Discover how Best Buy, along with other retailers like Apple, Adidas, Disney and Moosejaw Mountaineering are radically shaping the future landscape by leveraging what I call Tornado Effects to re-define the customer journey inside the the marketing funnel and to ensure today’s empowered consumer, is tomorrow’s empowered shopper.

He makes some very interesting points about building connections between people within the product itself. As a conversational marketing strategist, I naturally find this very relevant because, the majority of time, both products and retail experiences constantly fail to create opportunities to connect customers to customers; almost as if their marketing directors are afraid of having customers talk to each other.

But this thinking is akin to sticking one’s head in the sand, because customers ARE having these conversations everyday in forums, blogs and twitter streams, mostly without the brand’s participation. So here’s the rub, marketing directors either need to accept this fact and adjust their product, approach and ideally their entire business structure, or continue to struggle in a world that will become increasingly hostile.

Doesn’t seem much like a choice to me, but it still amazes me how many consultants and marketers alike think that old ways of doing business – make a website, buy a print, radio or TV ad – will draw people in to buy and do business. What they don’t see is that the main reason people are probably still doing business with their brands is because of:

a) previously good personal experiences,

b) lack of choice

c) Word of Mouth from other customers

and NOT from overpriced ads.

There are far more cost-efficient ways of doing business today. But it does mean accepting that change has happened and that it’s time to embrace new options. And Seth gives plenty of cases in point.

For the past three years, I have become a huge advocate of using the Internet as a way to create dynamic, lasting business change. There is a phenomenal amount of corruption, incompetence and greed in the corporate world, with AIG being just the latest example. If one were to compile a comprehensive global list using a 12pt font, it probably would be a mile and a half long. And toping the first tenth of the list would be much of the global banking, hedgefund trading and other financial industries that have so screwed up the current global economy. So while government’s tinker with throwing good money after bad into a system that is either corrupt, incompetent, broken model or all of these, here are my own strategies for how business could be using the Internet as a way to rebuild what they have lost and are in danger of never getting back, consumer trust.  

Strategy 1: Implement a policy of total transparency

We are currently at the cusp of a fundamental change in business, and even political thinking. Customer activism and watchdog groups are growing apace. Each day, they get better at revealing corporate and government dirty laundry. Each day they seem to gain greater access to information that was once considered confidential and proprietary, either through various freedom of information government movements, or a near endless resource of existing and former company employees whose own loyalty and trust have been wiped out by a decade of loyalty-busting labour practices. Each day, they are grow in influence among an ever-growing cynical consumer base whose most powerful weapon is the easiest to utilize, to stop giving money to people obsessed with other people’s money. Their message: “if profit is your sole reason to exist, your days are numbered.” 

The time has therefore come to fundamentally rethink the notion that secrecy is vital to the successful functioning of business and government. The Internet should be used to publish information proactively. Useful information to publish will depend on the nature of the business and product. For some, detailed ingredients lists, along with explanations as to what each ingredient is, its health risks and why it’s used, are important. For others, cradle-to-grave environmental statistics and policies will be key. How much energy did it take to make the product? How much to ship and recycle it? What materials are used in packaging, construction, so on, and how are they collected and recycled and by whom?

When mistakes happen, CEO’s and business leaders need to get tougher skin, fess up and talk about immediately. Errors are forgiven. Customers are actually reassured to know that companies are human after all. Lies and obvious omissions won’t be forgiven. They will make it look like you have something to hide and customer’s won’t trust you, something they are more inclined to do anyway.

US footwear company Timberland provides a useful benchmark on product information transparency. Their product labels, which are designed like nutritional labels, indicate the name and location of the factory where the shoes were made, the amount of energy used in production and the percentage of renewable energy used. It even shows the percentage of factories assessed against code of conduct standards and the number of hours employees have volunteered in the community. When it comes to information transparency, it’s safest to err on the site of too much rather than too little.

Price transparency is also critical, while also being the most difficult part of total transparency to implement. In much the same way as Marks & Spencers exposed what was behind its labels to reveal its ethical supply chain, price transparency shows the real cost of delivering a product to the shelves. What percentage of the product’s total price is made up by sourcing, manufacturing, packaging and marketing cost? What are the margins for the seller and the manufacturer? For many marketers, this is indeed a bitter pill as few customers will support a 400% or more mark-up, especially on household necessities such as chicken and eggs. This is where having ethics at the core of the company’s business will really pay off. Customers are probably more willing to pay higher margins to company that gives 100% of its profits to charity, and less willing to pay the same knowing that profits will go to finance the purchase of a super yacht for top shareholders. If you are not sure you should implement price transparency because you believe that consumers don’t know your real cost, here’s a simple exercise. Go to Google and enter: “the real cost of product x” or “profit margin on product x” where product x is what you sell. I ran this exercise on the cost of a pair of £100 Nike trainers (£2 was the conclusion) and on a $0.99 McDonald’s Cheesburger (89 cents was the conclusion). Whether or not these numbers are accurate is irrelevant. Because they’re the only answers I found, they’re now the only answer I believe. So you can let consumers dictate what people believe is the truth, or you can be transparent and let them know the truth and use good business strategy and product differentiation strategies to justify your profit margin.

Increasing label sizes to communicate all of this information can be daunting for a consumer to read and even counter-productive as it increases the amount of packaging. A more environmentally friendly solution is to use QR codes. Essentially square bar codes, QR codes can be read by mobile phones and link consumers instantly to websites. Larger codes can even convey the needed data in the code itself. With Nokia starting to ship new phones with pre-installed QR code software, the technology is becoming a feasible alternative to labeling.

Strategy 2: Foster dialogue with stakeholders

Business partners are typically considered to be critical stakeholders. However, a growing number of corporations are realising that they can’t monitor their long supply chain alone and are starting to partner with watchdog organisations and NGOs. As independent groups, watchdog organisations are often more effective than the companies themselves at finding out what is really happening in their own supply chain. By using the Internet to provide open communications between the NGO’s, corporate managers and suppliers, companies can stay on top of any violations of its codes of practice and change suppliers who fail to live up to them.

Partnering with employees seems obvious, but 69% of companies surveyed by IBM don’t partner with their employees. These companies view employees at best as resources that can be cut from the bottom line to suit quarterly profit returns. This short-sighted and dangerous thinking has completely eroded employee trust. Through the own behaviour, CEO’s have taught employees to look after their own personal interest above the company’s. 

By creating internal web communities that connect employees and management around the company’s CSR objectives and initiatives, employees can be empowered to drive real corporate change and customer confidence. They can share best practice, discuss problems as they arise and create solutions. They can participate in the charity process or even help shape the way it functions.

Strategy 3: Empower your customers

The final strategy is to view one’s customer base as partners rather than consumers. As partners, the company needs to empower them with the ability to help define and drive the corporate agenda and business practice. This goes far beyond UGC, or participatory marketing. As with the second strategy, customer empowerment requires using web 2.0 tactics to involve customers in every aspect of the business. In practice, this means letting local customers define the community issues that are most relevant to them. It means letting customers voice their concerns about the way the company does business locally and globally. It means giving customers a conduit directly to the CEO or even to Board management rather than filtering their opinions through layers of corporate bureaucracy. Board level decisions are too far removed from the customers that keep their businesses running.

Just as the NGO and watchdog organizations can be partnered with to follow one’s supply chain, customers can be partnered with to follow one’s reseller and sales network. Not all outlets will act in the best interest of the brands it sells. By encouraging customers to report overcharging or questionable service bundling practices, companies can reign in rogue sellers and protect their own customer base.

In short, the more information, control and involvement one gives to customers, the more likely are they to remain so for life. For involved customers are committed customers. And committed customers are far less likely to quite on you when times get rough or migrate to your competitors for a promotional gain. By involving and empowering customers in such a core, critical fashion, you generate a loyalty that far supersedes anything currently experienced by today’s loyalty programs.

Further reading:

http://www.prweekus.com/Profit-transparency-top-consumer-study/article/123629/

http://hbswk.hbs.edu/archive/1801.html

http://www.clickz.com/2221951

http://www.fas.org/sgp/crs/misc/RL34101.pdf

http://www.gaspricewatch.com/new/default_V3.asp

http://www.corpwatch.org