Why Web 2.0-based customer relationships work - or not

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By: Wise Marketer Staff |

Posted on August 30, 2007

Why Web 2.0-based customer relationships work - or not

In a world of increasing choice and commoditisation, consumers are seeking new levels of meaning and value in their choices, spending, and relationships, according to customer relationship expert John Todor of The Whetstone Edge, who has highlighted some of the most significant aspects of the 'Web 2.0 world'.

While the buzz-word "Web 2.0" may lack a universally accepted meaning and definition, the fact that Todor faces in his latest book ('Addicted Customers') is that Web 2.0 represents a collection of new-generation internet technologies that marketers can't afford to ignore.

Impact of Web 2.0 The Wise Marketer asked Todor to create a high-level summary of this opportunity. His analysis of the strengths, weaknesses, opportunities and threats surrounding Web 2.0 and the tech-savvy consumer provides a very different view than traditional marketing disciplines provide.

For example, his starting point is the customers of today, the challenges they face, how this impacts the ways in which they make brand and purchase decisions, and what they value most. Todor's list of factors that impact consumers and their suppliers today includes:

  1. There is a growing disconnect between what traditional businesses are serving up and what today's customers' value and reward with loyalty and commitment.  
  2. Businesses face short product lifecycles, global competition and rapid commoditisation. To protect or gain market share they use price, convenience, and incentives to bid for customers' business. This is neither profitable nor sustainable.  
  3. Customers face a world of abundance and overwhelming choice in products. Many have stated that this puts customers in control - but in control of what? The buying process? Sadly not. Such abundances, choices, rapid changes and short product lifecycles lead to too information, too much choice, too much uncertainty, and too much complexity.  
  4. These excesses lead to anxiety, confusion, frustration and stress, which consumers naturally try to minimise as quickly and easily as possible. The short-term psychological antidote is simple avoidance, which exacerbates the negative emotions. But, unfortunately, the evidence indicates that - at least in the industrialised world - there has been an increase in the baseline level of this approach.  
  5. Customers are becoming increasingly indifferent, disengaged and closed-minded. This increases the rate at which products are perceived as commodities, and commodities are merely a means to an end. As a result, brands often carry little weight with consumers.  
  6. Worse still, indifference is only a short-term strategy. Customers are actually losing control, not gaining more control. The uncertainty and complexity of innovation and change often pushes consumers out of their psychological comfort zone, creating a smaller sense of predictability and control over the outside world.  
  7. As consumers try to regain a sense of predictability and control, they seek new meaning and value in their decisions, experiences, and relationships. When they find it, they experience psychological gratification. Todor's point here is that it is the experience that delivers value and meaning, not necessarily the product.  
  8. When customers find the level of meaning they need and want, they gain a renewed sense of control. It's a learning curve. And, as this new competence grows, so does their desire and engagement. This could simply be learning to appreciate the difference between an everyday wine and a premium wine, Todor says. But once a meaningful difference exists, desire usually increases.  
  9. Customers do want help in extracting more meaning and value in life. Most don't know exactly what they want all the time, and pointers from others - even suppliers themselves - are often most welcome. Life without meaningful experiences or emotional value simply leads to consumer apathy.  
  10. Companies that enable customers to extract greater meaning and value from life will gain relationship value and trust. Customers are attracted to such companies because they help them find more value - and it's not just about money. When a business interacts with a consumer's life in a meaningful way, it's a win-win situation.  
  11. In a Web 2.0 world, customer generated content allows consumers from both sides of the customer base (both existing and potential customers) to share their experiences. At last, would-be customers can find out if the grass really is greener on the other side of the fence before they commit themselves to a brand or product choice. In fact, peer-to-peer networks are now among the most trusted sources of insight and information among those consumers who use them. The number of people participating in Web 2.0 activities is growing rapidly across all age groups, and businesses are losing the direct influence they've traditionally had over consumers' decisions about their products.  
  12. By shifting the focus of the buyer-seller relationship, businesses can regain some of that influence. The shift Todor means is from "selling things" to "providing meaningful experiences". It may sound a little esoteric, but a growing number of companies are already harnessing the power of social media to make this shift, and it works very well for those who are doing it properly. The most successful use integrated online and offline strategies to make it happen, and have the view that the technology is just a tool to help facilitate a shift in the nature of the buyer-seller relationship.

Conclusion Todor's book concludes that consumers don't really want intimate, involved, and collaborative relationships with every company they deal with. They just don't have time, the attention span, or even the bandwidth. The book therefore details the various principles and strategies that companies can apply to help customers choose to build a meaningful and trusted relationship with them.

The thing that makes these chosen few relationships endure is the company's willingness and ability to help customers face the uncertainties and complexities of a fast-changing world, and this demands relationship value rather than a better product at a better price. As Todor says, "Customers will scrimp everywhere else to be able to splurge where it is meaningful to them."

And finally, the main factor that turns customers into advocates - who tell their friends, their family, their co-workers, and their online social network buddies - is their experience of the company actually delivering on that promise.

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