Our biggest challenge is the customer

Be honest – would you believe an entrepreneur who boasted to you: “We know our customers better than ever, thanks to digitalization and the Internet! You have given us a customer data paradise, which reveals customer demands which we can promptly meet. We make our customers happy – and they reward us with their purchasing power and undivided loyalty.”

That sounds good, doesn’t it? But let’s face it: not many entrepreneurs could say that so far. Most are currently experiencing quite the opposite: customer loyalty is in decline – they are turning away, are suspicious and “ad-phobic”. 44 percent of all manufacturers’ brands – and the number is increasing – are losing more than 30 percent of their regular customers per year.

What is going wrong? To get an answer, it helps to change perspective. Consider the situation from the perspective of consumers. According to global studies, they are disappointed. In the US, for example, more than four out of five consumers (84 percent!) are frustrated because companies fail to deliver what they promise. It doesn’t look much better in Germany: where only 30 percent still trust brands and their messages.

This almost chronic mistrust is pure poison in a time when consumers have more freedom of choice than ever. They decide when and where they shop. They decide when and where they consume which media. If they are disappointed, they are quickly gone – because a better offer seems to be waiting only a few clicks away. Buying obeys a nervous, complicated rhythm nowadays. Consumers have long mastered this, but a lot of brands and retailers have not.

Instead of the hoped for nearness, the advertising industry is experiencing alienation. It is as if they don’t know consumers better through digitalization and the Internet, but in fact are losing sight of them. For entrepreneurial success this is a disastrous development. What can be done? One thing is clear; previously reliable solutions won’t help here, and neither will advertising power nor wily technical finesse. We need a fresh start.

Consumers today are self-confident and demanding; they know their power. Accordingly, they wish to be treated as partners – not as someone you can talk into taking something. This means that companies need to see them as partners, and grant them more influence. In consequence, this means that companies must put consumer needs at the centre of their actions.

Customer Centricity is the name given to this in the USA. The product is no longer the starting point of all marketing activities, but the consumers and their life phases. They are the starting point of all activity, all production, brand management and marketing. The sequence has been reversed.

Business models such as Airbnb and Uber show the way. Consumers needs have to be at the very beginning of product development. These models demonstrate that not only products and services are critical to success, but, increasingly, intangibles such as connectivity and information – elements which connect consumers and businesses in new and valuable ways.

To inspire consumers, the marketing of the future has to create worlds of experience in which engrossing customer experiences ensure long lasting customer relationships. Flight companies then sell travel events, not tickets. And car makers offer mobility experiences, not just automobiles. The product? It’s only part of a larger picture.

If companies want to build their future through customer centricity, they have to go through numerous change processes. The digital transformation, which currently pervades companies, can be an ideal starting point. For marketing this change means, among other things:

1. Away from the “14-to-49-years-mentality”…

…towards micro-segmentation and personalisation

Because consumers move in the new consumer media world individually, media planning with rough-edged categories like “14 to 49” can no longer achieve a lot. In future the focus won’t be on target groups, socio-geographic data and ranges, but the stages of life, needs, experiences of each individual consumer. For the media planning for this personalization, we need more than ever to focus on methods such as micro-segmentation.

This personalisation will also determine customer-base growth and maintenance. It will be more about the quality and depth of the individual contacts and less about quantity. This trend is already clearly visible in the Social Web. It used to be like a contest about getting as many followers as possible, but because such contacts have proved to be worthless, now careful personalized effort is made to get fewer, high-quality contacts. Only if customers are satisfied, do they become multipliers.

2. Away from the channel perspective…

…towards customer journey accompaniment

Nowadays, consumers use more channels, contact points and marketing resources for their purchases than ever before. The customer journey is now many times more complex than even ten years ago. Online or offline? It doesn’t matter, any mixture is okay. Studies show that few companies have concerned themselves with the customer journeys of their customers. Which type of customer can be inspired and how? If interested, how can they get further information and from where? Which channels are usually used to take the final buying decision? The need for this knowledge is urgent and will have a strong impact on the structures and processes of marketing.

When companies want to explore and accompany the customer journey, they must be clear on one point: it doesn’t end with the purchase! Sometimes it only really gets going then, with public relations, and with “Internet of Things” products – which have an estimated market value by 2025 of up to eleven trillion Dollar. Such goods are constantly updated and need to be cared for long term. Companies are therefore well advised to increase their marketing budget for the replacement phase.

3. The way from the advertising message…

…to relevant content offers

Exaggerated advertising promises no longer match present purchasing behaviour, because consumers believe nothing without checking. Up to 90 percent of product research is made before visiting a store. Therefore, companies need to develop ideas on how they can support potential customers at an early stage with information and persuasive arguments.

It is no wonder that the development of content strategy and content marketing is currently among the most important communication tasks. One of the now numerous examples is L’Oreal. The group said goodbye to its “Shelf & Sell-principle” and instead accompanied the contact points of the customer journey with smart content marketing – for example with the app “Make Up Genius”, which allows consumers to try different make up for their faces. Mail order experts, Otto Versand, inspired their customers and employees with five blogs.

We are only at the beginning, content marketing and storytelling will evolve with great force. But we need to explore in more detail which channels can be used for particular purposes – and what content is helpful there. The “this is a donut” example clearly shows how much content has to be adapted to the channel:

4. Away from selfish data analysis…

…towards the use of media for customer satisfaction

In future it won’t be about hoarding data for advertising purposes. Instead, companies should consider how they can use the information to shape their business model, improve their products – and ultimately to make their customers happy. That is the real power of Big Data. Its intelligent use can be absolutely decisive.

The problem: companies need high data quality. But, according to a study from the UK, around 50 percent of consumers give intentionally false information because they are suspicious. They only give useful data to companies they trust. These consumers need the assurance that their information will not be misused, but only used for their personal advantage – in the form of a surprising and exactly fitting offers. This trust is hard to earn, no question. But it is the basis for a company’s success.

That’s the power of customer centricity – and it brings with it highly sophisticated tasks for Marketing, it is becoming increasingly responsible for a company’s success. Almost half of German CEOs will therefore need to invest more in it over the next three years.

Marketing deserves this powerful position, but only if drops outdated mechanisms and tactics – and instead has the courage to venture into a new beginning. Consumers will be grateful. And that wholehearted statement at the beginning of the article – “We make our customers happy – and they reward us for it with their purchasing power and undivided loyalty” – comes within reach.

The article was published on capital.de (in German).