The next five years will be about direct relationships.
Several years ago a leading brand contacted us (Twist Image) about a new business opportunity in the digital space. The brand's reality was this: as the years wane on, the amount of retailers that they sell to were diminishing. As the major big box outlets continue to grow and as consolidation rifles through the retail sector, the bigger brands only have a handful of outlets to sell their wares. With these retailers' size and growth comes another reality: they begin to dictate everything from quantity and terms to acceptable margins. For some businesses, this is a dream come true because it secures significant sales, but for others (like this brand), their business was becoming a game of diminishing returns. It gets ugly fast when you run the numbers: eventually this brand will only have their product on the shelves of one or two retailers who are constantly dictating and changing the terms of sale... and the brand has no direct relationship with the consumer.
How do you win?
The brand's idea was to create a new e-commerce brand online that housed only their own brand name products. This was the last chance. This was the hope and prayer to save the business: start a direct relationship with the consumer... today. Notwithstanding how the major retailers might feel about this project, it was a smart and wise play. For a brand to truly shape its own destiny, it must lead the relationship with the consumer as well. This must have been a huge factor in Apple's decision to build out retail stores and not work exclusively with the major consumer electronic retailers.
How are your direct relationships?
Some brands do this well... most fail at it with spectacular fashion. Is it possible to be so judgmental? It is. One of the reasons I still enjoy the conversation and debate about the efficacy of Social Media marketing is that the majority of brands that struggle with ROI are comparing it to traditional push advertising instead of treating it as an opportunity to have real interactions between real people. A consumer that hits a "like" or "follow" button is opening up the opportunity to have a direct relationship with a brand. If all the brand does is blast back offers and specials, we're not pushing towards direct relationships... we're pushing towards broadcast advertising (in a new channel).
The opportunity is now.
I'm often reminded of an event I took part in called, The Art Of Marketing (sidebar: I'll be speaking at an upcoming Art of Marketing event in Vancouver on June 9th, 2011 - it will also feature Gary Vaynerchuk, Guy Kawasaki, Avinash Kaushik and William Taylor). Also speaking on the bill was Seth Godin (Poke The Box, Linchpin, Purple Cow). Seth doesn't hold any punches and made it very clear to the 1500 marketing professionals in attendance that this unique moment in time is not only a revolution in marketing - one that we will probably never again see in our lifetime - but that it was ours to either capitalize on or squander. The next five years are going to be about these direct relationships. The next five years are going to be about how well a brand can actually change the relationship from one that looks at how many people are in their database to who these individuals are and how the brand can make the connections and loyalty stronger.
The stars are aligned.
We have the technology. We have the data. We have the new media channels and platforms. We have the opportunity to publish whatever we want - in text, images, audio and video - instantly (and for free) to the world. What we do with this moment will be telling. It will also set the pace for everything that flows out of our marketing departments for the next decade. That big brand I talked about earlier? They never pulled the trigger on their e-commerce project and wouldn't you guess it: they're busy scrambling for "likes" on Facebook and are selling their products through the handful of big box retailers left.
No direct relationships. No future.