With my commute from the countryside into London, I have ample time to read and reflect each weekday. On my way to and from work my news feeds and customised content overload me with a world of digital transformation, innovation, Internet of things, unicorns, silicon everywhere and related growth bubbles.
In the subtext of this reading, and in my dealings with colleagues and clients, I’m seeing a common theme emerging — perhaps less of a golden thread than a grim reaper on horseback charging in from the horizon. It’s the nagging doubt most marketers have about whether we are doing enough to remain relevant as we compete with digital natives (Amazon, Google) and emerging disruptors (AirBnB, Netflix, Uber).
Are we innovative enough? Are we dynamic and nimble? Is our growth sustainable and are we building durable customer loyalty? To keep the paranoia at bay, we throw more resources at cutting edge technology, bigger data, pursue actionable insights and new operating models.
Even so, I am sometimes perplexed as CMOs who embrace these transformation programmes revert to a familiar mantra: “The best products and strongest brands will win.” They usually add: “Surely technology and data are subservient to this…simply an enabler.” Yes, their obsession with brand loyalty (brand love or whatever name you’d give profitable client relationships) is healthy, but marketing and products are no longer enough to win.
Brand as the software
To be blunt, there will be less of a sustainable, profitable client relationship if we keep focusing on simply creating a better product, tweaking product life-cycles and tinkering with marketing mix models. Products are to brands like hardware is to software, and as Marc Andreesen put it over four years ago, software is eating the world .
We’ve watched the death of software as a shrink wrapped product sold off the retail shelves, and many of the shops that sold it died too. The birth of Software-as-a-Service (SaaS), turned software product sales, licensing models and the client’s brand loyalty right on its head.
Marc Benioff and SalesForce, with their online delivery and subscription model led the charge. Their “Say No to Software” campaign disrupted the marketplace and business models of the entire software industry. SalesForce is today one of the largest investors in marketing cloud technologies.
SaaS not only made life simpler for clients by lowering barriers to entry, with quicker set-up and easier enablement, but it also lowered the upfront and overall cost of adoption. There’s a simple premise to SaaS: the value the customer derives over time from the tools, usually through the release of incremental new features whilst shifting from single to multi-applications, will equate to increased revenue for the software vendor.
In other words, SaaS requires a relationship over time (or brand loyalty) to ensure profitability. The profits don’t come from the upfront sales and license fees like the software products from the previous century. Apple is one company that gets how this concept applies beyond the software business: It has created a powerful ecosystem where it makes future purchases into the product life cycle.
From products to ecosystems and experiences
Apple’s customers are not just people who buy a device, but also sustainable revenue streams enabled by a network of service and product providers. Apple has built strong barrier-to-exit just by shifting its thinking from products to relationships. This is rigorously enabled through design standards that create consistent brand experiences.
Increasingly, the companies that have moved beyond a product focus to a brand and customer experience first model – that have adopted the SaaS mind-set – are pulling ahead of their peers. They have an inherent belief that brand value is built over time, through a consistent delivery of value added services. Think of GoPro and UnderArmour. Both are high growth businesses in what could be considered highly competitive, mature and commoditised categories – cameras and clothing.
GoPro is harnessing brand loyalty and user generated content by helping their core, committed customers with their content distribution and licensing. This has extended the relationship beyond a simple consumer device to a value-added network. The benefits extend GoPro’s customer relationships, brand engagement and the lifetime value of their customers.
It has embraced Product as a Service, increasing the value in the use of the product by embedding software and focusing on creating a platform for an expansive end-to-end customer experience. The customer’s iterative use of the product, of a more immersive and valuable experience is how brand loyalty is earned…Brand-as-a-Service (BaaS), a more sustainable model for brands in the 21st century
Now, if only my railway carrier could do the same thing, considering the exorbitant ticket price. May I suggest Wi-Fi and related utilities, like power points and USB points, free music and app downloads. Now that service would make me brand loyal.
Acceleration crafts digital marketing capability for the largest global brands. We are digital natives. Technology is in our DNA. We have always understood the radical impact that technology would have on the future of brands. To read more of our thinking, click on the link below.Explore Our Thinking