Summary of Part 1 and 2. The new phenomenon of customer empowerment, based on a combination of new technologies and new forms of consumer interaction has brought about new types of communication formats; increased Peer-to-Peer information exchange is weakening the traditional corporate and mass media control on the marketplace, posing important challenges to 21st century marketers and businesses.
Part 3 (final)
One thing increasingly becoming obvious to strategies and marketers is that the good old (mass media based) marketing practice of one-way push communication is not anymore as effective as it used to be and becomes even less effective over time. Many marketing executives witnessing the weakening of the mass media and mass message power respond with even more advertising and more push, leading to message saturation, lower acceptability and increasing consumer mistrust. According to a Yankelovich survey in 2004 60% of the consumers have today a much more negative opinion about marketing and advertising than just a few years ago while 61% believe that the amount of advertising is out of control. Also a 2006 survey of the Advertisers Union in Holland suggests that only 18% of the TV audience is actually watching TV commercials in this country.
Decreasing effectiveness of the marketing and increasing customer suspicion and power are the perfect ingredients of a disaster marketing scenario. What is the right way to move forward? Certainly not increasing customer push because the empowered and informed consumer has the means to react.
According to a new school of thought the only way to win and retain the today's consumers is to become their partner by helping them become successful by realizing their ambitions and personal goals. This strategy known as Customer Advocacy is based on the simple idea that if you want to win the consumer today you have to win the consumer’s trust. Such an approach could mean that you must be able to understand the real nature of your customer’s needs, motivations and psychology and that in fact you should be so honest with him that you would even suggest a competitive product if you realize that your product is not what the customer looks for. The reasoning behind such an extreme case of advocacy is simple: if you fool the customer he will most probably find out and you will lose him for ever, if you help him he will trust you enough to come back to you next time.
What are the effects of customer advocacy and how this can become a useful marketing instrument are questions that begin to attract the attention of the academic community. On the other hand practitioners have already shown interest and there are already some interesting findings in the field ( see for example Forrester Research.)
Advocating the customer might sound odd to those used to think that control of the mass media and control of the message/content was enough to win customer trust and loyalty. This view, ignoring the new realities and power migration in the marketplace, can lead today to a dangerous form of digital myopia with serious long term effects on the marketing’s ability to drive company success and growth.
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June 27, 2007
June 18, 2007
Power to the (online) consumer Part 2
Quick summary Part 1: The Internet has become an indispensable part of our life
Next to becoming the prime source of information for most of us the Internet influences in other ways our position as consumers. You will hardly find anyone around who does not have a personal story to tell about getting a better deal the last time he or she bought flying tickets, vacations, books, furniture, computers, new or second hand car, clothes, electrical appliances, kitchen equipment and anything else you can imagine, just by taking the time to do some search with Google before buying the product.
The whole situation is often labeled as “customer empowerment”, a situation attracting a good deal of the attention of both academics and practitioners. A symptom of changing attitudes: business people are not anymore surprised when you tell them that the era of the corporate market domination is over and that the existential, online consumer is on his way to become the dominant party of the marketing equation.
Customer empowerment has its roots to a number of evolutionary causes but it is primarily related to the Internet that made available and easily accessible large amounts of information that has led to a unique transparency of the marketplace, in combination with the ease of transacting with any supplier, in any part of the world as long as he offers a better deal. Recent developments around the social media (blogs, forums/bulletin boards, communities and social networks) have further contributed to customer empowerment by offering to consumers the option to further refine their product information and better assess the value of different offers by directly getting in touch with other users or experts and asking their opinion or experiences. The customer empowerment is also visible in the fact that the Internet has given consumers the opportunity to act as part of the supply chain, eliminating traditional intermediaries from the process. A simple example: The photo film and film processing industry are in the edge of extinction because of the digital technology replacing the film role and the Internet replacing the photo shop. Similar developments have affected a whole series of industries: airlines and Travel, banking, media, newspapers, telecom, employment services, printing and even the traditional high-street retailer.
The effects of customer empowerment on customer behavior but also on business processes and market structures are remarkable and far-reaching yet for many businesses it is not exactly clear what the consequences can be. A few tips in my next posting.
Next week: Part 3
Next to becoming the prime source of information for most of us the Internet influences in other ways our position as consumers. You will hardly find anyone around who does not have a personal story to tell about getting a better deal the last time he or she bought flying tickets, vacations, books, furniture, computers, new or second hand car, clothes, electrical appliances, kitchen equipment and anything else you can imagine, just by taking the time to do some search with Google before buying the product.
The whole situation is often labeled as “customer empowerment”, a situation attracting a good deal of the attention of both academics and practitioners. A symptom of changing attitudes: business people are not anymore surprised when you tell them that the era of the corporate market domination is over and that the existential, online consumer is on his way to become the dominant party of the marketing equation.
Customer empowerment has its roots to a number of evolutionary causes but it is primarily related to the Internet that made available and easily accessible large amounts of information that has led to a unique transparency of the marketplace, in combination with the ease of transacting with any supplier, in any part of the world as long as he offers a better deal. Recent developments around the social media (blogs, forums/bulletin boards, communities and social networks) have further contributed to customer empowerment by offering to consumers the option to further refine their product information and better assess the value of different offers by directly getting in touch with other users or experts and asking their opinion or experiences. The customer empowerment is also visible in the fact that the Internet has given consumers the opportunity to act as part of the supply chain, eliminating traditional intermediaries from the process. A simple example: The photo film and film processing industry are in the edge of extinction because of the digital technology replacing the film role and the Internet replacing the photo shop. Similar developments have affected a whole series of industries: airlines and Travel, banking, media, newspapers, telecom, employment services, printing and even the traditional high-street retailer.
The effects of customer empowerment on customer behavior but also on business processes and market structures are remarkable and far-reaching yet for many businesses it is not exactly clear what the consequences can be. A few tips in my next posting.
Next week: Part 3
June 13, 2007
Power to the (online) consumer Part 1
The Internet is hot again; having fully recovered from the boom and bust of the 90s the virtual economy has entered a new era of robust growth in all fronts; with over 1 billion users worldwide it is in several countries already the nr 2 retail channel while online advertising is the fastest growing advertising category. The broadband connections are expanding quickly (there were 285 million subscribers in 2006, expected to reach 560 mill. by 2011) and new technologies like Wiki and Ajax support a whole new family of interactive applications (known as Web 2.0 or social media) giving web users countless new options and capabilities.
The growing importance and influence of the Internet is clearly visible to consumers and businesses. As a teacher I experience a steady increase of requests for supervision of student assignments with subjects related to corporate online presence, mobile commerce and e-marketing during the last two years. On the other hand more and more literature and textbooks about E-Marketing are published every year (the last four months alone I was asked to review two concepts for textbooks about E-Commerce by different publishers).
The Internet has been fully integrated in our life as part of our decision making process. There is hardly anyone around using any other medium than the web when searching for information ranging from news, weather reports, medical information and train departure times to flying tariffs, movie theater schedules, telephone numbers, personal information or information about any person, product, brand or company everywhere in the world. According to a recent study 70% of the high income consumers use already the Internet as their nr 1 information source in the US.
Next week: Part 2
The growing importance and influence of the Internet is clearly visible to consumers and businesses. As a teacher I experience a steady increase of requests for supervision of student assignments with subjects related to corporate online presence, mobile commerce and e-marketing during the last two years. On the other hand more and more literature and textbooks about E-Marketing are published every year (the last four months alone I was asked to review two concepts for textbooks about E-Commerce by different publishers).
The Internet has been fully integrated in our life as part of our decision making process. There is hardly anyone around using any other medium than the web when searching for information ranging from news, weather reports, medical information and train departure times to flying tariffs, movie theater schedules, telephone numbers, personal information or information about any person, product, brand or company everywhere in the world. According to a recent study 70% of the high income consumers use already the Internet as their nr 1 information source in the US.
Next week: Part 2
Peer-to-Peer (P2P) banking: After mergers and acquisitions one more headache for Bankers ? PART 2
Short Summary of last week posting (Part 1): A new generation of Peer-to-Peer (or Citizen-) Banking web sites appear to attract enough attention of the public. Should traditional bankers worry?
Part 2
Is it possible that the incumbent banks will share the fait of the travel agencies, music industry, telephone operators and the newspaper classified adds who experienced a sudden and substantial loss of business to online competitors before they even understand what’s going on? The scenario is not unlikely at all; the past experiences has shown that many of the revolutionary Internet ideas tend to expand as a virtual pandemic after reaching a users’ critical mass. Take the examples of SecondLife, Google, Wikipedia, MySpace, Digg, Flickr, Skype and YouTube to name some of the familiar names. These are brands that have attracted millions of followers in very short time and without any promotion. I dare to predict that the same will happen with the Peer-to-Peer (P2P) banking sites, provided that they reach the critical mass of users that will put them in the radar of giants like Google, eBay, Yahoo or Microsoft (and why not of Amazone or WallMart) who constantly look for interesting ways to expand their online business. Experience from recent high-profile acquisitions of Internet businesses points to the fact that the industry giants have no problem spending billions of dollars in order to further strengthen their online position and expand their market reach. Having said that it is not so difficult to imagine what will happen if Google or Yahoo add zapa.com, Boober.nl or any other similar online Peer-to-Peer bank to their assortment: from small and local these names will become overnight big and global and most probably fierce direct competitors of the traditional banking by offering to hundreds of millions web users an interesting virtual banking alternative. The worst case scenario for the traditional bankers is that most probably the citizen banks will expand their assortment to more categories of financial services and products. Do banking CEOs and strategists need to worry? After all banking is not like every other industry since reliance (based on personal contact and interaction) is a core banking value that the Internet cannot provide. Moreover banking is an economic activity meticulously regulated and followed by governments and financial authorities. Can these and other possible problems stand in the way of citizen banks? Again looking to the Internet history I would argue that online concepts embraced by users develop their own momentum and can expand beyond the reach and control of industries, governments or any kind of watchdogs.The important question to my opinion is whether the banking world has noticed these developments and has given any thought to this threat, provided that they consider this as a threat at all. One would expect that guided by past experience banking executives and strategists should seriously consider making the first step, ahead of the Internet giants. The online P2P banks are still cheap and therefore easy to acquire, while the risks are relatively low.Will the banking world try to preempt? Looking again to the past this sounds very unlikely. Experience shows that incumbents are very slow to react to the fast and often uncontrollable developments in the cyberspace. If this is the case here, it is interesting to wait for the next chapter of the Online Citizen Banking story
Part 2
Is it possible that the incumbent banks will share the fait of the travel agencies, music industry, telephone operators and the newspaper classified adds who experienced a sudden and substantial loss of business to online competitors before they even understand what’s going on? The scenario is not unlikely at all; the past experiences has shown that many of the revolutionary Internet ideas tend to expand as a virtual pandemic after reaching a users’ critical mass. Take the examples of SecondLife, Google, Wikipedia, MySpace, Digg, Flickr, Skype and YouTube to name some of the familiar names. These are brands that have attracted millions of followers in very short time and without any promotion. I dare to predict that the same will happen with the Peer-to-Peer (P2P) banking sites, provided that they reach the critical mass of users that will put them in the radar of giants like Google, eBay, Yahoo or Microsoft (and why not of Amazone or WallMart) who constantly look for interesting ways to expand their online business. Experience from recent high-profile acquisitions of Internet businesses points to the fact that the industry giants have no problem spending billions of dollars in order to further strengthen their online position and expand their market reach. Having said that it is not so difficult to imagine what will happen if Google or Yahoo add zapa.com, Boober.nl or any other similar online Peer-to-Peer bank to their assortment: from small and local these names will become overnight big and global and most probably fierce direct competitors of the traditional banking by offering to hundreds of millions web users an interesting virtual banking alternative. The worst case scenario for the traditional bankers is that most probably the citizen banks will expand their assortment to more categories of financial services and products. Do banking CEOs and strategists need to worry? After all banking is not like every other industry since reliance (based on personal contact and interaction) is a core banking value that the Internet cannot provide. Moreover banking is an economic activity meticulously regulated and followed by governments and financial authorities. Can these and other possible problems stand in the way of citizen banks? Again looking to the Internet history I would argue that online concepts embraced by users develop their own momentum and can expand beyond the reach and control of industries, governments or any kind of watchdogs.The important question to my opinion is whether the banking world has noticed these developments and has given any thought to this threat, provided that they consider this as a threat at all. One would expect that guided by past experience banking executives and strategists should seriously consider making the first step, ahead of the Internet giants. The online P2P banks are still cheap and therefore easy to acquire, while the risks are relatively low.Will the banking world try to preempt? Looking again to the past this sounds very unlikely. Experience shows that incumbents are very slow to react to the fast and often uncontrollable developments in the cyberspace. If this is the case here, it is interesting to wait for the next chapter of the Online Citizen Banking story
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