Connect 2018 Opening Remarks: The State of the Brand/Customer Relationship
A look at the state of brand-customer relationships, including how e-commerce, Google and retention have changed sales, shopping and customer loyalty.
It’s the fourth year, as Motti said, that we’re running this conference. And I’m privileged to kicking off the event for the last four years because I set up the agenda and then I put myself first, the best slot. So, every time it’s, opening remarks is a pickle because you want to set the bar high enough, but then again, how do you reinvent yourself every year?
So I was thinking, and thinking, and thinking, and then… Clicker? Confucius saved the day. Study the past if you would define the future. So what I’m going to talk about to kick the day off is a bit about the brand consumer relationships and let’s start 2005.
2005, CEO of Procter & Gamble, back in the day coined the phrase called, FMOT and SMOT. First moment of truth and second moment of truth. And the idea is, this defines very well consumer 1.0. Consumer 1.0 came to the shop, faced the shelf and that was FMOT. The first moment of truth.
He sees all the products, good brand, good product, makes a decision, takes it. SMOT, second moment of truth is when they use the product and then decide whether or not to continue engaging with a brand. 2005, ever since all of the e-commerce trend, all of the e-commerce mess, “off started.”
Now, raise your hand if at any point today you buy something without googling it. So you buy something without googling it? I’m sorry to say you’re in the minority. What happened is, in 2011, Google coined ZMOT.
Zero moment of truth. And what ZMOT is and this by the way was the birth of consumer 2.0, was the age of SEM, Search Engine Marketing. You search everything on Google before you buy and then that’s the place where you can initially engage each and every consumer. Age of SEM, everyone invested in paid search and everything all of that good stuff, organic, paid, whatever.
And, that was the birth again of consumer 2.0. Now, what does this mean from an economic standpoint? Ecommerce lowered the barrier… The barriers to enter ecommerce are quite low. It’s easy to open your new shop. It’s easy to start your new gaming operation. Right? So think about economics 101.
Same amount of customers or same amount of target audience, more and more operators and merchants fighting over the same audience, your cost of acquisition skyrockets. Right? Economics 101. Now, what this did is that once you have very high cost of acquisition, you’re ROI negative if you don’t invest in your existing customers.
Right? It just makes sense. If you buy a consumer for $5, he spends $2, only to churn, you lost $3. So what happened is, in 2016, marketers, even before that, 2016, marketers started to focus on SMOT, second moment of truth.
Why? Because at that SMOT, at that second moment of truth, which is the focus of your experience, you decide what’s your perception of the brand and whether or not will you be buying with them in the future to come. The result of SMOT or after 2016 is consumer 3.0.
Consumer 3.0, let’s call her the entitled, or if we want to be more PC, the empowered. Why? Marketers started investing into relationship marketing, into making sure that consumer 3.0 is happy with them at the second moment of truth so they’d continue on buying with this customer.
Now, we created some kind of beast. All right? Sixty-three percent of Gen Z and millennials say that brands must show them loyalty to earn their business. They don’t want to be loyal to us, they want us to be loyal to them. That’s what’s called chutzpah. Eighty-nine percent of consumers don’t give brands a second chance after a bad experience.
Entitled. Fifty-two percent of millennials say they would switch from one major retailer to another for discounts. Price sensitive. Fifty-five percent of online shoppers abandon their carts and never return to the retailer’s site. It’s a pickle. How do we deal with this consumer 3.0? I think that this question is something that if us marketers aren’t confronting this question on a daily basis, something probably must be wrong.
Because we have a new consumer, if we don’t invest in relationship marketing, we’ll be ROI negative and then how do we even do that? Back to Confucius. One would be ashamed should his deeds not match his words. Let’s go back to our office marketers and see what is our always promise to our customers.
Marketing, noun, the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large. Have value to customers. Since the dawn of marketing, our promise, as marketers, is to deliver value to our customers.
Sounds easy, right? Eighty percent of teens cited value as the most important factor for purchase. So, let’s call this sub conclusion, value is key to engaging with consumer 3.0. Now, what does that even mean? In 2018, what we’ve been seeing is that marketers go for an enhanced SMOT.
They invest in every additional…in every next purchase as if it were the first second moment of truth. First second moment of truth. Why? Back to the definition of SMOT. At the second moment of truth, brands decide what… Sorry. Consumers decide what is their perception of the brand and whether or not will they continue engaging with that brand moving forward.
So, every additional interaction is considered by marketing or is treated by marketing as SMOT, second moment of truth again and again. Last year, this man here stated that the future of marketing is relationship marketing. Now, what does this mean? Back then, Pini, Optimove CEO, for those of you that aren’t familiar with this guy, said that, at a certain point in the future, all of the data will be in our databases.
Meaning that we won’t need to do, probably invest heavily into acquisition, and all of the marketing will become SMOT. Investing in our existing customer base. Making sure that we continue to deliver our initial promise of value to each and every one of our customers.
Now, where’s the problem? That value means different things for different customers. Not only that, per each and every customer, value changes over time. So back to our question, how do we cope with this? How do we cope with consumer 3.0? I’m an optimist, so there’s a light at the end of the funnel.
Do you like that? Funnel-tunnel? Eighty-one percent of consumers are more likely to do business with a company if it offers personalized experiences. Ninety-four percent of U.S. internet users cite consistently good customer experience as their top reason for loyalty. Ninety-one percent of consumers say they would be more likely to shop with brands that provide relevant offers and recommendations.
Relevant offers, personalization, really good stuff. The question is, in a world that value means different things for different people, how do we achieve that? And our answer would be, the consumer 3.0 is not only the entitled, the empowered, and all that good stuff, they’re also way smarter.
And in order for us to be relevant to them, we must exhibit smart marketing. That leads me to the question, what are we all doing here today? So, kicking off this day, I want to present the question that’ll be the overarching discussion across this event. What makes marketing smart marketing? Optimove Connect is here to share knowledge and this year we want to focus on the holy grail of smart marketing.
And we’re going to have panel discussions, keynotes, case studies, all about, from different angles, business model, strategy, org structure. You name it, we’re going to have it here. And hopefully, at the end of this day, you’ll have a better idea of what means smart marketing. Now, the vast majority of people here in the room work with Optimove. That’s a very good step towards this. But there’s still more.
I’d like to take the opportunity to mention some logistics. Please do share the conversation, #Connect18. At this point you’re supposed to take a picture of me. And then when I go off stage, I’ll search the hashtag and hopefully, I’ll be tagged. So please do share the conversation, #Connect18. I’d like to take the opportunity to thank our sponsors and partners, Mobivate, Wiraya, and Xtremepush.
All of them are vendors fully integrated with Optimove, expanding our offering. All of them have presence here on my left-hand side, your right-hand side. Please take a moment also to visit and see what they can offer. And last but not least, I want to thank you all. Without all of you, Optimove wasn’t Optimove, and Optimove Connect was definitely not Optimove.
We have, 70% of the people in the room came from overseas to see me dancing on stage. No, I’m just kidding. It’s a huge achievement for us. It’s a huge achievement for the global CRM, relationship marketing community. Thank you for making the travels. Thank you for coming here and for spending the day with us.