The Big Business Marketing Conondrum

Big corporations are usually oblivious to modern marketing. They typically lack not just the technology to capture, analyse and understand consumer data, but also the mindset and strategic framework. In isolation and indifference, they continue to run campaigns and bask in the glory of irrelevant “success” metrics, simply because they can: they are too big to fail. However, it’s not exactly fair to blame them, let’s blame the industrial revolution instead.

A brief history of marketing

A few centuries ago, marketing was simpler. If you were a baker, you had no choice but to bake consistently good bread, every single day. Your customers knew your name and remembered your face. Bad product or service meant you’d not only lose one customer but the entire village. You had nowhere to run or hide: word of mouth marketing at its best.

The industrial revolution brought a significant change: production on a scale. Companies grew bigger. With the invention of mass-manufacturing technologies, supply surpassed demand for the first time in history, giving birth to the door-to-door salesman. As competition got more fierce, mass-communication, differentiation and branding started to gain importance.

By the 60s, markets were becoming saturated. With so many brands and products to choose from, consumers became increasingly picky about how they spent their hard earned cash. The mere act of manufacturing was not sufficient to sell anymore — companies needed to deliver a compelling reason for consumers to prefer their products as opposed to competitors. Those realizing the need for this shift started paying attention to their consumers’ needs and tweaking their story to better communicate with their audience.

The invention and widespread adoption of internet was naturally the next step in the evolution of modern marketing. Compared to previous channels, the ability to constantly stay connected to consumers, almost real-time feedback, and understanding what made them tick was priceless. With the proliferation of social networks by 21st century, the circle was complete: Consumers were empowered to rely on their network of connections for purchasing decisions in an increasingly noisy world polluted with ads and commercials. Word of mouth was in full-force again.

So what’s the problem?

In an economy built around scarcity, ability to design unique products, manufacture them on a mass scale and access to logistics to distribute them on time were huge competitive advantages. Most of today’s big companies were founded in early 20th century, and their first-mover advantage combined with the momentum enabled by unprecedented growth propelled these companies to become the behemoths they are today.

As these companies grew, they started getting bloated. Slowly, bureaucracy took over the workplace. Then there were TPS reports, office politics, legal approval processes and of course, meetings about meetings. The industrial revolution introduced the concept of working hours, in an attempt to introduce efficiency and basically turn employees into replaceable parts. These employees did not have to look their customers in the eye anymore, they could hide behind the giant billboard ads their employers bought. Speak of lack of authenticity.

The changing fabric of the workplace was still somewhat compatible with a world of big ideas, 5-year marketing plans and multi-million dollar ad campaigns of the 60s. However, the “build it and they will come” mindset and the mass-production mentality of these companies fueled by their success at the beginning of the century — combined with their bad habit of attempting to solve problems by throwing more money at them — did not change as quickly as the changing marketing landscape. This is why big companies increasingly see their marketing expenditure growing, their return on investment shrinking and their consumer loyalty dwindling today.

Is there hope?

Modern marketing requires a willingness to listen to consumers, truly understand the rational/emotional driving forces behind their purchasing decisions, consistently delivering high quality products and services, and having authentic, relevant and personal interactions with consumers. The only valid strategy to thrive in a world where marketing opportunities, platforms and mediums are evolving faster than you can spell “marketing” is to learn to adapt.

Adaptation requires agility and a eagerness to experiment, take risks, test and learn. The big businesses, on the contrary are too big and slow, hate risks and love the status quo. The bright, ambitious marketers working in these big companies who are capable of driving change and possess adaptive traits either become docile through politics and bureaucracy and start saving up for retirement, or leave the corporate world to open the proverbial cafe and restaurant.

Change for these big business must start with empowering the bright ones to take initiative. A particularly interesting approach to do so is holacracy, gaining popularity thanks to companies like Valve, Github, Treehouse and very recently Zappos. Of course, getting rid of managers will not change a company’s culture and mindset overnight, yet it may very well be the first step in giving autonomy back to those who are self-driven and capable. And in a world of without managers, everyone is a producer. A small group of doers with complete autonomy can show everyone else that it is possible to be smart, agile and adaptive.

And one day, these big companies will find out that it makes a lot of business sense to listen to their consumers and build their businesses around what consumers want, instead of what they can produce or what they think they can sell. Then and only then, marketing will evolve from interruption into utility — meeting genuine consumer needs with truly useful products and services.

Personalize or Die

Attention is a scarce resource. Everyday, brands are fighting a decreasing portion of the attention pie, with significantly increasing costs. Although this one-upmanship is great for ad networks, it’s destructive for your bottom line.

Repeating your message over and over — hoping that if you do it for long enough, somebody will eventually pay attention — is useless and expensive.

Smart brands realize that collecting, analyzing and making use of customer data is great for building brand equity and loyalty. Breadcrumbs of valuable customer interaction at every touch point allows these brands to provide more relevant and timely product and services.

For example, Amazon has consistently improved their product recommendations over the past decade. Netflix granted $1M in 2009 to a team that were able to improve the accuracy of their recommendations by 10.06%. Target is able to identify pregnant women in their third trimester.

One of the most exciting updates is from Facebook: They recently made it much easier for themselves to analyze the data of their 800M+ users by introducing verbs in status updates with Timeline feature. Research suggests that when customers go through major life events, their habits become flexible. And naturally, Facebook is positioning itself to sell this window of opportunity at a premium to its advertisers.

Arguably, one of the main reasons why smaller companies do not invest time and money into providing a fine-tuned level of personalization is the complexity of the task, and the perceived (lack of) value it will bring. However, it’s never too early to start.

Tools like KISSMetrics for customer analysis, Custora for CLV calculation have made it affordable and easier for you start understanding your customers. Tech startups such as Platfora promise a brighter future for marketers. For a technical introduction to your home-baked solution, Programming Collective Intelligence is a good start to understand recommendation algorithms.

Personalized marketing is the future, and it’s here. Start looking for patterns. Figure out what makes your customers tick. Use your findings to tweak and improve your products and services. Repeat.

More vs. better work

On my first day as an intern back in 2003, I asked my new boss about my working hours. He handed me a pair of keys and told me that I was “free to come and go whenever I wanted”, as long as I did my job. It was very refreshing — conventional wisdom at the time was receiving hell for being 15 minutes late to work.

More than a decade later, I am surprised to see that not much has changed: many companies still try to impose rigid working hours (a concept which has survived pretty much unchanged since the industrial revolution), hoping to create a competitive advantage by doing more work.

For a manager whose primary job is managing people, the task of evaluating the efficiency of an employee seems to get easier when it’s based on the number of hours spent in front of a computer. This is a wonderful delusion of control and progress.

At the other end of the spectrum are startups. Taking pride in 14 hour workdays and sleep deprivation is an excuse for lack of focus and prioritization.

Modern businesses cannot rely on quantity of work to be competitive anymore: they need creative thinking and innovative solutions to problems, which can only come from better work.

So how do you enable better work? By prioritizing quality instead of quantity. By hiring smart & passionate people, creating an environment where they can work without interruption and friction, giving them the tools to collaborate efficiently and getting out of their way.