Ron Shevlin (Senior Analyst Aite Group and author of 'Everything They’ve Told You About Marketing Is Wrong') describes why it is time to define new rules for marketing. And why marketers should focus on participation. Welcome to 'Sense and Respond' marketing!

1. WELCOME
Everything They’ve Told You
About Marketing Is Wrong
370 – THANK YOU!
April 21, 2009

2. Value Proposition:
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Customers: Gen Y Panel
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Marketing Is Evolving? So How Can The PMN Help?

3. Ron Shevlin,
Senior Analyst
Aite Group
and author of
Everything They’ve
Told You About
Marketing
Is Wrong
Our Featured Speaker

4. Actionable, strategic advice on IT, business, and regulatory issues in the financial services industry
Everything They’ve Told You
About Marketing Is Wrong
Participatory Marketing Network Webinar
April 21, 2009
Ron Shevlin
Senior Analyst
Aite Group
Page 4

10. Theme
Marketing is suffering
from Ignis-fatuus-itis*
*Ignis fatuus: Something that misleads or deludes; an illusion

11. Agenda
• What changed?
• What’s misleading marketers (and what
afflictions do they cause)?
• What should marketers do?

12. Theory: The four Ps of marketing
• Product
• Place
• Price
• Promotion
Source: McCarthy EJ (1960) Basic Marketing: A Managerial Approach. Homewood IL: Irwin.

13. Reality: The three Ps of marketing
Predict
Push
Pray

14. The 3 Ps ain’t working like they used to

15. 15

18. “We are fueled by a need
to gain more control
over our
lives, to have valid and
significant choices.”

22. What changed?
Demand Supply
Self-directed consumers More points of involvement
Less reliant on firms Web sites
More pull, less push Search engines
More involved Social networks

23. Misleading marketing myths
• Marketing stories
• Customer engagement
• Customer advocacy

24. “Marketing is the story
marketers tell to
consumers.”
Seth Godin
“All Marketers Are Liars”
24

25. Affliction #1: Delusions of brandeur
A condition where marketers
think that a branding effort
will be the antidote
to falling or stagnant sales

26. “Good relationships
aren’t about clear
communication —
they’re about small
moments of
attachment and
intimacy.”
John Gottman
Executive Director
Relationship Research Institute
Page 26

27. Marketing is getting
customers to tell
stories to themselves
“Successful brands have a
story that consumers tell
themselves when they
reach for the product in
the store to buy it.”
Larry Huston
VP, Innovation
Procter & Gamble

28. 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

29. “Engagement:
Turning on a prospect
to a brand idea
enhanced by the
surrounding context.”
Advertising Research
Foundation

30. 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

31. “Engagement:
A series of interactions
that strengthen a customer’s
emotional connection to the
product or firm.”
Aite Group

32. What is customer engagement?
• Frequency of purchase
• Frequency of interactions
• Type of interactions
• Location of interactions
• Rewards program activity
• Referral behavior
• Category engagement

33. “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?”
Umair Haque
Director
Havas Media Lab
A: Because they don’t care that much about the
product/service that they purchased in the first place

34. Example: Measuring engagement
0 1 2
Money movement None 1-5 times 6+ times
Rate monitoring Never Infrequent Often
PFM usage Never Infrequent Often
Banking advice Never Online In-person
OL banking/bill pay Bank offline Bank online Bank + bill
pay online
Product research Offline Online at bank Online at
sites bank +
social nets

35. Engagement segments
High
Engagement
25%
Low
Engagement
75%
Source: Aite Group February 2009 Customer Engagement Survey

36. The economics of engagement
I often recommend 41%
my bank to my
23%
family and friends
High engagement
I plan to open more 27% Low engagement
accounts with my bank
5%
over the next 2 years
Source: Aite Group February 2009 Customer Engagement Survey

37. Engagement = strength of relationship
1. What what can we do to
Customer Engagement
engage them?
Low High
2. What needs aren’t we
meeting for these highly
3 4 engaged customers?
High
3. Who are these attrition risks
Breadth of 5 and what can be done to
relationship
retain them?
1 2
Low 4. What is the profit impact of
increasing customer
engagement?
5. Who’s migrating between
quadrants?

38. “The best way to
measure loyalty is to ask
one simple question:
Would you recommend
us to a friend?”
Fred Reichheld
38

39. 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

40. (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

41. Referral behavior versus intention
Q. How do you feel about referring your
bank to your family and friends?
I would never
I often recommend
recommend it my bank
to my family 13%
and friends
28%
I would
recommend it
if I thought
there was a
good fit
60%
Source: Aite Group February 2009 Customer Engagement Survey

42. Behavior trumps intention
Percentage of segment that plans to open more
accounts with their bank over the next two years
Often recommend
20%
bank to family/friends
Would recommend
7%
bank if it was a good fit
Source: Aite Group February 2009 Customer Engagement Survey

43. Trust is the differentiator
Trusts bank 55%
very much
Trusts bank 25%
somewhat
Level
Has no
of 15%
opinion
trust
Often recommend
bank to family/friends
Trusts bank
11%
very little
Doesn’t trust
11%
bank at all
Source: Aite Group February 2009 Customer Engagement Survey

44. Trust is multi-dimensional
Trust: Assured reliance on the character, ability,
strength, or truth of someone or something
“To demonstrate trust, it’s important for firms to . . . ”
Human-focused Advice-related Operational-oriented
 Have employees that  Clearly explain their  Respond quickly to
live up to values products and services inquiries
portrayed in ads  Acknowledge  Alert me to
 Have friendly and competitors’ offerings changes/issues
helpful service reps  Tell me when it’s a bad  Rarely/never make
 Listen to my problems idea to buy their mistakes
and concerns products

45. The stories loyal customers tell
“They have the most “They help me make “They’re really easy to
helpful employees.” the right choice.” do business with.”
Human-focused Advice-related Operational-oriented
 Have employees that  Clearly explain their  Respond quickly to
live up to values products and services inquiries
portrayed in ads  Acknowledge  Alert me to
 Have friendly and competitors’ offerings changes/issues
helpful service reps  Tell me when it’s a bad  Rarely/never make
 Listen to my problems idea to buy their mistakes
and concerns products

46. The ignis fatuus of marketing
Marketing is the story
marketers tell customers
Customer engagement is
about interacting with ads
Advocacy is getting
customers to refer you

47. Marketing’s job
High High
Trust Basic Engagement
No
opinion Low
Awareness Consideration Preference Purchase Re-purchase
Customer Lifecycle

48. What are CMOs doing about this?
What they said* What they meant
79% said they’re improving the
“My mom thinks I’m doing a great job.”
perceived value of marketing
“Told you it wasn’t my fault things
45% expect to change agencies
are screwed up.”
New competencies are at the top of “I just don’t know what competencies
the list of planned changes we need to build.”
*Source: CMO Council, 2008 Marketing Outlook

49. The prevailing mentality
“With loyalty to brands
decreasing over time,
companies need to figure
out how to reach customers
where they are.”
A popular blogger

50. Affliction #3: Blogophilia
According to Wikipedia, this is
“the irrational belief that creating a blog
or participating on social networks
will, in and of itself, help a company
reach customers and improve
its 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

51. Marketing must make changes
Philosophy Persuasion-based Participation-based
Focus Attitudes Behaviors
Competency Push-and-pray Sense-and-respond

52. Sense-and-respond marketing
Sensing consumers’ needs and intentions
based on their behavior and
responding with the appropriate
advice, guidance, and offers

53. One guru who got it right
“The secret to
creating strong
relationships is
honesty and
fair dealing.”
“If you can fake
those, you
have it made.”
— Groucho
Marx

54. Aite: Partner, Counterpart
Aite 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 Shevlin
Senior Analyst
rshevlin@aitegroup.com
www.aitegroup.com
1.617.338.6045

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