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What is More Important than Marketing? (Thinks Out Loud Episode 227) – Headlines and Show Notes
- Measuring marketing’s worth | McKinsey
- What % of your customers are influenced by marketing? | Narrative M.
- More than Half of Grocery Sales Now Influenced by Digital Marketing
- Customer Experience is Queen? What Does That Mean? (Thinks Out Loud Episode 190)
- Content is King, Customer Experience is Queen (Thinks Out Loud Episode 188)
- 8 Excellent Content Marketing and Customer Experience Insights: E-commerce Link Digest
- 5 Top Digital Trends for 2018 (Thinks Out Loud Episode 210)
- The Single Most Effective Way to Improve Your Brand’s Digital Marketing (Updated: 2017/08)
- How Method created a product so good it changed people’s buying habits – Mixergy
- Howard Schultz on Starbucks’ Turnaround
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Past Insights from Tim Peter Thinks
You might also want to check out these slides I had the pleasure of presenting recently about the key trends shaping marketing in the next year. Here are the slides for your reference:
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What’s More Important Than Marketing? Transcript
Well, hello again everyone, and welcome back to Thinks Out Loud, your source for all the digital marketing expertise your business needs. My name is Tim Peter. Today is Friday, August 24, 2018. This is episode 227 of the big show, and I think we’ve got a really great show for you.
Before I get into it too deeply, I want to thank our sponsor. We’re brought to you by Solo Segment. Solo Segment focuses on AI driven content discovery and site search analytics that unlock revenue. You can learn more about how to improve your search results and customer satisfaction for your site visitors by going to solosegment.com.
Now, it is funny, I didn’t do this on purpose, but it is funny that we’re talking about customer satisfaction because I heard a great couple of stories in the last couple weeks that I wanted to share with you. The first is I was having dinner not long ago with Mark Schaefer who is a long-time friend of the show. He’s a fellow instructor at Rutgers University, Rutgers Business School, and we were having some discussions about how people think about your brand in the longer term, and what makes them choose your brand in the longer term.
Mark reminded me of a McKinsey study from several years back that I thought was fascinating, and I thought was really, really worth reviewing. It’s from 2012 or 2013, so it may seem slightly out of date, but I want to point out that I think what the study talks about has only become more true over time, and I think experience shows and data shows that it has become a much bigger deal over time. And it really was focused on what percentage of revenue for most companies did marketing directly influence?
Now, before I answer the question, I want to point out I’m a marketing guy. I’m all about "are we creating great marketing that drives people to our brand and our business?" So, I would love for this to be a really big number, right? I have a vested interest in this number being, you know, epically large. But what the data shows is that marketing maybe influences about 30% of purchase decisions. You know, most of what influences purchase decisions is something other than marketing. And I suspect this is still true.
When I talk to companies, when I talk to clients, when I talk to other customers, they often talk about the other things that drove their purchase decision beyond just, you know, they saw a great ad, or they saw a search ad, or they thought the website was really great, right? And it really gets back to something I’ve talked about before here on the show, which is how customer experience is queen.
I had a funny experience years ago. I worked for a hotel company, and one of the brand managers for one of the brands that I worked with was fairly frustrated, you know, came to me one day and said that she didn’t believe the website did a great job of conveying her brand’s value proposition. And so I asked, I said, "What is you brand’s value proposition? What differentiates your brand from all the other hotel brands out there?" And I’m not saying this to be mean to her, but she kind of had a blank stare for a few minutes, and she said, "You know, it’s a fair point. I’ll know it when I see it."
And I thought, okay, that’s something maybe we need to work on a little bit, right? Because obviously the experience that someone had in one of our hotels from the moment they walked in to the moment they checked out was going to shape their perception of the brand far more than anything we could do on the web, especially at that time. I mean, this is not last year. This is several years back. And what we could from a user experience perspective was somewhat limited at the time.
And I think there are a handful of really interesting stories that illustrate what I’m talking about. One of my all time favorites is actually from 10 years ago. It’s when Howard Schultz returned to Starbucks as the CEO to turn the company around. They were struggling, and he rejoined the company. One of the first things he did was he cut the marketing budget, and again this is not something I want to see happen very often, but he cut the marketing budget to put more money into training, into training their baristas to make a good cup of coffee. He was interviewed in Harvard Business Review and he said, and this is a quote and it’s a relatively lengthy one. He said, "Unlike almost any other product or consumer brand, we have not been built through traditional marketing or advertising. It (meaning the company) has been built by the experience that I’ve just described and the only way we can succeed and sustain growth and new development and innovation and new dreams is the foundation of all of the future of the company is linked to the basic elements of one cup of coffee, one customer, and one barista at a time."
I think that’s an exceptionally wise point of view, because he’s really focused on how do we create a great customer experience every single time a customer interacts with one of our people providing the service, the barista, and with the product, the cup of coffee.
There’s another story I heard not long ago about Method soap. These are the people who make, you’ve probably seen these very cleverly designed soap dispensers in Target, in your local grocery store, etc., and there was a fantastic interview on Mixology with the CEO of method about how they chose in the direction that they did. And the story I had heard that led me to this interview was that they said cutting steel is a marketing expense, and what they mean by that is building the molds that shape the bottle that they put the bottle in is actually where they put their marketing dollars, right, because they were trying to create this great experience.
And in this Mixology interview, the CEO Andrew Ryan said, "That’s the role of design and the fragrance and the branding and the fun of it." So we would have people who essentially, what would happen is they would see it on the shelf because of the design. They would buy it, they would smell it in the stores, they’d buy it because of the fragrance, they would get home, use it, see what works, and eventually turn the bottle around and see that it’s good for them, good for the planet. That’s what helped create this cult following, and that’s what drove a lot of the loyalty. I’m going to continue this quote because it’s really fascinating.
He said, "When you talk to Method customers, you’ll find two different camps. You’ll find people who could care less about the environmental credentials of it. They just love the whole design experience of it. Then you can find people you really don’t care too much about the design, but they love the fact of our commitment to sustainability and human health."
So they’re really thinking about the overall experience right down to the packaging as opposed to a great ad campaign, or a great marketing effort.
Now, at the time, that interview was from 2012, and at the time they had had over $100 million in revenue at Target alone. Sorry, the interview was in 2017 and he said four or five years ago, so in 2012 or thereabouts. So we can safely assume they were making more than $100 million in revenue focused on design, and they were just sold to SC Johnson earlier this year for an undisclosed sum. So clearly this was having an effect. And remember, they’re competing against the Proctor & Gambles of the world who spend more money on advertising and more money on marketing than any other company in the world.
Now why did it work? Well, it worked because their customers told their story. One of the things I continually talk about with clients is, you know, how can we get customers to participate in the creation and curation of a positive brand story, or our positive brand story? Because if we can do that, we’re putting ourselves in a position to win. We’re putting ourselves in a position to really succeed.
There was a great piece on VentureBeat about how Open Table used just a little bit of data, and you’ve heard me say that, you know, content is king, customer experience is queen, and data is the crown jewels. But using just a little bit of data to understand customer intent and what customers were trying to accomplish, and then changing the product, changing the experience to actually being more useful for the people using it, and thus get them to use it more.
So again, it’s really about how you create this great experience that will get your customers to want to talk about you, to want to use you regularly, to come back again and again. Now, that doesn’t mean that marketing isn’t valuable. Again, if we’re giving credit to marketing for about 30% and you would not want to walk away from 30% of your business by any stretch. Nobody would. So this isn’t that marketing isn’t important, it’s that we have to remember the other 70% too. That’s what’s more important than marketing.
What is the customer experience you’re creating? What data are you using to build that customer experience and learn what’s working, and make it, in the words of Seth Godin, more remarkable for your customers? Because if you can do that, if you can create this extraordinary experience that gets people to com back again and again and again, you may find out that marketing is less than 30% of your benefit and of your results because you don’t need it to be, because your customers will do the work for you. And if you can accomplish that, you’re putting yourself in very rare company indeed.
Now, looking at the clock on the wall, we are out of time for this week. I do want to remind you that you can find the show notes for today’s episode as well as an archive of all past episodes by going to timpeter.com/podcast. Again, that’s timpeter.com/podcast. You can also find us on Spotify, on iTunes, on Stitcher Radio, on Google podcasts, whatever your favorite podcatcher happens to be. Just do a search for Thinks Out Loud, we should show up for that. You can find me on Facebook using the URL faceobok.com/timpeterassociates, on Twitter using the Twitter handle @tcpeter, and via email by sending an email to email@example.com. Again, that’s firstname.lastname@example.org.
Once again, I want to thank our sponsor, Solo Segment, focused on AI driven content discovery and site search analytics to unlock revenue. Check them out at solosegment.com to improve search results and improve your customer satisfaction too.
With that, I hope you have a wonderful weekend, a fantastic week ahead, and I will look forward to speaking with you again here on Thinks Out Loud next week. Until then, take care everybody.