Share of Life – A New Marketing Era.

Share of Life – a new marketing era?

July 2007, Updated Dec 2008

James Burke – in his PBS series (The Day the Universe Changed, Connections) brought to public life the notion that a sequence of events in time can create the requisite ripple effects which can ultimately lead to significant transformational changes.

Today we are on the verge of such a significant transformational change led by a technological nexus where bandwidth, connectivity and communication mobility will create profound changes in how we view and interact with those around us and indeed within a global community.

This convergence has already begun to impact the marketing world – which will usher in a new era – which I would like to call the era of Share of Life marketing. Looking back to just the last 70+ years we have seen two other important eras: Share of Mind and Share of Wallet.

Share of Mind

Share of Mind focused on supporting and defending a brand’s positioning in the market using the 4 P’s of marketing – 1948 and Unique Selling Point (USP) 1940’s – which albeit crude by today’s standards, utilized mass channels of communication to address a mass audience. Everyone recognized there was no such thing as an average consumer – but there was simply no way of reaching out consistently and cost effectively.

Share of Wallet

With greater data capture and outreach capability we saw the emergence of a new era – Share of Wallet – which focused on maximizing a profitable purchase stream with select customers and evolved from a variety of influences. Key milestones in its development included – Purchase Continuity/‘Loyalty’ programs 1929, Direct(ed) marketing 1950’s, BCG Growth-Share matrix 1970, Database marketing 1980’s and CRM in the 1990’s. During this era we plundered databases, scrutinized it’s entrails to squeeze out new linkages and relationships amid geometrically exploding database farms. The goal was straightforward – increase profitable share of wallet. Offer preferential treatment and up sell/cross sell programs based on their value score.

Share of Life – “WE” – “Co-creation”

The key tenants of this era and marketing approach are trust, a longer term solutions focus, co-creation and shared responsibility/sustainability – in a word…. WE.

As the very name implies, Share of Life is founded on a longer-term perspective of the commercial customer-brand relationship that seeks to build on trust in a co-creational partnership. It’s a fundamental recognition that it requires time to build something of value and durability. And so it’s guided in its evolution by a solution focus to the brand value chain which includes sustainability initiatives. By the end of the transformation, the brand will move from an efficiency-of-offer-push to a demand-pull CRM model benefiting from enhanced customer retention to the point where satisfied committed customers become an active and important source of acquisition through the impact of Word of Mouth and an elevated brand image/brand presence.

In Freidman’s Flat World, sustainable product differentiation is problematic without support from one’s community. Comparable sized competitors will have access to similar  supply chain efficiencies, production technology, distribution and systems. The key realization in this landscape is that it takes a willingness to partner in order to create and build differentiated value. If we stripping everything down to its bare essentials, the litmus test asks: does the brand activity help earn it the right to further value enhancements for the brand constituency or does it sell the transaction? Is the value product related or does it engage the extended brand promise and community benefits?

These questions belie the fact that Share of Life is by RSVP only. You won’t be able to spend your way in – you’ll need to earn it. Brands that have shown to be mature, responsible and forward thinking will be prime contenders. Hence this battleground will be comprised of fewer but more formidable adversaries. Those that have been granted permission will be charged with two levels of responsibility, providing BOTH category leadership AND social involvement leadership as consumers want to see some of the economic value they bestow onto brands transformed to the benefit of society, not just shareholders.

Why are brands being held to this higher standard? Consider that in 2006 Wal-Mart’s sales of $349 Billion rank it the 30^th largest ‘economy’ in the world based on GDP (PPP basis) just behind Ukraine and ahead of Belgium, Exxon at $335 Billion is # 33 ahead of Egypt, General Motors at $207 Billion is #48 just behind Portugal. When corporations and their brands generate this level of economic activity, it’s only natural they also take on some of the statesmanship duties that countries are held responsible for. Michael Porter & Mark Kramer wrote about this as an evolutionary development to Porter’s thesis regarding Competitive Advantage (see Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility) Their thesis takes on the perspective of maximizing shareholder satisfaction and lacks the humanity and indeed the humility that corporations and CEO’s need to convey to their customers in order to succeed in fostering the value exchange.

A recent study of 6000 consumers by MS&L and GfK Roper, further reinforces this core message in the course of its examination of some of the corporate values consumers find most important and the effects of such perceptions on maintaining long-term business relationships.

Being financially successful and corporate responsibility are not mutually exclusive, and the “leading” companies are ones that are innovative, financially secure, ethical and possess the biggest market share… The findings underscore the need for marketers to shift their business focus from being “driven by a coherent set of core values” to one that emphasizes how those “values [can] be communicated effectively at every touch point or companies risk undermining both their relationships with their customers and their long-term success.

And so from the customer’s viewpoint, Share of Life is characterized by a growing sense of worldly maturity and the subsequent realization of the power that interconnectivity and mobile internet access puts into their hands. In the previous Share of Wallet era, customers were not able to access the information on brand performance, price and value, satisfaction and social responsibility to the extent they can today. In the new requirement customers will seek an elevated delivery of a more expansive brand promise that delivers value, uses resources and treats constituents in a fair and equitable manner.

From the enterprise’s viewpoint, Share of Life is a recognition in the strategic imperative Customer Life Time Value accounting will have on the enterprise’s success. Indeed that the enterprise’s ability to create customer value is what enables it to create shareholder value, that Main Street trumps Wall Street, that Return on Customer drives Return on Investment. We must not forget that as much as an enterprise creates a value extraction (profit) assessment of the customer, customers are doing the same of the brand… So when this assessment is based on tangible/quantifiable aspects only, there is a greater risk of a transactional relationship. But it is when the accounting is able to factor in the intangible, unquantifiable ‘good will’ items that we are able to justify the investment value of an elevated relationship.

Share of Life however is a journey, not a destination. The natural customer tendency is toward transactional relationships unless the brand works hard to displace this and proves that it is prepared to work with its partners on a higher value and higher involvement relationship. As revelational as that perspective might be, only those enterprises that can covey that appreciation and understanding with honesty, sincerity and consistency will be recognized and rewarded by customers who will reciprocate by electing to become partners with the brand.

Readers might be interested in this article on Brand Affinity Dynamics as it outlines the s- shaped relationship between customer satisfaction and brand performance – gaining conceptual appreciation for why Customer Satisfaction has a stickiness to it and why it requires significant breakthroughs before registering business gains. That same process is at work with Share of Life in that it will take a significant sustained effort to secure the incremental gains.

Not all enterprises will have the ability or desire to pursue this direction. As Treacy and Wiersema noted in their book, The Discipline of Market Leaders, an enterprise has three fundamental choices; pursue operational excellence, product differentiation or experience differentiation. Only the latter will embrace the challenging strategic path and have the corporate assets to implement Share of Life. It requires a significant mind-set shift as organizational structures need to be realigned around customer (not department) value management, delivery and enhancement. A refocus that seeks to have brands ‘report back to’ their customers with greater frequency and importance than that currently placed on CEO’s reporting back to shareholders.

Value Creation: Solutions/Co-creation. All brands seek customer involvement; it’s their path to relevancy and higher customer response rates. However in the traditional hierarchical business model, these insights and interactions are infrequent and distant, more often than not to register a complaint, hence the market’s embrace of Net Promoter Score surveys as a way of monitoring the delivery of a satisfactory experience. In Share of Life, these initiatives gain potency by being guided from within a brand community. These value creation insights will come from multiple paths; some driven by a stronger alignment and communication of the customer’s relevant brand value-chain elements and others from co-creational participation. (For an excellent overview of co-creation/crowdsourcing see this four part article by Monica Hamburg)

Co-creation is the marketer’s dream (see Dell IdeaStorm) of giving customers the ability to input on design enhancements, marketing program development and product development. Just about anything the customer wants to have input on (via blogs, Facebook/MySpace/Twitter social community sites etc.) can be effectively leveraged to create and support the very real impression that the customer is truly valued beyond their wallet.

Not all solutions need to be relevant to each and every customer, what is important is the customer knowledge that the brand is seeking to become the leading source of category solution innovation in order to retain its standing as the category leader. Some of these solutions will be evolutionary; others will be disruptive particularly as the enterprise gains greater customer intimacy. One needs to look no further than P&G’s recent successes with Swiffer, Febreze and other ‘staid’ products/categories to recognize the significant customer centric volume and profit benefits.

Pricing: Once the value configuration is identified, the challenge lies in how to price it properly for maximum customer value without lapsing into a price centric CRM offer push efficiency model. Technological advances will enable marketers to reflect the individual buyer’s situation defined (geographic, social and temporally) value to the enterprise. With the unprecedented tactical pricing capability, some marketers will succumb to the ROI temptation by pursuing the traditional CRM offer efficiency demand push model. However in doing so, they will effectively devalue their brands unless they manage their CRM strategically. The premium will come to those who are able to develop a functioning strategic offer strategy who’s aim is not to communicate the price of the proposition as much as the value of the purchase invitation. (See The Anatomy of a Brand Purchase for a proposed integrated CRM model.)

This will come about by observing and adhering to several strategic pricing principles. The first is the brand must establish the maximum pricing/promotion parameters, its maximum depth of discount, for how many weeks and how many impressions. A simple GRP type of analysis will be invaluable as you match your discount communication message communication strategy against the activities of your key competitors.

With that guidance at hand, the value communication strategy seeks to put forth relevant components of the brand’s direct and extended value benefits (see example of Dell’s evolutionary pricing de-emphasis) and its societal benefits. Only when that is identified, including the channels and frequency of communication should the brand address the final question – what is the fair pricing of that value for my brand?

Conclusion:

I started this article by postulating that a convergence in global communication is leading to a new sense of community and with it a new sense of shared responsibility. This in turn has/is/will create an opportunity for marketers to help their brands make an evolutionary transition from managing icons (inner focused, engineered, purposeful, revered) to a rallying point for an integrated, living, breathing community.

Wishful thinking?

I look forward to hearing your thoughts.