Brand Unawareness

A fellow shopping for auto insurance asked an unusual question: what repair shop would we use in his location for body work.   Some years ago, he had an accident and was sent to a shop that did rather a poor job, leaving him so displeased that he changed insurance companies.   And then, when he had another claim, the new insurance company sent his car to the very same body shop for repairs, and he was again disappointed.  He wanted to change insurers again, but wanted to make sure that the new company would not send him back to the same shop.

In the years I spent in the insurance business, I had listened in on many phone calls – a few hundred or so – and this is the only one I can recall in which a shopper took this level of interest in our suppliers.   Everyone cared about the price, and to a lesser degree about the kinds of coverage that price included, but nobody seemed particularly curious about exactly how the benefit of the product would be delivered: what company is really going to do the work that they are paying for in advance?

There are many buying situations in which consumers are unaware of the brands they are purchasing when the company with which they are directly transacting is merely passing on the product of another firm.   No insurance company, to my knowledge, has a nationwide network of repair centers that it owns and controls, but sends claimants to a local provider.   And where the product is a good rather than a service, the invisibility of its providers is clear: you have no idea what brands you are consuming when you order a meal in a restaurant, nor what company refined the copper in your computer.  You are only aware of the brand of the seller, not the maker.

And in the present day, where most firms are vertically dis-integrated and business operations are outsourced, chances are that when you consume any product, you are consuming dozens or hundreds of brands that you are not aware of.   The more complex the product, the more hidden brands you are consuming without being aware.  I would venture a guess that no-one, ever, has investigated the full supply chain of every product they use – there simply isn’t enough time in the day.

That’s not to say that the brand of a supplier is of no value – it is of great value to their direct customer, the reseller, though invisible to the ultimate consumer.  And in this space, the values of the reseller are significantly different: is the supplier reliable, will delivery be timely, is the quality of goods consistent, and so on.   These are entirely different to the values that customers espouse, or pretend to espouse, in evaluating the brand of the reseller.   They are generally concerned only with the last link in the supply chain.

Relationship Portfolios: B2B, B2C, and C2B

I was reading an article about managing a relationship with difficult suppliers, and stumbled across a bit of advice that I think applies to many relationships, and particularly the convoluted mess that has been made of social media by the commercial sector.

The advice to business was that most organizations have hundreds of suppliers and it is clearly not possible to develop close relationships with each and every one of them.  As such, a business should attempt to classify its suppliers to identify a "manageable portfolio" of key business relationships based on two criteria:

1. What is their value to you?   You have many suppliers, but some are more critical than others.  You do not need to develop a close relationship with your office supplies vendor, but you should seek to closely collaborate with the firm that provides components of your own product.
2. What is your value to them?   Not all suppliers will want to invest the time and effort into developing a relationship to your firm.   They may be a critically important vendor to you, buy you might be a small account to them, and they will not have sufficient interest in sustaining a relationship.  Chasing after them is not a productive use of your time.

Based on those outcomes, it should be possible to spend your time interacting with vendors more wisely and productively, and to reevaluate your relationship with certain vendors: namely, if a vendor is more important to you than you are to them, find a different vendor (and in this sense, dealing with a smaller firm for whom you are a prized client may be more productive than dealing with a large firm who considers you to be far less important than their major accounts).

This advice is immediately applicable to the common consumer, who purchases many things and many brands, and doesn't wish to involve a great deal of time and effort maintaining a relationship with every single vendor.   Particularly in the present age of social media, brands are eager to become more intimately connected to their customers, and some customers seem to be indiscriminate in accepting and nurturing relationships with brands that do not matter much to them (which in turn gives the brands themselves a false indication of their importance).

It occurred to me immediately that businesses would be well served by taking the same approach to their own customers: recognize that some customers are more valuable to you than others, in that they provide the greatest profit, but that your most valuable customers may not consider you to be a significant supplier in terms of their total purchasing budget, and pursuing a relationship with them would be a waste of resources.

My sense is that this is one of the primary causes of social media clutter we see today: brands are indiscriminate in chasing after customers, and make unfocused and general efforts to connect with as many people as possible, instead of focusing on their most valuable customers (and those who want to connect), and the result of trying to appeal to everyone ends up in a sloppy and inconsistent message that appeals to no-one.

I don't have the sense that customers have quite so much of a problem: people who indiscriminately "like" brands are deluged with promotions and image marketing clips that are of no interest, and generally learn to trim their list of friends to the brands that matter most.   The problem became so prevalent that Facebook relegated business to a separate feed, which I strongly expect few people ever check.

So perhaps the question becomes, is it too late to even consider a more moderate and focused approach to interacting with customers via social media - or has the well already been poisoned?

Odd Similarity: B2B and Nonprofit Marketing

I was reading a blog post about nonprofit marketing and was stricken by the similarity between the situation of nonprofit marketers to their counterparts in the commercial sector, particularly in business-to-business marketing.

The author's point was that the chief difference between consumer and nonprofit marketing is that in consumer marketing, the customer is purchasing something for his own benefit, whereas in nonprofit marketing, the donor is purchasing something for the benefit of someone else. In the case of nonprofit, the necessity of cost-versus-benefit and quality of service remain important to the donor who expects his contribution to accomplish something significant.

Granted, this is not evident on the level of the low-end of donors: the millions of people who will give in small amounts to charities really don't invest much time in considering how their donation of $20 or $200 is going to be spent, unless the charity itself is notorious for being wasteful or corrupt in its use of donated monies, which is why charities who depend on small donors and have few significant ones are (rightly) viewed with some suspicion. The situation is much the same for low-ticket purchases: where the amount of cash is small, the consumer doesn't do much research and isn't particularly disappointed when their experience of using the product is less than ideal, and the small-ticket vendor is not often very scrupulous (unless he counts on many repeat purchases over a long period of time, adding up to a significant per-customer income).

On the level of high-dollar patronage, where wealthy individuals or corporate sponsors contribute six figures or more to a charity, much more discernment is given to how the charity will use the money, with an eye toward ensuring it is used well, and that the beneficiaries of the charity actually receive some benefit from the use of their donations.

In terms of brand, a nonprofit organization that seeks to obtain large contributions must be able to demonstrate that it delivers value for dollar, and must maintain a spotless reputation for being fiscally responsible and effective in accomplishing their stated ends.

My sense is that the same is true of B2B marketing - even though it is pay-for-product, the person who makes the buying decision and approves the money to be spent is not the user of the product, but ideally decides to make the purchase based on how well the product will suit the needs of their users.

Considered in that way, the mind-set of the buyer in a business is similar to that of the donor to a charity - for better or for worse. The corporate buyer is inclined to seek the cheapest alternative that is "good enough" rather than purchasing a product that will actually deliver the full functionality others seeking to obtain - and ultimately, the need of the employee for an effective solution is done in order to deliver a benefit to the company or the customers they serve.

That said, the B2B customer does shoulder some of the blame when they are indifferent to the quality of product or service that is delivered by a vendor. It's the undiscerning customer that feeds firms that should rightly have no customers at all.

And in B2B marketing, as in charity, there are vendors who will happily serve both classes: some offer cheap solutions for the "good enough" buyer, and others offer effective solutions for the "must be good" buyer. And the lower the price of the good, the less they care about whether it actually accomplishes its desired goals.

The Relationship Edge

I've added reading notes on a book called The Relationship Edge, which turned out to be about meatspace salesmanship rather than online relationship management. Given my recent rant about the lack of experience in books about Internet marketing, I decided to keep reading, and am generally glad I did.

The book is about relationship management in person-to-person sales, primarily in the business environment where the instances of contact between seller and the stream of revenue are both sufficient to enable the salesman to develop a relationship with regular customers whose accounts he will service over time.

Resource planning systems with automated ordering systems have sought to dispense with the inconvenience of face-to-face encounters - at the loss of the productive aspects of a less sterile interface between buyer and seller, as well as the competitive advantage gained by a vendor that provides a higher degree of service than merely filling orders.

But on the dark side, salesmanship has its unsavory characteristics, and the book is chock full of unctuous tactics that exploit social psychology to manipulate the client like a con-artist works his victim. Even so, the author express higher motives for doing so, though whether that's merely a smokescreen or earnest intent is a matter of opinion.

There are some concepts that lend themselves well to online relationship management, others that are entirely unique to face-to-face salesmanship, and a general weakness on the application of new media that comes with an air of luddite disdain ... and even the greasy bits are good to know for times when you find yourself getting worked over by a salesman who applies them to pressure you into making a bad decision.

Rediscovery

I've been disappointed by some of my recent readings in Internet marketing. The trade books are often bad, and the blogs are even worse. That's not to say that what I'm reading is fundamentally wrong, but that it is shallow and often misguided, based on a handful of anecdotes and the personal experiences of an author-practitioner, utterly lacking a consistent theoretical base.

Case in point, in reading about online brand relationship management, the practitioners seem to have a pioneer attitude - as if, before the Internet, no-one put much thought into these issues, and the "old ways" are shortsighted and bad, in favor of the "new way" they have discovered. And yet, their discoveries are merely a haphazard rehash of the traditional approaches they are castigating ... they don't know the "old ways" and assume that what they are suggesting is an entirely new approach.

I've noticed this about relationship marketing and e-commerce in particular. Much of the "new" knowledge is not new at all, but hearkens back to the basics of retail and B2B marketing, in which the shop owner or sales representative deals with customers in a face-to-face manner - which, in terms of age, is an even older practice than mass-marketing. Anyone who has ever provided (or to some degree, received) face-to-face customer service recognizes the value of customer relationships and brand experience to satisfaction and retention, and there is a substantial amount of theory that can be adapted to the new media.

And while much of this has been brushed-aside during the era of mass-marketing, it's not been entirely forgotten. There are still books and courses on retail and B2B marketing, though they've been largely marginalized in favor of the efficiency of dealing with customers as a faceless mass.

So in the end, my sense is that what we are experiencing is not the end of traditional marketing, but a return to traditional marketing - before the era of mass-marketing and the amalgamation of consumers into large groups who were assumed to be homogeneous - and that rather than experimenting haphazardly to "discover" or "invent" effective methods for treating them as individuals, what's needed is to blow the dust off the old textbooks and re-discover what was known before the profession took a turn.