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VOL. 35 • NO. 3 • MARCH 2022
THE AUTHORITY FOR THE DATA-DRIVEN BUSINESS
WINNING ON PURPOSE
COURTESY FRED REICHHOLD
An Interview with Loyalty Guru Fred Reichheld
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A Question of Loyalty: An Interview with Fred Reichheld, Loyalty Guru and Creator of the Net Promoter System
COURTESY FRED REICHHOLD
PRESIDENT Publisher & Editor-in-Chief Steve Lloyd - steve@dmn.ca
INTERVIEW
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Three Trends Propelling Digital Identity Momentum in 2022 And Beyond
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ICA’s Creative Power List 2022 Independent Agency Rethink Comes Out on Top
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How Your Brand Can Adapt to the New Digital Marketing Trends DMN.CA ❰
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Bridging the Digital Divide for Remote Canadians. ISM, an IT managed services provider and subsidiary of Kyndryl, and OneWeb, the low Earth orbit satellite communications company, have partnered to offer competitive internet access to remote organizations and communities across Canada. ISM has deep roots in the Canadian IT sector, with nearly a half-century of experience delivering leading-edge solutions to its clients using ❱ DMN.CA
“At ISM, we believe in offering equitable access to connectivity technology regardless of postal code,” said Hasnain Versi, President and CEO of ISM. “We are excited to realize our shared vision with OneWeb to further enable remote communities via wireless internet connectivity. We partnered with OneWeb because they have the right combination of technology, innovation, and skills to successfully design and deliver our new solution. This service will help remote organizations and communities by providing an essential service in an accessible way.” “We are thrilled to be partnering with ISM to expand OneWeb’s footprint in Canada and provide some of the most remote areas with broadband service,“ said Neil Masterson, CEO of OneWeb. “We are committed to bridging the digital divide, and we pride ourselves on removing connectivity barriers that hold economies and communities back. This new service by ISM will enable essential services in new areas and further enable digital transformation across Canada.” ISM is a provider of innovative IT business solutions serving Canadian clients and delivers technology-based solutions combined with personalized services in managed services including analytics, cloud, network, application management, digital transformation, and more, ISM offers a wealth of business intelligence to help clients achieve their strategic business objectives. OneWeb is a global communications network powered from space, headquartered in London, enabling connectivity for governments, businesses, and communities. It is implementing a constellation of Low Earth Orbit satellites with a network of global gateway stations and a range of user terminals to provide an affordable, fast, highbandwidth and low-latency communications service, connected to the IoT future and a pathway to 5G for everyone, everywhere.
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local resources. This partnership with OneWeb will enable the companies, through their newly created service, to connect the hardest-to-reach areas of Canada with fast, high-bandwidth and low-latency broadband service.The partnership is designed to help bridge the digital divide by improving connectivity in remote areas, extending access to higher quality audio and video calls and increasing the ability to stream a wide range of services. By bringing in this service, the benefits to rural and remote Canadian communities may include: ❯ Expanded access to distance learning, telehealth, government services, and telework ❯ Economic growth, fuelled by businesses becoming able to reach new customers around the world ❯ Additional ways to connect and communicate.
Breathing New Life into Atlantic Canadian Main Streets. An investment support effort to reanimate main streets, downtowns and neighbourhoods is coming for small towns down east. Atlantic Canada’s main streets, downtowns and neighbourhoods are vibrant spaces where people gather to enjoy all that our urban and rural communities have to offer. These spaces drive the economy by being hubs of social, economic and cultural activity. For more than two years, public health restrictions have made it necessary for businesses throughout Atlantic Canada, particularly those in the arts and culture, tourism and hospitality, and small retail businesses to shut down or to limit operations. These businesses are found in communities of all sizes, and often operated by women and under-represented groups. As restrictions begin to ease, the Government of Canada is committed to breathing new life into main streets, downtowns and neighbourhoods, where many of these hardhit businesses reside. Tapping the potential of local and regional collaboration. Ginette Petitpas Taylor, Minister of Official Languages and Minister responsible for ACOA, is leading a new initiative to fuel local economies by supporting community-led projects that bring more people to main streets, downtowns and neighbourhoods. As Atlantic Canadians make plans beyond their social “bubbles”, the Rediscover Main Streets initiative will foster collaboration that will create events, increase marketing and promotion of local institutions and happenings, and encourage residents and others to visit main streets, downtowns, and neighbourhoods. Through the Rediscover Main Streets initiative, ACOA will contribute up to $10 million to provide funds to nonprofit organizations across Atlantic Canada, including business improvement associations, tourism associations, chambers of commerce, and destination marketing organizations to help them generate new ideas that inspire MARCH 2022
// 5 locals and tourists alike to rediscover all that their main streets, downtowns and neighbourhoods have to offer. Non-profit organizations are encouraged to team up to take a problem-solving, active approach to drive consumers back to vibrant activity hubs. By supporting these locally and provincially tailored initiatives, the Government of Canada is taking real action to build a strong and resilient economy that is innovative, diverse and inclusive. “Our main streets, downtowns and neighbourhoods are at the heart of our vibrant rural and urban communities here in Atlantic Canada,” said Petitpas Taylor. “The new Rediscover Main Streets initiative will foster collaboration and generate new innovative ideas and projects to encourage residents and visitors to come out and enjoy everything our communities have to offer.” ACOA will accept applications for the Rediscover Main Streets initiative from April 4, until April 29, 2022. More information on deadlines and eligibility criteria is available on ACOA's website. The Rediscover Main Streets initiative complements other federal, provincial and municipal measures to help businesses and communities build back better. Since the beginning of the pandemic, ACOA has invested just under half a billion dollars to help businesses and organizations through the COVID-19 pandemic, protecting more than 5,000 jobs in communities across the region. The plan is to bring consumers back to their community main streets, downtowns and neighbourhoods; bring back arts and culture events that had been cancelled or reduced by health measures; support collaborative projects by non-profits that bring people back to the businesses hardest hit by the pandemic, helping them build capacity; increase community engagement through new partnerships; entice Atlantic Canadians to explore their provinces on a local and regional level; help build an inclusive economy through projects that support underrepresented groups and take into consideration their unique challenges. The Government of Canada will be investing up to $10 million in non-profit organizations such as business improvement associations, tourism associations, chambers of commerce, and destination marketing organizations to create projects and activities that will encourage people to revisit and rediscover what their downtowns, main streets and neighbourhoods have to offer. Funds for the Rediscover Main Streets initiative will be disbursed through the existing Regional Economic Growth through Innovation program. Contributions under this new initiative will be non-repayable; and could cover up to 100 percent of eligible costs. Contributions will range from $25,000 to $500,000 for targeted MARCH 2022
initiatives. Larger region-wide projects could receive more on a case-by-case basis. Information on eligible and non-eligible costs and activity is available on ACOA's website. ■■■■■■■■■■■■■■■■■■
Keep an Eye on Christina Pilarski, Named Top Entrepreneur. Christina Pilarski, CEO of Calgary-based full-service marketing and communications agency CIPR Communications, has been recognized by the Entrepreneur Herald as a leading entrepreneur. She was named to their list of the Top 30 Entrepreneurs to Look Out for in 2022. Entrepreneurs Herald, a digital publication for leaders and entrepreneurs from around the world, highlights the stories and ideas of the world’s best and brightest entrepreneurs and creates opportunities for meaningful conversations that help to educate and motivate its readership. According to the announcement, “Entrepreneurship is vital in the present era of globalization to ignite transformation in different industries…entrepreneurs are constantly enriching their industries and creating a better, more improved world for innovations, advancements, and development in their specific area of work.” “I am incredibly honoured to have been included among this esteemed list of trailblazing entrepreneurs,” said Pilarski. “With the help of my incredible team, I look forward to continuing to challenge the status quo and drive innovation in marketing and communications.” Pilarski’s entrepreneurial spirit is bolstered by her academic credentials. She earned her Bachelor of Arts (with honours) and Master of Arts, both in Communications Studies, from the University of Calgary. Her thesis focused on the ability to affect policy change through online engagement and had a strong focus on social media. That work proved helpful when she started CIPR Communications in 2010 before jumping in with both feet in 2015. Last year was a difficult year for many small businesses. However, with Christina’s business acumen and strong understanding of the industry, coupled with the vision of her partner
— in business and in life — Peter Pilarski, CIPR Communications was able to triumph. CIPR had its most profitable year to date, experiencing more than 55 percent growth — and they have no plans of stopping: growth is on track to exceed 60 percent in 2022. “Like any entrepreneur, I recognize that with great risk comes great reward,” continued Pilarski. “I’m looking forward to continuing to engage in meaningful work and build meaningful relationships with our incredible clients across North America in 2022 and beyond.” CIPR Communications is a full-service marketing communications agency that services clients in various industries across North America. CIPR puts their clients and their business goals at the centre of everything they do and their strategies, execution, and reporting all focus on adding value. CIPR Communications is a strategy-first agency, meaning they take the time upfront with every client to understand business goals, their competitive environment, past marketing and communications successes and failures, and the strength of their marketing and communications foundation. ■■■■■■■■■■■■■■■■■■
Who launches and markets a company during a pandemic? Toronto-based software as a sales (SaaS) company BoomerangFX, launched in 2021 — at the height of a global pandemic and national lockdowns —continues along an arch of exponential growth as it scales to meet the demands of the market. BoomerangFX is uniquely situated at the intersection of Martech, (marketing technology) which is a $120-billion-dollar industry growing more than 22 percent annually, and aesthetic and cosmetic health care market valued at $270 billion, experiencing a growth of more than 35 percent a year, Dwight noted, adding the company is presently on a hiring spree in areas such as technology development, data science and digital marketing. BoomerangFX is a SaaS-based technology company that has developed one of the DMN.CA ❰
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world’s first end-to-end healthcare practice management solutions designed for the non-insured, private-pay cosmetic surgery, dermatology, medical spa, ophthalmology, hair restoration, dentistry, women's health, and podiatric industry segments. Built on advanced artificial intelligence (AI), the technology includes marketing automation, telemedicine and virtual consultations, clinic management dashboards, e-scripting and electronic medical records, all in a single easy-to-use platform. “We have invested in a multimillion-dollar product roadmap to build AI across all our platform capabilities,” said Jerome Dwight, Chairman & CEO, BoomerangFX. “Artificial Intelligence has the potential to radically transform the inside of a medical practice and lead to better patient outcomes by allowing healthcare practitioners to spend less time on day-to-day administration and more time serving their patients.” “Our technology, guides clinic-owners through critical business decisions with real-time insights into patient engagement, optimal clinic revenues, retreatment patterns, and the allocation of digital advertising dollars to continuously attract a steady pipeline of new patients,” he continued. “Our decision to launch in the middle of a North American shutdown was not an easy one,” Dwight said. “But it was guided by our mission to support healthcare business owners with our technology and tools and a commitment to help them reboot their practice growth and profitability.” BoomerangFX is currently experiencing exponential growth of over 500 percent within its first 12 months and has a growing roster of medical practice clients across the U.S. and Canada in markets including Florida, California, Texas, Colorado, Arizona, Ohio, Oregon, and several Canadian cities. The company also has plans to open a technology and sales office in the U.S. later this year. The Leadership team at BoomerangFX includes executives from Silicon Valley, Digital Marketing, Fintech, and leading SaaS technology start-ups. ❱ DMN.CA
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Simplilearn for Business Looks to Upskill One Million Canadian Professionals in Digital Skills & Seeks Strategic Partners. Simplilearn, the world’s #1 online bootcamp for digital economy skills training, has seen rapid growth of its enterprise arm, Simplilearn for Business, over the last two years. Simplilearn for Business has seen accelerating adoption of its offerings globally and over 100 percent YOY growth that is tracking towards $100m in B2B revenue in the next 2-3 years. Simplilearn for Business is now expanding its focus beyond the markets of the US, EU, and India; for Canada, Simplilearn has three core focus areas: ❯ Powering new-hire onboarding for large enterprises in areas like Software Development, Data Science, Cloud, Digital Marketing, and others ❯ Powering digital transformation training across 35 critical digital roles ❯ Building strategic relationships with channel partners and distributors to expand global reach and take Simplilearn's products into even more countries Simplilearn has helped more than three million professionals upskill in digital technologies across 150+ countries. For enterprises, Simplilearn offers a scalable platform for live interactive workshops and bootcamps in digital skills. To reach global markets, Simplilearn works through partners, which include channel partners such as Accenture Academy and PWC Academy, and distributors like Deviare in South Africa, Saudi Business Machines in the Middle East, and the ILX Group in the UK. Kashyap Dalal, Co-founder & Chief Business Officer, Simplilearn, said, “Over the last two years, the pandemic has accelerated the move
towards digital business models and created a global need for over 200m digitally skilled professionals in areas like Programming, Data, Cloud, and Cyber Security. According to the World Economic Forum, with effective upskilling Canada could boost GDP by $56 billion, equivalent to 2.7 percent of the total GDP. Our experience in other regions has shown that for ramping up digital skills, organizations need to hire for aptitude and have solutions to skill them for job readiness. We are excited to announce our plans to enter the Canada market and work closely with enterprises and partners to chase our goal of upskilling one million professionals in the region in digital skills.” Simplilearn’s online training programs adress all critical digital domains, such as Data & Artificial Intelligence, Software Development, Cloud Computing, DevOps, Agile, Digital Transformation, & Digital Marketing, through comprehensive learning paths that are tailored to 35+ critical digital economy job roles. These programs are co-created with leading universities like MIT and Caltech, and alongside leading industry partners such as IBM, Microsoft Azure, and Facebook, ensuring the best learning outcomes. Founded in 2010 and based in San Francisco, California, and Bangalore, India, Simplilearn, a Blackstone company is the world’s #1 online Bootcamp for digital economy skills training. Simplilearn offers access to world-class work-ready training to individuals and businesses around the world. The Bootcamps are designed and delivered with world-renowned universities, top corporations, and leading industry bodies via live online classes featuring top industry practitioners. For businesses, Simplilearn offers products to power new hire onboarding, digital transformation skill development and leadership development. MARCH 2022
// 7 IAC News About the Institute of Canadian Agencies (ICA). The ICA is the community of Canadian agencies embracing purpose, responsibility, and sustainability in growing stronger as people and businesses. Founded in 1905, the ICA is the not-for-profit association for Canadian advertising, marketing, media, and public relations agencies.
ICA’s Creative Power List 2022
Independent Agency Rethink Comes Out on Top
Our mission is to Amplify, Protect and Transform the agency sector through advocacy, awards, community, consultancy, insight, networking, research, and training. Our membership and board of directors represent some of the most recognized and influential businesses in our industry, both in Canada and internationally.
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he Institute of Canadian Agencies (ICA) has revealed its Creative Power List 2022, with independent agency Rethink named as number one in the ranking of Canada's most creatively excellent agencies. Rethink surged from fourth place in 2021’s Creative Power List to reach the top spot, based on strong performances across the major domestic and international advertising awards in 2021. The agency was ranked number three Independent Agency of the Year at the Cannes Lions festival, and Independent Agency of the Year and Canadian Network of the Year at the Effie Awards 2021, after its campaigns for Kraft Dinner and Science World won Gold awards. FCB moved seven places up the rankings to claim second place, its highlights included winning its first ever Gold Lion at Cannes in Creative Strategy, with a campaign for Canadian Down Syndrome Society. Ogilvy climbed 8 places to third. Cossette dropped 1 to 4 while Juniper Park\TBWA shot up 15 positions to fifth, and No Fixed Address became the biggest climber in the top ten, rising 50 places to seventh. BBDO Canada, which was the most creative agency in the 2021 rankings, slipped 20 places to 21st. New entrants in the rankings, which were devised by MARCH 2022
the ICA to drive improved levels of advertising creativity in Canada, and provide transparency around the awards that really matter, included Miami Ad School in 11th place, Concrete in 14th, and Nickel Media in 20th. Giant Ant was the agency that leapt the most in the rankings, rising from 111th last year to 19th. Wedge also improved its ranking significantly, boosting its position by 70 places to 27th. The Creative Power List was created by the ICA’s Creative Power Group in 2020 and was based on 2019 awards performance. The body worked closely with RSM Canada, the audit, tax, and consulting firm, to provide the transparent ranking system of Canada’s agencies. A ranking based on 2020 performance wasn’t created due to the ICA’s call to support people rather than enter awards in the wake of COVID-19. Scott Knox, the President and CEO of the ICA, said: “Congratulations to all the agencies which are recognised for their creative excellence in the ICA’s 2022 Creative Power List. It’s vital to not only pay tribute to those agencies who have created the ideas that have had a profound impact on brands, their audiences, and even on society in Canada and beyond, but also to provide the creative industries with transparency around the awards that really count.” DMN.CA ❰
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A Question of Loyalty: An Interview with Fred Reichheld, Loyalty Guru and Creator of the Net Promoter System ❱ DMN.CA
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COURTESY FRED REICHHOLD
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I STEPHEN SHAW is the Chief Strategy Officer of Kenna, a marketing solutions provider specializing in delivering a more unified customer experience. Stephen can be reached via e-mail at sshaw@kenna.ca MARCH 2022
t’s been touted as the “one number a business needs to grow”. A number based on asking just one question: “How likely are you to recommend us to a friend or colleague?” Since it was first introduced in a 2003 Harvard Business Review article by Fred Reichheld, head of Bain & Company’s loyalty practice at the time, the Net Promoter Score has been widely adopted by organizations of all sizes and types to measure customer sentiment. The rationale behind it is simple: If customers feel strongly enough about a brand to recommend it, the positive word of mouth should spur revenue growth. And past studies by Bain have shown that it can be a great predictor of business performance. The strength of NPS has always been its simplicity. The more net promoters you have, the more likely you are to have a strong base of loyalists whose value is
likely to increase over time through increased spending and referrals. But what’s really helped make NPS a popular metric is that the formula is non-proprietary, free to anyone who wishes to use it. That’s enabled it to become a benchmark score in just about every industry where customer loyalty matters, allowing organizations to easily compare themselves to their competition. Companies renowned for putting customers first, like Apple, Costco, USAA, Amazon, and Intuit regularly earn the top scores, while less admired companies like wireless service providers and insurers get negative scores. That fact alone suggests a strong correlation between a great customer experience and market success. Or does it? NPS has its own share of detractors. Critics quibble with the arbitrary nature of the scoring methodology — some say the results are “too noisy” — others raise DMN.CA ❰
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“Accountants don’t care to consider if you're making the customer's life better.”
the question of correlation versus causation. And the NPS system is prone to gamesmanship when it’s managed in-house and not by a neutral 3rd party. Yet all of these critics are missing the point: the true value of NPS is that it has put the question of loyalty on the radar of many business leaders who might otherwise be obsessed with serving the short-term interests of investors. The real payoff of adopting NPS is not the score it generates — it’s the influence it has on the customer orientation of companies. Within the span of 20 years, NPS has achieved what customer satisfaction surveys could never do: make customer experience a strategic priority for executive management. In his latest book Winning on Purpose, Fred Reichheld distills 44 years of experience as a loyalty guru into a manifesto and set of “Golden Rule” operating principles. The purpose of a business, he declares, is not to maximize profits — it’s to maximize the happiness of customers — to “enrich their lives”. This worldview is a natural progression from his 1996 landmark book, The Loyalty Effect” which made the economic case for focusing on customers. Stephen Shaw: Your first book The Loyalty Effect remains highly
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relevant a quarter century later. Have we made much headway since then? Reichheld: I don’t think the world has come very far in appreciating the importance of loyalty. We’ve made some important progress for sure. In my opinion the more you can invest in making someone else’s life better, the better the world gets. But most people don’t see business that way. All the control systems and measurement systems and governance and compensation are all based on accounting. The accountants’ mindset dominates — namely, to maximize profits. But those companies who focus on enriching the lives of customers as their focal point have usually built great businesses. Shaw: In The Loyalty Effect you approached the subject of loyalty mainly from an economic standpoint. But in your new book, you make more of a plea for business leaders to take the moral high ground — to practice the “golden rule”. Why the switch in emphasis? Reichheld:Well, the reason I started with the economic argument is that until then no one had really demonstrated the value of increasing loyalty. And I understated the case because I skipped over the customer
referral part which is actually the most important. Over the years, I became more cognizant of the challenge of winning people over to this new mindset. And it was more than a measurement framework, more than an economic argument. People just had a mindset that was wrong, a wrongheaded notion about what made for a great business, what leads to successful, profitable growth. And so I went back to “first principles” — the notion that you want to treat people the way you want to be treated. And I think that argument has more inspirational energy, Shaw: You’re a big proponent of customer capitalism. Is that idea an extension of stakeholder capitalism, or something altogether different? Reichheld: I think it’s quite different. Maybe radically different. All stakeholders aren’t equal — just one is primary, the customer. Putting customers first is the only solution I’ve seen that creates great businesses that are sustainable. Shaw: Because, without customers, you don’t have a business. Reichheld:Yeah. And it’s more than an opinion. There's a fair amount of data and evidence in the book that the only companies
delivering real value to investors are the ones where customers are feeling the love. I do lay out [Costco Founder] James Sinegal’s philosophy about rank ordering the stakeholders: customers first, employees second, investors third — I’m sympathetic to that. I’m not 100 percent in agreement with it. Yes, I think every human being you touch deserves a golden rule of treatment. But the customer cash flow funds everything. The accountants really hide that fact. Accountants can't even tell you how many customers you have let alone how many are coming back, and certainly not how many are referring their friends. Shaw: The other thing they ignore is the importance of customer value creation. Reichheld:Right. Accounting does not help you understand how much value you put in a customer's wallet. It only keeps track of how much you extract from a customer’s wallet to your benefit. And that's a problem. You know, accounting is set up to protect the short-term interests of the company. The accountants don’t care to consider if you’re making the customer’s life better. Shaw: It’s really the short-term versus long-term investment question, isn't it?
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Reichheld: That’s the big question in almost everything — understanding the trade-offs. Having an investment time frame is vital and we do not have metrics that are … Shaw: Longitudinal. Reichheld:Yeah, people ignore that, it’s mind-boggling. The marketing guys work like crazy to bring in all these new customers and are so proud because their cost per new customer is real low, but then they never figure out what percentage of those new customers ever turned into loyal promoters who really have a positive net present value. In most cases, I find, new customers are destroying value because they don’t stick around long enough to actually pay back the investment cost of acquiring them. Shaw: In your new book you talk about Bain almost going bankrupt early in your tenure and how a new management team led by Mitt Romney turned it around by putting customers first. It’s quite a vivid example of what you’re talking about. Reichheld: Yeah. I am very pleased that my partners at Bain were willing to let me share the secret sauce and some of the internal practices we have because they’re powerful. I would say the tools and the processes we built are the best I’ve seen in the world
in how to treat employees, how to build teams, how to keep them inspired, and working constantly toward the best interest of customers. Shaw: Employee enthusiasm is critical, isn’t it? Reichheld: Yeah. How can you be happy as an employee if the people you’re serving, your customers, aren’t thrilled with what they’re getting? Are you going to put in more ping pong tables and beer refrigerators to solve that problem? I don’t think so. Shaw: An estimated two-thirds of the Fortune 1000 has adopted NPS but you say that many of those companies really haven’t adopted the right mindset. How would you describe their mindset today versus what it needs to be? Reichheld: I think only 10 percent of leaders today believe the customer comes first. So 90 percent of businesses have embraced a mission that is in my mind guaranteed to fail. You know, I wasn’t wealthy — I am now. But I kept investing in companies that have the highest NPS in their industry. Because I thought, their customers are feeling the love and they’ve got this flywheel going that the accountants can’t quite measure, it’s invisible, but customers keep coming back for more and bringing their
friends. I’ve more than tripled the stock market in my investments over the last decade. I’m not a fancy investor. I didn’t look at one financial statistic of these companies I invested in. I just looked at their customer feedback and the guys at the top have crushed it. Shaw: How do CEOs in public companies reconcile the immense investor pressure to grow at all costs with the moral and social obligation to do what’s right? Reichheld:Well, they just have to look at the examples in my book of the companies that have taken the highest road and put customer interests first. Those are the guys that have delivered the best returns to shareholders. They have a duty to make sure the customers feel the love and they need metrics to track progress against that goal. Right now companies are flying blind because the board is just looking at financials. Financials don’t tell you whether you’re treating the customer right. Shaw: So is the problem at the board level? Reichheld:It’s one of the problems. I don’t think it's the only one. I think it’s a secondary problem. Although the governance structure in most public companies I see as deeply flawed. CEOs have
enormous power. They pick the board, they recruit it. It's the CEO’s private advisory group for most companies until they do a lousy job and outside activists come in. I think the biggest shift has got to be in the mindset of the leadership team and how they measure success, measure customer outcomes, and how they define success in customer terms, not just in selfish financial terms. Shaw: You’ve proven a correlation between NPS and revenue growth. But finance people think it’s voodoo. Until they're won over, it's really hard to make the business case, isn’t it? Reichheld: Yeah. And you know, I’m sympathetic to the financial guys. I started out life as a financial guy — I really like the discipline of finance and accounting. One of the nice things about accounting is you can audit the books and make sure it’s real because you go to jail if you cheat. We don’t have that on the customer side yet. So we need a rigorous customer-related metric. That’s why I’ve introduced the idea of “earned growth”. How much of our business is coming from repeat and expanding customers and their referrals? And I believe the smart financial guys will get on board very quickly with that.
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“I think only 10 percent of leaders today believe the customer comes first.” MARCH 2022
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Shaw: But how do you change accounting practices that have been in place for 100 years or so? Reichheld: Well, one of my favorite tricks is just to say, let’s look at all the new customers in the last quarter or the last year. Ask them “What was the primary reason they joined the business?”. Split them into referrals versus promotions — look at the behavior and get a net present value estimate of those two customer groups. CFOs get that very quickly. They say, my gosh, we have been wasting a ton of marketing dollars on negative net present value outcomes. And when people ask, “Where should I invest instead?” — well, it has to be in delighting your existing customers and creating more promoters or helping the customers who really love you to refer more people. Give them the digital tools — make them feel like insiders. I think that is where smart marketers should focus more of their energy. Shaw: The concept of customer equity has been around for a while, brand equity as well. And yet it’s not reflected on the balance sheets, right? It’s buried under this abstract term called goodwill. Reichheld: Yeah. First of all, goodwill is a fuzzball concept in accounting. It makes the “book’s foot”, but it doesn’t really do anything to help understand the underlying economics. That’s why private equity firms who are pretty economically rational just wipe out all of this baloney accounting like depreciation and goodwill, and they just look at EBITDA. How to make customer equity or brand equity more credible? Let’s keep it simple. Let’s use metrics that you can audit. And that’s what “earned growth” is. How much of your growth is coming from your existing book? That gives you
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a really good sense of what the future looks like for you. Shaw: Who owns the championing of the earned growth rate? Is that marketing? Because marketing is still dismissed as having little financial literacy. Who should take up that challenge? Reichheld: I think the best marketing guys are going to convince the CFOs that they need to be measuring earned growth and then they're going to demonstrate that Net Promoter is a very useful tool for managing it. Shaw: You offer a lot of great examples in the book about best-practice companies, whether it's Discover or Enterprise or First Service, a Toronto company … Reichheld: Go Canada! My Grandfather Reichheld was from Canada! Shaw: Have any of those companies achieved the progress they have based on your financial proof of “earned growth”, or has it been driven more by leadership recognizing that it’s the right thing to do? Reichheld: I think those companies for the most part have morally certain leaders who have a strong, intuitive understanding of this. And that’s why it is so hard to do. I hope the tools and the frameworks and the process I’ve laid out in “Winning on Purpose” help mere-mortal CEOs embrace it and make it real. But business is run by accounting numbers. And yet accounting numbers are orthogonal to this objective, maybe worse. And so it takes great leadership and a moral foundation that inspires teams to put customers first. Shaw: Classical direct marketers have always understood the basic math of customer
retention and recurring revenue. The lifetime value methodology has been around a long time — yet it still isn’t being applied today outside of a very small circle of pure-play DM companies, is it? Reichheld: Yeah. At one point I thought this loyalty game was really a niche strategy. But as I got older I could see that it’s the only strategy that works long-term. And it's not that you put customers ahead of investors — you put customers first because that's the only way to achieve outstanding results for investors. And so that’s the subtle difference I have with Jim Sinegal at Costco, who’s a brilliant businessman. I don’t think you need to rank order the stakeholders. The primary purpose of a CEO should be to make customer lives better. Shaw: The Professor of Marketing Science Byron Sharp, always the contrarian, has been quoted as saying, “Loyalty isn’t an important question. Certainly not for practical people, especially since all measures, attitudinal to behavioral are highly correlated.” What do you make of his opinion? Reichheld: A lot of people have a very superficial understanding of loyalty. Loyalty is an investment. And that’s the magic of recommendation and referral. A CEO once said to me, “Fred, you don’t recommend to a friend a business that abuses employees or harms the environment. A recommendation is a really high standard. You have to believe it’s going to be in the best interest of a friend or family member to have the same experience as you.” Shaw: Back to Byron Sharp. I think his main beef is that if you have a high-value customer, of course, they’re loyal. He even
disputes your famous statement that higher retention leads to higher profits. Reichheld: I hope he reads the chapter on investment returns. Shaw: Can you explain how you actually landed on the fact that likelihood to recommend was in fact the best predictor of true loyalty? Reichheld: I thought there were too many surveys in the world. I wondered if there was just one question we could ask that would actually get to the heart of true loyalty and I tested what Enterprise was using and a dozen other questions about satisfaction. We actually watched customers over the next year or two and compared that to the scores that they gave back when T was zero. And “likelihood to recommend was the best predictor. Now, not the best in every industry, but almost the best everywhere. Repeat purchase — that doesn’t really get at loyalty. Referring to a friend — that is the highest standard and it’s totally contemporaneous, it’s timely. Shaw: What do you attribute the success of NPS to? Reichheld: I’ve thought about that. Recommendation is an act of love. You want something good for your friend or family member. However, one of the problems with it is that people don’t get the challenges of measuring it yourself. There all these biases — sampling bias, response bias — how you answer it. So getting apples-to-apples comparisons is hard. We built a new business at Bain called Net Promoter NPS Prism that finally gives you really reliable, rigorous data competitor by competitor, brand by brand, not just at the relationship level, but at each episode, each touchpoint. So it’s killer. But until now, I’ve just seen people throwing crap at
MARCH 2022
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INTERVIEW
the wall and saying, that’s my Net Promoter score. Shaw: I think one of the brilliant moves you made was making it open source so that everybody could adopt it. But that also made it susceptible to manipulation. Reichheld: Both conscious and unconscious. It’s just trickier than meets the eye. It sounds simple and it gets criticized for being overly simplistic when in fact getting this right — right timing, the right degree of anonymity, the closed-loop processes, it takes a lot of work. Shaw: One of the knocks on NPS for a long time was that it wasn’t really a diagnostic tool per se. Reichheld:Yeah, but that was one of the most unreasonable criticisms. From Day One Net Promoter was always 0 to 10: “How likely are you to recommend us to a friend?”, followed by an open text question “What’s the primary reason you feel this way?”. Now, the research statisticians don’t like it because they don’t have lots of nice, structured data that they can use their cool statistical tools on. But if you read the customer comments and the reason for their rating, it’s just gold for understanding what you need to get better at. Shaw: NPS has been, as you
point out, unfairly criticized, and one of the really stinging rebukes came last year when Gartner predicted that more than 75 percent of organizations would abandon NPS as a measure of success for customer service. Reichheld: I have never read a useful criticism of Net Promoter that didn't come from somebody who had an alternative metric they were trying to peddle — one that was way more complicated, and I fear that’s true of the example you just cited. I think they just bought a company whose business was based on an alternative metric. You’re supposed to learn from your critics? I haven’t learned much from my critics. I’ve learned a lot from practitioners who have done smart things and not so smart things and what works. So I’m humble about how much I have to learn, but I think in general, the critics have been not up to the task, sadly. Shaw: One of the other things you hear sometimes is that it’s too simplistic a measure. Reichheld:The cool thing about likely to recommend, 0 through 10, is it catches the “wows”. Now there’s a bunch of other touchpoints where we may not be able to “wow” customers. So then other metrics like customer effort score, or customer satisfaction or “rate your experience”
work just fine. But those tend to be the less important transactions. And no one knows exactly how they link up to the customer's overall relationship. So I’m totally open to using the right metric and the right process for different parts of the experience. Shaw: Is there a requirement to look at loyalty from both a corporate brand perspective and a product brand perspective? Reichheld:There’s no simple answer. You know, Apple has different product lines — there’s certainly an Apple relationship score and it’s different for different products. It really depends on how you want to identify the relationship in the consumer’s mind. And that becomes the most important element. But measure both and see which one is the most important. Shaw: Back to the question of who’s holding the purse strings — today customer experience is still very much an operational expense, isn’t it? Reichheld: It is indeed. And I think that’s one of the reasons to get the board of directors interested in this is because they should be demanding reliable information on customer results because they are so vital to the long-term interests of investors.
Shaw: You mentioned earlier that just 10 percent of executives believe the purpose of their business is to enrich people’s lives. What more is it going to take to get them over the hump? You’ve spent your entire career doing this — what more do you think needs to be done? Reichheld:Measuring earned growth rates should be part of that and changing the investment strategy and changing the customer experience. The book ends with a manifesto and a really detailed list of best practices. So I like to think the book offers an answer. I think earned growth rate will be a centerpiece of the next 10 years. And just like Net Promoter was unheard of when I invented it 20 years ago, I’m hoping that earned growth rate becomes standard. No business would ever consider not having an audited earned growth rate that they understood internally and could report outside. Shaw: What’s the next phase of business life look like for you personally? Reichheld:I don’t know the answer to that. I think you know, I’m getting old, so it’s time to go out in the garden and start taking care of it. You know gardening’s a pretty good metaphor for a lot of things in life.
“I think earned growth rate will be a centrepiece of the next 10 years.” MARCH 2022
DMN.CA ❰
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TECHNOLOGY
Meeting Consumers’ Expectations for Fairness
ISTOCK/ UNITONEVECTOR
Strategies to Help Businesses Implement Responsible AI
BY DAVID VAN BRUWAENE
T
he COVID-19 pandemic accelerated digital transformation across many industries. From financial services to healthcare, agile and fastmoving companies have expanded their in-person experiences to add virtual interactions online. These digital transformations are creating large amounts of digital data that didn’t exist previously. At the same time, advancements in artificial intelligence (AI), decreasing costs of computing power, and talent shortages are driving businesses to use AI’s automated decision making capabilities to help reduce costs and increase revenues. As consumers witness machines being entrusted to make decisions that impact their lives, they want businesses to take necessary precautions to prevent bias in AI ❱ DMN.CA
and the data used to train models. Automated AI decisions impact lives To put it simply, any applications using AI for screening decisions such as hiring, admissions, insurance, criminal justice, and credit have the potential to introduce algorithmic bias that can significantly impact consumers’ lives. As a result, consumers want businesses and organizations that use AI to proactively work to prevent bias. Consumers expect that the AI models used to determine who is approved for a loan and which patients are recommended for specialty healthcare services, for example, are fair and unbiased. Trust is the new brand equity, according to Edelman, the world’s largest public relations firm and
publisher of the annual Edelman Trust Barometer report. Fair and trustworthy AI is no longer just nice to have, it is a must-have for organizations. Unfortunately, consumers’ trust of AI (and the companies using it) has been eroded by instances of bias. One well-known example of bias’ impact is the Apple Card, an Applebranded credit card introduced by Goldman Sachs in 2019. The Apple Card came under fire for alleged gender discrimination in the months after its launch, with some customers complaining that women were granted lower credit limits than men. Goldman Sachs was eventually cleared of wrongdoing, but the damage to the company’s reputation had already been done. This incident famously highlights how bias in AI can impact consumers and result
in financial, legal, and reputational harm to the companies involved. Introducing responsible AI principles Considering everything that is at stake, it is no coincidence that more than 300 guidelines and principles have been published by organizations worldwide in the past three years to address trust issues in AI. For example, the Business Roundtable (BRT) — a nonprofit comprised of 200+ CEOs of the largest companies in the United States — recently published a Roadmap for Responsible Artificial Intelligence with “trusted and inclusive” AI being a main theme. This roadmap is a response to the need for businesses to align with consumers’ expectations of fair and responsible AI, and it is just the tip of the iceberg. The MARCH 2022
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TECHNOLOGY World Economic Forum (WEF) also recently published an “AI C-Suite Toolkit” to help executives navigate the responsible AI landscape. Many more guidelines and principles are currently in the works that will shape the use of AI in the future. How can businesses operationalize responsible AI principles and build consumer trust? Moving Beyond Principles: Addressing AI Operational Challenges is a valuable resource from the Canadian RegTech Association that details processes and technologies early AI adopters in the financial services industry are successfully using to help promote trust with responsible AI. The resource offers actionable information to help organizations get started. Additionally, businesses and organizations inside and outside of the financial services industry can leverage the following best practices as they work to meet consumers' demand for ethical and responsible AI. Use the three lines of defense framework for model risk management The model risk management three lines of defense framework was introduced by the Federal Reserve Board in the United States following the 2008 financial crisis. It involves 1) data scientists and model developers, 2) independent validators, and 3) internal auditors. It has been used by the banking industry to manage traditional model risk for over a decade. Now, this model risk management framework can be extended to AI models. It establishes responsibilities and quality checks throughout the AI lifecycle, enabling teams to identify and mitigate risks such as AI bias. Prioritizing risk management during the development and deployment of AI provides a structure for completing the functions necessary to build high-performing, trusted AI for all stakeholders. Adopt standardized documentation and reporting Documentation and reporting are necessary to make AI transparent, auditable, and compliant, the most MARCH 2022
important components of trust. The idea of having documentation and reports that can be shared among all stakeholders — including consumer-facing reports similar to the nutritional labels on food packaging — has been championed by regulators and businesses. The main challenge for producing these artifacts is time. Documentation and reporting are time-consuming tasks when they are performed manually. Automating documentation and reporting can save countless hours that can be redirected toward developing new AI. One timesaving solution is to use an AI governance tool that standardizes and automates documentation and reporting. Track evolving compliance requirements Organizations need to be aware of current and proposed regulations. Multiple U.S. states are working on developing new legislation related to fairness and bias. For example, New York City passed a first-of-itskind law in December 2021 that prohibits employers from using AI and algorithm-based technologies for recruiting, hiring, or promotion without those tools first being audited for bias. In Canada, the Office of the Superintendent of Financial Institutions (OSFI) is planning to introduce AI regulations and guidelines in 2023. To avoid compliance and legal issues, along with reputational damage, companies should: ❯ Implement stringent fairness standards internally that meet or exceed external regulations ❯ Create a library of policies, requirements, and guidelines to track new regulatory developments ❯ Ensure workflows align with regulations ❯ Use an AI governance tool that automatically provides compliance checklists for all applicable regulations Maintain an accurate and up-to-date model inventory Businesses need an organized way to inventory AI. A model inventory can provide at-a-glance performance and risk information for all AI models in use. Having this type of heat map view makes it easier to manage bias risks. A
model inventory also stores data and documentation for each model that is necessary in case of an audit, but also in anticipation of the new California Privacy Rights Act and similar regulations that are expected to follow. On Jan 1, 2023, consumers in California will have the right to opt-out of automated decision making algorithms. Having an AI model inventory management system will help companies track and ensure compliance. Using an AI governance tool that supports model cataloging in a central repository is the most efficient way to inventory AI. Constantly monitor performance Continuously monitoring AI is important and can help catch algorithmic bias problems early. Organizations should have access to real-time performance, risk, and bias information for all of their AI, and a plan for using that data to check for quality and fairness over time. As a result of the pandemic and the rapid digital transformations
that ensued thereafter, AI is becoming more ingrained in many business functions. Per the CEOs in the Business Roundtable, it is predicted that “In 12-18 months you’re going to start to see the results of this compressed transformation.” As businesses and organizations grow their AI, they need to adopt strategies and put processes and technologies in place that will enable them to build trustworthy AI and gain consumer confidence. DAVID VAN BRUWAENE is a purpose-driven serial entrepreneur, philosopher, and educator; a leader in consumer and business strategy for ethical technologies. He is the Founder and CEO of FAIRLY, a governance, risk, and compliance solution built to help businesses accelerate responsible AI models to market. Through FAIRLY, Van Bruwaene is working to promote and protect human rights at a time of growing concern of AI model development. With academic roots in Cognitive Science and Philosophy at Cornell University, David has academic relationships at UC Berkeley, the University of Ottawa, the University of Waterloo, and the University of Guelph.
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LEADERSHIP
Three Trends Propelling Digital Identity Momentum in 2022 And Beyond BY RODGER DESAI
A
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Biometrics Technology Becomes Mainstream: As mobile technology and capabilities continue to exponentially advance, the capacity to verify identity utilizing biometrics technology will become more mainstream and widespread. While applications such as face scanning technology exist in our smartphones today, the next
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accessing affordable credit and establishing a financial record, financial institutions have perpetuated the exclusion and instability of many people. For far too long, many consumers have been left out altogether from the financial system, preventing them from establishing economic progress and inhibiting mobility. For example, in the U.S. a staggering 11 percent of the adult population (26 million people) doesn’t have a file at the major credit bureaus, and 8.3 percent of the adult population (19 million) has too little credit history on file to even generate a credit score. To remain both equitable and relevant, companies need to meet this financially invisible population by creating fair and safe identity verification alternatives to credit scores.
ISTOCK/ KTSIMAGE
s we increasingly rely on mobile devices to engage in payments and banking activity, the applications for digital identity technology are continuing to evolve in order to secure these transactions. With the digital payments industry expanding exponentially each year, digital identity technology now plays a key role in making digital financial transactions a quicker, safer, and more streamlined experience for both customers and merchants. With the ongoing and unpredictable Covid-19 pandemic, the digitalization of payments and ecommerce transactions is rapidly increasing, with a projected growth rate of 15.4 percent worldwide, expected to grow to $180.2 billion by 2026. As retailers migrate towards primarily conducting business online due to the ever-changing pandemic and resulting ecommerce swell, the opportunity for transaction and payment fraud continues to grow in tandem. With new and increasingly advanced cyber fraud attacks arising seemingly daily, retailers and financial institutions are turning their attention towards fully securing digital transactions, and looking towards identity verification technology to enhance safety, speed, and overall experience for businesses and customers alike. With these developments in mind, retailers and financial institutions are faced with considering where the future of digital identity technology lies in 2022 and beyond:
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wave of biometrics technology will be streamlined and integrated into every step of the payments process to ensure the highest degree of security and efficient automation in identity verification, while also protecting consumers’ privacy. For example, verifying users and individuals based on behavioral metrics such as voice, the way we walk, and measurement of different behavioral metrics will become more widely used as a method to thoroughly identify users. The Growing 5G Market: With 5G technology being integrated into a majority of new devices entering the market, this improved functionality will further increase the number of digital transactions that consumers
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make. In the payments sector, 5G will transform the speed and ease of transactions, while providing merchants with more informative insights and data about their customers, markets, and products. With the market for 5G services expected to reach $115.4 billion by 2026, consumers will increasingly expect a secure, efficient, and convenient way to authenticate their identity and complete their purchase. To meet this growing demand, companies and merchants must embrace phone-centric technology and tap into 5G data-driven insights to provide secure identity verification across all channels. Advancing Financial Inclusion: With a history of preventing marginalized consumers from
Moving forward, the early adoption of growing digital identity technologies will be the key to success in establishing more secure and advanced digital payments. As the digital payments market continues to experience exponential growth over the coming decade, companies and institutions will need to look towards the next generation of identity verification technology, as it will help create a future-forward financial landscape that is more accessible and secure. RODGER DESAI is Co-Founder & CEO of Prove. Rodger is a mobile and digital identity expert who has been quoted by publications such as The Wall Street Journal, Forbes, CNBC, TIME, and the MIT Technology Review. Rodger is passionate about how technology can solve human and societal issues. In addition to his work at Rave Wireless, his business ventures have ranged from using mobile phones for microfinance village programs in emerging markets to enabling financial inclusion by leveraging Prove’s mobile identity technology to allow underbanked and credit-invisible consumers to access financial services. Rodger graduated from RPI and attended Harvard Business School. MARCH 2022
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ISTOCK/ DUSANPETKOVIC
LEADERSHIP
What’s Keeping CMOs Up at Night? C
OVID-19 has had consumers, supply chains, and brands under siege for three years. Social activism and political tribalism have never been higher. Emerging technologies like AI and the metaverse, and the unrelenting demand to continually prove marketing’s value are some of the concerns keeping marketers up at night, according to a recent Brand Keys Marketing On My Mind survey. The study, first conducted in 2019 by the New York-based brand engagement and customer loyalty research consultancy Brand MARCH 2022
Keys, seeks to identify the most challenging issues facing CMOs and Brand Managers. “Thirty percent (30 percent) of marketers’ bad dreams are new to the 2022 list of problems receiving mentions by 75 percent+ of the 407 CMOs and brand managers who participated in the 2022 survey,” said Robert Passikoff, founder and president of Brand Keys. Marketers’ nightmares include dealing with COVID issues (i.e. supply chain, work-fromhome, vaccinations, and masking issues), product availability (or lack thereof), inflation, optimizing
succubus of marketing, ‘ReturnOn-Investment’ or ‘Return-OnMarketing-Investment’ is always #1 on the list,” noted Passikoff.
Robert Passikoff, founder and president of Brand Keys
CX and the customer journey, brand engagement, and ever-rising customer expectations. “And the
Top Marketing Nightmares Brand Keys asked CMOs and brand managers, “What issues keep you up at night?” with the following results. Percentages indicate frequency of mention among respondents. The following numbers indicate changes from pre-COVID 2019. 1. ROI and ROMI (98 percent, +1 percent) 2. COVID and covid-related DMN.CA ❰
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LEADERSHIP employee management issues (95 percent, new) 3. Supply chain snafus and product availability (94 percent, new) 4. Inflation (92 percent, new) 5. Competition from new brands (91 percent, new) 6. Addressing innovation, AI, technology, the metaverse, and marketing automation (91 percent, -1 percent) 7. Optimizing and owning CX and the customer journey (90 percent, new) 8. Establishing trust between my brand the consumer (90 percent, -5 percent) 9. Consumer expectations regarding privacy, transparency, and CSR (90 percent, --) 10. Deployment of predictive consumer behaviour analytics and technologies (90 percent, +4 percent) 11. Proliferation of digital channels (89 percent, new) 12. Developing long-term/new strategies that align with corporate growth goals (88 percent, +8 percent)
13. Keeping consumers engaged with my brand (86 percent, +11 percent) 14. Managing agency relationships (84 percent, new) 15. Creating relevant and engaging advertising content and storytelling (83 percent, -5 percent) 16. Growing consumer expectations and the gap between consumer desire and brand delivery (83 percent, +1 percent) 17. Dealing with consumer tribalism and political dogma (82 percent, +5 percent) 18. Data security issues (80 percent, -15 percent) 19. Dealing with consumer advocacy and social activism (80 percent, -5 percent) 20. Protecting my brand’s equity (80 percent, +1 percent) 21. Creating an ‘unlearning curve’ to move away from legacy marketing metrics (79 percent, +4 percent) 22. Being replaced by a Chief Revenue Officer or CFO (77 percent, +2 percent)
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23. Better cross-platform synergy for brand marketing (75 percent, --) 24. Creating marketing synergy among different generational cohorts (75 percent, --) New Bad Dreams For Brands New “nightmares” visiting themselves on CMOs and brand managers include: 1. COVID and COVID-related employee management issues 2. Supply chain snafus and product availability 3. Inflation 4. Competition from new brands 5. Optimizing and owning CX and the customer journey 6. Managing agency relationships 7. Proliferation of digital channels “Dealing with competition has always been an integral aspect of brand marketing and management life. But today CMOs and brand managers are expressing worries about ‘new brands.’ The nightmare that has taken on ‘monster-inthe-closet’ status is ‘keeping consumers engaged with my brand,’ increasing by 11 percent over the past three years. If you combine that brand expectation inflation with the terror of new brands entering the marketplace you can understand why CMOs and brand managers face sleepless nights,” noted Passikoff. Consumer Insights for Insomnia-Inducing Issues “Who better than consumers to point the way to brand solutions,” asked Passikoff, “Nobody can deny that COVID and its attendant restrictions have changed the course of consumer history. But if CMOs and brand managers take a deeper look at how, what, when, and where consumers reached for their wallets before the pandemic one can see clues as to how consumers were about to
transform. Those insights expose trend lines that would never have been visible otherwise,” noted Passikoff. To that end, Brand Keys recently conducted a review of its 25-year Brand Keys Customer Loyalty Engagement Index database, the largest continuous database of predictive brand tracking metrics in the world. The review provided insights from 4.3 million consumers into their brand engagement and buying behaviors, detailing their history and emerging trajectory, and how issues faced by CMOs and brand managers can be better managed for long-term success. “And, including some problem-solution insights to ensure CMOs and brand managers get a better night’s sleep,” said Passikoff. Brand Keys uses an independently-validated research methodology that fuses emotional and rational aspects of brand categories, identifies four key category-specific path-to-purchase behavioural drivers, and identifies what consumers expect from brands versus how brands deliver against those expectations. These assessments are leading-indicators of future consumer behaviour, identifying activities 12 to 18 months before they appear in traditional brand tracking surveys or focus groups. Brand Keys’ research technique, a combination of psychological inquiry and higher-order statistical analyses, has a test/ re-test reliability of 0.93, and produces results at the 95 percent confidence level. It has been successfully used by hundreds of leading brands in B2B, B2C, and D2C categories in 35 countries for twenty-five years. A FREE COPY of that report, “A 25-Year Roadmap to Brand Loyalty,” can be downloaded from the Brand Keys website.
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STRATEGY
ISTOCK/ ALESSANDRO BIASCIOLI
How Your Brand Can Adapt to the New Digital Marketing Trends
STAFF
I
n a way, being in marketing is like being an animal in the safari. It’s eat or get eaten. The only way to survive in the marketing industry is to stay one step ahead of the rest. But since trends change daily, it’s not surprising when agencies fall through the cracks. In order to make it another day, brands need to adapt. Mendel Cohen, the chief executive officer and founder of Krafted Digital says that staying keen on the everchanging trends is what can make or break a campaign. For those wanting to stay in the safari, here are some upcoming trends to know about: Looming Removal of Third Party Cookies Cookies have been around for a long time, helping marketers collect data and organize more targeted ads. However, that’s all going to change. Recently, Apple has updated its privacy policy to exclude third-party cookies, and Google is working on removing them from Google Chrome. “Going forward, priorities need to shift to first-party data” says Cohen. The looming removal of third-party cookies stems from consumers not wanting to feel like they’re being tracked unwillingly. First-party cookies are mainly used to improve a user’s experience. The information is gathered from what the consumers offer freely while online. Marketers can start implementing tactics now to help adjust for the lack of
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future third-party cookies, such as asking consumers for consent for targeted ads. Secondly, they can invest in data management firms that can help find alternatives to capitalizing on first-party cookies. Google recently announced the delay of the death of third-party cookies until 2023, so there’s still time to prepare for the change. Utilize AI in Marketing Artificial intelligence is a powerful tool for marketers when used correctly. Implementing the software can be as easy as acting on behalf of customer service representatives, offering personalized conversations, or exclusive sales deals. “The AI learns about your customer base. Every touchpoint helps collect data, but more than that, it can help create loyalty with your audience. The AI can learn from every interaction with the goal of providing the best experience to the user,” explained Cohen. AI is an innovative marketing tool that can set one brand apart from the rest. Welcome to the Metaverse Think of the Metaverse as an online alternate reality where lives are created and lived with currencies and economies. People will live as if in real-time in the Metaverse. It is an entirely new platform for marketers, a blank canvas, a barren field waiting to grow. It’s a new opportunity for strong branding and customer acquisition. Marketers can
insert their branding all over the Metaverse, and users would be able to interact or experience a product or service. For this reason, Cohen notes that whatever happens in the Metaverse should be reflected in real life. Marketing campaigns can be designed to be synonymous with both the Metaverse and reality. “Those who get on board early will be considered pioneers of the newest wave of marketing,” says Cohen. Remember when we all thought Facebook was a ground-breaking thing? The Impact of Influencer Marketing Unlike the Metaverse, influencer marketing has been around a while. In 2021, it was reported to be worth nearly $13.8 billion. Cohen explained that while influencer marketing can be used on almost any platform, TikTok and Instagram is where it is booming, and believe it or not, celebrity influencers aren’t always the best avenue for a good ROI. An influencer for a campaign should be carefully and hand-selected. To get the most out of this strategy, Cohen says marketers need to remember to design campaigns that will resonate with the influencer’s audience, even if it is different from the brand's usual audience. Change in Content Another marketing craze making its mark is a jump in native content. This type of content is,
simply put, advertising in disguise. Native content often doesn’t appear as an ad, and it results in more user engagement or views. Some common examples of native content can be SnapChat filters, Spotify playlists, social media In-feed ads, sponsored blog posts, and more. This type of content is usually in long-form and offers a lot of value to readers. Say so long to blunt advertising. Cohen says, “going forward, content will need to be native and valuable. ” Staying ahead of the game will keep you around in the safari and make sure that you and your brand stay relevant. Learning alternatives to thirdparty cookies, understanding artificial intelligence, delving into the Metaverse, and more is a great place to start. It is an ever-changing world filled with uncertainties. It seems the one thing that is certain is change. Being smart enough to adapt to the changes will make all the difference. MENDEL COHEN is the CEO and Founder at Krafted Digital, a Miami-based Digital Agency helping brands grow through data-driven online marketing strategies. As a tech entrepreneur and marketing expert, Mendel frequently shares insights on trends facing the digital marketing space. Cohen is also involved in ventures in the software industry, co-founding and partnering in numerous tech companies. MARCH 2022
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