Gain a fresh perspective on Canada’s distinct communities and markets VOL. 35 • NO. 8 • AUGUST 2022 THE AUTHORITY FOR THE DATA-DRIVEN BUSINESS PM40050803 ❱ 7 The Race PrimacyCustomerfor ❱ 9 InfrastructureDigitalSustainable WHO NEEDS ANYMORE? MarketingMarketingMarketing DENIZBAYRAMISTOCK/
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// 3 AUGUST 2022 DMN.CA ❰ Vol. 35 | No. 8 | August 2022 PublisherPRESIDENT& Editor-in-Chief Steve Lloyd - steve@dmn.ca DESIGN / PRODUCTION Jennifer O’Neill - jennifer@dmn.ca ADVERTISING SALES Steve Lloyd - steve@dmn.ca CONTRIBUTING WRITERS Fiona Roach Canning Andrew Eppich Stephen Shaw LLOYDMEDIA INC. HEAD OFFICE / SUBSCRIPTIONS / PRODUCTION: 302-137 Main Street North Markham ON L3P 1Y2 Phone: 905.201.6600 Fax: 905.201.6601 • Toll-free: 800.668.1838 home@dmn.ca • www.dmn.ca EDITORIAL CONTACT: DM Magazine is published monthly by Lloydmedia Inc. DM Magazine may be obtained through paid subscription. Rates: Canada 1 year (12 issues $48) 2 years (24 issues $70) U.S. 1 year (12 issues $60) 2 years (24 issues $100) DM Magazine is an independently-produced publication not affiliated in any way with any association or organized group nor with any publication produced either in Canada or the United States. Unsolicited manuscripts are welcome. However unused manuscripts will not be returned unless accompanied by sufficient postage. Occasionally DM Magazine provides its subscriber mailing list to other companies whose product or service may be of value to readers. If you do not want to receive information this way simply send your subscriber mailing label with this notice to: Lloydmedia Inc. 302-137 Main Street North Markham ON L3P 1Y2 Canada. POSTMASTER: Please send all address changes and return all undeliverable copies to: Lloydmedia Inc. 302-137 Main Street North Markham ON L3P 1Y2 Canada Canada Post Canadian Publications Mail Sales Product Agreement No. 40050803 Twitter: @DMNewsCanada ❯ 4 Talking Points talkingpoints NEXT ISSUE: Finding and Implementing the Best Lead Generation Tools; Insights on Dimensional Mail. WHO NEEDS ANYMORE? MarketingMarketingMarketing ❯ 12 Who Needs Marketing Anymore? ❯ 7 In the Race for Customer Primacy it’s Time for Traditional Banks to Win ❯ 9 Sustainable InstitutionsModernizingInfrastructure:DigitalFinancial FINANCIALINSIGHTSSERVICES Z_WEIISTOCK/ METAMORWORKSISTOCK/ DENIZBAYRAMISTOCK/
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Over the past 10 years, Cabot Cape Breton has appeared on the covers of the most esteemed golf publications across the globe and tops the charts for having the best courses in the world by every golf ranking system. Recently, Cabot Cliffs was ranked No. 1 and Cabot Links No. 5 in SCOREGolf’s Top 100 courses in Canada. Golf Digest named Cabot Cliffs the No. 1 golf course in Canada and No. 10 in the world and Cabot Links was ranked No. 6 in Canada and No. 39 in the world. In addition, Cabot Cliffs and Cabot Links were highlighted in LINKS Magazine’s 21 Best Holes of the 21st Century and Cape Breton Island was once again voted the best island in Canada by Travel + Leisure readers in the 2022 World’s Best Awards. Beyond the warm hospitality and awardwinning golf at Cabot Cape Breton, guests have access to countless land and sea excursions, and many visitors have been so captivated by the picturesque island that they requested permanent lodging. Cabot Cape Breton has seen tremendous success with its real estate offerings, planning thoughtful and beautiful homes that coexist with the natural surroundings. Fifty-five homes have been sold across four phases of real estate, with the latest phases selling out within hours of launching.OneofCabot’s guiding principles since opening its first course 10 years ago has been to support the communities in which it operates. Beyond employing over 560 people, the resort supports a variety of local organizations including United Way Cape Breton, the Inverness Development Association, the Nova Scotia Community College and the Sir Arthur Lewis Community College. By donating rounds of golf and offering hospitality training and scholarships to students, Cabot is an active partner in the community, bringing positive change to the lives of the people who call Cape Breton home. In addition, Cabot Links and Cabot Cliffs have both been designated as an Audubon Cooperative Sanctuary. To achieve the prestigious designation, courses must undergo a rigorous certification program and maintain a high standard of environmental stewardship.
From Coal Mining Town into a Bucket-List
Destination with Universal Acclaim Cabot Cape Breton, located on over a mile of sandy beach along the coast of Cape Breton Island, Nova Scotia, emerged on the global stage a decade ago with the opening of Cabot Links, which was immediately heralded as one of the world’s greatest golf courses. Cabot CEO and Co-founder Ben Cowan-Dewar discovered the former mining town 17 years ago, and with the help of a dedicated team, he has since turned the remote stretch of land into one of the premier golf destinations in the world. Cabot Cape Breton now includes a 72-room lodge, various real estate offerings, three restaurants and 46 thrilling holes of golf. Following the tremendous success revitalizing the rural region and catapulting the destination of Cape Breton onto the map, Cabot is now a world-renowned international brand with five properties in some of the world’s most jaw-dropping settings. The resort’s dramatic setting, exceptional hospitality and three dynamic golf courses that rank among the world’s best continues to draw a diverse set of visitors to the destination year after year. Cabot Cape Breton has generated a record-setting visitor number of visitors in 2022, with the golf courses at capacity most days and the hotel sold out for the entire season. “It’s incredible to reflect on everything that Cabot has accomplished in the past 10 years, and one of the greatest rewards has been seeing the profound economic impact the development has created in the region,” said Ben Cowan-Dewar, CEO and co-founder of Cabot. “Thanks to our committed team, the gracious hospitality and personalized service that visitors first experienced a decade ago still holds true today, and we remain committed to creating memorable experiences and magical moments for our guests.”
Incoming Call, Again: When looking at the stats above, it is no surprise that 61 percent of consumers stated they are receiving more calls from unknown numbers over the past year.
Press 1 To Hear Your Balance: Overall, consumers are satisfied with self-service options in many instances. When asked how satisfied or dissatisfied they are when using a self-service option, 65 percent said they are either “extremely satisfied” or “somewhat satisfied,” while only 12 percent stated dissatisfaction. Click Here To Chat: Chatbots are becoming more intelligent and, in turn, resolving many customer service issues without the need to introduce a live agent. 55 percent of consumers said they are satisfied when using online chatbots to resolve a customer service issue.
Doing More With Less It is no secret that many companies are trying their best to get by with fewer employees, and this trend of doing more with less is not expected to change anytime soon. According to the Bureau of Labor Statistics, the projected average growth rate for all occupations from 2020 - 2030 is 8 percent, but when looking at customer service specifically, the estimated growth is actually -1 percent. Even so, customer service does seem to be improving in the eyes of consumers. According to the survey, half of Americans believe the coronavirus pandemic has positively impacted customer service. When asked how they think the pandemic impacted customer service in general, 20 percent responded “it made it significantly better;” 30 percent said “it made it slightly better;” and only 25 percent believe it has gotten worse. 25 percent stated that they saw no effect.
Buy From This Brand: On the other hand, 55 percent of consumers stated that they had posted an online review about a great customer service experience. Last year, only 33 percent said they had posted positive reviews. We Apologize For The Delay: No one likes waiting on hold, but how long is too long?
How Can I Help You: An agent’s ability to solve a customer’s issue is critical, especially for the 52 percent of consumers who chose this as a top-three quality of a customer service agent. Equally important is getting the customer through to the right agent; when asked what is most important when contacting a company’s customer service department, 48 percent chose “easy to get through to a live agent.”
Call Dropped: Along with positive experiences dealing with customer service departments, some situations can also bring frustrations. When asked what best describes the biggest frustration(s) when calling a company’s customer service department for the second year in a row, the most chosen answer was “waiting on hold for a long time and then getting disconnected and having to start all over again.” 50 percent of respondents chose this answer this year, a slight drop from 68 percent in 2021, but still the most common response.“Thisyear’s survey reveals some interesting insights into the progress that contact centers have made in their customer service engagements with customers. The results really drive home the importance of
Most Improved, Cable & Wireless: When asked which companies offer the best customer service, the industry that was named the most often was cable & wireless, with 22 percent of respondents calling these brands out. This is a significant improvement from last year when only 7 percent of consumers chose companies in this industry. May I Ask Who’s Calling: Either people are becoming more trusting of anti-spam regulations, or they just want to speak to someone. 47 percent of respondents stated that they are likely to answer a call from an unknown number in this year’s survey compared to only 42 percent last year. On the flip side, only 33 percent are unlikely to pick up the call, much less than the 50 percent in 2021 who would rather hit the side button.
Healthcare & Finance Dropping Slightly: Customer service in the healthcare and finance industries is still fairing well, despite a slight drop in satisfaction. When asked how satisfied or dissatisfied they were when contacting healthcare organizations, 59 percent were satisfied, a 5 percent drop from 64 percent stating satisfaction in 2021. When asked how satisfied or dissatisfied they were when contacting financial institutions, 60 percent were satisfied compared to 68 percent last year.
Scam Likely: Despite many regulations being put into place to reduce the number of spam calls consumers receive, Americans feel they are receiving more calls from unknown numbers. When asked how many calls on average they typically receive in a week from unknown numbers, this year’s average number was 9.2, compared to 8.6 last year.
Poor Customer Service TCN, Inc., a global provider of a comprehensive cloud-based call center platform for enterprises, contact centers, BPOs, and collection agencies, today released the results of its second annual “Consumer Insights about Customer Service” survey. The national survey, conducted by OnePoll and commissioned by TCN, reveals Americans are very likely to abandon a brand after a poor customer service experience. On the other hand, Americans are also very likely to recommend a brand after a positive customer service experience. Additionally, despite the labor shortage the country has been experiencing over the past two years, customer service seems to have improved overall in the eyes of the consumer. Consumers’ desire to speak to a human has not changed. When asked their top three preferred methods of communication with a company’s customer service department, the most chosen answer again this year was “talking to a live agent by phone,” with 49 percent of respondents listing this option. Not far behind this option at 45 percent was “online chat with a live agent.” This result clearly indicates that although technology can play a critical role in customer service, it should remain part of a larger strategy that still includes the human touch.
Other key findings include: I’m Telling Everyone: When asked if they have ever posted an online review about a poor customer service experience with a company, 50 percent said “yes,” up from 42 percent in 2021. The responses remained consistent across all age groups.
Fool Me Once According to the survey, 66 percent of Americans are likely to abandon a brand after a poor customer service experience. This is a significant jump compared to only 42 percent in the 2021 survey. When asked how likely they were to abandon a brand after poor experiences, 27 percent said “very likely,” up from 16 percent last year, and 39 percent said “somewhat likely,” up from 25 percent last year. On the flip side, only 4 percent responded that they were very unlikely to abandon a brand this year, a significant drop from 20 percent in 2021.
TCN Consumer Survey Reveals Significant Increases in Brands Being Abandoned for
The average hold time in the 2022 survey was 14.6 minutes, which was down 16 percent from last year’s average of 17.4 minutes. When asked the longest they have been on hold when calling a company’s customer service department, 26 percent said “6-10 minutes;” 25 percent said “11-15 minutes;” and only 11 percent said “31 minutes or longer” compared to 23 percent selecting this option last year.
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Scream It From The Rooftops Leaving customers with a smile at the end of a call can go a long way for referrals. 71 percent of Americans are likely to endorse a brand when they have a positive encounter. When asked how likely they are to recommend a brand after a great customer service experience, 35 percent said “very likely,” and 36 percent said “somewhat likely.” Conversely, only 7 percent said they are unlikely to recommend a brand after such an experience, so the chances of being advocated for are in favor of the brand.
❯ A leading advertising agency on behalf of one of the world’s largest global consumer goods companies, a customer of the Company since 2019, signed on June 21, 2022. This program is notable as it is the first time that a customer will use PLATFORM3 to host a B-to-B program to reward its distribution salesforce for making sales. It is expected that the initial program will be expanded, subject to a successful trial.
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❯ A Canadian based marketing and promotions agency on behalf of one of their customers that signed their first agreement with Datable in 2021, signed on June 20, 2022.
The Canadian Automobile Association (CAA) has a new interactive EV Buyer’s Guide that allows Canadians to look up which EVs might be best for them, along with information on the other critical elements of owning an electric vehicle. The EV Buyer’s Guide is a userfriendly online tool aimed at the EV-curious, with information on all the 90-plus electric vehicles on the market today, as well as facts and advice on price, savings, charging, and owning an EV in Canada.
// 6 ❱ DMN.CA AUGUST 2022 positive customer service and its significant impact on brand loyalty,” said McKay Bird, marketing director at TCN. “When comparing the 2022 results to 2021, we are happy to see improvements in many areas such as reduced wait times, and major industries like cable & wireless improving overall customer satisfaction. Other major industries like healthcare and finance appear to be doing well; however, it will be critical to continue providing a wide variety of contact options for their customers to keep them happy.” Survey Methodology Commissioned by TCN, the 2022 “Consumer Insights About Customer Service” survey was conducted by OnePoll, a marketing research company specializing in online quantitative research and polling, between May 12-16, 2022. Feedback was obtained from 1,000 U.S. adults. TCN is a global provider of a comprehensive, cloud-based call center platform for enterprises, contact centers, business process outsourcing firms (BPOs) and collection agencies. Founded in 1999, TCN combines a deep understanding of the needs of call centers with a unique approach to pricing — no contracts, monthly minimums or maintenance fees — that supports rapid scaling and instant flexibility to changing business needs. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■
❯ The home entertainment division of a leading U.S.-based film production and distribution company, an existing customer of Datable who has been using PLATFORM3 to host its loyalty program since 2018, signed on June 22, 2022.
Datable has developed PLATFORM3 a proprietary Consumer Lifecycle and Data Management Platform that is sold to global consumer brands. PLATFORM3 is delivered as a subscription service (Software as a Service model) and used by some of the worlds’ most valuable consumer brands to access new consumer communities and engage them while collecting, analyzing, and managing their first-party data. PLATFORM3 incorporates proprietary technology to monetize the consumer data, including demographics and purchasing behaviour, by sending consumers targeted offers by email and text messages.
CAA releases Canadian EV Buyer’s Guide
“CAA has been supporting the transition to more fuel-efficient and zero emission vehicles for more than a decade,” said Ian Jack, Vice President of Public Affairs for CAA National. “We wanted a one-stop, neutral source of information for those considering an EV for their next vehicle, and we think our guide deliversAccordingit.” to a recent study, seven in 10 Canadians intend to make their next vehicle purchase an EV. The CAA EV Buyer’s Guide provides potential buyers with the information they need to turn their curiosity into confidence.
In Canada sales of new electric vehicles grew from 5 percent in 2021 to 7.7 percent in the first quarter of 2022, and with its growing EV market, Canadians will be seeking a location to learn more about EVs that is simple, accurate, and thorough. CAA is a federation of eight Clubs providing over 6.8 million Members with exceptional emergency roadside service, complete automotive and travel services, Member savings and comprehensive insurance services. CAA also advocates on issues of concern to its Members and Canadians, including road safety, the environment, mobility, infrastructure, and consumer protection.
The Agreements are contracted to generate approximately $126,000 in license and rewards revenues, with additional revenues expected from transaction fees, rewards and upsells. Three of the marketing programs covered by the Agreements are scheduled to be completed in 2022 and one in early 2023, with gross margin expected to be between 40 percent and 50 percent. “We have worked with this customer since 2019 and been building a valuable database of consumers who engage with their brands via PLATFORM3 driving incremental sales and brand awareness,” said Robert Craig, Datable’s CEO. “Consumer goods companies that license PLATFORM3 under our annual and multi-year SaaS agreements have very high renewal rates because we deliver quantifiable ROI by helping leading brands monetize firstparty opt-in consumer data.” Datable now has over $4 million in revenue under contracts for 2022 and future periods, of which approximately $3.5 million is expected to be recognized as revenue in 2022. This includes over $3.7 million in contracted revenues and close to $400,000 in expected program fees from customers. Datable expects gross margin to be between 40 percent and 50 percent in 2022, depending on the product mix.
Datable Signs Year-Long Contract Renewal Datable Technology Corporation, the developer of a proprietary SaaS-based Consumer Lifecycle and Data Management Platform called PLATFORM3, signed an agreement for a one-year contract renewal with a leading manufacturer and distributor of consumer-centric and compliance driven solutions and products that has been using PLATFORM3 since 2019 to host its loyalty and consumer data program. The Agreement pays Datable approximately $170,000 in license revenues, with additional revenues expected from transaction fees, rewards and upsells. Gross margin on the revenues is expected to be greater than Datable’s gross margin of 43 percent in the first quarter of 2022 due to the product mix. In June, Datable announced four new agreements with existing customers for marketing programs to be completed in 2022 and early 2023. The customers include:
❯ A leading bedding company, that has been a customer since 2020, signed on June 13, 2022.
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FIONA ROACH CANNING is Co-Founder and President of Pollinate, leading Product, Marketing, Sales and Solutions. Her career has included working on the launch of Egg, the first internet bank in 1998, running European Insights for Visa, and leading operations and customer experience for Nectar, the UK’s largest and most successful loyalty scheme, with 20 million members. Fiona has been named one of the UK’s top 30 female entrepreneurs by the FT and one of the Top 25 Women Leaders in European Financial Technology, as well as being one of Beauhurst’s 50 Female Entrepreneurs to Watch. She is also featured in the 2021 Women in FinTech Powerlist.
In the Race for Customer Primacy
*Source:disruptors.McKinsey’s Banking
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Harnessing the power of data Traditional banks already have the assets needed to respond and secure customer primacy. They have an established product and distribution advantage, backed by a wealth of customer data that can drive new experiences and interactions. The key to success is harnessing this data, at speed and scale, but if traditional banks fall short in delivering a competitive offering, this could open the door to digital disruptors who excel at experience.Ourglobal research among nearly 1,000 business banking leaders shows a disconnect among the wealth of customer data traditional banks can access and how they use it to build relationships. The majority of traditional banks in Canada (74 percent) rank collecting data as a key strength, but 37 percent reveal they have lost customers because they cannot offer SMBs the data and insights they require about their business. In order to build data-driven experiences at the required scale and pace for the modern market, any investment by traditional banks needs to be focused on collaboration, both internally and externally, including securing strong partnerships with FinTechs that can work as smart partners, and accelerate and elevate the delivery of data-led experiences. Currently, 95 percent of Canadian banks recognize the need to work with capable FinTech partners, who they trust. However, traditional banks and competitors differ in why these partnerships are created. In Canada, 17 percent of traditional banks partner with FinTechs collaboratively to build specific digital solutions from scratch, compared to 60 percent of challenger banks, and 50 percent of Banksneobanks.need FinTech partners that go far beyond a basic transactional relationship or plugging in services. They want smart partners who can build alliances based on key qualities including safety and security; working collaboratively; being a trusted partner; understanding business needs; sharing financial expertise, and advising on security or compliance. Smart partners work collaboratively to not just implement tech, but also create a successful business for the bank. Investing in such deep relationships with FinTech partners can play a fundamental role in the rapid deployment of data-driven experiences, which will be key to traditional banks gaining a critical advantage in the fight for customerTraditionalprimacy.banks have the ingredients of success, now they must focus investment on harnessing the power of their data through smart partnerships. With the right strategy and partners, traditional banks can gain a long-term competitive advantage and overcome the threat from
Global
Annual Review 2021
it’s Time for Traditional Banks to Win BY FIONA ROACH CANNING SMBs account for around one-fifth ($850 billion) of global banking revenues, with annual growth predicted to reach up to 10 percent over the next five years. This is a critical revenue stream that banks can’t ignore. Customer expectations of digital services are being shaped by the battle to become the SuperApp of choice; becoming the single marketplace and closed-loop ecosystem for users every need (e.g. Apple). SMB banking is just one sector that is being disrupted by this model, with new challenger banks, FinTechs, and digital disruptors focused on creating experiences that drive customer primacy.
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A hyperconverged infrastructure can help organizations meet their sustainability goals by run applications on fewer servers as well as adopting the latest cooling solutions employed within nextgen data centres. Edge The best experience for end users of financial institutions can’t be provided by relying solely on the core. To deliver the best user experience possible, transactions need to be distributed through infrastructure at the edge, allowing them to be processed in proximity to the customers and devices that initiate those transactions. For Canadian organizations, there are data privacy and sovereignty regulations requiring data to be processed and stored locally. This means financial institutions are building out their edge infrastructures to meet regulatory requirements. To reduce the carbon footprint impact, many of these facilities are being built to run on local renewable energy sources, such as wind or solar power. For example, Equinix’s TR2 facility in Toronto leverages a deep lake water cooling system to reduce its power consumption. By using the city’s system to draw water from the cold depths of Lake Ontario, Equinix reduces fossil fuel energy needs by 50% or more and obviates the need for make-up water intensive heat rejection systems like cooling towers.
ANDREW EPPICH is Managing Director, Equinix Canada.
BY ANDREW EPPICH FininstitutionsinancialCanada and around the world are facing increased pressure to transform their offerings and systems to remain competitive and relevant with quickly evolving customers. Additionally, with continued pressure from rapidly evolving regulations, increased competition and the financial impact of the COVID-19 pandemic, the banks, credit unions and other financial service providers have had to accelerate their digital transformation plans deploying hybrid public and private cloud architectures.Accordingto Equinix’s latest Globe Interconnect Index Vol. 5, Toronto and Montreal are tied as the second fastest growing edge metros in North and South America behind Mexico City. Toronto is forecast to continue to be the largest metro in Canada, with growth led by Financial Services. As more customers expect digital first services such as instant payment services like Apply Pay and as e-transfers eclipse cheques as the standard way to send payments, Canada’s financial service providers will need to rethink how they approach their infrastructure needs. As such, banks in Canada and around the world will need to make their digital infrastructure more flexible and distributed through hybrid and sustainable digital infrastructure. However, that is often easier said than done. What can they do to meet customers evolving need for digital-first services, improve agility, while future-proofing their infrastructure and embracing a sustainable approach? Core, edge, and ecosystems are driving modern digitalization In today’s digital economy, the most agile and adaptive business generally wins. A fixed approach to infrastructure that most financial institutions operate through is no longer feasible or sustainable. As banks evolve and expanding their businesses locally and globally, continuing to operate traditional infrastructure that wasn’t built using sustainability innovations can be detrimental from a carbon emissions perspective. Optimizing digital infrastructure to thrive sustainably in the future economy is the next step. Core Many financial institutions are shifting their digital cores into vendor-neutral colocation facilities to enable a hybrid multicloud approach to maximize agility and realize greater efficiencies. Moving into the cloud, allows them to decommission some data centres while still running certain workloads with special security requirements on-premises. This means banks can strike the right balance of gaining an agile infrastructure in the cloud, while meeting the strict regulatory requirements around data by leveraging their on-prem direct and secure, private interconnection. From a latestcentresFirstly,acosts”perspective,sustainabilitythereare“sunkthatcomewithoperatinglegacy/traditionaldatacentre.manyoftheexistingdataweren’tbuiltusingthesustainabilityinnovations.
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Ecosystem As hybrid multi-cloud grows more important in the financial services sector, being able to connect with more global partners quickly and securely is important as well. Implementing a simplified platform that allows financial institutions to access multiple digital and business ecosystems physically and virtually — and does not compromise performance, reliability, security or control — would be the ideal integration.Additionally, a software-defined interconnection provides an agile, high-performance option that allows financial institutions to spin up new secure virtual connections to multiple clouds on demand via a single physical port, without the need for additional physical hardware investments. Canadian financial institutions are already shifting to the public cloud and taking advantage of sustainable innovations from partner ecosystems, further decreasing carbon footprints and helping their customers meet their own sustainability goals. In today’s digital economy, speed and agility can be competitive differentiators; but to be THE leader, financial institutions must take a balanced approached in transforming their services and underlying infrastructure. Doing so means meeting today’s consumers changing needs with a great end-user experience, future-proofing systems for tomorrow’s challenges, while improving embracing innovative solutions that allows them to meet increasingly aggressive sustainability goals.
Digital Infrastructure: Modernizing Financial Institutions
SustainableSERVICES
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The story of bottled water was a brilliant triumph of marketing — a classic example of “engineering demand”: convincing people of a need they never knew they had. Sure, people had to pay for water — but it was water that was “better” for you, “purer”, “tasted better” — all made-up claims, of course, completely debunked in independent water quality and blind taste tests. At its best marketing can transform an entire industry merely through the amplification of an idea. At its worst it can lead people astray by
WHO NEEDS ANYMORE?
MarketingMarketingMarketing
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BY STEPHEN SHAW Marketing is in crisis. No longer respected by corporate chieftains as a strategic function, it has been demoted to simply making ads. The only way for marketing to stage a comeback is to become a difference maker once again. There was a time when people never thought twice about getting their drinking water from a tap. Or if they were outdoors, from a water fountain. Or in the office, from the large blue jug atop the water cooler. That all began to change forty five years ago. That was when Perrier, the top selling sparkling water in Europe, launched one of the most successful marketing campaigns of all time to crack the U.S. market. A series of TV ads featuring the sonorous voice of Orson Welles proclaimed the water to be “naturally sparkling, from the center of the earth”. His message resonated with a boomer audience seeking a healthy alternative to soft drinks and alcohol. The campaign just happened to coincide with the jogging craze that had started in the mid-1970s. Perrier began to sponsor running events everywhere. Soon after the company’s distinctive green bottles began to fly off the grocery shelves. The rest of the beverage industry took notice, as the bottled water category grew rapidly, cutting into soft drink sales. Pepsi and Coke had no choice but to get in on the action. But instead of sourcing their water from aquifers and springs, they figured they could just take advantage of their existing purification equipment and turn ordinary tap water into something they could market as “pure”. They were able to exploit their sway over convenience stores to ensure their brands were given plenty of visibility. And thanks to their massive ad spending, their share of bottled water sales soon surpassed every other competitor. By the start of this century the beverage industry had convinced most people that bottled water was healthier than what came out of the tap for free. And by associating the product with healthy living, the act of drinking bottled water signified an active lifestyle (until of course it eventually led to widespread revulsion over the mounting piles of single-use plastic).
The actual secret formula to Coke’s success has been bottling sentimentconsumer Marketing could only be resultedsuccessfulconsideredifitinasale
Coke has always excelled at stirring people’s emotions by associating its brand with universal themes like togetherness. The first marketing textbook published in 1914 defined the new term “marketing” as inclusive of everything to do with influencing sales.
The “Hidden Persuaders” Marketing never used to be just about making ads. Certainly not in the early 1900s when marketing initially began to take shape as a management practice. Back then marketing was a verb and not a noun. It was a time when new mass production methods had created standardized products in large volumes which could be distributed and sold nationally for the first time. In this formative period the terms “marketing” and “distribution” meant the same thing. Manufacturers counted on wholesalers and distributors to find them buyers. Marketing was all about how to take products to market through intermediaries. The first textbook to even have marketing in the title — “Marketing Methods and Salesmanship” — did not appear until 1914. The authors of that book wrote that in place of ‘selling’ the word ‘marketing’ is “gradually coming into popular use to apply generally to the distributing campaign.” They go on to explain, “Marketing methods, in a sense, are inclusive of everything that is done to influence sales”. By the 1920s, manufacturers needed to fill the rapidly expanding shelves of chain stores that had begun to displace local shopkeepers. Brand rivalries erupted as manufacturers battled for shelf supremacy. Whether selling soap or breakfast cereal or toothpaste, “reason why” advertising was their way to crow about product differentiation (“Kitchen Work Is Now a Pleasure!”). Advertising was synonymous with salesmanship. Owing to greater prosperity and free time, ordinary people
INSIGHTS promoting mindless consumption over the common good. And that’s where the marketing business finds itself today — at a fork in the road, facing a reckoning over past excesses while trying to validate its worth. Marketing is going through an existential crisis — challenged by corporate chieftains for its shallowness, viewed disdainfully by the public for deceptive practices, and yet knowing the only path to redemption is to do what’s right for customers and society, despite the relentless pressure to grow revenues. How marketing responds to this crisis will determine its future as a management discipline. A Watershed Moment Coca Cola was able to help pull off the clever trick of persuading people to pay for something that was already free because it has always been masterful at branding. The company has defied the laws of commoditization by making the Coke brand more valuable than the product itself, turning an otherwise ordinary fizzy beverage into a symbol of togetherness. Its most famous slogans — “It’s the Real Thing”, “I’d Like to Buy the World a Coke” — lived on in memory long after the campaigns ended because they stirred the soul. The actual secret formula to Coke’s popularity has been bottling consumer sentiment — wrapping itself in humanitarian themes like patriotism, social harmony, happiness, and solidarity — and then spinning that into advertising gold. Coke realized early on that memorable advertising is about making people feel happy. Just recall those Christmas-time ads featuring a rosy-cheeked Santa Claus with his bottle of Coke — or Mean Joe Greene of the Pittsburgh Steelers sharing a Coke with a young fan. And so when the beverage giant announced last year that it was “transforming and modernizing” its marketing model by moving away from mass communication, it was a watershed moment. Here we have a 130-year old company that spends $5 billion per year on feel-good communications announcing that it was backing away from the very strategy that had made it one of the most valuable brands in the world. Instead Coke wants to create “unique and ownable experiences”, in the words of its CMO, developing an “ecosystem of experiences” aligned with “consumer passion points”. The announcement of its new branding platform “Real Magic” was a clear sign that marketing is at a turning point. Coke realizes that scrawling “happiness” messaging on media walls everywhere is no longer enough to prop up even an iconic brand. More has to be done to connect with a public whose lives are ruled by their screens. Never before have people been able to crowd out ad messaging by creating, publishing, and sharing their own content. But this democratization of media, leading to a content glut and the fractionalization of attention, has radically altered the marketing landscape, making the kind of tentpole campaigns that Coke became famous for dead-on-arrival. Everyone knows that people are not consuming media the way they used to — certainly not anyone under the age of 25 who spend their time on Twitch, TikTok, YouTube, Instagram and Snapchat. How do you get through to a perpetually distracted generation with miniscule attention spans when they are far more interested in sharing their own stories? Who prefer streaming video to TV? Whose free time is taken up playing games? Who want to connect with their friends, not brands? Coke has embarked on a grand experiment in platform storytelling to “change the way it communicates with consumers”, a transformation every other marketer now faces as well. The marketing playbook for this transformative era is being written on the fly, by Coke, by Nike, by Red Bull, by Proctor & Gamble, by any number of DTC start-ups, by any brand, in fact, that realizes the jig is up: the Age of Persuasion is over. Historically, marketing has proven to be remarkably adaptable in the face of revolutionary change, the first to confront upheavals in consumer habits, in media usage, in cultural norms, in societal expectations. The main job of marketing, in fact, has been to seize upon those trends and convert them into commercial opportunity. But the market climate that exists today is far more complex and forbidding than at any time in the past, threatening marketing’s very existence as a business function. Who needs marketing anymore if no one is paying attention to ads? If people see ads as just more fake news?
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Marketers began to spread their dollars more equitably across different forms of media in an effort to create fully integrated brand communications
// 14 ❱ DMN.CA AUGUST 2022 INSIGHTS felt they could now afford modern household gadgets and newly invented electric appliances, even radios and automobiles. It was the start of consumer culture. That is, until the party abruptly ended in 1929, bringing the Roaring 20s to a crashing halt. The ad business cratered along with the demand forDespiteproducts.the worldwide depression, marketing became institutionalized during this era. In 1931 P&G’s Neil McElroy famously came up with the idea of brand management. And in 1935 the National Association of Marketing Teachers, a forerunner of the American Marketing Association, crafted the first definition of marketing: “Marketing is the performance of business activities that direct the flow of goods and services from producers to consumers”, amended slightly in 1937 by the newly formed AMA to read: “…the flow of goods and services from production to consumption”. This original definition stood for the next half century. Once the world emerged from the wartime years in 1945, consumer demand for products awoke from hibernation after nearly two decades of thrift, deprivation, and rationing. The manufacturing industry went back to full-scale production of consumer goods. The boom times began. The “baby boomers” came along. The car-friendly suburbs metastasized. Shopping malls began to spring up everywhere. An increasingly affluent middle class strived to “Keep up with the Joneses”. Conspicuous consumption became a way of life — luxury goods a status symbol — social conformity an expectation. By the early 1960s there were TVs in every home. Massive audiences tuned in to watch the same few network shows (“I Love Lucy”, “Gunsmoke”, the “Ed Sullivan Show”). Advertisers salivated — mass advertising was now possible. Ads became part of the culture: “The Marlboro Man”; the “Jolly Green Giant”; the “Pillsbury Doughboy”. Campaign slogans and jingles became as familiar as top billboard songs (“You’ll wonder where the yellow went, when you brush your teeth with Pepsodent!”). These were the Mad Men years — the era of Peak Attention. It was during this golden age of mass media that marketing became widely accepted as a legitimate discipline. The turning point came in 1957 with the publication of John Howard’s “Marketing Management: Analysis and Decisions” which asserted that marketing could only be considered successful if it resulted in a sale. Three years later, in another inflection point, Edmund McCarthy introduced his famous Four Ps model in a book called “Basic Marketing: A Managerial Approach”. His model became the unifying theory for modern marketing. This period was also when motivational research came into play, revealing the latent reasons behind consumer behaviour (a practice eventually exposed in Vance Packard’s 1957 sensationalist book “The Hidden Persuaders” showing how people’s subconscious minds were being subliminally manipulated by advertisers). It was also when the concept of brand image was introduced, suggesting that people’s visceral perceptions of a brand trumps rational thought. That insight changing the ad game, sparking a “Creative Revolution”: fact-filled ad copy was swapped out for imagery that triggered an emotional response. And for the first time market segmentation became a recommended stage of the planning process. But it was Phil Kotler’s 1967 classic textbook “Marketing Management — Analysis, Planning and Control” that proved marketing was a grown-up business practice, going on to become a standard part of the teaching curriculum for decades to come.
The End of Business as Usual By the 1970s marketing management was fully in charge of the brand mix (the Four Ps). This was particularly so in the consumer packaged goods sector where the “best and brightest” business students flocked to do their marketing apprenticeship. Later they fanned out across other industries, bringing with them everything they had learned about brand building, with its emphasis on research-led market analysis andMassplanning.advertising was still the go-to-market strategy. The glamour media channels (TV and print) absorbed most of the ad dollars while all other media (e.g., product sampling, promotions, point-of-sale display, sponsorships, direct mail and more) got whatever budget scraps were left over. Heading into the 1980s, however, that was all about to change. The biggest disruptive force was the rise of cable TV. Traditional network TV began to lose its captive viewers to Pay TV channels. The audience diaspora began. And it was during this same period that VCRs (succeeded later by PVRs) suddenly exploded in popularity. People could now time shift their viewing — even better, “fast forward” through ads. As the decade rolled on these forces of “demassification” led to close scrutiny and questioning of traditional advertising. Mass audiences were becoming too hard to reach. Concern grew over the cost and effectiveness of mass advertising. Marketers began to spread their dollars more equitably across different forms of media in an effort to create fully integrated brand communications (‘IMC’ for short). By the mid-1980s a new, more targeted media alternative was becoming technically feasible: the use of addressable databases to target specific individuals. Database marketing became a fastgrowing speciality function. And as desktop computing became more accessible, for both businesses and consumers, marketing automation systems grew in number alongside early CRM and SFA solutions
In the 1950s and 60s marketing campaigns became part of the culture, creating iconic figures like the “Marlboro Man”.
// 15 DMN.CA ❰AUGUST 2022 INSIGHTS designed to automate customer service operations and sales forces. At the same time a new school of thought began to emerge in academic circles (championed by prominent scholars like Jagdish Sheth and V. Kumar), going on to become the bedrock principle for relationship marketing: namely, the idea that sustainable growth is only possible by getting closer to customers. Customers are assets, its proponents argued, whose future cash flow was vital to the health of a business. More attention and resources needed to be spent identifying and retaining the high value customers because, the logic went, it cost much less to keep a customer than acquire a new one. That idea crossed over from academia into the mainstream in 1993 with the best-selling book “The One to One Future” by Don Peppers and Martha Rogers. They urged marketers to give up expanding “share of market” in favour of “share of customer”. Written just a couple of years after the birth of the Internet, the book depicted “life after mass marketing”. Soon after, the term “one-to-one” marketing became an everydayThroughexpression.the1990s
the adoption and growth of CRM was stalled by old school forces resistant to change. But by the time the new millennium arrived, there was no turning back. The exponential growth of the World Wide Web eventually led to a rising movement to reform marketing amongst a messianic class of digital marketers. They were determined to challenge orthodoxy and shake up the status quo. The most compelling expression of that reformist ambition was “The Cluetrain Manifesto”, a treatise published in 2000 that boldly decreed, “the end of business as usual”. The authors asserted, “Markets are conversations”, and argued that the only way business could join the conversation was by speaking with a “human voice”. Following the dot-com bust in 2000, Internet technology progressed from serving up static pages that were meant to be passively read (Web 1.0) to a more interactive medium where people could actively participate by creating and sharing content (Web 2.0). But it was the launch of Google AdWords, followed by the meteoric rise of programmatic advertising in the mid-2000s, that catapulted marketers into the digital age. Marketers had to begin thinking about how to allocate their budgets across earned, owned and paid media. Every business now had a marketing team solely dedicated to digital media. What followed was even greater media fragmentation and a sharp fall-off in the size of TV audiences and print readership as people drifted away from conventional sources of information. Their smartphones were now commanding most of their attention. Marketers began to divert a big slice of their media budgets from offline to online — mainly using Google and Facebook — which they would continue to do year after year until in 2019 it would finally surpass traditional TV and print spending. In that time marketing spending on social media doubled, suctioning up more than one fifth of the total marketing budget in pursuit of “followers”, “likes” and “shares”.
In the 1950s and 60s marketing campaigns became part of the culture, creating iconic figures like the “Marlboro Man”. Source: “TV, merchant media and the unbundling of advertising”, Benedict Evans
An Alien Landscape In 2004 the AMA decided that the contours of the marketing landscape had changed sufficiently to warrant a fresh look at its definition of marketing which had gone unchanged since 1985. That earlier definition still viewed the discipline as primarily a mercantile transaction between seller and buyer with marketing management in charge of the 4 Ps. But there was no mention of the customer. So the AMA came up with a new definition that reflected the growing importance of relationship marketing: “Marketing is an organizational function and a set of processes for creating, communicating and delivering value to consumers and for managing relationships in ways that benefit the organization and itsThestakeholders.”reviseddefinition came under fire from critics who felt that the job of facilitating an “exchange” should never have been left out. Plus, they argued, marketing had a moral imperative to do what’s right for society, not just for the organization. So the definition was amended in 2007 to read: “Marketing is the activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”. Ever since, marketing has been buffeted by the centrifugal forces of data, technology, media diffusion and, more recently, public distrust. Marketers are now witnessing the most dramatic shift ever in consumer buying behaviour, lifestyle, media habits and values. The marketplace has become an alien landscape. The media business is disintegrating. People are fleeing from intrusive brands; will do anything to avoid ads; ache for greater meaning and purpose in their lives. Sustainability is a worrying concern — so is social justice — so is the need for more conscientious consumption. Lifestyles are in flux, due to the isolating impact of the pandemic. Brand trust is harder to win than ever. And video streaming and gaming are preoccupying an upcoming generation of socially connected GenZers (now called “zoomers”) who shun TV watching. Stripped of its broader powers to influence corporate strategy by the financialization of business decision making, with its myopic emphasis on short-term profits, marketing is now populated by digital natives who have limited job qualifications and no clue what marketing strategy really means. The popular Marketing Week columnist Mark Ritson acidly notes that “Half of all marketers don’t have any knowledge of marketing. No training. No big picture. No real clue.” Their employers expect them to learn on the job — except that any senior mentors who might have been able to coach them are long gone, victims of the naïve notion that marketing is a job anyone can do (preferably, someone cheaper). So now marketing is pretty much left with overseeing advertising and promotion, staffed by novices, who are “mediocre thinkers” rails Mark Ritson. Typically communication grads, they are unschooled in business planning, uncomfortable with numbers, lack analytical acumen, Marketers are now witnessing the dramaticmost shift ever in consumer buying habitslifestyle,behaviour,mediaandvalues
// 16 ❱ DMN.CA AUGUST 2022 and care more about how an ad looks than brand positioning. They tend to be ignorant or dismissive of any marketing theories that predate the Internet (Phil who?). No wonder marketing has little say anymore in how the business is run. In fact, according to Forrester, just 35 percent of CMOs are involved in corporate strategy development. They are certainly denied a voice at board meetings. As a result, CMOs have become expendable. Under pressure to drive sales, they are quick to be blamed for revenue shortfalls, even if the business is suffering for reasons beyond their control. Cranking up the ad volume is no longer the answer to a dip in sales. As the marketing consultant Mark Schaefer has said, “Most executive teams expect marketing to be coinoperated. You put coins in, you get more coins Long-termout”.brand building has been sidelined by hard-selling clickto-buy digital tactics. Performance marketing has taken over, fixated on the bottom end of the sales funnel. Marketing has devolved into a motley crew of factionalized teams (social, mobile, email, paid search, CRM), vying for top gun status, protective of their turf. Elsewhere in the business no one really understands what marketing does anymore — because neophyte marketers tend to get drawn to every passing fad, every shiny new object (NFTs being the latest infatuation). And with their baffling jargon, marketers seem to be living in an alternate universe. In short, marketing has lost whatever gravitas it once had. And so CEOs have started to question its purpose, unable to relate to marketing’s media-centric, superficial strategies. “Where’s the payoff?” they demand to know. “Why are likes even important?”. How can marketing reclaim the leadership role it once enjoyed during that three-decade span from the 1950s to the 1980s? How can it live up to the idealistic call of digital utopians to “join the conversation”? How can it “make marketing great again” by focusing on creating genuine value for customers? How can it design and deliver rich, memorable, commercial-free experiences that will inspire, rather than bamboozle, their audiences? It Always Starts with Innovation Marketers should draw their inspiration from the brands that have proven to be the most resilient through each successive consumer era, adapting smoothly to continuous mutations in people’s media habits and buying preferences. And certainly one brand that deserves very close inspection — a brand that anticipates and shapes consumer demand rather than chase it — is the company that gave birth to sneaker sub-culture. The story of Nike’s rise to become the world’s largest seller of athletic footwear and apparel provides an almost flawless blueprint for market differentiation. Consider how Nike started out — the co-founder Phil Knight selling imported Japanese running shoes out of the back of his car at track meets, up against shoe titans Adidas and Puma. Today Nike is a $44 billion company — its “swoosh” recognized worldwide — its enduring slogan “Just Do It” shorthand for athletic tenacity — its brand a symbol of exceptionalism. Nike found the sweet spot at the intersection of sport, culture, and fashion, leaving its once formidable adversaries trailing far behind. Nike got off to a fast start in the early 1970s by coming out with innovative new products that star track athletes were willing to wear and enthusiastically endorse — believing the shoes made them faster, more confident, more successful. Those high-profile endorsements won the attention of retailers who excitedly made room on their shelves for Nike’s orange shoe boxes. And then in 1984 Nike struck endorsement gold by taking a gamble on a rookie NBA player by the name of Michael Jordan. His shoeline, the Air Jordans, went on to become an instant hit. Later it spawned sneaker culture. But Nike’s innovative spirit was never limited to shoe design — it permeated every aspect of their business, especially their marketing. “For us, it always starts with innovation,” the CEO John Donahue wrote in his 2021 Shareholder letter. Nike does just about everything right. Its shoe products are high quality. It’s stores are experiential meccas for wannabe athletes. Its apparel has street swagger. Its ads are always uplifting — its slogans memorable catchphrases (“There Is No Finish Line”). Its devotion to social justice is unflinching even in the face of critics. Its imprint on popular culture is profound. But there is one thing Nike does better than almost any other brand next to Apple: form a cultish attachment with customers bordering on worship. Just think of those sneakerheads who cherish their beloved collection of Nike shoes. The Nike brand is an affirmation of the talent potential within everyone: “You too are an athlete capable of greatness”. All of its brand imagery and messaging is consistent in conveying that exceptionalism (just think back to “Wings”, the fabled 1980s Michael Jordan poster that hung on every young athlete’s bedroom wall). Nike doesn’t just sell products - it tells inspirational stories. Those stories imbue their products with an aura of exclusivity. It’s the reason Air Jordans continue to be a topselling line for Nike: wearing them makes people feel special, whether they are worn for street ball or just hanging out. Everyone wants to “be like Mike” — exceptional. Nike has also had the foresight to accommodate the omnichannel shopper — the mobile-first, “help me now”, socially engaged, The sorcery behind Nike’s extraordinary success – the conjoining of innovation and marketing – is exactly what legendary business consultant Pete Drucker once declared were the only two basic functions of a business INSIGHTS
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STEPHEN SHAW is the Chief Strategy Officer of Kenna, a marketing solutions provider specializing in delivering a more unified customer experience. Stephen can be reached via e-mail at sshaw@kenna.ca
The starting point, as always, is innovation, as Nike points out. Marketing must use its creative superpowers to imagine what tomorrow looks like and come up with a strategic roadmap to navigate change. How can the business move at the speed of customers? How can it deliver even greater value? How can it be a trendsetter, not just a trend spotter? How can it be more integral to the lives of people? How can it prepare for the next generation of customers? Marketing should serve as a divining rod for the business: become a cultural decoder — an alchemist capable of turning observations of human nature into insight. As marketing sage Scott Galloway has observed, “The CMOs who are thriving and potentially become the next CEO are the ones who say, ‘I’m your link to the market, I understand strategy’”. Marketers will need to lead with empathy — learn what’s in people’s hearts, what excites them, what they care about, what troubles them. They must then link that insight to brand purpose and promote the ethos of putting customers first. Because the path to brand affinity now runs through people’s values. Most people crave identity and belonging - they hunger for connectivity with like-minded people. So marketers will need to go beyond creating “ecosystems of experiences”, as Coke has set out to do, to inspiring movements arising from a collective sense of purpose, as Nike has done. And that will allow marketing to get closer to people — to speak with a human voice — to tell stories that really matter to them. Above all, marketing must stretch its mandate and own the customer experience - not just the initial stages leading to sale, the so-called “brand engagement” part - but all of it. The post-sale experience a company provides today is just as important a differentiator as its products and services. A bad experience will usually disqualify a brand from future consideration. So marketing should not simply serve as the brand custodian — turning its back on the customer once the sale is made - it should be the mastermind behind the entire customer journey. And that journey must be designed and orchestrated with one goal in mind: create customers for life. Win their trust. Convert them into brand believers. Enrich their lives. Because marketing’s job is not just about ad-making anymore: it needs to be about making a difference.
INSIGHTS
Consumer culture still rules.
butterfly consumer. At Nike’s 2022 Q1 earnings call with investors, the company’s EVP and CFO Matt Friend said, “As we accelerate our consumer-led digital transformation, we are developing and refining new capabilities that are transforming our operating model, quickly becoming a competitive advantage.” Nike has invested heavily in developing high-performance digital commerce platforms. Today digital-sourced revenue accounts for 20 percent of its business — and that is expected to grow to 40 percent in a few years due to a fast-growing membership base of 300 million who rely on their mobile apps to guide their training activity, get tips and advice, participate in a community, share their achievements, and be the first to learn of new products and special offers. As a result, Nike has felt emboldened to pull its products from the shelves of middling retailers in favour of strategic partners who share their passion for sport. Making a Difference The sorcery behind Nike’s extraordinary ascent — the conjoining of innovation and marketing — is exactly what legendary business consultant Pete Drucker once declared were the only two basic functions of a business. Marketers everywhere should be encouraged by that evidence, knowing there is a larger role for them to play as a difference maker. The next few years will be portentous for marketing. Ad spend as a share of GDP has already shrunk by one third. Pay TV is in freefall due to “chord cutting” — print advertising has nearly hit bottom — a “cookieless” Internet will suck the oxygen out of digital advertising — social media has become radioactive — so where will marketing spend its media allowance? Will it even be allowed to keep that allowance? Probably not. According to Gartner, marketing budgets as a percentage of revenue fell sharply last year from 11 percent to 6 percent, often reallocated toward digital transformation projects. Despite the tornado warnings, the forecast is not entirely dire. The convergence of media, mobile payments and e-commerce is bound to open up all kinds of virgin opportunities (just look at how social channels have already transformed shopping in China). Merchant media platforms are growing — connected TV will enable individually targeted ads based on viewing and purchasing history — of course, there is also the “metaverse”, somewhere in the near future. After all, people still want to discover new products that can help them live a better life. They still want to browse and shop.
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