Has the ‘Relationship Era’ of Marketing Changed Business Models?

Post 2 Post logoI have the honor of being the first to post in the Post2Post Virtual Blog Tour for Can’t Buy Me Like: How Authentic Customer Connections Drive Superior Results by Bob Garfield and Doug Levy.

In Can’t Buy Me Like, Garfield and Levy trace marketing’s move from the Consumer Era, where companies would say anything to make a sale and their only relationship to the customer was through a sales transaction, to a “new Relationship Era where the only path for businesses seeking long-term success is to create authentic customer relationships.”

CBML_3D_v3In between, and for some companies continuing now, there was a painful 40-days-in-the-desert era where many companies “got” only part of the new message. These are the companies that put money and effort into “hip social media promotions, viral videos, or blizzards of microtargeted online ads….that simply disguise old ways of [transactional] thinking with new technology.”

What works now, say Garfield and Levy, is to build “authentic customer relationships” from “Honesty. Transparency. Shared values. A purpose beyond profit.” Yes, there’s still a (hopefully) “high-quality product or service to offer, but that’s not enough. Now that people can easily discover everything that’s ever been said about your brand, you can’t manipulate, seduce, persuade, flatter, or entertain them into loyalty. You have to treat them like flesh-and-blood human beings, not abstract consumers or data points on a spreadsheet.”

Isn’t the goal still to make money?

My initial concern with the “Relationship Era” was that the company’s goal is still to make money. That makes the relationship effort seem a bit disingenuous. I put the question to Garfield and Levy:

Q.  So even if their relationship with me is better than before, they are still trying to make money from me. Don’t you get pushback from readers on that issue?

A.  Bob Garfield: 

Not sure I understand the question.  But I’ll say this: waiters aren’t supposed to spill the coffee. But if they stare at the coffee cup on the way from the kitchen, it will spill. If the waiters stride purposely forward, eyes on their path, the coffee does not spill. CEOs who make decisions based on short-term stock price spill the coffee and frequently get burned.  

Points for Garfield! That makes sense to me! But Levy offers a great analogy, as well.

Doug Levy:

Ed Freeman, often called the father of stakeholder theory, has a fitting analogy.  He says that our bodies need red blood cells to survive.  But, the purpose of our bodies is of course not to make red blood cells.  Similarly, profit is foundational to a thriving business, but its not the purpose of a business.  In essence, profit allows us to fulfill our purpose, in a sustainable way.

What’s the business model for Relationship Era marketing?

My other two questions had to do with business models. If you’ve read me for very long, or participated in #innochat, you know the importance I (and others) ascribe to business models. So I asked,

Q. How does the new Relationship Era approach to customers change the business model; ie., the value provided by the company, the delivery mechanism for that value, the customer base, and the profit or the place where the profit comes from)? 

A. Bob Garfield:

Sustainable brands by definition enjoy far greater lifetime customer value. Cost of acquisition is amortized over a much longer period and costly marketing to replace lost customers is reduced. We can’t prove it, but we suspect purposeful companies have greater productivity and lower employee churn.  These lowered costs offset potentially higher costs along the supply chain. The key thing to remember is the value — sadly, according to current accounting standards, not bookable — of goodwill. Good conduct becomes a key part of the value proposition.

That last point was one I had homed in on myself as perhaps the key difference in Consumer Era business models and Relationship Era business models. I would think also that the target market might change a bit, and obviously the means of reaching them has changed.

Doug Levy:

Business used to be about creating a product offering and sharing it with the masses – as long as they liked your product…that was enough.  But now, it’s the full spectrum of stakeholders that matter, and the marketing channel (focused on only one stakeholder, the customer) is one spoke in the wheel.  The best businesses look at their business value proposition across all key stakeholders – including employees, suppliers, channel partners, communities, investors,   consumers, and investors.  When your purpose is at the center of this wheel, both the tangible and the intangible product you create is more remarkable and evident to all…making it far easier to attract like-minded people to try, buy, join and forever love your brand.

Finally,

Q. Can you think of a company that already had a business model that would accommodate this, that in other words was always doing this?

A. Garfield’s answer was Zappo’s, with which I agree. In fact, Zappo’s success may have been one of the drivers that spread adoption of the Relationship Era mindset. I also think Amazon always had a touch of Relationship Era mindset that has actually gotten much more pronounced in recent years, at least for Amazon Prime members.

Levy answered with Whole Foods Market, Starbucks, Panera, and Patagonia, all good examples. I would place Whole Foods Market with Zappo’s as a pioneer of the Relationship Era approach.

Can’t Buy Me Like is worth checking out, especially for students of business model innovation and those in marketing.

Bob Garfield is the co-host of NPR’s On The Media and a columnist for MediaPost. Previously at Advertising Age, he has been a prominent commen­tator on and analyst of advertising and marketing for 30 years.

Doug Levy is the founder and CEO of MEplusYOU, a leading strategic and creative agency that believes authentic relationships fuel astonishing brands.

Tune in to the Post2Post Virtual Book Tour this week to read more on Can’t Buy Me Like:

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