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DigitalCementWP 092409 FINAL

DigitalCementWP 092409 FINAL

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Published by Princess Shanti

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Published by: Princess Shanti on Jan 01, 2011
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Relationship Marketing 3.0
Thriving in Marketing’s New Ecosystem
white paper|2009
©2009 Peppers & Rogers Group. All rights protected and reserved.
The world has changed: power has shifted from companies to customers, and the traditional waysmarketers controlled their messages are gone. To succeed today, marketing needs to transform—customers
companies to change. The only way for a company to earn attention and loyaltyis to develop an authentic and relevant relationship.These days customers trust each other far more than they trust a company’s brand. Don Peppers, co-founder of Peppers & Rogers Group, explains the new dynamic in this way: “People’s friends and col-leagues have always played a role in shaping their opinions. However, social media makes it easier andmore convenient than it ever was to access and act on those opinions. This development is putting anail in the coffin of companies that build their business on a single unique proposition and then throwit out there to see how many people will bite on it. Flexible relationship marketing programs representtable stakes to participate in the economy these days.”Think about it: Networked consumers can quickly sap brand value. Consider the significant hit toDomino’s reputation, and revenue, because of an employee prank video on YouTube (page 4). On theother hand, this new breed of consumers can strengthen a company’s brand message and boost itsbottom line. For instance, customers who join General Mills Canada’s “Everyday Celebrations” pro-gram generate more business because they value the community created by the program’s recipe andmeal-planning guidance (see case study on page 8).While economic volatility has crimped marketing budgets, the business case for innovativerelationship marketing programs is more compelling than ever. Social networks present valuablenew reservoirs of customer intelligence for companies that can access and harvest the data.Always-on mobile communications and smart phones can facilitate more relevant interactions,greater customer advocacy and significant boosts to bottom lines. Savvy business leaders canthrive in this new marketplace, but they need to understand the changing environment.Peppers & Rogers Group and Digital Cement (subsid. Pitney Bowes Inc.) recently completed a study,
Relationship Marketing 3.0,
to assess how marketers are responding to the shifting landscape. The onlinesurvey was sent to senior level 1to1 Media subscribers, and over 650 marketing executives responded.The study shows that there is a serious disconnect between theory and practice. For instance, 88 percentof the participants stated that they are involved in relationship marketing and understand the importanceof building long-term relationships with customers. However, less than a quarter (24%) report they arespending the majority of their budget on enhancing relationships with retention efforts.
This white paper will teach marketers how to connect theory and practice. If they don’t, theircompetitors will.
Relationship Marketing 3.0:
Thriving in Marketing’s New Ecosystem
Executive Overview.............2The New Realities ofRelationship Marketing.......3Diminishing Controland Other Challenges.........4Relationship 3.0....................6Conclusion............................7Case Study............................8The RelationshipMarketing Survey................9
Key Takeaways
The rise of social media, always-on mobile connectivity and volatile economic conditions arereshaping marketing.
These changes pose significant reputation and financial risks and opportunities; they alsorequire companies to deploy relationship marketing to deepen their interaction with valuablecustomers while measuring the value of these relationships throughout the customer lifecycle.
Trust is the life-force of successful relationship marketing, and trust is developed andstrengthened through relevant communications through relevant channels at relevant times.
The most effective relationship marketing capabilities must be wedded to overall customerstrategy, deployed quickly and adjusted efficiently in response to changing conditions.
Executive Overview
The only way for acompany to earnattention and loyaltyis to develop anauthentic andrelevant relationship.
©2009 Peppers & Rogers Group. All rights protected and reserved.
Ready for some trivia? Which publication did one of the most influential reviewers of the biggestsoftware release in the past decade work for?It’s a trick question. The review of Microsoft’s Vista operating system two years ago by AdamFuhrer was one of the most widely read analyses of the operating system’s features. Fuhrer wasnot on staff at any computer magazine or newspaper. His judgments on software gained him ahuge following on the collaboration website Reddit.
Here’s the punch line: When he wrote his review, Adam Fuhrer was a 12 year-old who worebraces and lived with his parents in a Toronto suburb.
Since then, hundreds of other AdamFuhrers have disseminated their insights and opinions on numerous topics – quite possibly includ-ing
products and services – in dozens of online realms. Anonymous virtual tastemakers likeAdam represent one of the many challenges and opportunities posed by the explosive adoption ofsocial media technology, always-on communication connectivity and smart-phone devices. Thesedevelopments have profound implications on marketing.
Companies have acknowledged that “say and spray” mass communications techniques may not be aseffective as they used to be. And, while many companies have begun to embrace 1to1 communicationsby tailoring messages and offers to different customer segments, this is no longer sufficient.
Customers increasingly get their brand messages from other customers and peers – not justfrom the brand itself. Peppers explains, “The relatively small number of people with the most con-nections in a network exert influence through the cascading effect. If these influencers say some-thing positive about your product, it cascades through the network. However, negative opinionsand reviews from influencers also cascade.”To be successful in the socially connected world,companies need to be aware of these cascades.Peppers continues, “Social networks are like theweather: you cannot predict them any distance inadvance. No matter how good your analytics are, youcannot know the future of social networks. In this sce-nario the only defense against an unjust review or acascade of bad news is your organization’s reputationfor trustworthiness.”To build this kind of trust, companies need to knowmore than their customer’s name and zip codes; theyneed to understand all of the spheres of influence thataffect their most valuable customers, and then integratethat understanding into what, when, how and why theycommunicate with individual customers. In short, com-panies need to deploy “relationship marketing 3.0.”“Companies that thrive in this new relationshipmarketing ecosystem evaluate, improve and managetheir relationship marketing capabilities in a more iterative, integrated and flexible fashion thantheir competitors,” notes Sharad Verma, President of relationship marketing company DigitalCement, a Pitney Bowes subsidiary. “Doing so enables companies to ‘control what they can con-trol’ while establishing stronger, more durable foundations for brand messages that a growingnumber of customers control and convey through their own channels.”Can Microsoft find the next Adam Fuhrer and tailor its message directly to him? Unfortunately,doing so in advance is impossible. Instead, companies must be prepared to respond to, and eventake advantage of, unexpected brand impacts, both positive (see
Case Study: General Mills Canada
) and negative, when they do occur.
The New Realities of Relationship Marketing
While many companieshave begun to embraceone to one communica-tions by tailoringmessages and offers todifferent customersegments, this is nolonger sufficient.
Applications:Shiny and new or back to basics?
Shiny and New:
Successful relationship marketing in era of theconnected customer will involve the use of nifty new technology.Consider the potential value of designing smart-phone “apps” as apiece of content that helps draw new customers into a relationship.For instance, a pharmaceutical company could develop an app thatalerts allergy sufferers of various pollen, dust and mold counts.
Back to basics:
This new ecosystem also requires relationship man-agement programs to extend into highly valuable areas with lessgee-whiz appeal. A handful of leading companies are beginning toapply relationship marketing tactics to operational communications,such as regulatory mailings, invoices and statements, that they arerequired to send to customers. It remains an under-leveraged butimportant relationship marketing channel.

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