Creating personalized experiences for your customer is historically an expensive alternative to mass marketing, but recent advances in CMS technology, cloud storage of customer data, and associated analytic capabilities have made this increasingly possible and practical for marketers. In the digital age, customers are in control, and this is especially true online. Industry leaders are using new technology to track their customer’s every move (which email they open, what they click on, when they call for support, etc.…). Utilizing this data to enhance the customer experience seems obvious now, but it took decades for even the most innovative marketers to begin deploying context marketing tactics. Technology has recently risen to meet the need of marketers identified decades ago. Let’s begin by exploring the power of mass-market advertising and the growth of segmentation.
Mass Markets and Elvis
Mass attention peaked in September 1956, when Elvis Presley made his first television appearance on the Ed Sullivan Show. Radio broadcast giants were leveraging existing sponsors to fund their new novelty platform: prime time television. For a brief moment, advertisers seemed to capture the attention of the entire nation with a commercial break. In a decade of 1950s American conformity, most families gathered to watch the same broadcasted programs — on one of three channels — each night. Sixty million viewers tuned in to watch Elvis perform, which represented an 82.6 percent share of the television audience that has never been topped.
Advertising giants of the 1950s and 1960s laid the groundwork for mass marketing practices that continue airing to this day. Admen like Leo Burnett engineered demand with startling precision. Burnett’s firm specialized in creating warm associations by developing brand mascots such as the Jolly Green Giant, Pillsbury Doughboy, Tony the Tiger, and Marlboro Man. 1 Advertisements were broadcasted to all potential customers, allowing brand recognition to become household knowledge.
Leading firms began contracting motivational researchers that specialized in appealing to unconscious desires, blurring lines between behavioral science and advertising. Focus groups established studies to measure why customers behaved the way they did, and companies churned out more commercials for the growing television audience. Marketers adapted and prospered throughout the counterculture movement of the 1960s, as the average household viewed close to six hours of television each day. 2 Programming became increasingly more relevant and the advertising sponsors followed suit.
The Segmented Audience
In the early 1970s, Jonathan Robbin founded Claritas (Latin for “clarity”) as a one-man startup. He designed early computer models for his PRIZM system to understand American communities and to help advertisers improve the marketing of their products. The US Postal Service had recently introduced new Zone Improvement Plan (ZIP) codes. Robbin’s PRIZM began by assigning each zip code to one of forty lifestyle categories. 3 By refining this concept, he established a robust geographic segmentation system that could generalize goods and services likely to be purchased based on where a person lived. This type of granular demographic data unlocked an entirely new approach to contextual marketing.
One of PRIZM’s biggest success stories is their role in the launch of Diet Coke. In the early 1980s, TAB (distributed by Coca Cola) was the leading diet beverage on the market. Coca Cola consulted Claritas to help capture drive customers demand for Diet Coke without disrupting sales of TAB. By profiling demographic clusters across the US, Coca Cola could successfully avoid advertising Diet Coke in TAB-preferential-clusters. You can imagine how important the application of this methodology has become in political elections. As others began using customer data to tailor advertisements, companies discovered a need for targeted advertising to speak more directly to a customer’s needs.
Emerging Technology Redefines the Role of Marketing
Marketing is built on the shoulders of trust. The strategic marketer realizes each customer interaction is similar to a social encounter, which allows a company to demonstrate trustworthiness. First time customers often feel heightened uncertainty and vulnerability for services of personal importance or complexity. Virtually every market offering has an associated service component, and digital content acts as an extension of company values.
Repeated contact between customers and service providers facilitates relationship marketing. Throughout repeated interactions, companies can measure behavior and gather knowledge about a customer’s requirements and needs. This familiarity can lead to tailored, personalized service based on a customer’s specifications.
These concepts are nothing new. In the 1995 Journal of the Academy of Marketing Science, Leonard Berry defined relationship marketing as “attracting, maintaining, and — in multi-service organizations — enhancing customer relationships.” 4 Berry, a long time Texas A&M Marketing Professor, identified the need for personalized website experiences decades before recent advancements in Content Management Systems (CMS).
For any strong relationships to exist, it must be mutually beneficial, and most customers actually desire to be what Berry called “relationship customers.” This desire is amplified when customers consume repeated services and if these services feel personally important. There is a fundamental appeal in connecting on a one-on-one basis, like the old-fashioned familiarity of a local butcher or grocer. Relationships like these can be extended into the digital space by delivering a sense of continuity through multiple customized interactions (across both online and offline channels), evoking a sense of loyalty.
Data driven content requires placing the customer at the center of a context marketing strategy. For many years, marketers were focusing their energy on attracting new customers to their products instead of nurturing and retaining their loyal customer base. Loyal customers not only generate more revenue over a longer time period, but the associated cost to retain them is frequently lower than the cost of new customer acquisition. Leaders in context marketing are moving from segmented clusters to focusing on the individual and his current stage in the customer journey.