Last June, at the Innovation Marketing CMO Summit, led by Corante and Columbia Business School, John Hagel delivered one of the best talks I’ve ever heard. In his 15-minute, Powerpoint-less presentation, he posed a shift in business economics:
We are in the early stages of a profound shift in the economics of business that will transform marketing (along with many other things). Three shifts in economics are occurring in parallel.
First, we are moving from a world of relatively scarce shelf-space to relatively scarce attention. Second, costs of production and physical distribution are significantly declining on a global scale and customer acquisition and retention costs are rising. At the risk of over-simplification, value creation is shifting from businesses driven by economies of scale in production to businesses driven by economies of scope in customer relationships. Layer in a third factor at work – the systematic and significant decline in interaction costs that make it easier for customers to identify vendors, find information about them, negotiate with them, monitor their performance and switch from one vendor to another if they are not satisfied with performance.
These three forces reinforce each other and help to explain the growing power of customers in markets around the world.
He then talked about a new marketing strategy:
These shifts have broad implications in terms of marketing strategy, branding and marketing performance metrics. To start with marketing strategy and again at the risk of over-simplification, conventional marketing is built upon the three “I’s”:
- Intercept – target and expose customers to your message wherever you can find them.
- Inhibit – make it as difficult as possible for the customer to compare your product or service with any other options.
- Isolate – enter into a direct relationship with the customer and, wherever possible, remove all third parties from the relationship.
Nirvana is the walled garden of direct marketing. It is captured in the mantra of “one to one marketing” – one vendor dealing individually with each customer.
A different approach will be required to succeed in a business landscape defined by the economic shifts described earlier. I describe this marketing approach “collaboration marketing” and define it in terms of three “A’s”:
- Attract – create incentives for people to seek you out.
- Assist – the most powerful way to attract people is to be as helpful and engaging with them as possible – this requires a deep understanding of the various contexts in which people might use your products and a willingness to “co-create” products with customers.
- Affiliate – mobilize third parties, including other customers, to become even more helpful to the people you interact with.
In contrast to the “one to one marketing” mindset of conventional marketing, collaboration marketing requires a “many to one” mindset. The winners in this new world will be orchestrators who can mobilize rich networks of resources to serve customer needs.
And John finally posted an entire summary here. This talk and subsequent posting is inspiring some thoughts in my head. More later.