The Consumer Is Boss

Even before the social network was crowned king of the marketing jungle, prescient executives had foreseen the shift in pricing and buying power from companies to consumers.

The dotcom bubble was the first wave of that revolution and the subsequent innovations have cemented its truth. That said, many companies have yet to fully embrace this change. The problem appears to be that they hope to ride the wave of social networks or mobile commerce without investing the requisite time, money and operational changes to fully take advantage of the financial and productivity-related rewards. Part of this is fear of the disruption and part is concern that they will not realize an immediate return on investment, which might negatively impact executive bonuses. Clearly, better run companies have seized the opportunity and are running with it, but as the article below points out, the majority have not.

One interesting sidelight to this trend is that the consumer has not seen his/her status as boss translate into political support. Business continues to dominate the policy realm from credit card fees, to mortgage servicing, to consumer safety. The cost to consumers has been real, but corporations have fought vigorously to protect their advantages through lobbying, public relations campaigns and financial donations. It is not clear whether this is a doomed rear-guard action or a more sustainable victory. Price increases and compensation declines have eroded consumer buying power. Frustration is evident, but whether the advances in convenience and product satisfaction translate into more substantial benefits will be played out over the next few years as the economy either recovers or slides into another recession.

Bryan Eisenberg reports in Brand Amplitude:

"On October 15, 2000, A.G. Lafley, president and CEO of Procter & Gamble Co., delivered a prophetic speech entitled "The Consumer is Boss!" to the Association of National Advertisers. In his presentation he emphasized three main points:

"We're moving away from the current mass marketing model, away from push and toward pull. Consumers will only become more demanding. They want to have a conversation, to dialogue, to participate, to be more in control."

These points may seem obvious to marketers and other business people today, but they still confound us. We only now begin to realize the implications. Recently, Rich Green, CTO at Nokia, said companies should stop trying to think of using social media for their own ends: "The big 'a-ha' moment is when enterprises finally realize that their digital existences are being defined by the consumer world, not the reverse. It is hubris to think that an enterprise can 'use' social media for its advantage."

There is no question that marketing has been completely redefined, and understanding the impact of social and mobile technologies on customer behavior is still unclear for many. While we know people are engaged with our social and media efforts, the return on investment is still hard to define. In fact, according to the just released Forrester/Shop.org's State of Retailing Online 2011 report (SORO 2011), 68 percent of retailers said if Facebook went away it wouldn't impact sales at all in 2011. Also, 62 percent of retailers agree that returns on social marketing strategies are unclear. There is some good news: 72 percent of retailers will increase their spend in social. However, 36 percent of retailers are pursuing a social media strategy mostly because their competitors are.

In IBM's State of Marketing 2011 study, we learned that 60 percent of marketers identified "turning data into action" as their top organizational issue. We suffer from data overload. It's unclear what a lot of this social data is telling us, because we can't directly correlate that data to sales in most cases. The true ROI of social media is unclear for many.

The study shows our frustration with social media:

"This year, social media is no longer the adorable baby everyone wants to hold, but the angst-filled adolescent – still immature yet no longer cute – who inspires mixed feelings. All things social continue to hold intense interest, with 53% of marketers currently applying it to their marketing efforts. But as tactics rise and fall, a more sophisticated approach is emerging."
As quoted in The Wall Street Journal, Jean-Philippe Courtois, president of Microsoft International, said: "The explosion of social networking with consumers has changed their (consumers) expectations about how they can and should connect with businesses. 'Real-time' is a new imperative, which is causing many businesses to rethink their customer relations strategies via digital marketing."

We have had 10-plus years of warnings about these changes and so few are prepared. Companies have totally missed the point. They don't really need to worry about keeping up with their competitors. Nevertheless, they must worry about how to keep up with their customers.

We have either entered or passed the year when mobile became a critical issue for business. The SORO 2011 reports that only 29 percent of retailers say they have a mobile strategy, are implementing it, and are already optimizing. Meanwhile, only 12 percent of the Internet Retailer Top 500 websites had mobile websites in a mid-2010 study, and only 7 percent had mobile apps.