This week at the Association of National Advertisers’ annual conference, ANA president and CEO Bob Liodice relayed a sobering fact: over the past year, 259 companies on the Fortune 500 list had declining revenues.
“Look at the pattern of U.S. business sales that declined for the last two calendar years,” Adweek reported Liodice saying as he kicked off the conference. “This is a terrible proxy about the effectiveness of our marketing.” He went on to place the responsibility squarely on marketers’ shoulders, citing as an example our acceptance of the incredibly complex digital media supply chain – in which the lack of transparency and efficacy efficiency more than $20 billion in marketing waste. (Yes, that’s billion with a B.)
As problematic as the digital supply chain is, however, I’m inclined to think that there’s a deeper issue at play when so many corporate revenues are declining despite a relatively healthy economy and fairly steady consumer confidence level. And I believe that what we’re seeing in the marketplace is two-fold.
First, it’s a reflection of the difficulty that large brands have in maintaining market share when technology and lower barriers to entry allow faster and smaller competitors into the category. Where once craft beers needed to invest significantly in space, bottling and marketing to break into a local or regional market, they can now outsource even the labeling to an on-demand printer and interact directly with suppliers. Second, upstart brands can use digital and social channels to build a loyal following and leverage that traction into broader distribution—even baby food, a highly regulated industry, has been shaken up by new competitors encroaching on shelf space at big box stores.
These fundamental shifts in technology enabling faster entry to markets, simpler production and more efficient marketing mean that large corporations and big brands can no longer rely on being the first or the biggest in their category. When everyone, including the new competitors, are competing on parity the features and products all blend together. And therein lies the danger in focusing your business strategy on your competitive set; you’ll forever be racing to cut costs and add features, but there’s only so far you can go by increasing efficiencies.
The smarter direction is to broaden your approach to business and market strategy by looking first at your consumer, taking an outside-in approach to insights and strategy rather than looking out from within the competitive set. Consumer Experience Strategy is one component of such a shift, which looks holistically at all the touchpoints your customers interact with to develop improvements to gain new customers, up-sell and cross-sell products and services, and increase loyalty and advocacy. Measurement, surveys and big data all play a role, but the end goal is focused on increasing the bottom line by improving customer experiences.
The other aspect of an outside-in approach is consumer insights, the area of study devoted to better understanding and serving your customers’ needs, wants and desires. But we’re not just talking about segmentation and communications; connecting with consumers doesn't mean force-feeding them advertising they didn't want for products they don't need. The most forward-thinking brands understand that acting on powerful consumer insights may dictate adapting your business model, product, services, and platforms to fit what consumers actually want – both now and in the future.
But insights on their own are meaningless unless they’re truly understood and actioned by employees and groups empowered to rethink strategies and impact every aspect of the consumer journey. Understanding those complexities of human behavior, beliefs and values and then ideating around different scenarios for how they fit with your company’s strengths can inspire new ways to delight through products, services, and every touchpoint of the consumer experience. In this way, insights and agile processes can lead to improved innovation by helping your teams develop empathy for the true motivations behind consumer behavior, then develop prototypes for addressing those motivations holistically.
The reality is, marketing just doesn’t work the way it used to! The power in the consumer market has shifted so drastically from the owners of businesses selling wares to connected, powerful consumers calling the shots that our methodology for brand and business strategy must change as well. Let’s stop focusing all our attention on the message, and start investing more in developing meaningful engagement and interaction with our consumers.