How we relate to brands is undergoing a dramatic shift. The idea of a brand as a relationship was once asymmetrical and transactional. A company provided a product or service and you consumed it.
With the advent of social media enabling people to publicly share their opinions on products and services brands needed to respond quickly and evolve. For example, websites like TripAdvisor provided consumers with an open platform to share their experiences, which heavily impacted the need for hotels and providers to significantly prioritize their customer’s experience.
The communication between consumers and providers has shifted from one-directional to bi-directional. As our relationship with social technology continues to become more connected our relationship with brands has evolved as well; today, brands are the relationship.
To put this into context here’s a great overview published by Harvard Business Review on how brands have evolved. The word brand originates from the Old Norse word brandr, which means “to burn.” However, the initial term was most widely used in cattle ranching and farming to claim ownership over a specific herd of cattle. It wasn’t until the 1950’s when David Ogilvy used the word to define his approach to brand advertising.
Marketing 1.0, 2.0, 3.0 and the shift to brands as relationships
The evolution of a brand aligns with the evolution of marketing through the phases of marketing 1.0 to 2.0 to 3.0.
Philip Kotler, author of Marketing 3.0: From Products to Customers to the Human Spirit defines the evolution of marketing in three phases:
Marketing 1.0 is product-focused. “Marketing 1.0 is noted for reaching clients’ minds. 1.0 companies do a good job, offer good quality products to people and generate earnings.” A brand is a concept that the provider presents to the consumer. It’s a one-directional relationship, where the company provides the product or service, and the consumer consumes it.
Marketing 2.0 is consumer-focused, based on using data to create targeted messages, segmentation and personalization. This is the marketing approach that most companies practice today. “Some companies decide to learn more about to who they are selling their products, set out to fabricate and sell quality goods, to understand their clients through the study of large databases and to offer them a differential service… they study consumer behaviors and preferences in order to give them the best service possible.” In this phase, customer experience is a focus, and therefore a brand wraps the experience to help build awareness and loyalty.
The newest evolution of marketing, marketing 3.0, is values-focused, and “comes down to understanding that getting to know the client is much more than finding a person interested in your product. It’s understanding that people are in an unstable world with economic and ecological problems which should be remedied.” Brands are shifting the relationship from producer/consumer to a peer/peer relationship.
For example, according to Kira Wampler, CMO of Lyft, “Our original tagline was ‘Your Friend with a Car’ which served not only to describe the human, peer-to-peer experience we delivered with Lyft but also to differentiate us from other private driver approaches.” The brand relationship shifted from taxi driver/passenger to friend/friend.
Marketing 3.0 speaks to consumers’ emotional needs and considers the individual instead of segments. We see 3.0 working in strong omnichannel strategies, which relies on marketers’ abilities to identify an individual customer across the brand’s entire ecosystem in order to tailor programs that build relationships with each individual.
It’s now more important than ever for brands not only to sell great products, but to engage consumers through channels that they prefer across all stages of their journey, beyond the transaction. Customer engagement has been defined by one study as “a multidimensional concept comprising cognitive, emotional, and/or behavioral dimensions, [which] plays a central role in the process of relational exchange.”
Under this lens, the very measurement of a brand as a relationship in marketing 3.0 is customer engagement.
Building a brand as a relationship
The rise of marketing 3.0 illuminates an important point: consumers demand and deserve a two-way relationship with brands. They want to know their brands, and they expect their favorite brands to know them. They want brands to understand their emotional needs and standpoints, and they want brands to engage with them holistically in a personal way. Most of all, they want to feel good about purchasing from their favorite brands.
Starbucks is a brand that understands the marketing 3.0 frontier, as well as how to deliver meaningful customer experiences that encourage brand loyalty through omnichannel strategies. The mission statement alone embodies the essence of marketing 3.0: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.”
Starbucks translates that mission into their corporate social responsibility programs, touching consumers on an emotional level – “Bringing people together, helping provide education and employment opportunities and making a difference in people’s lives – it’s all part of being a good neighbor and a sustainable company. Starbucks, even as a public company, has always believed that we can balance profitability and a social conscience.” The brand relationship is not a coffee/consumer relationship but rather a neighbor/neighbor relationship.
From a tactical standpoint, the Starbucks app is an example of how the brand uses omnichannel marketing to encourage customer engagement and continue to build meaningful relationships. The Starbucks app is a seamless, interactive, and effective loyalty app experience that allows the brand to deliver offers, accept mobile purchases, build customer relationships, and reward their loyal customers – keeping them coming back. Nearly 30% of sales are now generated through the app, and it has helped increase revenue by 12%.
By incentivizing customer behavior through offering rewards for purchases, Starbucks gathers a wealth of data on the individual customer’s orders and visit history, which can be used to inform more personalized marketing strategies. “Our digital flywheel is a powerful proprietary asset that is driving deep customer engagement, revenue, and profit growth around the world,” said CEO Kevin Johnson.
As the marketing 3.0 landscape continues to evolve, brands have an opportunity to redefine their relationships. Every company should think hard about what that relationship looks like for each customer. It begins with merging a more empathetic approach to your customer’s lens and your brand mission, and then translating that into a visceral experience for every individual wherever they are and however they choose to engage with you.