43. Stage 3
Responsive
to consumers
Stage 4
Engaged
with consumers
Stage 5
Powered
by consumers
Stage 2
Targeted
on consumers
5 MATURITY STAGES
OF CONSUMER
RELEVANCE
WELCOME TO THE age of relevance
Stage 1
Neglecting
consumers
One can wonder why businesses need to be more insight led / relevant now than say 10 years ago. The reason is that the world today is radically different than the one we knew.
Obviously change itself is not new, but it is the acceleration of change that is! Some of you may be familiar with Singularity University of which Peter Diamandis and Ray Kurzweil were the founders. The University focuses on scientific progress and "exponential" technologies.
If you don’t believe speed of change is accelerating, just think about the time different media needed to reach 50 million users:
Telephone 75y
Radio 38y
TV 13y
Internet 4y
Angry Birds 35 days
And if that does not make an impression on you, join me in listening to this interesting story an MIT professor has shared on the inventor of chess.
Peter Hinssen stresses the importance of building networks in a networked society. Makes sense knowing that Uber is the world’s largest taxi company without owning vehicles, that Facebook is the world’s largest media owner without creating content, that Alibaba is the world’s most valuable retailer without having inventory, and that Airbnb is the world’s largest accomodation provider without having real estate.
Peter Diamandis believes that emerging technologies like nanotechnology and biotechnology will massively increase human intelligence over the next two decades, and fundamentally reshape the economy and society for the better. We’ll have a society of haves and super-haves!
Jeremy Rifkin says we are about to reach the optimally efficient state where it is feasible to sell at a marginal cost of zero with digital technology dramatically lowering transaction, communication and collaboration costs and shifting from vertical to lateral resource allocation.
In the second machine age, the authors argue that the automation of a lot of cognitive tasks will make humans and software-driven machines substitutes, rather than complements.
Joeri Van den Bergh highlights how younger generations think and act in significantly different ways than older generations and what this implies to build strong brands.
Finally, in the book ‘Firms of Endearment’, the authors point out that companies helping all stakeholders to thrive - customers, investors, employees, partners, communities and society - have grown no less than 3 times faster compared to ‘Good to Great’ companies over the last 10 years.
Summarizing, we are moving from linear to accelerated change, from craftmanship to increasing automation, and from scarcity to abundance. A brave new world.
It puts brands in a very different position with brand expectations becoming more and more extreme.
Interaction moment: what are the extra requirements or expectations consumers are putting on your brand(s)?
A first big shift is that brands need to go beyond promising what their products or services can do for consumers, but instead think bigger and craft a corporate purpose that impacts society at large. The power of purpose of clear when you think back to the days Microsoft Encarta was competing with Wikipedia. While well-paid professionals incentivized with standard extrinsic motivators developed Encarta, Wikipedia was built for fun by unpaid volunteers and ‘Wikipedians’. Just before Microsoft decided to remove the software from stores in 2009, Wikipedia got 97% of U.S. online encyclopedia visits, Encarta just 1.3%.
Unilever, one of the biggest FMCG players globally, is taking purpose seriously. The company gradually defines purposes for all of its brands beyond the product promises. An example is Omo with its “Dirt is good” purpose, supporting parents in creating the necessary conditions for their kids to play and hence, learn about life and explore new things.
Interaction moment: what is the insight behind MasterCard?
As second big shift is the one from brand identity to brand identification. While the first is unilateral, the second is bilateral in nature.
Abercrombie & Fitch is a good example of how brand identity can go wrong. Its severe targeting and extreme positioning backfired, where cool is not cool anymore. After several lawsuits, people simply did not want to be identified with such a company.
Third, people increasingly want personalized experiences instead of generic ones.
A great example is the Push for Pizza app, allowing you to compose your favorite pizza once and from then on, just push the button if you want one delivered at your doorstep in no time. The ultimate me-xperience.
Research showed how most people would not care if 74% of all brands disappeared for good. Clearly brands are struggling as a result of the newly imposed expectations.
They are struggling so intensively that the risk of brands turning into zombies is very real … where just like zombies you think your brand is alive but in fact you are long dead.
Without fully realizing, you have been surpassed because of the tsunami of changes that is characterizing this world.
Brands have thrived for a long time using the Kotler principles, but are now running the risk that they think they know on how to tackle the future. Brands are facing difficult times for a number of reasons.
Brands’ first knowledge illusion is that they are there for eternity. While there are different iconic brands that have lasted for more than 100 years, these are typically the exception. On a macro level, we see the average lifespan of a company decrease by more than 50 years in the last century, from 67 years in the 1920s to just 15 years today (according to Professor Richard Foster from Yale University). But also the expiration date of brand ideas and creativity is getting shorter, with ideas being copied better and more rapidly.
The second illusion brands are facing is that they think they are unique. When the effect of usage and prototypicality is factored out, brands don’t have exclusive image attributes but share them with other brands. Even worse, brands can make increasingly less use of functional claims: organizations such as the EFSA (European Food Safety Authority) are narrowing the mind spaces that can be claimed. The consequence is that most are playing a zero sum game: most of them compete in flat-lining categories, with private label sales expected to soon exceed branded product sales in Europe and other maturing markets like the US and Canada (Planet Retail). The 3 German Samwer brothers turned it into a new business model, making a fortune by creating copycat companies of successful web companies such as Pinterest or Groupon through their company Rocket Internet.
The third illusion of knowledge is that brands can buy attention cheap. Traditional media are increasingly experiencing drops in effectiveness with media on demand such as Netflix redefining the media landscape and making it increasingly harder to get marketing messages across.
A final knowledge illusion is about the classic 80-20 pareto principle. Did you know that 72% of Coke drinkers also drink Pepsi? Repeat buying levels for Apple are 55% only, for Harley-Davidson 33% and for Kellogg’s only 13% … This implies the old Pareto rule is not true anymore. In any given catagory, 20% of customers maximally represent 50% of revenues instead of the classic 80%.
In order to complicate things even further, marketers get confronted with mixed signals on where the solutions can be found. Roughly speaking, you could classify brand religions into 3 broad groups: the penetration religion says maximizing penetration is the ultimate way to grow brands, the influencer religion believes the best way to grow brands is to have existing customers and fans share their passion for the brand with their networks, and the relationship religion says emotional brand connection between brand and user is the holy grail. The problem is that some marketers tend to become extremists, radically following one of the religions and blocking out any inconsistent information and signals. Others stagnate and don’t craft any strategy for growth. And some alternate between religions, confusing their organizations and people on where to go and how to get there.
Interaction moment: who believes in which model and why?
All of this means we need to take a different look at reality.
We need to move from from marketing to consumers and instead focus on mattering to people. In other words, brands need to let go of their egocentric perspective on the world and use relevance for people as their most important objective.
When talking relevance, it is important to spend more time on the problems people are trying to solve instead of the solutions brands can come up with. Or as Albert Einstein once famously said: “When I have one hour to solve a problem, I’ll spend 55 minutes thinking about the problem and When thinking about how to improve the experience of using an electric drill, it is often thought of to improve the product itself or have more clear instructions on how to use the drill. However, ultimately, people do not want a quarter-inch drill, what they care about tis the hole in the wall. Or even beyond, to hang a painting or a family picture. People buy and use products and services to get jobs done.
People are in fact only consumers a small time of the day. Besides that, they are just people. If you really want to be more consumer centric, you need to look beyond the boundaries of time and place related the specific consumer journey and see how your brand can help shaping an experience that matters to people in their lives.
Based on our own research, it appears consumers only have 5 brands they really love and would make compromises for. It shows that we are in the middle of a Copernican management revolution, with increasingly more leaders understanding that consumers rather than brands are at the center, just like the Polish astronomer Nicolas Copernicus defended the idea that the sun is the center of our universe rather than the earth.
Brands typically take a self-centric perspective, putting their own touch points, solutions and purpose at the core of thinking and acting.
Marketers should not get blind focusing on touch point satisfaction. Instead, they need to understand the moments of truth for consumers and optimize their touch points to deliver at these moments.
Moments are the the specific steps consumers take while buying or using a product or service. Not all moments are equally important as some moments more strongly affect the overall consumer experience. Often they differ from the assumptions a company have. For example, on behalf of KLM we conduct a study to understand the key consumer needs related to transferring and helped them to develop winning concepts. We collected hundreds of actual transferring stories from frequent travelers. It struck us that many of the observations did not take place in the airport but on the aircraft before they landed in the airport where they had to transfer. We learned that travelers are insecure even on board whether they will get their connecting flight. So KLM had to think how to extend their current transfer touch points. It is not only about signage and wayfinding in the airport. Transfer starts in the plane.
Understanding the moments of truth is not enough. It is also important to understand why consumers experience things like they experience them. So we should understand the deeper consumer needs for our products, and align our solutions to these needs.
If you change your perspective, you see more. Volkswagen launched its Beetle on the US market in the fifties. This small, strange looking car arrived at a time when US streets were flooded with huge cars. Volkswagen told Americans to think small, but their insight wasn't small at all. There was no real need for a smaller car at that time, but there was a sizable group of people who needed to be different. By taking a different perspective to the concept of a small car, the Volkswagen Beetle helped US consumers to stand out of the American crowd.
It is crucial to understand the key needs consumers have in a category. But being insight-led also means to shape experiences that matter in people’s lives, beyond specific moments or in specific situations, and as such deliver on your brand purpose.
Many insights can be found when looking into the needs and lifestyles of a specific target group. For example, Rexona understood that there is also something as emotional sweat or fear. Instead of looking for insights on their product, they researched what fears young teenagers have. The result was the ‘we know what makes you sweat’ campaign which received a lot of awards. It focused not at all on the product but on the needs of the target group. For example, going to the black board … or their little brother that admitted that he read their email … So to find insights, look for knowledge on your target group in general.
Let’s find out how consumer centric you are and play a little interactive game.
Interaction moment: last man / woman standing.
Can I ask all of you to stand up please.
We are going to play a game called ‘last man & woman standing’.
I will be asking you 5 questions that will related to last week.
If the answer is yes, you stay upright.
If the answer is no, you sit down and remain seated.
No cheating.
Let’s go!
There is a saying that “if your eyes are looking at the organization, your ass is facing the customer”. There indeed is a real danger being too focused on your company’s inside. And there is ample evidence that treating customers as the ultimate heroes pays off. According to Bain & Company, a 5% increase in customer retention can increase profits by 25% to 95%. Brands at the top of Forrester’s Customer Experience Index show far better stock market and revenue performance than customer experience laggards. According to the Insights2020 study (Kantar Vermeer), in 78 percent of over-performing companies, customer-centricity is fully embraced by all functions whereas this is only true in 12 percent of the under-performing companies.
A crucial step in building an insight-led business is to enable people in the business to work together with consumers, with the outside.
One of the first myths to bust is to treat consumers not as morons, but as essential input for strategy formulation and decision making.
Things can go seriously wrong if you don’t treat consumers seriously.
Who invented the digital camera? Ironically, Kodak did – or, rather, a company engineer called Steve Sasson, who put together a toaster-sized contraption that could save images using electronic circuits. The images were transferred onto a tape cassette and were viewable by attaching the camera to a TV screen, a process that took 23 seconds. It was an astonishing achievement. And it happened in 1975, long before the digital age. Mr Sasson and his colleagues were met with blank faces when they unveiled their device to Kodak's bosses. Even he didn't full see its potential. "It is funny now to look back on this project and realize that we were not really thinking of this as the world's first digital camera," Mr Sasson was later to write on a company blog. For Kodak's leaders, going digital meant killing film, smashing the company's golden egg to make way for the new.
Early 2000, Lego was in trouble. They were facing huge losses. They lost connection with the consumer. They realized that were are not in the business of technologies or even toys, but in the business of play. To remind their employees, they drastically changed their company culture and even office. Their CMO wanted everybody to connect as much as possible with their inner child because, according to him, they are the only honest people except for drunk people. Today`s offices are not only accessible for designers and children: as an employee you are encouraged to bring your child to work. Everywhere, yo will find hotspots with games. People are sitting in oversized chairs to remind them how it feels to be a child.
Kellogg’s is another nice example. In the 90th, the sales of breakfast cereals was stagnating in its core markets US & UK. As many other brands today, at that time, they wanted to introduce breakfast cereals in India. Even with a predicted market share of 2%, Kellogg’s could turn an additional 18 million people into customers. How could it go wrong? Kellogg’s failed to step outside of its own cultural traditions and understand that Indian breakfast is very different from our western habits with hot vegetables and rice on the menu. They knew from research in the west that adding cold milk to cereals really makes the taste. However, storing fresh milk was not an common thing in India. Kellogg’s portfolio contains now porridge. This HOT cereal is already embedded in the Indian culture. After a lot of lost time and money, Kellogg’s could only become more successful by abandoning its own reality.
Silicon Valey credo.
Gut-feeling has to do with relying more on gut reactions, but equally with feeling as such. At PrimaDonna lingerie, specialized in luxury lingerie at larger cup sizes from C to J, they took the concept of feeling literally. The company decided to get all of its male employees to know what it's like to haul around an extra 6.6 pounds on their chest. Labeled as the International E-Cup Day for Men, the idea of literally feeling what it is like to have E-cup-size breasts during a full day is very impactful. For example, as the boobs get heavy after a while, they leave painful shoulder marks, causing one wearer to rest them on a table - something I've seen large-breasted women actually do. It is a great example of stepping into the shoes of your customer, directly experiencing their pains and gains and learning from it.
The timing has never been more perfect to collaborate with consumers given the wealth of technological / digital tools we have to facilitate collaboration. According to a M.I.T. Sloan School of Management study, in the UK, consumers already spend more time and money on innovation than all consumer product firms combined, with initiatives such as Kickstarter increasingly gaining momentum.
The LEGO Ideas initiative allows volunteers to submit any project idea to LEGO. Ideas reaching 10,000 votes are reviewed by the LEGO Review Board and potentially turned into real products, with the person having submitted the original idea receiving 1% of the total net sales of the product.
Foldit is an online puzzle game with players collaborating worldwide to fold protein molecules in three dimensions. Whereas scientists have spent 15 years trying to unlock the structure of an AIDS-related protein, Foldit players were able to solve the puzzle in just 10 days …
When it comes to breakthrough innovation, Google believes your target should not be to improve 10%, but 10 times instead. As Larry Page put it: “Incremental improvement is guaranteed to be obsolete over time”. Make sure crazy ideas have a place in your company. Project we have worked on for Dorel: longboard stroller.
Add example on business model transformation - add message of continuous, ongoing collaboration. Link leggen met Madonna als voorbeeld?
I’m sure you are all familiar with this quote from Steve Jobs. A specific hurdle to overcome is indeed that not only companies are often unaware of real consumer needs ... it is also the case for consumers. They are bad witnesses of their own behavior and have therefore problems expressing what needs they have. People often don’t know why they are doing what they are doing, they can’t even always report back about what they actually did, let alone what they were trying to solve. When people are expressing what they want, we often start from the false assumption that they have a set of stable, explicit, conscious and consistent preferences to live by. Instead of having people tell you directly what they want, you could observe, involve and activate them in new and creative ways so you can get to their deeper needs and emotions (implicit measurement, activation vs deprivation, task-based reporting, ethnography, etc.).
Let’s illustrate this with a case. A major pharmaceutical company was interested in exploring how elderly consumers were able to use their prescribed medications for ailments such as arthritis. Admirably, the innovation team went ‘out there’ in the world to directly talk to their customers and asked whether they experienced any difficulties in using their medications. The direct answer was usually ‘no’ ‘no real issues’. Only when people made pictures of how they used their medications, different usability problems emerged on the surface.
Collaborating with the outside world is one important thing, providing the basis for insight detection. But inside-out activation is at least as important, making sure insights are understood and used among the different business stakeholders.
Jack Welch, CEO of General Electric. We already talked about the fact that outside change is accelerating.
While external clock speed is getting faster and faster, we are confronted with organizations that face a slow internal clock speed, a recipe for disaster. The consequence of this is that the inside should accelerate as well, making sure everyone is dealing with important consumer insights faster and better.
Ever heard of Gemba? It is a Japanese term originating from the Total Quality Management era and is a synonym for ‘the real place’. By going to where the real action is taking place, whether it is a crime scene, a supermarket or a living room, managers can sharpen their senses and enhance their creative potential, stimulating their consumer brain. To research our consumers effectively and achieve true empathy into their lives we should look at the world like a ‘traveler’. Think about how you behave differently on a holiday. You’re on high alert, look for details. You may notice things that even regular citizens do not see.
Create a positive vicious circle of open discovery: the more people (want to) know and discover, the more they realize what they don’t know. Think of the immense amount of time aircraft pilots spend in simulation environments, getting prepared for emergency situations they will hopefully never have to encounter in reality. Organizations should develop a similar simulation, moving from a ‘crisis-prone’ to a ‘crisis-prepared’ context by immersing themselves in less than comfortable business contexts and surrounding themselves with people thinking differently or being more critical than they are.
Did you know human capacity for non-linear, imaginative thinking drops from 50% at the age of 12 to 20% at the age of 16 all the way down to less than 10% the moment we graduate from university?
In order to fight this negative trend, we use the following framework of thought:
- Win the hearts – create buy-in for consumer centricity
- Educate the minds – let them experience how consumer inspiration and insights helps them in their role
- Get into action – turn insights into action and have people work together with insights at the basis
The ultimate goal is to break the silos in companies, with insights becoming the common language people use to work together. Empowerment means everyone should be able to put in their own ideas, not just a few. Horizontal innovation instead of vertical innovation.
Your brain only thinks something is a habit once you have done it 21 times consecutively. Explain habit loop thinking!
Memes are defined as carriers of ideas, behaviors or styles that are transmitted and spread from one person to the next within a culture. Much in the same way as genes, they self-replicate, mutate and respond to selective pressures. Worthy of being imitated and repeated over and over again, memes can be very instrumental in making collaborative initiatives self-sustaining and long-lasting. Think about the power of the selfies or loom bracelet hypes, spreading like a virus by having people imitate and inspire each other. At Amazon, Jeff Bezos installed a meme bringing an empty chair into meetings so that people would be forced to think about the crucial participant who wasn’t in the room: the customer. Can you think of similar meme-inspired approaches that could act as burning platforms to spur collaboration, getting people positively addicted to it?