The crucial success factor will be maximum customer closeness, making full use of technological developments such as AI and Blockchain, as well as empathy, depth, compassion, romance, and support. Source: © kieferpix / Fotolia
The new customer closeness: Why it is so unique
Never in the history of economics have individuals and their needs been as clearly the focus of all effort as they are today, in the throes of the digital transformation. What does that mean for companies and their brands? On our 15-year anniversary, we take a look back into the past – in order the better understand the future of brand management.
Klaus-Dieter Koch
Managing Partner
Now the individual is the focus of all effort. Not ‘One to Many’ but ‘All to All’ is the crucial difference in the interaction between seller and buyer.
No doubt, our markets are changing at their core. In the future, people will no longer need central middlemen and organizations like banks, insurance agencies, trade organizations, and media. All they will need are platforms that organize trust, define the general conditions, and otherwise stay out of the interaction. The principle of "One to Many" makes way for the "All to All".
How can companies successfully navigate this transition, what do they have to prepare for? To see more clearly, let's take a look back:
Through the millennia, supply has defined the market. The market economy was the rule for everyone – with a few exceptions. What could be produced basically sold itself during those days.
This economic model didn't change until the industrial age: Thanks to serial and scalable production, for the first time ever there were more products than demand. Quantum leaps in research and development initiated a previously unimagined speed of innovation. The development of new production techniques and machines went hand in hand with more and more new products. The thinking of "fabricators" was dominated by the possibilities – but not by the necessities.
After the two World Wars, markets became saturated for the first time. Companies had to proceed in more refined ways in order to carve out business opportunities. They discovered the customer, a hitherto unknown creature.
The mass media worked on the sender-receiver model
Gallup in the USA was the first great market researcher. Also, the discipline of marketing with all of its derivatives like advertising was born. But still, at the center of all efforts were not customers, but abstract, highly compacted target groups, motives, and needs. The economy entered the age of the mass market, which was tapped by a variety of new media channels (TV, later internet). The age of mass media was born.
Apart from a bit of demographics (age and income), range was the crucial success factor, widespread awareness the associated currency. Thought was dominated by the sender-receiver model. One side did the sending, after finding out all about the target group and the best way to address its needs and emotional structure. The other side received and reacted – by either buying or refusing.
The "Phase of Obtrusiveness" is still palpable today
So far, the evolution through digitalization has progressed similarly in phases. In the mid-90s, the emerging internet was simply seen as another transmission channel. Companies used it the same way they used their established channels like radio and TV: for inundating precisely pre-defined market segments.
The unavoidable banner ads and video clips – in places where they are neither expected nor needed – are vestiges of this "phase of obtrusiveness". What was technologically feasible was used, receiver needs were secondary.
In the 2nd generation, with the arrival of the social networks, receivers also became senders: They started giving unsolicited, uncontrolled, and not pre-selected feedback, developed their own messages, and disseminated them. Thanks to the dominance of software and the development of intuitive operating methods like touch and gesture control, the technologies lost their dominion.
Now the individual is the focus, not the supply
Now, in the 3rd phase of the evolution, the technologies are disappearing from our consciousness. They are merging into the everyday world and shape our daily lives virtually unnoticed. Offline and online become "noline". Centrality becomes decentrality.
People no longer need central middlemen and organizers. Now, the individual is at the focus of all effort – not supply, not clever production, not the channel or creative marketing, but every single human being with all his contradictions, longings, fears, and hopes. Not "One to Many" but "All to All" is the crucial difference in the interaction between seller and buyer.
That means: The often demanded customer centricity approach falls short, because as before, it is premised on the sender-receiver model. (With the only difference that the sender focuses his efforts more on the receiver.)
The crucial success factors will be maximum customer closeness, making full use of technological developments like AI and Blockchain, and offline closeness through empathy, depth, compassion, romance, and support. In the Age of You, the goal is to become one with the customer. Sender and receiver merge into one entity – as the digital world merges with reality.
Challenging: People are becoming more experienced and the competition is getting smarter
But how do differentiation, distinction, and attractiveness develop when every provider has the perfect technology, everybody knows their customers better than ever thanks to data analysis, and everyone can satisfy their needs as easily and quickly as everyone else?
The winners will be those who distill this knowledge into an essence better than others, couple that essence with strong associations, and make it available anyplace and anytime. If they also do this in a credible, attractive, and differentiating way, they will have come full circle to the only system that has been around almost as long as people have been doing business: the brand.
Only well-managed brand systems can – independently of technological and disruptive developments – condense and store essential performances, values, attitudes, merits, and intentions in a way that gives them meaning and significance. And thus make the crucial difference.
A glance at economic history shows us: Every transformation began with a few strong oligopolies or even monopolies, which gradually broke into segments in the course of their evolution. It was that way in the Eastern trade, where the Venetians had a monopoly. It also happened that way with the Medici and their banks in Florence, the Fugger family in Augsburg, and the Patricians in Nuremberg.
This continued with railroad companies, oil companies like Standard Oil, telephone monopolies (AT & T) and software monopolies (Microsoft): In each case, a strong centralization that was present at the beginning was replaced by a decentralized development.
And so it will probably happen with the current oligopolies – GAFA (Google, Amazon, Facebook, Apple) in the western and BAT (Baidu, Alibaba, Tencent) in the eastern hemisphere. People are becoming more experienced, regulators more aware, and the competition smarter. All together they are chipping away at the great monoliths of our time.
