People are humans, not robots

As the excited proclamations of data mavens and numerous case studies show, the ability to mine and employ data with great precision is extremely useful in driving traffic and sales. A multi-billion-dollar industry has been built using data to drive sales. But is focusing on data alone helping build brand value, or simply providing a sugar high?

If people were robots, this would be a moot question. But people are people, and it may be that our ability and penchant for using data to drive activity (read: clicks) has eclipsed our ability to tap into a far more powerful motivation for brand growth: human nature. Are the dopamine hits marketers experience from looking at their data trends masking a brand-building muscle weakness, in the same way that the social media driven dopamine hits mask actual human connection with people? Is the data high taking marketers eyes off more important priorities?

A quick review of any basic sociology textbook will reveal that humans are social creatures. They like to identify as members of society as a whole (the human race), and as members specific communities (Americans, Italians, East Enders, Artists, Pickleball Players, etc.) to further define their identities. These community-based identities become powerful motivators for certain behaviours. People seek to make friendships with people in their community. They dress like people in their community. They eat the same food as people in their community. They drive the same cars as people in their community. They use the same words and language as people in their community. This behaviour has serious implications for brands. If a brand can identify and connect with people as they relate to their community, they can build powerful relationships with individuals AND their communities (this is the real influencer and network effect).

As an entrepreneur, you need to think of your target market, or market segment, as a community, rather than a collection of individuals with similar data characteristics (an important distinction). By doing this, your brand value creation potential is exponential. But communities have rules and behaviours that organise their existence. If you want to be accepted by a community, you need to know its rules and abide by its customs. Otherwise, you will not be included, and you may actively be blocked.

When entering a new community, people normally need to go through three basic steps to gain acceptance and membership.

1) Introduction

This is the stage where a person lets the group know who they are, and states an intention to become part of the community. They will highlight some reasons why they would make a good community member, and signal some value they will bring to the community. No community likes takers. People must give and take, preferably in that order.

2)  Ingratiation

At this stage, the person is becoming known by the community, and is engaging in communication (1-on-1 and group) with members of the community. They are becoming closer to particular members, and are starting to demonstrate their value to the community. This step can last weeks, months, or years, depending on the dynamics of the community and intensity of your efforts (for brands, read budget), before gaining full acceptance.

3)  Consummation

Once the person has demonstrated that they can be a good community member, and there is some group consensus confirming that, they can begin to consummate their group membership through relationships. They can create close or intimate relationships with community members, and can provide value (possible goods or services) to the community and gain personal benefit from their community membership.

Brands build relationships the same way. The meaningful initial marketing promise of the internet was the ability to infiltrate communities of millions or billions of people (this is what Facebook set out to do, once it pivoted from Hot or Not), and for brands to have the ability to build relationships directly with all of these community members. But this cannot be done in a digital-only vacuum, and you can’t take a short cut to acceptance. As a startup brand, you must not try to shortcut the process or you will pay the price. Maybe you will get those alluring early sales, but at what cost?

Have marketers gotten lazy or greedy, or both?

As the capability to drive and measure immediate clicks (performance advertising) has expanded and become the norm online, many brand marketers have forgotten (or never learned) how human nature works. Many have wrongly assumed that if they can get consumers to click on ads, that’s all that matters. Their brand briefs are not as painstakingly precise as Coke’s famous bottle brief, and may even be misguided in only specifying clicks. Many have abandoned brand advertising altogether, or have tried to make every communication some hybrid of brand storytelling and special offers designed not to inform and inspire, but to drive an immediate action.

In an extreme case, I recently spoke to someone at a multi-billion-dollar brand (young company, category leader) who told me that the brand does NO brand advertising. It only runs performance ads that can be abandoned within two weeks. My jaw was on the floor. Why is this a problem, you may ask, since the role of advertising is to ultimately drive sales through traffic?

Let’s consider the case of a brand like American Express, which has spent decades telling consumers a compelling story. Over many years of campaigns and executions, Amex has demonstrated to consumers that the brand has many valuable attributes. The card is accepted around the world. If you lose your card, they will overnight you a new one. If someone makes fraudulent charges to your card, you are not liable. Certain Amex cards offer special event tickets or seats, or access to lounges in airports. They have told me that membership has its privileges, and they have showed me what those privileges are, over and over again. I wrote all of that from memory, by the way, so their ads have been highly effective. As a result, I have let them into my community, and they have delivered value for decades.

Do you think that if all of Amex’s ads had only been asking me to sign up for the card, or that if I signed up today I would get special deal from my card, that I would:

 1) have such recall about why I should have an Amex card, and be such a loyal customer?;

 2) prefer to have an Amex over other cards;

 3) trust Amex over cards that seem to just trying to attract me by offering the latest rate deal?

Most likely not. And millions of people join me in paying for the privilege of having an Amex, when a no-fee card from a competitor may provide the same transaction-making capability. And Amex has driven greater profitability by telling its brand story. In addition to consumers spending to have their cards in wallets, retailers, hotels and restaurants around the world pay a premium to ACCEPT Amex as a payment method! Like many successful brands, their brand value has allowed them to charge a premium and make higher margins.

Many startup brands need to take a moment to stop and rethink their actions. Are they hooked on the data high, or are they taking actions that may not give them the immediate dopamine boost or sales volume, but will build a more valuable brand asset and deliver more profitable results for a longer period of time?

Of course, the bigger question is are boards, investors and Wall Street going to punish them if they make the right brand moves? That’s a topic for another article, but worth noting as it is a factor in brand decision making.

Are brands racing to the bottom?

Startup brands that buy ads with the intent of only driving transactions run two big risks. First, they risk consumers not fully understanding the product benefits that could create lasting relationships and higher margins – the benefit of brand campaigns is that they allow brands to highlight different aspects (human, emotional benefits) of a product and drive home the principal brand benefits in a compelling way. Remember, the goals of great advertising campaigns are to get your attention, build brand awareness and understanding, and build enough curiosity to get you to try the product.

Second, by relying too heavily on performance ads, brands leave themselves vulnerable to attack by other brands who can outspend them to steal share (clicks). Without clear differentiation besides price or some special offer, why would consumers stick with your brand? Do you want to train your consumers to only buy the best deal of the moment or to prefer your brand?

As more and more brands take the performance-heavy approach, it becomes a race to see which brand is willing to spend more dollars to get less value, and build a less loyal following who are buying mostly on price or deal. Remember what happened to Groupon and the companies that bought into using it? They found that customers would only come because of the Groupon deal, and then they would leave. Little loyal business was built, and Groupon is now a fraction of its once lofty stock price as a result.  This is a classic race to the bottom, and one that creates commodities of what might otherwise be valuable brands. In a click war, the brand with the biggest war chest will win… at first. Then, no brand really wins because margins have been squeezed to nothing, and you are left only with commodities, not brands.

However, brands that spend the time and money to build loyal (even fanatical) customer relationships, or at least some brand preference over time, can defend against a well-funded performance ad attack.

What should brands do?

First, stop measuring the value of ALL ads by how many immediate clicks they generate or the cost per acquisition. For some ads, this is appropriate, but not for all. Instead, decide what communities (groups of consumers) you’d like to join, and develop a plan to introduce yourself properly. What do you want them to know about the brand? How can the brand help them? Why can your brand do better than competing brands? Allocate enough time to make sure the community knows those points, and measure how well you are doing in gaining awareness of your story. There is no prescribed time for this, as it will depend on the intensity and cadence of your communication with the group. Penetrating consumers’ consciousness takes time and repetition, and specific brand cases (categories and communities) will vary in the time it will take to gain an effective level of awareness.

Second, once you’ve built awareness, start connecting with community members and ingratiating your brand to them. What does that mean? Give before you take. Let them know clearly what you bring to the table and why it’s good for them. Demonstrate or sample that value. Create value with a few key community members and let THEM tell your story. Again, this is what influencers do, but the problem with most influencers is that they are not always trusted members of the community you are trying to penetrate (worse, they may not even be liked by your target community). People know you are paying them, and that diminishes the credibility of the brand connection (people know they are just shilling your product). Depending on your brand and product category, great content, special offers, product samples and things that do NOT require a purchase and allow community members to get to know you better and appreciate your brand will all work well.

Finally, make your pitch. At this point, you should have built sufficient curiosity, demand and trust for trial. If you can get trial, and your product delivers on its promises to satisfy the needs of consumers, you have the opportunity to create a long-term, loyal and profitable relationship.

The alternative approach, which many brands are trending toward, is you can jump right to step three and try to make the sale on the first touch, while you are introducing your brand and trying to ingratiate it to people all at the same time. And you may make some sales (about 1-2% of the time that succeeds). But are you building anything beyond the sale? Are you building lasting brand value? Are you building a brand?

Go with the flow of human nature

Before the internet, marketers were better brand builders. Why? It was almost impossible to shortcut the process to making sales. Sure, there were always direct brand pitches in-stores and by mail, but they were usually offered in the context of a broader brand storytelling effort. Marketers knew they had little chance to make an immediate sale, and no chance to build any kind of lasting relationship with consumers without letting human nature take its course. They knew that part of consumer appeal comes from letting consumers discover your brand, not trying to shove it down their throats. Everyday, my social media feeds and email box are filled with new brands trying to shove a purchase down my throat.

Ironically, Apple – the company that has provided many of the digital tools that have taken marketers off track – has done an amazing job of brand building. Apple has defined its target communities, has ingratiated its products and has consummated trillions of dollars of transactions since its inception. I wonder what percentage of performance ads offering a deal, if any, are run by Apple in its marketing efforts? I’ve never seen one.

Once start-ups stop chasing clicks as their first priority, and start getting into the flow of how humans build relationships, connect as communities and tap into those connections to make decisions, they will again start building valuable brand assets. Once they step away from the temptation of dopamine inducing data mania, and get back to building relationships with consumers first, only then will they find the path to developing brands as valuable assets, and not just temporarily fattened geese that they will eat before way before they start laying the golden eggs.