Posted by The next five years will be about direct relationships.
Several years ago a leading brand contacted us (Twist Image) about a new business opportunity in the digital space. The brand’s reality was this: as the years wane on, the amount of retailers that they sell to were diminishing. As the major big box outlets continue to grow and as consolidation rifles through the retail sector, the bigger brands only have a handful of outlets to sell their wares. With these retailers’ size and growth comes another reality: they begin to dictate everything from quantity and terms to acceptable margins. For some businesses, this is a dream come true because it secures significant sales, but for others (like this brand), their business was becoming a game of diminishing returns. It gets ugly fast when you run the numbers: eventually this brand will only have their product on the shelves of one or two retailers who are constantly dictating and changing the terms of sale… and the brand has no direct relationship with the consumer.
How do you win?
The brand’s idea was to create a new e-commerce brand online that housed only their own brand name products. This was the last chance. This was the hope and prayer to save the business: start a direct relationship with the consumer… today. Notwithstanding how the major retailers might feel about this project, it was a smart and wise play. For a brand to truly shape its own destiny, it must lead the relationship with the consumer as well. This must have been a huge factor in Apple‘s decision to build out retail stores and not work exclusively with the major consumer electronic retailers.
How are your direct relationships?
Some brands do this well… most fail at it with spectacular fashion. Is it possible to be so judgmental? It is. One of the reasons I still enjoy the conversation and debate about the efficacy of Social Media marketing is that the majority of brands that struggle with ROI are comparing it to traditional push advertising instead of treating it as an opportunity to have real interactions between real people. A consumer that hits a "like" or "follow" button is opening up the opportunity to have a direct relationship with a brand. If all the brand does is blast back offers and specials, we’re not pushing towards direct relationships… we’re pushing towards broadcast advertising (in a new channel).
The opportunity is now.
I’m often reminded of an event I took part in called, The Art Of Marketing (sidebar: I’ll be speaking at an upcoming Art of Marketing event in Vancouver on June 9th, 2011 – it will also feature Gary Vaynerchuk, Guy Kawasaki, Avinash Kaushik and William Taylor). Also speaking on the bill was Seth Godin (Poke The Box, Linchpin, Purple Cow). Seth doesn’t hold any punches and made it very clear to the 1500 marketing professionals in attendance that this unique moment in time is not only a revolution in marketing – one that we will probably never again see in our lifetime – but that it was ours to either capitalize on or squander. The next five years are going to be about these direct relationships. The next five years are going to be about how well a brand can actually change the relationship from one that looks at how many people are in their database to who these individuals are and how the brand can make the connections and loyalty stronger.
The stars are aligned.
We have the technology. We have the data. We have the new media channels and platforms. We have the opportunity to publish whatever we want – in text, images, audio and video – instantly (and for free) to the world. What we do with this moment will be telling. It will also set the pace for everything that flows out of our marketing departments for the next decade. That big brand I talked about earlier? They never pulled the trigger on their e-commerce project and wouldn’t you guess it: they’re busy scrambling for "likes" on Facebook and are selling their products through the handful of big box retailers left.
No direct relationships. No future.
Never another podcast episode or article 
Excellent post Mitch. I admire brands who seem to get this and are building relationships. There are brands that do this so well that it is almost cult-like (in a good way). I am a member of a few such ‘cults’ and I go out of my way to promote those products because that brand has built a great relationship with me. I care, even though I don’t profit in any way. People often point out that I pay more for that brand’s product – I do not care.
And it really doesn’t take much – great customer service, interesting website, good content in member emails, and a Facebook page that allows fans to interact. Maybe that sounds like ‘a lot’ to a brand but this is the opportunity to build a loyal customer base and to me, that is not much.
I absolutely accept the argument. I also look forward a post about the implications for reorganizing and staffing teams traditionally known as marketing departments and customer service departments.
Today reminds me of the tech bubble of the late 90s. Marketers can either carelessly take what they can get, or they can build for the future. People thought tech was dead after the bubble. It was only dead to those who wanted to skim from the top and not build a solid foundation.
To me the social media explosion is way more exciting than the tech boom because the action is there for absolutely anyone.
Yet another great piece, Mitch!
There are a lot of moving parts here. We have those who get it and are jumping up and down in the hall in frustration. There are those who don’t get it and think it’s just another bunch of noise. We have those who are petrified this looks too much like change and that’s simply not safe for the shareholders. And we have those who think it’s a threat to their matrix.
As you mentioned in your SPOS podcast last week, for decades the marketing department was really the advertising department. I’m not convinced that has changed much.
Internal and external customer service, dividing the organization into neat and tidy “departments” and filling days with mind numbing butt covering meetings won’t do thing one toward the development of direct customer relationships. And one (me) might argue, some (most?) either don’t want that relationship or they are unsure how to begin to form that relationship.
Five years ago, we weren’t even talking about an activity that has been going on since we began to walk the earth – social networking.
@Karen: best comment I’ve seen this year. I briefly worked for the Scientologists and they *really* understand relationship building.
@Mich: I have a challenge for you and anyone else who believes “No direct relationships. No future”. For the next month, only buy/sell/visit/use businesses and products where you have a current direct relationship.
I think you will find it hugely wasteful of time, because in all the minor matters where normally convenience trumps brand loyalty, you will have to search around for the exact brand.
While CEO of ICP Solar, I struggled to introduce this concept to a marketing team that was totallly aligned with our external sales team. I plowed through the resistance, with Mitch’s help, and even though that company didn’t succeed (due to a number of other factors) we were beginning to build some loyalty through the direct customer service (technical sales) and brand development programs that we had built. We were light-years ahead of the competition in beginning this kind of direct brand relationship in our industry (just as we were in 1996 when Chris Emergui and his Mcgill student buddies helped us build our very first website).
The challenge mentioned in another post about buying only from brands that have bothered to build a direct relationship is an interesting one. It will help understand the areas where brands matter, and where they don’t.
I think it depends on the “touch points” of the item you are purchasing and how important it is to you, for whatever reason, to have that brand. We may buy the latest parka from LLBean because its so unique, fairly priced, good quality, and because they have bothered to create a direct relationship with us, but will we care what brand of gasoline we buy when the tank reads “empty”?
Sass
Great post, but I am curious to know the future for B2B brands that still depend heavily on their VAR’s. Can they form these direct relationships?
I find it curious that this post drew fewer comments than usual? Does everyone simply agree, have they already been there (don’t think so)? Seth Godin’s blog post of a couple of days ago complete with link to a four part audio-video of his Chicago stop last year rings the same bell. I found this audio so thought provoking, and listening to it in four parts after entering passwords so thought stopping, that I ordered the DVD for $300. Call me crazy.
Mitch. What an important post this is for all of us in this field.
Not because we don’t already know this. But when a prominent voice in our industry speaks up and writes… and truly believes in direct relationships, the word spreads, and will eventually reach our bosses. I know many of us have tried to get that across, we’ve tried to paint the picture, but “they” are too comfortable to change now, preferring to ‘wait and see.’
Let me hit the forward button and send this post to some people that may NEED to
read it to hear it from someone else.
Thanks Mitch
Maybe it was the weekend that caused a lack of comments or maybe it’s the usual: the things I think will garner the most discussion, get the least and the stuff I think will get the smallest amount of comments usually sparks something… ahh, the Intertubes!
So refreshing to see this. Just today, I was mentioning how service models are moving away from the “service” they claim they have. We as consumer crave human relationships and contact. We don’t want to be treated as another “sale”.
Bravo. And I totally agree.