Wednesday, November 29, 2017

Why Marketers Need To Focus On Return On Relationships


Relationships, A.K.A. "the way in which two or more people or organizations regard and behave toward each other." There are of course other definitions but in this particular context this is the most appropriate. Relationships are all around us and come in many different forms.

For brands the word takes on a significant meaning and value for having relationships — the right kind of relationships that is, with customers and prospects alike is paramount for long term survival. Of course that is easier said than done for sure.

And just so we're clear when I say the right kind of relationship I mean one in which the brand realizes they are not in control. One where the customer or prospect drives the bus, decides what movie to see and what restaurant you go to. Get the analogy? You better.


The Importance of ROR

Last month I attended the GRMA (Global Retail Marketing Association) Executive Leadership Forum for Financial and Insurance Services in Florida. One of the speakers at the event was Lou Paskalis, Senior Vice President, Enterprise Media Planning, Investment and Measurement Executive at Bank of America Merrill Lynch. Yes his title is a mouthful.

Lou, whom I met for the first time at the event, was incredibly dynamic and passionate about the importance of Return On Relationships, adding that he believes marketers need to focus on ROR before (gasp!) ROI.

I spoke with Lou after the event to dig deeper on ROR and other topics including the fact that he also believes, quite strongly mind you, that marketers measure the wrong KPIs.

Steve Olenski:
At the GRMA Forum you spoke about Return On Relationships (ROR). You believe that marketers need to focus on ROR before ROI, adding that you think marketers are measuring the wrong KPIs. I'm sure there are cynics and skeptics out there who are literally shaking their heads even reading this. Why is ROR so important and what are the wrong KPIs and in turn what are the correct ones?

Lou Paskalis: I think it’s a fundamental human truth that we are generally more receptive to people we have a relationship with. People who work in retail often engage their regular customers in conversation about current events or acquaintances. Our financial center associates often cultivate relationships with their frequent customers as a matter of instinct or human nature, not merely business value. Rishad Tobaccowala is fond of saying that we chose with our heart and then rationalize with our head.

We’ve lost some of that ethos in advertising, particularly digital advertising, because we have been lured to the bottom of the funnel by transactional measures. Last-touch measures are interesting diagnostically, but too often it’s these measures that are optimized, when in fact it’s the relationship over time that the marketer should be optimizing which, is possible with today’s technology. This requires a fundamental regrounding in the role of advertising. Too much industry is put behind the direct relationship between an advertising stimulus and a transactional response.

I call that “A” to “C” marketing. What we should be measuring is the impact that an ad or a piece of content published by a marketer has on the relationship between that marketer and a particular audience as measured by some impact on perception. Once a positive perception is cultivated, then we can, and should and see a corresponding positive impact on business outcomes. In other words, “A” to “B” to “C” marketing. Investing in relationships is far more sustainable than just trying to money ball transactions.

Olenski: As a follow up how do you get marketers, so deeply-rooted in the same old KPIs to pivot and measure what you believe are the right KPIs?

Paskalis: Great question. This requires an amalgam of marketing science, marketing intuition and intestinal fortitude. Until the 1500’s every map ever made showed the earth to be flat. That was the truth. Then it turned out that it wasn’t. That’s where a lot of the KPI discussion are today. In marketing we’ve got a set truths that are hard won and very specific to a channel or a product or even an audience sometimes, but more often than not, those truths are looking only at a narrow set of stimuli and force relating them to a specific outcome.

Very often, these “insights” are constrained to a specific session in which the customer interacts with the marketer. Where we are going is to connect every experience to a “single view of the customer across all touch points” so that we learn their needs, retain the insight and orchestrate the next interaction based on not only same session insights, but previous learnings on everything from interests, to preference to immediate context and how that might impact receptivity.

Ultimately, the KPIs that we need to be optimizing are grounded in the sentiment space such as favorability, relevance or advocacy. KPIs that modern marketing technology enables us to observe and learn from. At Bank of America, we know that customers who think more favorably about us do far more business with us than those who don’t. It’s common sense, but that insight is commonly underutilized in a marketing industry that has had their focus pulled to the bottom of the funnel by measures that historically have been easier to measure.





Source: https://www.forbes.com

Image Source: Pexels

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