubits -- they would represent a vast number of values simultaneously. And the existing limits of computer power are thrown out the window.” 12