WELCOME

Everything They’ve Told You About Marketing Is Wrong

370 – THANK YOU!

April 21, 2009

Marketing Is Evolving? So How Can The PMN Help?

Value Proposition:• Education: Webinars/Research• Best Practices• Case Studies• Access to Future/Potential

Customers: Gen Y Panel• Don’t forget to join today!

Our Featured Speaker

Ron Shevlin,Senior AnalystAite Group and author of

Everything They’ve Told You About

MarketingIs Wrong

Page 4

Actionable, strategic advice on IT, business, and regulatory issues in the financial services industry

Everything They’ve Told You About Marketing Is WrongParticipatory Marketing Network WebinarApril 21, 2009

Ron ShevlinSenior AnalystAite Group

RON, YOU HAVE FOOD

STUCK IN YOUR TEETH.

AMERICAN DENTAL ASSOCIATION

THANKS FOR YOUR

LOYAL PATRONAGE, RON.

FRENCHY’S ADULT BOOK STORE

YOUR ALIMONY

PAYMENT IS 3 MONTHS

LATE, RON.

NY ASSOC. OF DIVORCE

LAWYERS

YOUR ALIMONY ISN’T

THE ONLY THING LATE, RON.

Dr. Seymour Schnitz, OB/GYN

Theme

Marketing is sufferingfrom Ignis-fatuus-itis*

*Ignis fatuus: Something that misleads or deludes; an illusion

Agenda

• What changed?• What’s misleading marketers (and what afflictions

do they cause)?• What should marketers do?

Theory: The four Ps of marketing

• Product• Place• Price• Promotion

Source: McCarthy EJ (1960) Basic Marketing: A Managerial Approach. Homewood IL: Irwin.

Reality: The three Ps of marketing

Predict

Push

Pray

The 3 Ps ain’t working like they used to

15

“We are fueled by a need to gain more control

over our lives, to have valid and

significant choices.”

What changed?

Demand

Self-directed consumers

Less reliant on firms

More pull, less push

More involved

Supply

More points of involvement

Web sites

Search engines

Social networks

Misleading marketing myths

• Marketing stories• Customer engagement• Customer advocacy

24

“Marketing is the story marketers tell to consumers.”

Seth Godin“All Marketers Are Liars”

Affliction #1: Delusions of brandeur

A condition where marketersthink that a branding effort

will be the antidoteto falling or stagnant sales

Page 26

“Good relationships aren’t about clear communication — they’re about small

moments of attachment and

intimacy.”

John GottmanExecutive Director

Relationship Research Institute

Marketing is getting customers to tell

stories to themselves

Larry HustonVP, Innovation

Procter & Gamble

“Successful brands have a story that consumers tell

themselves when they reach for the product in

the store to buy it.”

The stories loyal customers tell

They have the most helpful employees

They help me make the right choice

They’re really easy to do business with

“Engagement: Turning on a prospect

to a brand ideaenhanced by the

surrounding context.”

Advertising Research Foundation

Engagement: Confusion reigns

• Importance– One-third of agency execs said customer engagement

is essential to their clients versus half of marketers• Business impact

– Twice as many agency respondents as marketers said that customer engagement initiatives increased profits

• Measurement– Half of marketers have dedicated engagement metrics,

just 30% of agency execs think their clients have them

Source: cScape, 2007 Customer Engagement survey

“Engagement: A series of interactions

that strengthen a customer’s emotional connection to the

product or firm.”

Aite Group

What is customer engagement?

• Frequency of purchase• Frequency of interactions• Type of interactions• Location of interactions• Rewards program activity• Referral behavior• Category engagement

Umair HaqueDirector

Havas Media Lab

“Why do Apple customers care so much (about Apple)?

A good question…but the wrong question. The real question is:

Why don’t most consumers care more about firms and brands?”

A: Because they don’t care that much about the product/service that they purchased in the first place

Example: Measuring engagement0 1 2

None 1-5 times 6+ times

Never Infrequent Often

Never Infrequent Often

Never Online In-person

Bank offline Bank online Bank + bill pay online

Offline Online at bank sites

Online at bank +

social nets

Product research

OL banking/bill pay

Banking advice

PFM usage

Rate monitoring

Money movement

Engagement segments

Low Engagement

75%

High Engagement

25%

Source: Aite Group February 2009 Customer Engagement Survey

The economics of engagement

Source: Aite Group February 2009 Customer Engagement Survey

I often recommend my bank to my

family and friends

41%

23%

I plan to open more accounts with my bank

over the next 2 years

27%

5%

High engagement

Low engagement

Engagement = strength of relationship

Low High

1. What what can we do to engage them?

2. What needs aren’t we meeting for these highly engaged customers?

3. Who are these attrition risks and what can be done to retain them?

4. What is the profit impact of increasing customer engagement?

5. Who’s migrating between quadrants?

Customer Engagement

Low

High

Breadth of relationship

3 4

1 2

5

38

“The best way to measure loyalty is to ask one simple question: Would you recommendus to a friend?”

Fred Reichheld

Affliction #2: Net Promoter Syndrome

The belief that if the number of people who might possibly recommend your firm is greater than the number of people who hate your guts and want to destroy you, then your firm is on the path to Nirvana and should tell its story at conferences

(Some of) The issues with NPS

• Cost: Requires large investment to collect, analyze, and disseminate data -- and change incentive plans

• Operational disconnect: Doesn’t help identify what operational enhancements are needed

• Periodic: Captures opinion at periodic intervals, not continuously

• Intention: People don’t always do what they say might do

Referral behavior versus intention

Source: Aite Group February 2009 Customer Engagement Survey

I would never recommend

my bank13%

I would recommend it

if I thought there was a

good fit60%

I often recommend it to my family and friends

28%

Q. How do you feel about referring your bank to your family and friends?

Behavior trumps intention

Source: Aite Group February 2009 Customer Engagement Survey

Often recommend bank to family/friends

20%

Would recommend bank if it was a good fit

7%

Percentage of segment that plans to open more accounts with their bank over the next two years

Trust is the differentiator

Source: Aite Group February 2009 Customer Engagement Survey

11%

11%

15%

25%

55%

Doesn’t trustbank at all

Trusts bankvery little

Has noopinion

Trusts banksomewhat

Trusts bankvery much

Levelof

trustOften recommend bank to family/friends

Trust is multi-dimensional

Have employees that live up to values portrayed in ads

Have friendly and helpful service reps

Listen to my problems and concerns

Respond quickly to inquiries

Alert me to changes/issues

Rarely/never make mistakes

Clearly explain their products and services

Acknowledge competitors’ offerings

Tell me when it’s a bad idea to buy their products

Human-focused Advice-related Operational-oriented

Trust: Assured reliance on the character, ability, strength, or truth of someone or something

“To demonstrate trust, it’s important for firms to . . . ”

The stories loyal customers tell

Have employees that live up to values portrayed in ads

Have friendly and helpful service reps

Listen to my problems and concerns

Respond quickly to inquiries

Alert me to changes/issues

Rarely/never make mistakes

Clearly explain their products and services

Acknowledge competitors’ offerings

Tell me when it’s a bad idea to buy their products

Human-focused Advice-related Operational-oriented

“They have the most helpful employees.”

“They’re really easy to do business with.”

“They help me make the right choice.”

The ignis fatuus of marketing

Marketing is the story marketers tell customersCustomer engagement is about interacting with adsAdvocacy is getting customers to refer you

Marketing’s job

Awareness Consideration Preference Purchase Re-purchase

Customer Lifecycle

Trust

Noopinion

Basic

High

Low

High

Engagement

What are CMOs doing about this?

What they said*

79% said they’re improving the perceived value of marketing

What they meant

“My mom thinks I’m doing a great job.”

New competencies are at the top of the list of planned changes

“I just don’t know what competencies we need to build.”

*Source: CMO Council, 2008 Marketing Outlook

45% expect to change agencies “Told you it wasn’t my fault things are screwed up.”

“With loyalty to brands decreasing over time,

companies need to figure out how to reach customers

where they are.”

A popular blogger

The prevailing mentality

Affliction #3: Blogophilia

According to Wikipedia, this is“the irrational belief that creating a blog

or participating on social networkswill, in and of itself, help a company

reach customers and improveits customer relationships.”*

*I made that up. But you have to admit, it sounded real — as do so many of the other half-truths floating around Wikipedia

Marketing must make changes

Persuasion-based Participation-based

Attitudes Behaviors

Push-and-pray Sense-and-respond

Philosophy

Focus

Competency

Sense-and-respond marketing

Sensing consumers’ needs and intentionsbased on their behavior and

responding with the appropriateadvice, guidance, and offers

“The secret to creating strong relationships is

honesty andfair dealing.”

“If you can fake those, you have

it made.”

— Groucho Marx

One guru who got it right

Aite: Partner, CounterpartAite Group (pronounced eye-tay) is an independent research and advisory firm focused on business, technology and regulatory issues and their impact on the financial services industry.

Ron ShevlinSenior Analystrshevlin@aitegroup.comwww.aitegroup.com1.617.338.6045

Resources

Social Networks

Micro-Blogging

Blog

Question Forum

Research

What’s Up Next?

Register with promo code DVYN01 & receive a 20% discount! http://twtrcon.com/

Our Last FREE Webinar: http://thepmn.org

THANK YOU

INFO@THEPMN.ORG

mdellapenna@aitisolutions.com

rthomas@aitisolutions.com

Start and continue the conversation.