"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

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

by Paul Greenberg on Dec 11, 2006

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