Originally published on ANA
New waves of technologies are disrupting our lives. We are consequently modifying our ways of living and our interactions with brands. This environment of transformation changes everything a person touches and shifts the gains or losses in "Share-of-LifeTM" for products and services. The reliance on brands that we thought would last forever is rapidly disappearing. After leading Interbrand's rankings for 13 years, Coca-Cola is now in fifth position after a decline of 5 percent in 2018. At the same time, tech brands such as Microsoft, Amazon, Apple, and Google have all realized big advancements.
These technological advancements allow customers to shop with a click, find a potential partner with a swipe, and play their favorite song by simply asking Alexa. As a result, consumers have never been left with more choices, but are also more impatient. A study from Fetch found that 38 percent of surveyed consumers said that they were less patient than they were five years ago, with the proportion even higher for millennials (45 percent). To keep up with today's customers, brands need a new model that allows for a value-adding relationship between a product and the consumer. The past decade has fostered companies with new and different mindsets that reflect a brand's need to be one with the consumer, rather than the traditional marketing model of communicating to the consumer.
Netflix has disrupted the entertainment industry and completely innovated the revenue model for media services providers, from one based on TV advertising (what we largely call at Vertic 'nonvertising') to one based on subscription and content marketing programs that extend the Netflix experience outside their own platform. Similarly, Google, Amazon, and even dating services such as Tinder have disrupted business models that were based on display advertising with a new marketing mindset. These brands have managed to build a meaningful connection with today's impatient consumer by meeting and even exceeding their expectations.
Impatient customers no longer accept traditional advertising that disrupts their experiences without adding value. Accordingly, they only choose brands that provide them with a mutually-beneficial relationship. Think of Barkbox, a startup that was able to win over 500,000 subscribers and a 95 percent retention rate.
But is it enough to have a subscription model? Not if your experience is not reinforcing your relationship with the customer, and your organization is geared towards chasing new customers rather than empowering existing ones. Early adopter Birchbox fell into this trap, believing that a financial commitment every month was enough, but it wasn't. This made it easy for competitor Ipsy to outperform Birchbox by simply focusing on empowering their existing customers through a beauty community. Its key for a successful subscription strategy to create marketing programs to retain and empower your existing customers instead of chasing new ones. While startups that were built on subscription models might have missed an opportunity, new ones can take note of their lessons, especially the legacy companies that have decided to join the game. As CPG conglomerates such as P&G, Nestlé, and Unilever recognize the need to turn loyalty into commitment, they have announced that they are migrating a number of brands to a subscription-based model, yet this is not enough to a build Share-of-LifeTM. It takes much more than a subscription to satisfy and retain today's consumer. A true mutually-beneficial relationship is more than a financial commitment; it requires customer reinforcement and empowerment, or else it will remain only a 'share-of-wallet'.
So, who is winning with customers today? The recent Interbrand list of leading global brands shows a clear trend: digitally-born companies are building "brand entanglement," while the traditional titans are losing pace. Vertic's concept of "brand entanglement" has been developed to support brands in increase of brand equity, operationalized through a C.R.E.E.D model (Commitment, Reinforcement, Empowerment, Excitement, Development).
The answer to create long lasting customer relationships is to ensure that a brand is a "value-adding partner." The winning companies have established successful entangled relationships with the impatient customer by adopting a Share-of-LifeTM mindset. Instead of investing marketing budgets in "nonvertising" efforts, bombarding consumers with a non-relevant messaging, today's winning brands are investing in activities and experiences that are adding value to what consumers value and therefore improving their lives.
Smart marketers recognize that there will be a distinct “before” and “after” in consumer behavior as a result of the pandemic. You must start now to create the digital tools needed to embed your brand in the customer’s post-COVID life.
Take the time now to identify and understand the new expectations of your customers, and how have their habits and priorities shifted during this time