The Birth of “Customer 2.0”
and the Death of Marketing As We Know It:

Adapting Marketing to Changing Customer Behaviors and Demands

By Pelin Thorogood ’90, MEng ’91, MBA ’94, and Rand Schulman, principals of the Schulman Thorogood Group

Online marketing and social media have dramatically changed the marketing landscape. From boardrooms and garage startups to business school lecture halls, a new, billion-dollar question now reverberates: “Is marketing as we know it really dead?” The answer: The more things change, the more things stay the same. Marketing is still about knowing your audience. However, the tools and tactics we employ to get to know and engage our target customer have indeed changed as has how we define and measure success.

Renowned scholar and philosopher, Marshall McLuhan, described this phenomenon of change with his famous aphorism, The Medium is the Message, where he argued that each medium produces a different "message" or "effect." In the early 1960s, he wrote that the visual print culture, ushered in by the Gutenberg press in the fifteenth century, would soon be brought to an end by what he called "electronic interdependence,” and coined the term for this new social organization, the “global village.” The Internet was invented almost ten years after his death, but McLuhan may have prophesied today’s Web technology as early as 1962: “The next medium, whatever it is, may be the extension of consciousness.”

In this article we will explore how social media and “inbound marketing” are transforming marketing the same way electronic media forced print media to re-invent itself (or else face certain death!). To add in a healthy dose of practical wisdom, we will also discuss the emerging technologies and best practices required to optimize your marketing mix.

Branding is Dead... Long Live Branding!

Social media is impacting customer behavior and expectations and creating a new breed of informed, socially engaged buyer: Customer 2.0. These new buyers rely a lot more on social media and a lot less on advertising to inform their decisions about the products and services they are considering. The multimillion-dollar branding efforts of yesteryear are being trumped by customer-to-customer conversations taking place in social media. The fate of a company’s brand and reputation is transitioning from corporate marketing departments into the hands or rather the online reviews, blog posts, and tweets of customer 2.0.

If brands are now made or shattered in social media, then businesses have no choice but to join the party and embrace a new kind of branding. The model: First listen, and then engage. With the advent of social media monitoring and analysis tools, marketers now have much more than demographic data about their target audience. We can monitor and analyze the social conversion that is taking place across the Web from Amazon reviews to Facebook fan pages to extract customer sentiment about products and trends. We can then craft effective marketing responses to engage and influence the buyer, for both long-term brand management and crisis-management situations.

Take Nordstrom for a good business-to-consumer (B2C) example: In mid-August, Nordstrom completely revamped its Web site to incorporate social media, enabling site visitors to explore customer opinions and experiences about specific brands, as well as fashion and shopping in general. Nordstrom is engaging its site visitors with questions, comments, and voting options. The result: a site that reflects the real Nordstrom in-store experience, and builds trust in the Nordstrom brand, since the visitor doesn’t feel “sold to,” but, rather, engaged within a community.

An example of what not to do: Last year, Domino’s Pizza experienced how bad news spreads like wildfire in social media, when two employees posted prank “health code violation” YouTube videos. Hoping the buzz about the video wouldn’t last, Domino’s acted neither fast enough (waiting over 48 hours after the incident) nor, through the right mediums (70 percent of the initial conversation about the incident was indirect, through YouTube and Twitter, hence their response, which didn’t include social media, wasn’t enough). The result: According to a national survey, 65 percent of respondents who said they previously would have visited or ordered from Domino’s reported they were less likely to do so after the incident.

One clear takeaway: Ignore the impact of social media on your brand at your own risk.

The Evolution of Direct Marketing

Now let’s examine the impact of Web 2.0 technologies on direct marketing, the stepsister to the more glamorous areas of branding and advertising. There are two main characteristics that distinguish direct marketing from brand marketing. The first is that it sends its message directly to consumers, without the use of intervening commercial communication media. The second characteristic is the core principle of driving a specific "call to action." This aspect of direct marketing emphasizes trackable, measurable, positive responses from consumers (known simply as "response" in the industry), regardless of medium. Online marketing technologies and methodologies have transformed this originally print-based marketing form, making it one of the most predictable and accountable sources of demand generation. Here’s how:

• Email marketing is replacing print-based direct marketing efforts as a more personalized, cost-effective, and green alternative. It gives the marketer the ability to test different subject lines for better open rates, experiment with different offers, or design ideas to improve click-through rates all in real time. This makes email marketing easier to optimize, faster, and less costly than print-based marketing programs.
• Behavioral targeting (i.e. serving different Web pages to different visitors based on their prior Web-site actions) enables businesses to present a personalized and thus more relevant experience to their site visitors. Whether an etailer, focused on ecommerce, or a brick-and-mortar business, trying to capture online leads for offline purchases, businesses improve their online conversion rates, as well as customer satisfaction ratings, by presenting personalized content or discounts, based on visitors’ prior choices.
• Web analytics empower marketers with data to determine if Web site visitors from different programs or campaigns (e.g. banner advertising, Google adwords, LinkedIn, SEO, etc.) have more or less propensity to engage on the site (e.g. buy, fill out a lead form, read an article…whatever engagement may mean for the site in question). Armed with this intelligence, marketers can focus their scarce resources on targeted programs that deliver results.

Enter Inbound Marketing

Traditional marketing or, as it is coming to be known, outbound marketing focuses on finding customers by building brand awareness and demand through activities such as PR, online and offline advertising, direct mail, and email promotions. It is the company reaching out to the customer to entice them to buy their products and services. Unfortunately, some outbound-marketing efforts have backfired, not only due to the method of communication, but also to the timing, frequency, and relevance of these messages. As a result of interrupt-driven and program-heavy (i.e. costly) outbound-marketing campaigns, the public is inundated with solicitations. Banners and pop-ups invade Web sites while spammers invade mail and email boxes.

The problem: Customer 2.0 does not want to be sold to. They want to find the right products and services by themselves, which renders interrupt-driven marketing less effective and desirable. Inbound marketing is a new approach to marketing that optimizes getting found by customers, and attracts qualified buyers to the business. Social media engagement, search engine optimization (SEO) and link-building are all examples of effective inbound-marketing activities. Inbound marketing not only benefits the business by improving Web site “findability” by qualified buyers, but also benefits the visitor with improved content relevancy and linked resources.

Inbound-marketing activities tend to be more people-heavy, rather than program-heavy, since they rely on relevant content creation and community engagement. According to a 2010 presentation by leading analyst firm IDC, “Tech Marketing and Sales: The Transformation Accelerates,” the program-to-people effort split for outbound marketing is 60 percent to 40 percent, underscoring how outbound-marketing efforts require more program dollars than marketer time. With social and inbound marketing, the ratio reverses to 90 percent people effort vs. 10 percent program dollars. It makes sense: Creating a content-rich Web site building relevant links, blogging, commenting on other’s blogs, tweeting, and curating discussion boards on Facebook and LinkedIn takes time, but not a lot of program dollars. In its mission to successfully and cost effectively engage Customer 2.0, inbound marketing takes the best plays from today’s branding and direct-marketing playbooks. It leverages social media and networking to target and attract qualified buyers, and encourages the adoption of a culture of measurement to optimize the effectiveness of the inbound-marketing mix.

The Era of the Content Engineer

In Darwinian terms, the demands of the new breed of customer not only forces the evolution of the marketing practice but that of marketing practitioners as well — and a new breed of marketer is emerging. The content engineer is a marketer who engineers and optimizes the many forms of content required to engage customer 2.0, based on the data presented by the many analysis tools. Social-media monitoring and analysis give them the pulse on buyer sentiments on brands, products, and ad campaigns. Web analytics tell them which content is engaging which type of visitor from which source. Search engine optimization tools present them with the right keywords to include on their Web site to improve page rank (and thus findability) with search engines. Leveraging all the social and behavioral intelligence available to them, content engineers develop and apply the right content, at the right time, to engage the right audience in the most effective manner possible. Part creative left brain and part scientific right brain, content engineers live and breathe the new marketing math: creativity without conversions = zero!

Creating a Virtuous Marketing Cycle

The key to engaging customers is relevance, and relevance comes from a deeper understanding of customer behavior and sentiment. It comes from listening to the customer through all the newly available mediums before crafting the marketing messages for each those mediums.

This is where the content engineers shine: They listen to and engage customers in social media, building trust in their brand. They analyze visitor behavior and sentiment to optimize Web site content for visitors as well as search engines. They invest in quality link-building to establish their Web site in a community of related sites. And, rich with buyer insights gleaned from inbound-marketing efforts, they charge forward with more effective outbound-marketing campaigns that resonate with customers in the here and now. (After all, people will mind the “interruption” less if marketers improve upon the timing and the relevance of the messages.)

Empowered with new tools to decipher the new customer and the insights to engage them effectively in all the new marketing mediums, the new marketer has what it takes to synchronize the marketing cycle with the buying cycle creating a virtuous cycle for businesses and customers alike.

Author’s note: Pelin Thorogood is an Internet executive and self-proclaimed content engineer, who credits her Cornell Engineering/MBA education for her creative as well as scientific approach to solving today’s unique marketing challenges.

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