"Its Just So 2.0 Out There" The 4Ps are Dead

The 5Cs, Not the 4Ps By Paul Greenberg President, The 56 Group, LLC Chief Customer Officer, BPT Partners, LLC Author: CRM at the Speed of Light MAN! It’s Just So 2.0 Out There

The Business World Changed "Companies used to focus on making new, better, or cheaper products and services....Now the game is to create wonderful and emotional experiences for consumers around whatever is being sold. Its the experience that counts, not the product." “ People…want capabilities and options, not uniform products…business is there to provide the tools.” “ The Knowledge Economy is giving way to the Creative Economy...” (Knowledge has become a commodity so the solution is to) "focus on innovation and design as the new corporate core competencies." BUSINESSWEEK, DECEMBER 19, 2005

The Business World Changed “ NBC Universal announced sweeping cuts to its television operations yesterday, demonstrating just how far a once-unrivaled network must now go to stay competitive with YouTube, social networks, video games and other upstart media.” – Washington Post, October 21, 2006

The Business World Changed It's official: YouTube and Verizon ink deal Tuesday 11:50 AM | Cyrus Farivar | Engadget Mobile | | Filed under: Handsets , Verizon Wireless Well folks, we told you just over three weeks ago about "advanced talks" between Verizon and YouTube, and it looks like as of today, the two lovebirds have just tied the knot officially. with their joint service will launch next month. However, there are a couple of points to take stock of: first, it's exclusively on Verizon, which means it's going to run on V CAST -- costing you an extra $15 a month, that is, assuming you have a V CAST-capable handset. (According to one analyst, Roger Entner, only about 10 percent of Verizon's 20 million users with such phones have signed up for the service so far.) Second, Verizon's exclusivity is only going to be for "a short time," and it's more than likely that T-Mobile, Sprint, Cingular and friends have already been knocking at YouTube's door. Third, as you probably know, YouTube is a two-way street (you know, that whole "user-generated" thing we've been hearing so much about) and as such, Reuters is reporting that you'll be able to post videos directly from your handset with the use of a "five-digit short code instead of an email address." Finally, the Mercury News points out that you won't have access to all of YouTube, just what Verizon decides that you'll want via its proprietary YouTube channel. So that means you can probably forget about catching episodes of "Ask A Ninja" on your bus ride home. Still, diluted YouTube is better than no YouTube; we can almost hear thousands of freshly-bought VX9900s flipping open to check out the content already. Read - Reuters Read - San Jose Mercury News Permalink | Email this | Comments

The Business World Changed Second Life Game Gets Virtual Phones The accessories from YouNeverCall look and act like cell phones. By Thomas Claburn InformationWeek Nov 28, 2006 06:53 PM The communications revolution has gone virtual. YouNeverCall , an online mobile phone store, is making free virtual cell phones available to Second Life residents. "The virtual cell phones we are offering on Second Life are more than just a fun accessory," said Sam Michelson, CEO of YouNeverCall, in a statement. "The cell phones let Second Life residents send and receive text messages, as well as hold the virtual phone to their ear. They ring like real cell phones and, best of all, require no special download." Really, they're just a fun accessory — in a world where teleportation is an option, you don't need a telephone to reach out and touch someone. But Second Life residents may find them compelling as a fashion statement, at least until someone finds a way to dial into Second Life from real-world phones. The YouNeverCall virtual kiosk in Second Life is located in the Alston region at coordinates 95, 58, 22 .

Web. 2.0 (or Business Web, or Live Web)

User created content

Co-creation of value

Experience economy or support economy

Customer managed experiences

Authenticity

Transparency

Social networking

Social media

Customer advocacy

Fixed mobile convergence

User communities

Experience mapping and design

Experiences as economic outputs

Trusted sources

CEM

Voice of the customer

Return on customer

Customer value

Customer ecosystem

Personal value chain

Service Oriented Architecture

On Demand

Prosumer

Conversations, not marketing “spin”

Social customer

Personalization

Services as a platform

Characteristics of the Ecosystem

Pre 90s

Product/Demand driven corporate ecosystem

Separate demand and supply chains

Late 90s to nearly present

Customer driven corporate ecosystem

The enterprise value chain

Present

Customer ecosystem

2006 - the “Era of the Social Customer”

Personal value chain

The Business World Changed

Generation C – Cross-generation ( source: Springwise )

C stands for:

Content

Connected

Creative

Collaborative

Contextual

Age is irrelevant to Gen C (except me – I’m getting OLD )

Its nature and ease of information availability makes it empowered

Sea change in use of technology

Gen Y first generation to spend more time on the ‘Net than watching TV

Implications for marketing staggering

40% of Gen Xers do research online

Only 10% of seniors

Phase 1 – The customer and vita passiva

New definition of trusted source

Carnegie Mellon study of Facebook participants

Information available nearly instantaneously – either structured or unstructured via the web (Google, Yahoo, MSN)

On Demand software as a service (salesforce.com, etc.)

Enterprise value chain supersedes siloed supply, demand & support chains

Link between lifestyle and business – consumers adopt “sexy” content

Phase 2 – The customer and vita activa – Era of the Social Customer

Social networks as active participants in effecting change (blogosphere, podcasting)

Collaboration between company & customers to provide useful value for each

Personal value chain subsumes enterprise value chain

Ubiquitous technologies leading platform

The Live Web (Web 2.0) (MySpace, Facebook)

Customer begin to include business as feature of life choice, not a separate factor – user generated content becomes part of business (salesforce.com AppExchange, Samsung open IP to engineers)

The social customer is increasingly a mobile customer

Each customer wants a personalized experience…

They couldn’t care less if they are high value or low value customers

They don’t know if they are high or low value to you

But you have to accommodate even low value customers because of what they can do to you if you don’t

But how do you begin to “know” millions of customers?

First, understand how they interact with you at every point, in every channel

That means detailed mapping, not just surveys, etc.

Ultimately, the tools for the customer to manage their own experience are paramount

Give them access to information that allows them to make informed, empowering choices which thus, provide value

Satisfaction? Nah

Tryptophan effect

Less & less useful as we move along the 21 st century timeline

HBR – 65% of the customers surveyed who left a company were satisfied when they left

Same survey in automotive shows that with 90% satisfaction, only 40% rebought

Loyalty? Nope

HBR Study – Loyalty/Profitability correlates Mediocre/Fair

Brand loyalty becoming largely a myth, though still valuable in context and can be misunderstood easily

Oklahoma regional banks

Hilton Hotels

Advocacy – Yeah baby

Net Promoter Score ( Fred Reichheld , The Ultimate Question )

Emotional metrics

Verbal terrorists are rising to new levels of activity

Conventional, oft quoted research from companies like TARP say:

Advocates will speak to between 5 and 9 people about what they love

Verbal terrorists will speak to between 9-16 people

Current reality is that a verbal terrorist can reach millions of people through blogs, podcasts, and online communities.

2005 “Dell Hell” from “The Buzzmachine” - Study entitled “Measuring the Influence of Bloggers on Corporate Reputations” (2005, Market Sentinel, Onalytica, ImmediateFuture.com) found that

Bloggers as a group were the second most influential group about Dell service after Dell itself and had more impact than Dell on negative customer service rather than positive customer service

The Buzzmachine buzz penetrated the mainstream press.

Second most frequent references to “Dell Hell’ story after Buzzmachine was the NY Times.

Differentiators are no longer products & services

Pretty much the same from company to company

Key differentiator is the customer’s experience with the company

Provides a business value for the experience with the products/services

Comfort

Convenience

Simplicity

Ubiquity

Timeliness

Contemporary technology use (e.g. mobile technologies, not Oracle)

Wow factor

Customer feels sense of importance, self-control, ownership

New Business Model

2007: year of web 2.0 for customer engagement

cScape study

64% - joint online & offline experiences essential for engagement

BUT

84% haven’t moved far or even started mapping customer experiences or even identifying customer touchpoints

cScape study

95% - personalized experiences essential or useful for engagement

This goes beyond micro-segmenting

BUT…

37% are providing no personalization at all

New Business Model

Old School Irony… Source: BearingPoint/EIU, 2004

cScape study finds customer experience “major barriers” – which are absurd given the other results

From company respondents

66% - lack of resources & time

50% - disconnected systems & technologies

38% - lack of skills & training

37% - lack of finances

36% - lack of regular processes/suitable methodology

From agency (marketing) respondents

49% - lack of boardroom buy-in (30% at company)

44% - problems with organizational culture (34% at company)

Old School Irony…

Introduction of “Web 2.0” business/marketing functions:

User generated content

23% - using it already

42% - will use it in 2007

34 % - no plans

Business blogs

48% - no plans

Podcasts

49% - no plans

Videocasts

48% - no plans

Old School Irony… To New Business Model?

Four Ps are done as a lead approach

Product, Price, Promotion, Placement are ka-Put.

No longer valuable to be thinking in those terms

They are the terms of a world where value rested in the products produced and the services provided

Customer is object of sale, not subject of a relationship

Because of things like the Cluetrain Manifesto, the perceptions of marketing campaigns immediately calls up “hype”, “buzz”, “spin”, “b.s”, “corporate shills” (in so many words), etc.

The New Marketing Model

The Cluetrain Manifesto: The End of Business As Usual

Markets are conversations

Markets consist of human beings, not demographic sectors

Networked conversations are enabling powerful new forms of social organization and knowledge exchange to emerge

There are no secrets. The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone

Already companies that speak in the language of the pitch…are no longer speaking to anyone

Most marketing programs are based on the fear that the market might see what’s really going on in the company

The Cluetrain Manifesto (Part II)

Markets do not want to talk to flacks & hucksters. They want to participate in the conversations going on behind the corporate wall

We want access to your corporate information, to your plans & strategies, your best thinking, your genuine knowledge. We will not settle for the 4-color brochure, for websites chock-a-block with eye candy but lacking any substance

The jargon may impress your investors but it doesn’t impress us and if you don’t, your investors will take a bath

We are immune to advertising. Just forget it

We’ve got some ideas for you too; some new tools we need, some better service. Stuff we’d be willing to pay for. Got a minute?

We want you to take 50 million of us as seriously as you take one reporter from the Wall Street Journal

When we’re not busy being your “target market” many of us are your people….Speaking to the market is Marketing’s job

Broken Marketing Logic

Communicates mostly tangible value through attributes of the product

Focuses on transaction and exchange value

Can't help but provide asymmetric Information (selective communication of product value attributes to stimulate desired customer response)

Customers are viewed as passive objects of a sale or resources to be acted upon and owned

Aims to merely satisfy the customer through mixing the firms marketing resources (4P's)

Manipulates the language and systems of relationship marketing to suit own ends

Places primacy of firm over customer value

New Marketing Logic

Emphasizes engagement and exchange of intangibles such as skills, knowledge and processes

Provides "offerings" which generate experiences which create personalized value

Value & values are given, in return, value and values are received (CRM #1)

Moves into the customer sphere of "value-in-use" by assisting the customer to derive value from multiple, ongoing interactions with the firm and its products and services

Focuses on assisting customer to achieve multiple experience desired outcomes, which vary according to unique customer events and contexts

Develops customer capabilities and makes knowledge the primary source of competitive advantage

Authenticity & story-telling are marketing mantras

Aligns business partners and sales teams with the customer's view of value

Creates mutual alignment and a blurring of roles between company and customer and the co-creation of value

Marketing shifts to centerstage as an holistic organizing process of value-creation

Because the model is built on trust, the reputation of the company, not the message, becomes the brand

That means, both the perception but also the actual quantified assessment of the marketing practices as certified by third parties (TRUSTe, etc.)

The practical side would be an authenticated or accredited message that is validated by the ISP or whoever is transmitting it.

Marketing becomes the center point for engagement of the customer

Messages are not to be pushed at the customer about products and services;

Marketing uses the media tools that are available to engage the customer

But with authenticity (Walmart & Edelman screw-up)

Authenticity and trust is what matters – more than “type” of marketing

Each of them is valid and potentially valuable as long as the message is engaging & empowering for the customer

Relationship Marketing

Experiential Marketing

Search Engine Marketing

Email Marketing

Customer Analytics is changing

The value of the data is in its use for insight

Tendency to place too much importance on the data itself

Sony did that once and lost $100,000,000 in less than 24 hours due to a misplacement of goods because of their interpretation of data associated with customer demand & geographic distribution

Affected their stock price – dropped $3.00 that day

Often focused around segmentation

Now has to focus around microsegmentation

Or even better, personalization

Use of social tagging

Gathering of data from user communities

The New Marketing Tools

Power of social networks

Linked In – 10 million members

MySpace – 106 million members

Facebook – 12 million members

ASmallWorld – exclusive membership for those who have social networks

Social networks as capital

Self-created customer microsegmentation/personalization

Blogs (GM Fastlane, IBM 1200+, Engadget)

Podcasts (Knowledge At Wharton, ESPN)

Vlogs/Videocasts (Rocketboom)

User Communities (Facilitated or Open) (Threadless)

Social Networks (P&G Vocalpoint)

Social Network analysis (Haystack)

User created content (collaboration) (Second Life)

Customer experience mapping and design (Me)

New marketing techniques (viral marketing, etc.) (The Wise Marketer)

“ Transparent Interaction” – (P&G working with customer to promote innovations they can’t use by opening up their own IP

“ We have to create a great experience every time you touch the brand, and the design is a really big part of creating the experience and the emotion. We try to make a customer’s experience better, but better in her terms.” – A.G. Lafley, CEO Proctor & Gamble Case Study: Proctor & Gamble “ I think its value that rules the world. There’s an awful lot of evidence across an awful lot of categories that consumers will pay more for better design, better performance, better quality, better value and better experiences.” – A.G. Lafley, CEO, Proctor & Gamble

Focused around the co-creation of value and user communities

Sales/Marketing

Vocalpoint – 600,000 moms

Tremor – 225,000 teens

Research

Innovation Network – 80,000 scientists

Technology entrepreneur networks

Benefits?

In 2001 – 20% of ideas, products, technologies external

In 2004 – 35% of ideas, products, technologies external

In 200X – 50% of ideas, products, technologies external

Case Study: Proctor & Gamble

Perhaps the most innovative company in the U.S. when it comes to understanding of the benefits of customer ecosystem

They emphasize the “desired consumer experience” as their primary design focus

Taste, smell, feel of products – not just utility

Connect & Develop program

Moving technology and ideas between cross-functionally

Crest Whitestrips involved oral care unit (whitening teeth), corporate R & D (film technology), and fabric/home care (bleach experts)

Tie the effort to working with consumers too

50 technology entrepreneurs who scour for external resources including customers

Use of ethnographers to try to understand the activities of individuals in the context of social anthropology

Contemporary Marketing

Secret Sparkle body spray products launched Feb. 2005

Not campaign focused

Blog SparkleBodySpray.com launched May 2005

12,000 visitors per week

25 minutes per visitor per visit

Four teenage authors under identities of Vanilla, Tropical, Peach, Rose (4 body spray names)

Music, fashion, sports, dating, parties

Interactive activities e.g. building dream date (choice of males) that you can send to a friend

Results?

0.8% of the $10.4 billion antiperspirant/deodorant market by July 2005

Do the math - $83 million in five months

"You're starting to see big advertisers pull money out of television," said Michael Goodman, a senior analyst at the Yankee Group. "Proctor & Gamble announced...that they are pulling money out of TV advertising because they felt they weren't getting enough bang for their bucks, and they are looking at video games as a place where they can." Case Study: Proctor & Gamble

Virtual World, Cyber economy

Avatar-existence

American Eagle

Starwood Hotels

Alcatel – VOIP

Borough of Queens, NY

IBM

Case Study: Second Life $354,558

Collaboration in value creation between customer & company

Transparency where it never existed before

The world of PC/Video Games is a prototype of this new model

= = Case Study: PC/Video Gaming

Counterstrike 2004-2005

30,000 game servers

85,000 players at any given second 24 X 7

4.5 billion minutes per month played

18,000,000 retail units sold

88% of PC online market

Documented best practices on mod development using their engine ( http://developer.valvesoftware.com/wiki/Making_a_MOD )

Case Study: PC/Video Gaming

What does this mean for marketing?

IDG – MI2006 Consumer Research Report

17% of gamers actually find official publisher game sites useful

70% of gamers get game specific info from forums, game fansites, and third party news websites

The concept of trusted source is now entirely different – and that includes YOU folks

In-game advertising

By 2010, between $1.6 & 1.8 billion ( source: Massive, Inc. )

Yankee Group thinks $1 billion by that time

Case Study: PC/Video Gaming

Custom T-Shirt Company

User Community-focused

Close to 400,000 members – all word of mouth

User content creation

Community members design the t-shirts

Community members vote on their favorites

Threadless produces them – 1000 – limited edition for each winner

Threadless shares the revenue with the designers

Premium pricing

Case Study: Threadless

Adrants

Creatives portfolios

The Wise Marketer

Chief Marketer

Springwise

1to1 Magazine/Online

B2B Magazine/Online

Interesting Resources

THANK YOU For further information: Paul Greenberg President, The 56 Group, LLC Chief Customer Officer, BPT Partners [email_address] 703-551-2337 Blog: www.the56group.typepad.com Podcast Feed: www.the56group.typepad.com/route_56_podcast/rss.xml BPT Partners website: http://www.bptpartners.com