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The New Consumer Conversation

2012 July 11
Consumer Conversation Homer

Ever since social media came on the scene, a lot of people have been talking about brands initiating meaningful conversations with consumers.

Detractors caution that consumers have other people they like to talk to, like friends, family and attractive members of the opposite sex.  In their view brands that waste time and money trying “create conversations” risk annoying consumers instead of selling to them.  They have a point.

Just because you need to buy socks or bathroom cleaner, doesn’t mean you want to build an entire relationship around your purchase.  However, I also think that the skeptics are missing the larger issue.  Every good business needs to pay close attention to market signals and digital technology is enabling us to both listen and respond exciting new ways.

The Red Herring of Consumer Engagement

At the core of the confusion is the incredibly misleading term of “engagement.”  Many people take it to mean that people want brands to be their friends and insert themselves in their lives.  That’s a grave error.

The Ad Contrarian put it like this:

Here’s what people want. They want products that work well, look nice, taste good and are reasonably priced from companies that treat them fairly.

Is that so freaking difficult to understand?

All this conversation/relationship bullshit is just a distraction.

Okay, that’s a bit strong, but there’s a lot of truth to it.  Throwing around terms like “engagement” and “conversation” doesn’t really get you anywhere and has the potential to do a lot of damage.

Brand Value Exchange

What people really want is a value exchange.  What the skeptics miss (and the conversation crazies take way too far) is that the nature of that transaction is expanding to include social aspects.  As I explained in an earlier post, value exchange now includes three broad categories.

Product value exchange:  This is the most obvious form of value exchange and it’s easy to find examples.  Apple excels at it and so does Wal-Mart (especially when you consider that their logistics capability is a major part of everything they sell).

Content Value Exchange: Consumers increasingly expect brands to be partners by helping them get maximum utility and enjoyment out of their purchase.  Probably the oldest example is the Michelin Guides, which were originally conceived to help motorists get more out of driving to new places, but has become a brand in its own right.

More recently, L’Oreal Paris created the Destination Beauty channel on YouTube to give consumers advice on how to use their products.  American Express Open Forum gives small business owners advice on running their enterprises.  Oakley gives their consumers valuable information with their Surf Report.

Social Value exchange: Every local pub owner has long understood that we’ll pay a whole lot more to go to a place where we can meet interesting people than we will to get drunk at home.  Starbucks has built an enormous business on a similar concept and is investing heavily in digital to further their strategy.  Zynga is another company that profits through adding social value.

So it’s not entirely accurate to say that consumers merely “want products that work well, look nice, taste good and are reasonably priced from companies that treat them fairly.” That, of course, is primary, but brands can add value in other ways as well.

Conventional Marketing Research

The concept of a dialogue with consumers is not exactly new.  Marketers have long sought to glean insights from sources other than sales data.  They spend millions on tracking studies, focus groups and bespoke research to understand needs in the marketplace and react to them.

The problem, of course, is that the old tools have been crude and slow.  Typically, if you had a question and wanted answers, you would set up a questionnaire, establish a panel, carry out the survey, analyze the results and, if you were lucky, might be able to go to market in about six months.

Even in longitudinal tracking studies you are analyzing backward-looking data to make forward-looking decisions.  In the digital economy, six months is a lifetime.  By the time you get answers to conventional research, the questions have often changed.

Building new conversations is not only important; it’s imperative.

New Conversations within the Consumer Network

One of the most harmful ways that the concept of consumer conversations has been misunderstood is that the term is taken far too literally.  Sometimes it seems that marketers think that consumers really want their brands over for a barbecue and a ball game.  The new conversations are vastly different than a trip to the beauty parlor.

For instance, in the digital age, it has become common practice for companies to offer develop products with alpha and beta users before offering wares to the general public (Gmail was in beta for five years).  This not only allows for wider testing and better performance, but also encourages early users to become advocates later on.

However, it goes far beyond that.  With social media such a potent force in the world today, literally millions of brand conversations are going on every minute and companies like Networked Insights and Open Amplify are using natural language processing to building powerful new platforms with which to turn those conversations into true insights.

Make no mistake, these are conversations and in more than an abstract, philosophical sense.  In 2003, Google asserted in a civil suit that its search results were a form of free speech and won a favorable opinion.  Today, a vast array of recommendation engines is affecting what we watch, buy and do based on machines talking to other machines.

Co-Creation and the New Web of Things

So the new consumer conversation is not necessarily verbal, but it is a conversation nonetheless.  Smart phones, smart cars, smart homes and smart retail are creating a new web of things that is made up of machine-to-machine interactions where consumers indicate preferences through normal use and marketers can respond.

Marketers now have to think in terms of SDK’s and API’s as much as GRP’s and CTR’s in order to co-create products with consumers.  In a very real sense, everybody is now a potential alpha or beta user.  Push marketing is giving way to hack marketing.

And that’s the interesting thing about the conversations that marketers are having with consumers.  Much as open source and open innovation has revolutionized technology, open brands will revolutionize marketing.

Brands are no longer defined by what they say, but how they listen.

– Greg

7 Responses leave one →
  1. July 11, 2012

    Interesting post. Two points. 1) Peak Attention. I learned this phrase from Venkatesh Rao’s blog and it makes lot of sense. With every brand joining the bandwagon, we are having one hell of conversation soup, with every brands ( and persons-as brands) clamoring for attention. Here is the catch: As companies discover new ways to gain value exchange from the conversations( Big Data, APIs etc) , new pockets of attention sources are becoming harder to find. In other words, the cost for creating value exchange is increasing exponentially. The analogy with Peak Oil is not just a case of semantics. Attention, like oil, is a high value source, with high energy density. With customers increasingly personalizing the modes in which they wish to converse and interact, it would be uphill task for marketers to derive value. Here is the blog post which gave me this wealth of insight: http://www.ribbonfarm.com/2011/06/08/a-brief-history-of-the-corporation-1600-to-2100/

    2) In other words, are’nt we getting closer to becoming prosumers? I know the word sounds quite buzzy. But, it makes whole lot of sense at this juncture.
    Venky´s last blog post ..Does Indian Education system breed innovation?

    [Reply]

    Greg Reply:

    Thanks Venky.

    – Greg

    [Reply]

    Venky Reply:

    Would have loved to hear your thoughts on this. I have been trying to probe into this.
    Venky´s last blog post ..Does Indian Education system breed innovation?

    [Reply]

    Greg Reply:

    Venky,

    Well, to be honest, I’m not sure that’s quite right. We keep getting more people who have more money and are more literate, so as a global aggregate I would say that attention is expanding. In developed markets, advertising clutter has been a factor for a long time. So I don’t really get how the concept of peak attention is particularly helpful.

    One point that I do think is salient is that there is a trend in the marketplace from making contacts to building assets. When you look at initiatives like Nike+iPod or Fiat Eco:Drive, you see that marketers are now able to build platforms that can build and grow over time, rather than run for three months until the next campaign comes along. That’s a big change.

    I wrote about it here:

    http://www.digitaltonto.com/2012/4-new-marketing-paradigms/

    – Greg

    Venky Reply:

    Thanks for the reply Greg. I remember reading your blog post on this.
    Venky´s last blog post ..Social Media, ROI and all that jazz – Part I

  2. July 18, 2012

    I’m not comfortable anymore with the concept of “consumer” – I wished you used a different title.

    [Reply]

    Greg Reply:

    You can always take the economist’s approach and simply assume another title:-)

    [Reply]

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