Right Side Up

Globally, the marketing services industry is worth about one trillion dollars. That’s an awful lot of dosh spent employing an awful lot of very clever people doing mostly less-than-wonderful things.

The underlying problem for the marketing services industry is it has lost sight of its real customer. It has confused the person who pays the bills (the client) with the person who stumps up the cash (‘the consumer’, who pays covers the cost of the bill when he or she buys a product or service).

Clients and ‘consumers’ have different objectives when they go to market. The client’s prime concern is the search for (profitable) customers. The buyer’s prime concern is the search for best value.

The output of the marketing services industry – 30 second TV spots, junk mail and so on – is designed solely to pursue sellers’ purposes. Buyers’ purposes go unaddressed, even though buyers are actually footing the bill.

To test this thesis out, just ask yourself this. If junk mail or 30 second TV spots were products like any other – in other words, if they were purchased or not purchased according to buyers’ perceptions of the value they deliver – how big would the industry be then?

Alan Mitchell

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AlanMitchell Advertising, Marketing

Suggestion: to really understand the character of the modern corporation, don’t study the newspapers or read clever business books. Study the monarchies of the middle ages.

Consider the parallels. The intense focus on ‘the leader’, the king. Endless intrigue and power struggles to become king. The vanity and ambition of those who do. The splendid, awe-inspiring palaces. The regalia (now called ‘branding’). Courts full of professional flatterers (the business press), and courtiers whose job it is to carry out the king’s will, whatever it may be (the professions). The blithe unconcern with the populace who are seen as mere pawns in the real business of power and money. Self-serving ideologies such as the divine right of the shareholder (see Marjorie Kelly’s excellent book on this, The Divine Right of Capital).

Then there’s war. How about this gem, from Sony CEO Sir Howard Stringer announcing his long-awaited restructuring plans for the ailing company. “We must be like the Russians defending Moscow against Napoleon, ready to scorch the earth to stay ahead of the invaders. We must be Sony United and fight like the Sony warriors we are.”

A few years back, CEO-in-waiting at Coca-Cola Doug Ivester had has poor minions on stage, howling like wolves, apparently to frighten the living daylights out of competitors – ‘sheep’ who always followed what Coke did.

Pathetic it may. But very frightening too.

Alan Mitchell

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AlanMitchell Uncategorized

In Canada a new service for consumers called Fetch is gearing up for a national launch for early next year. Fetch lets consumers respond to advertisers with requests for more information, samples etc while still retaining their anonymity so they won’t be spammed in future.

Fetch is the brainchild of the Canadian Post Office, which is using its reputation as an impartial trusted deliverer of information, to act as an intermediary and ‘shield’ between consumers and advertisers.

Advertisers only discover the identity of who is responding to their ads if the consumer decides to transact with them at a later date. They lose database building capabilities, but they gain higher response rates.

Fetch is currently negotiating with advertisers to include its ‘Fetch button’ on their advertising – and this, it seems, is its major task: negotiating terms with scores of different advertisers, each of which want their own conditions, commercial deals and so on.

To state things crudely, the current world breaks down into two broad types of commercial relationship: B2B which is negotiated, one-to-one and bespoke; and B2C where the supplier sets standard terms – this is the price, this is the offer – and consumers have a binary choice. Take it or leave it.

As intermediaries emerge gathering information from and filtering information for individuals, the need to negotiate bespoke terms and conditions with every would-be supplier is becoming a major cost. A logistical, administrative and management headache.

As we move towards a buyer-centric world, will this old B2B/B2C dichotomy flip over to its opposite? In this world, individuals are empowered to negotiate terms which relate to their specific needs. But increasingly, the intermediary/supplier relationship is determined by a modular, take-it-or-leave-it approach. ‘Sign up on these terms (to automate the process as far as possible), or lose access to the benefits of the service’. That way, the costs of doing business could fall dramatically.

Is this the way of the future?

Alan Mitchell

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AlanMitchell Buyer centric services

Individuals only buy products or services because they want to. To that extent every exchange facilitated by marketing is a win-win exchange.

However, this win-win revolves around the quest to improve the economics of the firm. Firms only produce those products and services they can make and sell profitably.

Products and services that firms cannot or do not want to make and sell either have to be made by individuals themselves, or are not made at all. For example, despite their much vaunted ‘customer focus’ marketers have not developed business models designed to help individuals make the most of their information, attention and emotions. Instead, they have tried to corral these personal assets into the service of brands.

So, while marketing creates a win-win with ‘consumers’ the scope and nature of this win-win is limited. By addressing the individual as ‘the firm’ whose profitability must be improved and whose personal assets must be deployed to best effect – to earn the best possible return – buyer- and person-centric commerce opens a vast new swathe of potential win-win innovations.

Alan Mitchell

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AlanMitchell Buyer centric services, Marketing

Emotion is a resource marketers use to drive sales of their products.

By adding a layer of ‘emotional added value’ to the functional benefits offered by their products and services, marketers hope to persuade consumers to buy more, more regularly, at a higher price.

Marketers see human beings’ emotions as a potential resource for the firm – as ‘triggers’ to be pulled and ‘buttons’ to be pressed to ‘build loyalty’ to their brands – not as a potential source of value to the people feeling these emotions.

Marketers’ actual ability to corral and deploy peoples’ emotions in favour of their brands has never been as strong as their ability to use information or grab attention. So we’re likely to see less change here.

But change there will be. The attempt to corral peoples’ emotions as a resource for brands will become increasingly despised and resisted, and personal emotional fulfilment will emerge as part of the commercial agenda.

Emotional fulfilment was always central to individuals’ agendas anyway. But, just as making the most of individuals’ information and attention are part of the buyer-centric agenda, so helping individuals make the most of their emotional lives will be an important contribution of certain types of person-centric business.

Alan Mitchell

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AlanMitchell Advertising, Branding, Marketing

Attention is a resource marketers use to drive sales of their products.

They use advertising and other marketing devices to draw attention to their offerings, remain top of mind and influence preferences, choices and behaviours.

Marketers treat attention as a potential resource for the firm, not as a potential source of value to the attention holder.

The media makes its money by trading in consumers’ attention; by selling it on to advertisers. But as information overload sets in the ‘price’ of attention is rising. And new technologies are enabling individuals to filter, edit and specify what they pay attention to. Power is shifting from the media owner to the attention owner.

This means the marriage between media and marketing is coming to an end. ‘Return on attention’ – creating value for the attention holder – is the emerging attention agenda.

Alan Mitchell

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AlanMitchell Advertising, Branding, Marketing

Information is a resource marketers use to drive sales of their products.

They use information about prospective customers to identify the hottest prospects and to communicate them, thereby grabbing their attention. Marketers gather information about customers and send information to and at them.

They treat information as a potential resource for the firm, not as a potential source of value to the source of the information, the individual.

The direct marketing, CRM and market research industries make their money by trading in consumer information.

But now, new technologies are making it possible to elicit information from individuals, to use information for them, and to give individuals greater control over who has access to what information. As a result, things are going to change. Power is shifting from information gatherers to information sources: individuals.

Gathering, managing and using information for and on behalf of individuals is the emerging agenda.

Alan Mitchell

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AlanMitchell 'The Information Age', Buyer centric services, Data, Direct Marketing

CRM RIP.

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timkitchin Uncategorized

Very interesting times in the world of identity theft.  As the victim-community becomes more and more sophisticated, so it becomes less and less ready to accept the actions of the established corporates.  Last week, the mass-media caught up with this new, less compliant reality.

To date, the corporate stance has been: shred your statements, hide your pin, and you’ll be fine.  Meanwhile, take out some identity theft protection.

In our February 2005 ID theft seminar, Glasshouse predicted a forthcoming tipping-point when the volume of experienced victims would be sufficient to overturn this received wisdom.  The media in turn would start to reject this stance, and kick back. 

Well guess what – on September 5 2005 (5/9/5) things tipped.

Newsweek published a seminal article: Grand Theft Identity. 

The premises which underpinned the previous blame game were as follows:  1) ID theft is the fault of the individual 2) Data-holding organisations are doing all they can 3) Technology is powerless to solve the problem.  None of these is now accepted as true by sophisticated media.

The market has now reached its next level of evolution.  At Glasshouse, we reckon that Identity theft will henceforth begin to be recognised as an issue which the individual is powerless to resist.  The cracks in corporate personal information management practices will be be exposed.  Instead of ducking the blame, organisations will increasingly need to account for their own practices and in particular, their victim responsiveness. 

Smart organisations will start to publicly share their own actions and approaches and reengineer their customer support.  Starting victim support groups is an obvious first step.

Some time later – perhaps by mid-2006, the next phase of this cycle will kick in: the realisation that data theft is not the issue, but data exploitation.  The hard truth is that this issue can only ultimately be solved downstream – in the personal data marketplace.  The balance will shift from offering consumer advice, to exploring and adopting technologies and protocols which manage downstream identity-in-use.  Consumer advice will shift to substantive personal information management (PIM) support services – not just insurance products.

At this stage of the cycle, though, levels of ID-security and ID-authentication procedures will become highly stratified, application-specific and ultimately user-accountable.

This right side up phase will usher in the world of the personal knowledge bank; of personal digital identity, and of contextual authentication.  It may still be 2-3 years away in its full form, but it’s going to be a big, and lucrative deal.  Retailers, telcos and financial services companies have a lot to gain by being on the side of the consumer, not against them in this battle for self-protection.

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timkitchin Resources and Papers

What does ‘improving the economics of individuals’ mean?

It means:

• Enriching the outcomes they experience in their lives

• Improving the efficiency and productivity of their processes – things they do to achieve these outcomes

• Making the best use of their personal assets and resources, such as their time, money, knowledge and information, attention, energy, emotions, and so on.

As individuals, we are always trying to do these things all the time. Person-centric business models earn their keep by helping us to improve the efficiency and effectiveness of these tasks by adapting and applying the knowledge, skills, resources and infrastructure of the business world to them.

For example, many person-centric services will help individuals run personal ‘departments’ better: my home, my finances, my health, my personal transport, my communications, my information, my leisure, my social network, and so on.

Others will help individuals manage important life events better: marriage, divorce, moving home and such like.

Other, buyer-centric, services will help individuals improve the efficiency and effectiveness of personal processes such as ‘shopping’. The job of marketing is to help firms in their search for customers; the job of the buyer-centric added value buying service is to help individuals in their search for value.

Thus, instead of looking at a world of potential customers through the eyes of the firm, person- and buyer-centric services look at a world of potential providers through the eyes of the individual. Instead of focusing on the purposes, processes and outputs of the firm, person-centric commerce focuses on the purposes, processes and outputs of the person.

Buyer- and person-centric services effectively represent a huge new, ‘white space’ market – and when I say ‘huge’ I mean it. Buyer-centricity will affect all products, services and industries serving the life departments and events just mentioned – my home, my money, my health etc – plus all personal capital goods purchases (cars, homes, home equipment, computers etc), and most if not all routine replenishment and special purpose purchases too.

So why aren’t existing product and service providers falling over themselves to open this new market up? I’ll return to this in another posting soon.

Alan Mitchell

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AlanMitchell Buyer centric services