Nick Wreden's new book argues that most brand marketers are out of synch with both their consumers and their management -- learn what they should do about it.
"Companies no longer sell. Customers buy." That line from Nick Wreden's latest book, "ProfitBrand," sets the tone for why changes in the consumer landscape have, in turn, put pressure for change on the companies wanting to do business with them.
With "ProfitBrand," Mr. Wreden has launched a compelling argument that most brand practitioners are out of synch with the two groups they most need to relate to: consumers and corporate management.
Wreden's depiction has the brand marketers getting sandwiched between these two groups.
On one side they face a changing consumer base whose overexposure to advertising has left them unable to remember a commercial, let alone the brand attached to it. Further stirring the bucket, these consumers have sampled the fruit of on-demand media via the internet, and there's no going back to a force-fed mass-media model.
On the other side, corporate management sees marketing as the petulant child they've been unable to keep in line. New ROI tracking capabilities have now placed marketing operations under the spotlight of accountability, and are giving the chiefs a way to finally reign in those loose canons over in the marketing department.
The message comes across like a mix between a battle cry and a tornado siren. Get your game together or get your resume together.
Wreden places the changing mediascape within the context of the executive mindset, customer analysis and segmentation strategies, as well as the latest marketing measurement technologies and cost-effective CRM tactics. His perspective not only highlights the demand for new brand strategies but also provides an outline for them to execute upon.
The real problem, according to Wreden, is that mass media is an acquisition-focused medium. But mass market acquisition is no longer economically feasible. Thus it's time to focus our planning on retention. And that's what his new school of branding is about.
This shift, according to Wreden, requires companies to become "ProfitBrands."
So what does a "ProfitBrand" look and feel like? Wreden presents six characteristics:
- Attention: making sure that messages are relevant through the latest targeting capabilities
- Transactional excellence: making the customer's purchase as frictionless as possible.
- Trust: it's not only about gaining the customer's trust, but also that of employees, suppliers, the media, and other constituencies
- Loyalty: simply put, stop the churn.
- Advocacy: great customers also make great salespeople.
- Profitability: using measurement and analysis tools to maximize profits.
The foundation of a "ProfitBrand" is an ROI system based on profitability, accountability and sustainability.
Wreden's emphasis on efficiency provides a natural transition from acquisition branding to retention branding. After all, who hasn't heard the stats regarding how much cheaper it is to hang onto an existing customer than to woo a new one?
By now it's clear this is all veering into CRM, below-the-line territory, which Wreden knows will irk the ire of the Positionistas (as they've been so derisively tagged). But he holds that it's a matter of staying in step with changing consumer preferences and behavior.
Simplified, "ProfitBranding" is really a customer-centric approach to brand marketing. So it's not surprising that the process begins with an attempt to determine customer equity.
The mission to determine customer equity leads the reader into a series of math equations that aren't for the faint of heart. But it's imperative that a company understand the value of its customers, for it's the foundation of the entire "ProfitBrand" method. Once we understand what constitutes a valuable customer and who he or she is, we can begin to separate the profitable from the not-so-profitable.
This segmentation process can seem like a Gordian knot, but Wreden presents a surprisingly digestible explanation of how to break it down. What follows segmentation is a concept sure to unite agency and client. There are good and bad customers, and companies should fire their bad customers.
Remember, it's about profitability, not market share. By one of Wreden's estimates, 15 percent of most company's customers are not profitable. These unprofitable customers buy the loss-leader product, suck up customer service hours, and then defect when a competitor saves them two cents on a 50 dollar item. Fire the bums, says Wreden.
CRM is what locks a "ProfitBrand" into place, developing a closed-loop connection with your best, most profitable customers. Listen to their needs. Make sure they're happy. Help them spread the word about your brand. This is a company's best insulation from competition in a world in which it's easier and easier to comparison shop.
As Wreden notes, products are increasingly similar, and the online environment only makes it easier for your competitors to replicate your best practices and have them live within days. In that type of environment, the only part of the customer equation you can truly own is the relationship. It's your last line of defense.
Implementing plans like this requires financial support from upper management. It's not an overnight solution and Wreden approaches this fundamental shift in thinking and practice with admirable frankness. Someone would have to manage all that data, sort through it, turn it into something meaningful and finally sell the results and findings throughout the company. Not a small task. But then the rewards are not small, either.
As Wreden concedes, the planning and implementation requirements for a strong "ProfitBrand" are considerable, and there will certainly be a number of companies that simply can't be bothered.
Like many calls for change, this one could be easily dismissed as yet another claim of "this time it's different." But Wreden has done his homework. The book is full of case studies, most of which are sufficiently captivating without being overbearing.
ROI is a topic that isn't going away any time soon. It's inevitable that ROI thinking will eventually dig its way into all corners of the branding process.
Some of Wreden's thinking may be familiar territory -- we all understand the fall of mass media -- but what this book does is carve a pathway through the critical changes in media, consumers, technology and corporate management. It then devises a series of steps to address those changes. Wreden is an excellent guide along that pathway, taking us through the changes and offering researched solutions in an insightful and well-written manner.
If you're in brand marketing, "ProfitBrand" should be on your bookshelf.
Doug Schumacher is the president of Basement, Inc. He ran the Sugarshots campaign for iMedia's open source marketing project.