Marketing has been a story of eras: from mass marketing to the direct marketing era to digital marketing and, now, data-driven marketing. As marketing strategy changes and marketing resources shift, so do consumers and customer loyalty — today, consumers use more devices, ad blockers, and other privacy protection tools and still have increasingly sophisticated customer experience expectations. And make no mistake: If you’re not meeting those expectations, customers will find someone who will, as according to Forrester Analytics data, 54% say they’re willing to experiment in any market.
Unfortunately, in their efforts to deliver data-driven marketing and high-quality customer experiences, marketers have stumbled. For example, in many cases, their attempts to build data-rich customer profiles created data hoarding practices and broke customer trust when the extent of some companies’ profiling became public (see Facebook and Cambridge Analytica). Or consider that when marketers recognized the growth of values-driven consumers, they tried to appeal to them with values-focused messaging but sometimes at the cost of authenticity, such as when a car reseller announced it was pulling advertising from a television show it hadn’t bought media for in years just to take a stand in a controversy.
Why have marketers’ attempts at becoming customer-obsessed backfired? Well, one of the myriad challenges with stabilizing your customer base under these circumstances is that customers are complex human beings, not just numbers in a spreadsheet or targets in an ad tech platform. Just when the challenges seem insurmountable, however, a fundamental truth about customers emerges that should give marketers some amount of comfort: People’s most basic needs and desires haven’t changed. They seek to express their identity and individuality; they long to be part of a community; they want tools to make life better and easier; etc.
What’s different is how these needs are expressed, demonstrated, and met in today’s world. For example, the drive for belonging has led to tribalism as polarization has set in. For proof, just do a quick Twitter search for the day’s threatened boycotts. Similarly, we know that customers will actively participate with and advocate for brands that they care about, and yet their measurable loyalty has waned. Forrester’s Customer Experience Index (CX Index™) shows a 20-point difference in sentiment when customers judge the quality of a brand’s overall service and sense that they are rewarded for their loyalty. The majority of brands’ scores show that less than 50% of customers believe their loyalty is rewarded.
When marketers fail to understand the complexity and nuance of how customers’ core characteristics evolve, people lose trust in them. As they look elsewhere, customers have found a more nimble set of businesses to meet their needs: direct-to-consumer (DTC) brands. DTC brands pride themselves on their direct relationships with customers and often drive rich personalization based on zero- and first-party data, rather than inferred data. Many incorporate values-driven missions as well, such as Parachute’s participation in the United Nations’ Nothing But Nets program. (Every Parachute bedding purchase helps provide mosquito nets to families in areas with a high risk of malaria.) These benefits have driven consumer trial and adoption — Forrester’s data shows that two-thirds of 18-to-34-year-old US consumers have made at least one purchase from a DTC brand.
For large, historic brands, DTC challengers represent not just a shifting competitive landscape and changing consumer attitudes but also an opportunity to examine the shifting marketplace at large. Purpose-driven ecosystems will embed tribalism even further, but people are increasingly taking control of their consumer identities — through the emergence of the personal digital twin, for example — which means that segmenting customers into tribes won’t save brands either. Instead, marketers must grapple with how they can serve consumers’ individual needs, expressed on the customers’ own terms, through the innovative use of AI technologies and curation platforms, rather than jumping on the latest tech bandwagon just for the heck of it.
For more on the path forward and marketers’ new remit, download Forrester’s complimentary eBook.