IE Focus March 2009 | By Manuel Alonso, Professor at IE Business School
Let’s face it, the customer is always right, and this long-standing truth is growing truer by the day thanks to new technologies. Traditional marketing doesn’t work anymore.
The main effect of the exponential technological development of marketing in recent years has been the increase in consumer power in commercial relations. We have to accept the situation: the consumer is in command. He is no longer an isolated person bombarded by commercial strategies that lead him to take purchasing decisions. He has his own opinion, which he can say very easily through digital channels, directing it not only at advertisers, but also at other consumers, over whom he has huge influence. It is very easy to gather from this statement that usual advertising has abandoned the traditional unidirectional format to become not bidirectional between brand and customer, but rather multidirectional, where customers exchange information with each other.
Bearing in mind this situation, it comes as no surprise that the 2007 New Year cover Time magazine always dedicates to the person it considers as being most important in the previous three-hundred-and-sixty-five days was dedicated to you, and me, and each and every one of us, since we are at the helm of the new information era in which the consumer has become the prosumer: he has unlimited options for choosing products, for comparing them, for hearing other buyers´ opinions, for influencing manufacturers and advertisers… And all that power is making him more difficult to reach using the staler advertising formats, especially in the cold, corporate tone.This change has been brought about by the evolution of the digital environment in general and the web in particular. Consider the early days of the net and go back in time to when we had more hair and fewer kilos: 1996. We are speaking of a World Wide Web that was still small, with approximately 250,000 sites and 45 million users, on which the content published by those responsible for the websites was much greater than that generated by users. A read-only scenario which we refer to today as Web 1.0, on which Internet users dedicated their time mainly to reading and consulting information. Commercial advertising over the web was almost exclusively unidirectional, with content transplanted from physical leaflets and an advertising style that was completely corporate and inflexible. After all, the Internet was just another new channel to which information was adapted, not one for which it was specifically designed.
And now look at the day before yesterday: 2006, two years ago. The change is radical: 1,000 million users and 80 million sites. But, careful: the content generated by users is almost half the content posted by website directors. And CGC (Consumer-Generated Content, which we have already mentioned) has incredible value in terms of commercial advertising. It can be the key to our success if we know how to use it in our favour; but it can be our ruin if it goes against us. Thus, the brands that have done their homework use their customers to develop their digital advertising content. They use their most loyal customers as online apostles to convince potential customers. They use an advertising tone that is more intimate and adapted to the real situation of each target and they develop content adapted to the digital reality as part of a blended strategy in which brand values act as an umbrella that provides coherence and cohesion between traditional and digital advertising.
Advertising that is not strictly publicity is therefore relatively more important in the marketing mix. The prosumer is becoming more and more impermeable to pure publicity (e.g. the DVRs that make it possible to avoid publicity on TV automatically, which we shall refer to in detail in the next chapter), which means that getting our commercial message to our target in a less aggressive way is a must. As pointed out in the magnificent book The Cluetrain Manifesto, the markets have become conversations in which customers are no longer willing to remain silent and listen as if they were on a broken telephone.
Who are more trustworthy? CEOs or secretaries? The answer is quite simple: secretaries, because there are more of them. I´ll explain what I mean: people trust in their peers, in the concept of “a person like me” much more than in corporate marketing. Nobody is more reliable for telling you about a product than another consumer like yourself and it is even better if there are more than one with different opinions to help you form your own before you decide to buy (or not). I am remembering a few days ago when I was looking for a country lodge near Barcelona where to run an in-company programme. It was late at night (I work at night) and I wasn´t going to wake anyone up to ask them for advice, so I went to a website on rural tourism that is popular not only because it gathers the opinions of users who have been at each establishment, but also because it allows other users to value their opinions, so that I know how trustworthy what each one has written is. There is little room for error in a decision taken in this way: I chose a small hotel in the hills of Argentona, about which almost every user with good credibility scores said that the customer service was extraordinary… And I still remember the bottle of Cava wine in the room and the waiter playing card games on the glasses during the dinner served on the terrace… Was I going to trust what the owner of the hotel said on his website? Not at the present time with the options I have…
The social media have handed over the control of the conversation to the prosumers, each one of whom becomes:
•A publisher: who does not have his own blog today, with Blogger letting you create one for free?
•A DJ: more and more people go to iTunes to configure the music they are going to listen to in the car, at the dinner they prepare at home for friends or simply to listen to it on their iPhone as they go to work on the underground.
•An expert: millions of anonymous people cooperate with the drafting of Wikipedia. By the way, did you know that a recent study has shown that the level of precision of Wikipedia is slightly higher than that of the Encyclopaedia Britannica? There are academic institutions that now accept its quotes as official references.
•A filmmaker: how many of you have not yet uploaded a video onto YouTube?
•A journalist: in the final chapter of this second block, we shall take another look at the subject, but woe betide the newspaper that does not allow its online readers to comment on its news articles…
•A critic: do you not trust the recommendations made by other readers when you buy a book on Amazon? I am sure that some of you have uploaded your own comments at some time.
•Member of a social network: anyone wanting to be visible as a professional in their sector is today a member of a network such as Linkedin, never mind the leisure networks: there is no better way of controlling your friends than following their adventures on Facebook.
It is vital for our brand to triumph in all these exchanges of information between users. The key is to become hosts for the conversations we mentioned earlier. That is why not so much the future but rather the present belongs to the companies that are capable of:
•Understanding that people want human interaction on the digital medium.
•The Internet is NOT another channel for broadcasting.
•Its role must be to encourage conversations.
•Taking part in giving value to prosumers.
In short, if the institutions want to take part in the new conversations the markets have become, they need to adapt and hand over the control to the prosumer.