The customer is dead, long live the network!

Yvonne van de Wal and others TOTAL IDENTITY

digital edition

Credits Based on an idea by: Hans P. BrandtText and editing: Yvonne van de WalCo-authors: Martin van Brakel (van Brakel Advies) and Jan Kranendonk (Kranendonk Robotics)

The customer is dead, long live the network!Yvonne van de Wal and others

2012 TOTAL IDENTITY Amsterdam

What led to this essay was an online discussion on customer focus and cus-

tomer intimacy, initiated by Hans Brandt on the TSM Business School web-

site. Martin van Brakel responded with his definition of customer intimacy.

In his view, organisations have to deal with three developments. Leaders in

organisations face questions such as ‘How do employees give substance to

the meaning of inspiration in organisations?’ ‘How are we currently work-

ing on customer focus?’ and ‘How do we create long-lasting relationships?‘

Out of this discussion, two round table talks arose at Total Identity, during

which the participants explored the topic of customer focus. Thanks to the

diversity of the participants - various professional groups, and a lovely mix

of digital natives and digital immigrants - the subject was discussed in great

depth. The most important insights were: it pays to invest in relationships

instead of transactions and it pays to steer the process instead of consump-

tion. People in organisations need to be aware of the fact that they are part

of a system. This leads to the challenge that customer-focused thinking and

working requires organisations to act. So, the new customer focus starts

with the culture of an organisation, the employees’ motives & intentions and

exploring the structure of and interaction with the surroundings.

We would like to thank all participants for their input and sharp insights.

– Martin van Brakel, van Brakel Advies

– Ivo Cerfontaine, Pink Roccade Healthcare

– Souhail Haouari, Investors association (VEB)

– Arjan Keunen, TSM Business School

– Peter Kustermans, Boer & Croon

– Kevin Looyschelder, Investors association (VEB)

– Jeroen van Oostveen, Architectenweb & Materia

– Ellen Roest, Boer & Croon

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Prologue

Scientists were ahead of us on the digital highway. I found that out 22

years ago when I was working as a temp at Elsevier Science Publishers.

Scientists from all over the world used it to deliver their manuscripts.

When I opened another big envelope, I thought African soil would fall

out of it or that I could smell Indian spices. They were thick wads of

typed paper which sometimes resembled parchment. However, the East-

ern Europeans and Americans used to send emails. They arrived at the

department’s central email address and it was always something of an

important occasion. I was fortunate enough that when people went on

holiday, I was allowed to read the messages and reply to them. The idea

that I was in direct contact with people on the other side of the world

was astonishing! An unusual sensation that occasionally comes over me

is when I am in contact with ‘digital natives’, young people born after 1980

with a mouse in their hand. Whereas for me it was sensational to be able

to communicate with people over the whole world, young people today

have never done anything else and they do lots more besides. They renew,

unite and connect and to them it’s all very easy matter of fact. The older

generations, the ‘digital immigrants’, can learn a lot from them. Along with

the arrival of ‘digital natives’ in business, there is another world on its

way which, in a positive way, is without borders. Far beyond the indus-

trial era, it is a world in which the customer calls the tune and organisa-

tions would do well to make online social networks part of their business

strategy and experience what new customer focus means.

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The customer is dead, long live the network!

The fundamental changes on the consumer side have made the road clear for

another way of doing business. There is scarcely a place for traditional mar-

keting communications any more. Network organisations with professionals

who are linked to each other online are the ones who will make a difference

in the near future. This essay offers a glimpse into how an organisation can

operate in a really customer focused way again. In order to do so, organisa-

tions will have to make a radical change in which the customer becomes a

part of the operation. The customer is dead, long live the network!

What do you mean, the customer is dead?

People looking for product information are inventive: they often use

Google to get their bearings, or they use sources outside the company,

such as social media, word-of-mouth advertising or customer reviews.

Social networks like Facebook and Twitter are playing an increasingly

greater role. This development is not in line with the way many compa-

nies and organisations are currently organised. They often still operate

using a strategy, culture and processes that date back to the last century.

In an environment that is becoming increasingly dominated by social

media, traditional marketing techniques and sales alone will no longer

work in the long run. The future belongs to organisations that use online

social networks as a real part of their strategy. In his book ‘Connect!’1,

author Menno Lanting sees that there is a two-way division between

‘digital natives’ and ‘digital immigrants’. The first group was born after

1980 and grew up in a digital world. The second group stems from the

industrial era without internet. Organisations that use online social net-

works as a real part of their business strategy turn out to be above aver-

age ‘digital native’: internet companies like Google together with media

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companies and young person brands belong to this group. These organ-

isations already do naturally what their counterparts have yet to learn:

they merge with the new ‘digitally connected world’.

In his book ‘How customers think’2, Gerald Zaltman demonstrates that

marketing specialists will have to change the way they work in order to

better understand the customer . During market research, consumers say

that they will buy a product; however, once the product is on the shelves,

they don’t buy it. Zaltman concludes that consumers know exactly what

they want to buy, but that marketing specialists don’t dig deep enough

to find out what their actual motivation and reasons are.

Large companies, where ‘digital immigrants’ form the majority now real-

ise that their customers will raise their voices if they aren’t being heard.

A typical example of this happened recently: during Giel Beelen’s morn-

ing radio show on 3FM, columnist Joep van Deudekom called for people to

boycott KPN. Any customers who weren’t immediately helped by the KPN

service desk had to say they were ‘friends of Joep van Deudekom’. He guar-

anteed that they would then receive proper service. The story was seized

upon by Twitter and other social media. How did KPN react? It wouldn’t

be the first brand to be sunk by widely backed criticism; remember for

example Buckler beer an Youp van ‘t Hek. In his essay ‘The effect of social

media’3Martijn Arts of Total Active Media writes: ‘Communication used to

be considered a linear process resulting from one fixed opinion. This was

possible because the use of communication instruments had been the

prerogative of opinion leaders and professionals. Corporate communica-

tions presented a frozen image of the organisation. Employee statements

have always contributed to the organisation’s reputation but because of

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social media, the influence and the impact become much greater. In the

perception of the customer and the stakeholder, this bottom-up commu-

nication is inextricably connected with the company and is part of the

total. Therefore the communication from the individual contributes to

the corporate communication.’ In other words: KPN will have to make a

radical change. It will have to get used to the digitally connected world.

It will have to replace the distant, bureaucratic and expensive image

with a more open, personal and authentic one. The radical change is only

reserved for people of flesh and blood. That is to say, the KPN employees.

In an environment where traditional marketing communication is losing

more and more ground and where consumers rely far more on their own

sources in order to gain (product) knowledge, there is a lot of specula-

tion as to what will replace traditional marketing. What will marketing 3.0

and 4.0 look like? Will we still be talking about customers? Will the term

actually fit in with the network’s ideas? Will customers become influenc-

ers, shareholders, entrepreneurs or co-makers? And what about organ-

isations? Menno Lanting expects that half of the current top 10 popular

employers among students - companies like Unilever, Shell, Heineken and

Philips - will be replaced by other names...Just to give you an idea about

customer focus.

Marketing 1.0 and 2.0: from product to people-centered

In the traditional customer approach - marketing 1.0 - the customer used

to be bombarded with advertising campaigns with the expectation that

sooner or later they would buy the product. Marketing 1.0 is offer driven:

you can buy this product, dear potential customer (and you are crazy if

you don’t).

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Marketing 2.0 is already (more) demand-focused; the marketing specialist

engages in dialogue with the customer and in doing so tries to build trust

and real contact. Wikipedia describes marketing 2.0 as follows: the central

idea is that marketing should be more about dialogue with the customer.

The suffix 2.0 refers to both the assumed succession of the traditional way

of marketing companies (marketing 1.0) and to the use of Web 2.0 tech-

nologies, although the use of the term Marketing 2.0 doesn’t appear to be

strictly dependent on the use of this web technology. Entering into dialogue

and building up a relationship moves from composing a product together

(co-creation) to thinking together about new products and services.

The benefit of this to the organisation is that more customer information

is obtained. This can be turned into a better offering so that distinguish-

ing capacity is created. New insights can lead to a strengthening of the

relationship with existing customers, an offering that better matches

the customer’s needs and enables you to come into contact with poten-

tial customers.

Marketing 3.0: from consumer to people-centered

Just like ‘consumer oriented’ Marketing 2.0, Marketing 3.0 aims to satisfy

the customer’s needs. However, companies that put Marketing 3.0 into

practice have ambitious missions, visions and values: they want to make

a contribution to a better world. Marketing 3.0 complements functional,

emotional marketing with ‘marketing for the soul’. It subscribes to princi-

ples that include those of Stephen Covey4 that every person has a head,

a heart, a soul and a philosophical core.

The most important driving force behind the rise of Marketing 3.0 is the

rapid development of mobile phones, Blackberry, iPhone, cheap computers,

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the emergence of social media such as Twitter, Facebook, YouTube and

collaborative media like Wikipedia. These technological developments

offer unprecedented possibilities for lightning-quick interaction between

individuals and various target groups.

Profitability is weighed against corporate social responsibility (CSR).

The trick is to position a unique identity and reinforce it with authentic

integrity in order to construct a strong corporate image. The best way to

spread a unique mission is by talking about your trademark and, in par-

ticular, by involving consumers. Companies like Unilever, Procter & Gam-

ble and Hewlett-Packard are trendsetters in the new world of Marketing

3.0: they have left Marketing 1.0 and 2.0 far behind. Coca Cola has also

recently been converted: until a short time ago, their corporate website

had a classical layout. Now it is filled with stories such as how Coca Cola’s

vintage bottle got its shape and a lot of CSR (‘what Coca-Cola is going to

do with its 50 million Facebook fans’). Visit www.coca-colacompany.com

to see this typical Marketing 3.0 website.

Marketing 4.0: holistic marketing

The future will see holistic marketing within which all stakeholders are

integrated. Marketing is developing into a true ecosystem in which rela-

tionship marketing, internal marketing, integrated marketing and cor-

porate social responsibility play a part. At least that is what marketing

founder Philip Kotler5 has already dubbed ‘Marketing 4.0’.

So, what part will the customer play in this? Instead of acting as ambas-

sador (so Marketing 3.0) they might become a shareholder, for instance in

a company set up as a cooperative. Internet marketing specialist, Stephan

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Fellinger6 puts it nicely: ‘The core of the cooperative stands for 3 issues:

togetherness, sharing and people, and it is no coincidence that these

three characteristics are part of the internet’s DNA. The culture of organi-

sations that are set up as cooperatives allows for a much greater chance

of online success (e.g. Rabobank). The Financieel Dagblad recently wrote

that organisations in which the employees are shareholders are scoring

better, in terms of profitability, within the current economic climate. As

such. it is possible not only to be a shareholder as an employee but as

a customer too. I saw a great example of this in New York last year. REI

is a Canadian outdoor gear brand which invites the customer to become

a shareholder (www.rei.com). It was founded in 1938 when 23 friends

started a cooperative because they weren’t happy with the outdoor gear

that was on offer at the time. Now 4 million customers are shareholders

who can spend their annual dividend on items from the store. When you

walk through the store you can also witness REI’s social involvement.

For example, there are nature courses for young people as well as pro-

grammes that help stop people getting overweight. At REI you can also

become a Steward, which means you van sign up as a volunteer and take

part in the running of the above projects. And don’t forget that a large

section of shareholders and volunteers are fanatical brand ambassadors.

What I also really like about the REI stores are the photos of staff mem-

bers who share their love for their sport with the customer. This way, the

customer knows at once who happens to be the in-store expert on a par-

ticular subject.... I understand, of course, that many brands will never

be able to change the structure of their organisation into a cooperative.

However, getting your customers to become shareholders in your brand

is, from a marketing angle, very interesting.’

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P.S. Just to come back to Philip Kotler: he says that it’s suicide to direct all

your marketing budgets into digital media. It is a both/and story with a

good blend of classical advertising media which is still the cheapest way

to reach the customer efficiently and social media which enable you to

engage the consumers in dialogue and strengthen your links with them.

Marketing flows 1.0 to 4.0 with associated core principles

Product focus (1.0) Consumer focus (2.0) Person focus (3.0) Holistic (4.0)

– Transaction– Customer– Paying– Quality– Company– Corporate– Sales– Product, product

loyalty– Competition

– Value– Contacts– Influence (buying)– Access– Service– User– Influencer– Measurable– Customer Lifetime

Value

– Network– Influence (earn

money!)– Platform– Open system– Person, human– System loyalty

– Ecosystem– Connection– Independent from

channels (stakeholder selects the channel)

– Stakeholders are equal (each has their own role)

– Interests are known and accepted

– Open and transparent– Altruistic?

Hands on with marketing 3.0

Marketing 3.0 is ‘hot and happening’ and ‘digital natives’ are far from

being in the majority in today’s companies. How can traditional organi-

sations, which are mostly staffed by ‘digital immigrants’, adopt the prin-

ciples of Marketing 3.0? Do you want to make a start on actually involv-

ing the customer (and other stakeholders such as your own employees,

suppliers and shareholders) in your organisation?

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Be authentic

Number 1: your company has to be itself An organisation can assume

an image of sustainability but today’s critical consumers will soon see

through that. People want to buy from an authentic organisation. They

want to be associated with it and write a review or recommend it to oth-

ers, talented people want to work there and suppliers jostle to do busi-

ness with such a company. Good things come to those who do good things.

Introduce ‘community marketing’

If somebody is considering making a major purchase like a TV, a new

roof or eyelid correction, they ask friends and neighbours, the peer net-

work – what they use and what their experiences are. Companies should

position their social media efforts in such a way that potential buyers

get the feeling that they are in contact with an extension of their peer

network – people who provide trustworthy information and give advice

based on their own experience with the product or service. Potential

buyers then have the experience that they are buying within their local,

physical surroundings.

Have a look at www.zuberance.com: this company offers loyal custom-

ers a selection of social media platforms where they can leave a review

or recommendation. The Zuberance platform ensures that reviews or

recommendations end up on the right websites. The promoter’s network

can learn at once from their experiences.

Go and find the customer’s ‘influencers’

Many companies spend their budget on buying influence through online

influencers with lots of followers. This contradicts the idea that, as a

company, you have to be authentic. Certainly if only well-worn messages

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are spread via these influencers. This kind of communication will not

be viewed as authentic and it will have a negative effect on the wider

online distribution of the message that was hoped for. It is better to

find and cultivate influencers who are already satisfied customers. By

exceeding the customer’s expectations, a mutually beneficial relationship

is born. Loyal customers will be prepared to act as promoters: they

will publicise the company whether they are asked to or not. It is for

this reason that you should give them something special to talk about.

Involve them in the development of new products and services, like you

would real VIPs.

A company like www.klout.com concentrates entirely on charting people’s

online influence. They do this by keeping track of which content peo-

ple share online, how others interact with that content, how influential

people are, how many followers they have (Twitter), how many friends

and ‘likes’ they have (Facebook) etc. They claim that Klout has a total of

25 variables, subdivided into three categories: True Reach, Amplification

Score and Network Score. The result is what they call a Klout Score, vary-

ing form 1 to 100. Peerindex, which was founded in 2009, also focuses all

its attention on this particular area. The company has set itself the objec-

tive of identifying online influencers (‘authorities’) and scoring each one.

It is interesting for companies to know how online influencers can be

deployed in order to achieve certain goals. There is a very interest-

ing short film about this called, ‘Influencers: how trends and creativity

become contagious’, written and directed by Paul Rojanathara and Davis

Johnson. See www.influencersfilm.com

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Involve loyal customers in the solution that the company is offering

Customer who are influencers are keen to broaden their network,

enhance their reputation and gain access to new information. Compa-

nies could make use of this by letting them be the first to profit from new

research results so that they can show their followers that they are influ-

ential thinkers. A company could ask customers to join them in thinking

up appealing solutions and then enlist their help in implementing them.

There’s a good example of this in Florida where the number of young peo-

ple starting smoking was becoming alarming. The state of Florida asked

influential young people such as student leaders, athletes and cool kids

who didn’t smoke or wanted to stop smoking to help them come up with a

solution. Around 600 young people got together. They explained to the offi-

cials who also attended why their anti-smoking campaign wasn’t work-

ing. Outraged by the fact that cigarette companies were aiming their

advertising campaigns specifically at getting youth to start smoking to

replace older people who had died (often as a result of lung cancer), they

set about devising a plan that would work. A group calling itself SWAT

(Students Working Against Tobacco) then travelled through the entire

state spreading their anti-smoking message. They succeeded too: in ten

years, the number of young people smoking fell by 50%, despite a vicious

counterattack by the tobacco lobby.

Finally

Companies whose most important business objective is customer focus

deliver a consistently superior customer service and, as a consequence,

they are able to count on higher profits. Research by John Fleming and

Jim Asplund7 points out that customers who feel involved generate 1.7

times more sales than average customers. Companies whose employees

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and customers feel involved actually generate 3.4 times more sales than

average. Moreover, there is proof that investors put their money in com-

panies that have loyal customers and employees. In short: Customer focus

is too important for a company simply to put in the hands of the marketing

department, because marketing says nothing about the loyalty of employ-

ees or investors. Customer-focused thinking and working therefore has

to be arranged at the highest strategic level.

Whereas in the past the value of the customer was mainly expressed in

monetary terms, the transactions that take place between organisation

and customer (the network) are much more diverse. Moreover, there

needn’t be transactions between all members of the network for it to be

sustained. Financial transactions will continue to exist, but they come in

various forms; for instance rent, lease, barter and freemiums. The trans-

action often has other components: payment in advance in order to gain

access to a network.

Hence the reason for this essay’s title: ‘The customer is dead, long live

the network’. The customer no longer exists; they may still be a buyer, but

they are also critic, ambassador, innovator, megaphone, shareholder and

networker. In what capacity is the customer the most interesting to the

organisation? As buyer of a bottle of Coca-Cola or as a Coca-Cola ambas-

sador on Facebook? Listen to what Coca-Cola themselves say about this

on their website: ‘We’re here because more than 1.8 billion times a day,

every day, people express their love for our brands by purchasing one of

our products. But those purchases represent more than just transactions.

They’re emotional. We know because more than 50 million people have

become our fans on Facebook, and millions of others have posted photos,

15

videos and blog posts that demonstrate their passion for Coca-Cola. We’re

here because our consumers allow us – and want us – to be here.’

www.klantgerichtheid.nl

After all the talks about customer focus and the appearance of this essay,

we would like to set up a ‘community of practice’ where you will be able

to share your knowledge and practical experience with customer focus.

For more information visit [www.klantgerichtheid.nl]. Goodbye!

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Reference list

1. Menno Lanting, ‘Connect! The impact of social networking on organi-

sations and leadership.

2. Gerald Zaltman, ‘How customers think’.

3. Martijn Arts, ‘The effect of social media’: essay can be downloaded from

www.totalidentity.nl.

4. If you would like to know more about the Stephen Covey’s influential

work, then read ‘The Seven Habits of Highly Effective People’.

5. Dutch marketing professors chose Philip Kotler’s book, ‘Marketing Man-

agement’, as the most influential marketing book of all time.

6. If you would like to read the complete column ‘Het jaar van de coöper-

atie’ (the year of the cooperative) by Stephan Fellinger, go to:

fellinger.nl/2012/10/01/het-jaar-van-de-cooperatie

7. John H. Fleming and Jim Asplund, ‘Human Sigma: Managing the

Employee-Customer Encounter’.

If you have any time left

Read the little book ‘Think Small, Grow Big’ by Ab Kuijer (it’ll only take an

evening). It is aimed at the modern day marketer who can no longer see

the wood for the trees. Using concrete examples and five-step plan for

setting up a social media strategy, the book answers the question how

to get your message effectively across to your target group these days.

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