Our economy has shifted and continues to shift from a focus on ownership to a new focus on access. The rise of the sharing economy (Airbnb), the subscription economy (Netflix) are disrupting the power balance on a global scale.
Since 2012, revenues of subscription businesses have grown nine times faster than sales of companies in the S&P 500 and four times faster than the United States retail sector, according to Zuora’s new Subscription Economy Index.
In the process of paying for access to a product or service rather than owning it, consumers’ very habits are changing from transactional to relational. Consumers demand more from brands than purchases at the best possible price points. They want optimal customer experiences over the entire lifetime of their relationship, thereby shifting the big-picture focus from a transactional economy to a relationship economy.
The relationship economy
As it turns out, relationship-based exchange is not new, but the oldest form of transactional model known to man. From the dawn of civilization to 300 BC, humans engaged in a local relationship economy marked by barter exchanges – eggs for furs, cheese for seeds – with people they shared a connection with.
Tethered to their smartphones, consumers in today’s global relationship economy are free to choose their own path. Quite literally, as more and more customers use the services of companies that offer stylish holiday getaways or make a personal driver appear at the swipe of a finger (and car ownership among millennials is at a historic low).
The new meaning of brands
At this point, some marketers may interject because their business models depend, not on subscriptions or shared access, but on selling actual products that customers buy and own. Nevertheless, these marketers are also part of the relationship economy, since the concept of brands has changed accordingly.
In the consumer economy, the meaning of a brand depended on an “image” held in the consumers’ minds. This image sugar-coated the brand’s products and services in a halo of desirability and uniqueness, amplified by marketing magic, reinforced through repetition.
But as we enter the relationship economy, brands are increasingly defined by consumer experience – to a point where the relationship with consumers comes to define the entire brand.
Consider Nike, a highly successful brand with a business model based on selling sports equipment, currently topping the Forbes list of the world’s most valuable athletic brands with a $15.9 billion valuation.
What’s keeping Nike at the top is the fundamental nature of its relationship with consumers, which has long-since evolved from one between sports company and customers to one between athletes looking for better performance, and Nike as a personal trainer helping them reach their goals (for instance via workouts tracked by the free Nike+ Run Club app, but also with $200 running shoes).
The new rules of relationship marketing
Across the board, brands are following Nike’s lead and putting relationships at the center of their marketing efforts. Following consumers as they alternate between channels, goals, and customer journeys is not easy. But by following these new rules, and with the right marketing technology, marketers won’t be left behind:
1. Define the relationship and focus on the long game. Remembering Nike’s example, what relationship are you looking to have with your audience? Think beyond transactional, top-down relationships such as seller-to-customer. Choose balanced, cooperative models such as friend-to-friend, human-to-human and position your brand as a helpful assistant ready to provide personalized advice.
And while the consumer economy focused on conversion as the optimal outcome and success metric, relational marketers need to think long-term. Retention, loyalty, lifetime value – these are new KPIs to watch in evolving relationships.
2. Maintain focus on customer success. Embrace the role of friend and supporter by helping customers win with contextually relevant information: Whether it’s pointing out short-term offers on desired products, opportunities to upgrade their service experience, or rewarding loyalty with exclusive deals – marketers need to design lifecycles that inject relationships with added value at every turn.
3. Build trust and offer convenience. Legislation such as the CAN-SPAM Act and the European Union’s General Data Protection Regulation (GDPR) leaves marketers no choice but offer transparency in their data collection.
But it’s not just a “must” but an opportunity to build trust in a relationship: Ask consumers for relevant data – stored in universal consumer profiles – with clear language around opt-in. In return, offer turbo-charged levels of convenience through one-click ordering, seamless payment experiences, ultra-fast checkout, again and again.
4. Get automation/targeted marketing tools right. Nothing spells “unsubscribe” faster than irrelevant, automated emails sent at enervating frequencies. Then again, building humanized relationships at scale via automated marketing platforms is not a paradox.
Choose a platform that leverages consumer insights into personalized lifecycle campaigns. Relate with personalized messages across the right channels at the right junctures (opt-in, pending renewal, anniversary), incorporating touches across email, SMS, push, social, website, and more.
5. Tell stories that are personally relevant. Every relationship needs a story, much in the way Nike as a coach encourages athletes to “Just Do It” and perform their best. Maintain the personal focus with individualized content – tailored to relationship type (see 1.), current situation and lifecycle stage – and show customers you are paying attention by celebrating milestones and remembering past achievements.
Personal stories also power a more prospect-centric sales process, because the genuine customer wins you deliver attract new customers to discover your brand. Keep the spark alive by retargeting at the right time – based on browsing behavior, purchase data, social listening – and offering opportunities for deeper engagement.
6. Let consumers have a word. The true magic of the relationship economy is that marketers reap what they sow. Happy consumers in meaningful relationships will tell their friends about the experience, and bring new prospects on board with no extra marketing spend required whatsoever.
According to a recent study, customers will share a positive brand experience with six more people on average. Plus, fan-generated content and testimonials on social media build credibility and sustainable brand buzz.
7. Keep it personal and relevant. Play your part in scoring wins for your customers, and keep learning about their goals, habits, and unique needs. Get more personal and translate these consumer insights into noticeable service improvements, exclusive offers and VIP experiences.
Also make the relationship feel unique by sprinkling the customer journey with milestone rewards (anniversary of joining/subscribing, loyalty rewards, referral bonuses, etc.). Communicate with empathy and remember that the story of your relationship is not written by one side only — you and your consumers are both deciding where this journey is headed.