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The sub­ject of cus­tomer loy­alty is guar­an­teed to get the atten­tion of vir­tu­ally any­one involved in mar­ket­ing. The cost of acquir­ing new cus­tom­ers always massively out­weighs the cost of retain­ing exist­ing ones (although sadly reten­tion is still given too little mean­ing­ful atten­tion by too many com­pan­ies). And with so many tech­no­lo­gies approach­ing par­ity, switch­ing brands has never been easier.

Of course, exactly what mar­keters mean by loy­alty is often a some­what fuzzy idea. Gen­er­ally it comes down to a desire for exist­ing cus­tom­ers to carry on doing what they’re already doing (with a hope that they may do a little more too). As a res­ult, many ‘loy­alty pro­grammes’ use clas­sic beha­vi­our­ist ideas of reward­ing desired beha­viour and habitual repeat buy­ing. This is fine when we’re talk­ing about get­ting some points on a store card for buy­ing sugar but doesn’t stand up to any­thing more com­plic­ated than simple reflex pur­chases. This is because it is focused almost solely on habits of mind rather than any­thing deeper (what aca­dem­ics term ‘rou­tin­ised response behaviour’).

A truer defin­i­tion of cus­tomer loy­alty is whether people will wait for your product if it is out of stock (or still in beta). Whether they will recom­mend it to their friends (or blog favour­ably about it). And whether they’ll for­give you when you make mistakes.

But in a 2.0 world is any­one really ‘loyal’ to brands any­more (espe­cially in the tech sec­tor)? Loy­alty is, to some degree, a meas­ure of per­man­ence. Yet as we all know, tech­no­logy is about relent­less change. The tech­no­logy grave­yard is littered with the remains of brands and products that at one time attrac­ted many loyal users. And we are poten­tially see­ing a new wave of change with the move to webOS-based services.

It was unthink­able at one time that Sony Play­sta­tion users might defect instead of wait­ing for the next ver­sion. Yet right now the brand’s pos­i­tion seems more pre­cari­ous than ever as PS3’s release date and avail­ab­il­ity moves ever farther away and the com­pet­i­tion gets its act together.

Like­wise, until Fire­fox came along, Inter­net Explorer had effect­ively won the browser war. Sadly, hav­ing won, there was no need to remain focused on improv­ing the product (ie bet­ter serving users) and, from a tech­no­logy stand­point, Microsoft has been play­ing catch up ever since.

Even Apple, one of the more bomb-proof tech brands, only had to have a few scratched Nanos and dis­col­our­ing Mac­Books to see once ‘loyal’ cus­tom­ers fall out of love with the brand.

One reason for this is that there is no habit of mind for most tech­no­logy pur­chases. They are two infre­quent, too expens­ive and the next pur­chase is almost never a like-for-like replace­ment of an older product (tech moves on too quickly). Buy­ers are also more informed than ever before (and far less scared of tech­no­logy than they used to be). They are more will­ing to adopt earlier because on the whole the con­sequences of get­ting it wrong aren’t too worrying.

So where does this leave tech marketers?

The first thing to do is turn the whole loy­alty ques­tion on its head. Instead of ask­ing how loyal your cus­tom­ers are to you, ask how loyal you are to your cus­tom­ers. What can you do to help them get through their day? What would you do if you really were on their side? Find ways to be loyal to them (their wants, needs and aspir­a­tions) between purchases.

Secondly, involve cus­tom­ers in refin­ing exist­ing products and devel­op­ing new ones. Work as part­ners with them. The open source ethos of co-creation comes into play here. If cus­tom­ers have some skin in the game then they are more likely to stay the course.

Finally, never, ever com­prom­ise on sup­port. For most tech com­pan­ies, this is the prime com­mu­nic­a­tion cus­tom­ers have with the brand between pur­chases. Yet examples of great sup­port are con­sid­er­ably rarer than those of diabol­ical sup­port. There is no faster way to squander hard earned brand equity than to deliver a crappy sup­port experience.

So is loy­alty dead? Yes and no. Tra­di­tional notions of brand loy­alty are, in the tech sec­tor at least, gasp­ing their last breaths. But in their place could come a more authen­tic, more effect­ive rela­tion­ship with customers.

I’m not around for the next week so no post­ings. Nor­mal ser­vice will resume on the 30^th (as soon as I’ve deleted sev­eral thou­sand emails and caught up on an encyclopedia’s worth of RSS feeds).

This is rather lovely. Yahoo! has worked with Jonathan Har­ris to cre­ate a digital time cap­sule. The cap­sule is open for 30 days end­ing 8^th Novem­ber and allows Yahoo! users to con­trib­ute con­tent (writ­ten, pho­to­graphic, video, audio) under 10 broad cat­egor­ies. After this date, the res­ult­ing cap­sule will be will be ‘sealed’ and entrus­ted to Smith­so­nian Folk­ways Record­ings based in Washington.

The capsule’s cre­ator explains:

The aes­thetic of the Time Cap­sule is that of a ball of thread, spin­ning like a globe, its shift­ing sur­face entirely com­posed of words and pic­tures sub­mit­ted by people around the world. The thread ball concept relates to threads of memory and threads of time, where threads are taken to be any con­tinu­ous and self-consistent nar­rat­ive strand. When the Time Cap­sule opens, it dis­plays the 100 most recent con­tri­bu­tions, which form the spin­ning globe. The ten themes orbit the globe in a pin­wheel pat­tern. At any moment, any indi­vidual tile can be clicked, caus­ing the globe to fall away and the selec­ted tile to expand, reveal­ing detailed inform­a­tion about the tile and the per­son who cre­ated it. Using a search inter­face, view­ers can spe­cify the pop­u­la­tion they wish to see, explor­ing such demo­graph­ics as “men in their 20s from New York City”, and “Iraqi women who sub­mit­ted draw­ings in response to the ques­tion: What do you love?”. There are an infin­ite num­ber of ways to slice the data, and each res­ult­ing slice then becomes its own thread, which can be browsed inde­pend­ently, tile by tile, like a filmstrip.

Jonathan Har­ris spe­cial­ises in cre­at­ing won­der­fully evoc­at­ive digital exper­i­ences. They tend to have a touch of whimsy about them. They are also addict­ively com­puls­ive with beau­ti­fully intu­it­ive inter­faces. If you haven’t already, be sure to check out 10×10 and we feel fine (as well as his other work here).

As prom­ised, we’ve cre­ated a video of the high­lights from the Inside the Bubble event. It’s on b1.com but I thought I’d put it here too.

Enjoy.

You can also read thoughts from one of the pan­el­lists here and one of our attendees here.

So you’ve heard about the tech­no­lo­gies, you’ve read a few blogs, and watched some­thing hil­ari­ously funny on You­Tube – but from a mar­ket­ing per­spect­ive, what should you actu­ally be doing about Web 2.0? And where do you start?

Some­times it can seem as though unless you imme­di­ately launch a blog, put up a wiki, tag all your con­tent and host an uncon­fer­ence, you’re being left in the dust. But there are some rel­at­ively simple things you can begin doing right now.

1: Hear the conversation

Go to Tech­nor­ati and set up a watch­list to track blog men­tions of your com­pany, your products and key team mem­bers (eg your CEO, your CIO etc). Do the same for your competitors.

2: Join the conversation

Begin to engage with those who post about your brand and mar­ket. Nom­in­ate people intern­ally who can talk pas­sion­ately (and help­fully) about the industry. Give them the free­dom to be themselves.

3: Cul­tiv­ate advocates

Con­sider giv­ing pro­lific posters more priv­ileged access to your com­pany. Invite them in, show them around, drink tea together. Don’t merely spin the com­pany line to them. Don’t PR them. Don’t try to place product on their blogs. Find out where they are com­ing from, get to know them bet­ter. Then as stuff hap­pens, keep the con­ver­sa­tion going with them to give your per­spect­ive on events.

4: Think community

Look for oppor­tun­it­ies to bring groups of cus­tom­ers together to work with you. This might be to develop new products and ser­vices, it could be to open new ways of com­mu­nic­at­ing with them, or it could be any num­ber of other ways to col­lab­or­ate. Import­antly, this is not a ‘sem­inar’ or a ‘show­case’. The best model for this is the Bar­Camp series of events and the Yahoo! Open Hack Day.

5: Bring a little 2.0 to your site

Start to look at how you can use some of the Web 2.0 tech­no­lo­gies on your cor­por­ate site. This could be as simple as incor­por­at­ing the Google Maps API on your con­tacts page or as com­plex as devel­op­ing an AJAX self-service con­fig­ur­ator to help cus­tom­ers get the products that are best suited to them. There are so many use­ful tech­no­lo­gies and ser­vices being developed – it seems rude not to extend them to your customers.

That’s it. Of course this is not rocket sci­ence and is far from the cut­ting edge. But it’s a start and, judging by some the con­ver­sa­tions I had at the Inside the bubble event, right now that’s what many in mar­ket­ing seem to need.

Thank you to every­one who came to the Inside the bubble event last night. It was great to see so many people (there were over a hun­dred of you) look­ing to get to grips with what Web 2.0 means for marketing.

A spe­cial thanks to our pan­el­lists, Jose Adams of Visit Lon­don, James Cash­more of Google, Simon Grice of eTribes, Ian Jin­dal and Sam Sethi of Tech­Crunch UK / Vec­osys for open­ing them­selves up to inter­rog­a­tion. We filmed the event and will put it online at b1.com as soon as it’s edited, com­pressed and all that other good stuff.

In the mean­time, there is a photo set up on Flickr (which also gave me the excuse to try out their geot­ag­ging for the first time. Have a look here – the hybrid view is best).

The event has given us lots of food for thought and the con­ver­sa­tions after the event (and through the day today) have kept us buzz­ing. We’ll be tak­ing the ideas on fur­ther both here on the blog and in per­son at Mar­ket­ing Focus Europe in just over a week.

Con­tinu­ing to set the scene for our Inside the bubble event, today I’m going to look at open source. While open source is not strictly speak­ing core to Web 2.0, the think­ing and philo­sophy behind it is. And, I believe, it is the open source way of work­ing which will have more impact on the way cli­ents and agen­cies work together in future than any­thing else.

Of course, open source for many of us in tech­no­logy is syn­onym­ous with soft­ware and the high pro­file of Linux, Open­Of­fice et al. The open source ethos has also spawned the Cre­at­ive Com­mons approach to licens­ing intel­lec­tual prop­erty and the release of the APIs that have been used to cre­ate so many mashed-up applic­a­tions and services.

This is all very well for cre­at­ing new applic­a­tions but what has it really to do with mar­ket­ing communications?

For me this is at the core of the dif­fer­ence between Mar­ket­ing 1.0 and Mar­ket­ing 2.0. We can char­ac­ter­ise ‘old mar­coms’ as essen­tially a one way, blunt, broad­cast affair that dis­trib­utes largely san­it­ised “over pol­ished” communications.

These com­mu­nic­a­tions talk at people rather than with them. This is now out of step with the new real­ity of blogs, wikis, ad block­ers, Sky+ etc. It is the kind of approach that audi­ences men­tally tune out of as fast as the mes­sages hit their retinas.

The cre­ation of Mar­ket­ing 1.0 com­mu­nic­a­tions is also increas­ingly out of step. The days of the cli­ent hand­ing the prob­lem to their agency who van­ish into a closed room for a couple of weeks and the return with the answer that they then must sell to the cli­ent must be numbered (and are already van­ish­ing in more enlightened agencies).

Essen­tially, the old way is closed source.

One way of con­struct­ing a route for­ward is to look at the model offered by open source (the bazaar model) and apply this to the agency/client rela­tion­ship. The res­ult is to change the way agen­cies work with clients.

This model has 6 core principles:

1: Users should be treated as co-developers

This means embra­cing journ­al­ists, cus­tom­ers, blog­gers, ana­lysts etc as co-developers of the mes­sages and strategies we cre­ate. While tra­di­tional agen­cies have always used research to pre-test their ideas, by the time it gets to that stage, there is little chance to change course (except when the feed­back is so bad that it’s a rip and replace exer­cise). Co-development doesn’t mean abdic­at­ing respons­ib­il­ity for the mes­sage to 6 cus­tom­ers behind one-way glass. It does mean that you get more informed, more insight­ful input as the pro­ject pro­gresses. Input that offers a more roun­ded view of the mar­ket, the chal­lenges and poten­tial solutions.

2: Early releases

Mar­ket­ing 1.0 emphas­ised that the final com­mu­nic­a­tion be totally fin­ished, totally pol­ished and then rolled out. In con­trast open source-based Mar­ket­ing 2.0 means that mes­sages are not over-polished. We put ideas out there and work with our co-developers to evolve them. We encour­age them to gain a life of their own, to keep pace with the market.

3: Fre­quent integration

Build­ing on the idea of early releases, we need to con­stantly farm for new ideas and insights from other dis­cip­lines and indus­tries and integ­rate them often. The pro­ject keeps mov­ing for­ward. This is, of course, easier for integ­rated agen­cies as they have less of the silo-mentality that afflicts old-school single-discipline agencies.

4: Sev­eral versions

If Web 2.0 teaches us any­thing, it’s that the media are frag­ment­ing. For any mes­sage, there are a mul­ti­tude of ways to con­nect with cus­tom­ers (even with ad-blockers, RSS and SKky+/Tivo etc). To suc­ceed means ensur­ing you have a truly media-neutral idea driv­ing the brand which can be re-configured in a wide vari­ety of ways. It could also mean cre­at­ing more stable (pol­ished) cam­paigns for mass media and more ‘buggy’ (unpol­ished) cam­paigns for rela­tional media (eg blogs) which can be fur­ther co-developed.

5: High modularisation

In a Mar­ket­ing 2.0 world, every cam­paign is a hol­istic cam­paign. It’s not enough to run an ad and think the job’s done (actu­ally, this has always been the case). Even on lim­ited budgets, it’s still vital to think through all the mod­ules that are needed to make the cam­paign suc­cess­ful (again this is some­thing that comes more nat­ur­ally to integ­rated agen­cies). It means being able to cre­ate mod­u­lar cam­paigns that allow for par­al­lel devel­op­ment (pos­sibly by mul­tiple part­ners). And, of course, none of this must neg­at­ively impact upon avail­able timescales.

6: Dynamic decision making

Speak­ing of dead­lines, it is vital that cli­ents and agen­cies have a way of mak­ing stra­tegic decisions quickly and effect­ively within a chan­ging envir­on­ment. With the latest work­flow sys­tems and devel­op­ment wikis this is now easier than ever but on inter­na­tional assign­ments with lay­ers of sign-off this still presents chal­lenges for every­one involved.

The open source model presents a com­pel­ling blue­print for how Mar­ket­ing 2.0 will develop.

Are we there yet? No. While today’s integ­rated agen­cies are adopt­ing some of these ideas, embed­ding them through­out both agen­cies and cli­ents will take time and com­mit­ment. This will be less a case of if than when.

I look for­ward to see­ing what vis­it­ors to the bubble think.

In part two of our run up to the Inside the bubble event I’m going to be tak­ing a whistle-stop tour of blogs within a mar­ket­ing con­text. It’s a big topic so I appo­lo­gise in advance for not doing it justice.

So much of the back­ground to blogs and blog­ging has already been writ­ten (mainly on blogs) that I won’t do the whole 101 thing in this post. If you want a good over­view look here.

The debate for mar­ket­ing is around just how import­ant blogs are in the mix. This tends to get pretty polarised.

On one side are those who believe that blogs are the future and rep­res­ent the authen­tic ‘mar­kets are con­ver­sa­tions’ approach of the Cluetrain Mani­festo. They point to the expo­nen­tial growth of the medium (23,000 more a day accord­ing to some estim­ates), the massive pop­ular­ity of the lead­ing blogs and and the crit­ical mass that can be achieved when an idea takes hold.

In the other corner are those who believe that the import­ance of blogs is massively over-stated (by any­one who is not a blog­ger). They argue that out­side of the blo­go­sphere (where most people live) the impact of any blog is close to zero. And for mar­keters, when there’s never enough budget to do the basics as well as they’d like, they’re not about to start throw­ing money with no ROI in sight.

So where do blogs fit in the over­all scheme of things?

To date, brands have used blogs in a num­ber of ways. The first is to show the human face of the com­pany. Blogs offer the pos­sib­il­ity of a less medi­ated view of a brand. So when we hear that CEO of XYZ com­pany is blog­ging, we believe that we’ll get a less spun pic­ture of the busi­ness. It is also an easier podium for admit­ting to mis­takes and express­ing dreams for the future. And it’s not just the CEOs, this same role can be played by people through­out a cor­por­a­tion (Robert Scoble was the per­fect example of this when at Microsoft).

Blogs also offer a more imme­di­ate view of a com­pany. I don’t know about you but I habitu­ally check the timestamp on any entry (in a way I never would on a brand’s main site). A blog is intrins­ic­ally more dynamic, more vibrant than the cor­por­ate .com. You get a far bet­ter sense of the com­munity behind the façade. And when you bear in mind that in the final ana­lysis people do busi­ness with people (even when it’s a six-figure cap­ital expendit­ure) this can be a major asset.

Some brands try to influ­ence the influ­en­cers. As every­one knows, word of mouth is power­ful stuff. If an a-list tech blog­ger says my product is cool it’s way more believ­able than if I say it. Of course this has led to legions of old-school PR people inund­at­ing blog­gers with shot­gun emails regard­less of the rel­ev­ance of their mes­sage to the blog or its read­er­ship. The ones who appear to be more suc­cess­ful are those that are upfront about their motives and highly spe­cific to the blog they are tar­get­ing. This, how­ever, takes far more effort.

Of course, a real con­ver­sa­tion is a two-way affair. Blogs, through their com­ments fea­ture, allow for a brand to engage in debate with its cus­tom­ers. Sadly, many of the com­ments sec­tions of blogs are being spammed into obli­vion, but this is where the guard is really dropped. Again, the time involved for a brand in keep­ing up to date with the con­ver­sa­tion should not be underestimated.

Much has been said about the destruct­ive power of blogs. Take one tetchy blog­ger, give them a bad exper­i­ence of your brand and stand back to watch the fire­works. There is after all no editor. And as they say, inform­a­tion wants to be free (espe­cially inform­a­tion fueled by a self-righteous mind­set and a desire for revenge). That’s why it pays to keep an eye on how your brand is being dis­cussed on blogs. I have per­petual searches run­ning on all of our cli­ents and on Ban­ner itself. I would prefer to enter a debate early than when it has begun to snow­ball. Just because you’re para­noid doesn’t mean they’re not out to get you.

On the flip-side of the above point, the con­verse is also true. Brands can to some extent insu­late them­selves from this kind of ava­lanche. By enga­ging with blog­gers, tak­ing time to build rela­tion­ships, address­ing their con­cerns, they can build a com­munity of people who when the wheels fall off will stand up and offer a more reasoned view.

The bottom-line, I believe, is that tech­no­logy brands should take every oppor­tun­ity to join the con­ver­sa­tion. While blogs are, des­pite their growth, still rel­at­ively embryonic, the num­ber of tech buy­ers read­ing them is becom­ing significant.

As I said at the begin­ning of this post, it’s a huge topic and I’m undoubtedly over­sim­pli­fy­ing it. It’ll be inter­est­ing to hear what the pan­el­lists at the bubble think.

In the run up to our Inside the bubble shindig, I’m going to start look­ing at some of the tools and chal­lenges of mar­ket­ing within a Web 2.0 world. First up: social networks.

It seems as if you can’t move right now for talk about social net­work­ing. Of course, what most people are really talk­ing about is MySpace (with some stateside widen­ing this to include Friend­ster and Face­book). MySpace gained its 100 mil­lionth account this August and is reckoned to be the world’s 4^th most pop­u­lar Eng­lish lan­guage web­site. It has also attrac­ted massive mar­ket­ing atten­tion among those look­ing to tar­get its users (who are the same people who are switch­ing away from tra­di­tional media) as well as a pretty luc­rat­ive deal with Google for search.

One of the real tri­umphs of the mass-appeal social net­works is to cre­ate a net within a net. (It’s sur­pris­ing in some respects as this is where Com­puserve and AOL were a dec­ade ago.) The net­works become self-referencing which binds them ever closer together. You stay on the same site for con­tent and com­mu­nic­a­tion, and you gain prestige from the num­ber of links you have (encour­aging users to make even more con­nec­tions). Of course from a mar­ket­ing point of view, this fur­ther insu­lates users from push-based messaging.

So how have mar­keters been try­ing to break through?

The first way is by cre­at­ing their own branded per­so­nas and set­ting up pages for them. This is the approach Wendy’s took in the US to pro­mote their square bur­ger (gen­er­at­ing over 100,000 ‘friends’ in the pro­cess). VW USA went fur­ther to cre­ate a liv­ing breath­ing char­ac­ter in Helga, an über-minimalist icon for the brand. These have suc­ceeded through tap­ping in to a kind of post-modern, ironic atti­tude within the net­works where users cer­tainly aren’t fooled and are will­ing to play along (for now). But for how long? This is a trick that can only be pulled so many times and will almost cer­tainly see dimin­ish­ing returns over time.

Another approach is seed­ing, whereby influ­en­tial users carry messages/recommendations out to their con­tacts. Essen­tially a word of mouth strategy, this approach is wrapped up in an eth­ical mine­field. How upfront should a brand or seeder be about their motives? Really effect­ive word of mouth works because of its authen­ti­city and the trust that gen­er­ates. Paid-for opin­ions are by their very nature less authen­tic and less believ­able. And any brand that gets bus­ted is likely to see the down­side of social net­work­ing pretty quickly. The people behind BzzA­gent in the US seem to have a good atti­tude to this (see their code of con­duct). Per­son­ally, I would be wary of this approach unless your seed­ers are 100% trans­par­ent and offer some­thing of real value to the community.

A third route is viral con­tent (this could be the some­thing of real value men­tioned above). Viral is still largely syn­onym­ous with video (prob­ably even more so now with the growth of You­Tube) but it does’t have to be. It can range from use­ful writ­ten con­tent to wall­pa­pers, from browser pug-ins to online games. The exact nature depends on rel­ev­ancy (to the brand and the audi­ence) and on its likely infec­tious­ness. This can include user-generated con­tent which has worked well for some (eg Con­verse, Jet­Blue and Mas­ter­Card where cus­tom­ers engaged with the brand) and dis­astrously for oth­ers (eg Chevy Tahoe where cus­tom­ers were enraged by the product’s impact on the environment).

Of course, all of this very B2C. What about B2B?

Iron­ic­ally, social net­works in the B2B space pred­ate those in the con­sumer space. It’s just that they weren’t called social net­works, they were called user groups. Of course today we have the likes of LinkedIn, OpenBC and AlwaysOn (which is the one most like a B2C net­work) as well as forum sites for spe­cific technologies.

With B2B net­works, the keys are engage­ment and use­ful­ness. I remem­ber a few years back when we were pitch­ing for a broad­band ISP, I was doing the ini­tial crash course work on them and the busi­ness broad­band sec­tor. I ended up on a forum ded­ic­ated to broad­band where there was vig­or­ous debate on the issues of the day. On there was a rel­at­ively senior per­son from the ISP (not a mar­ket­ing guy) who was end­lessly patient and help­ful to other forum mem­bers. He did more to raise my opin­ion of the brand than any mater­ial I had read to that point.

Of course, ded­ic­at­ing people to this kind of task is expens­ive (in time and money). Other options revolve around spon­sor­ing sec­tions of a net­work and facil­it­at­ing the debate there (no hard sell). Or cre­at­ing tools that help users find what they need easier. You can evolve the white paper into some­thing more inter­act­ive (wikis are per­fect for this). Or you can cre­ate your own social net­work around your area of the industry if one does not already exist and there is a clear need for it (sig­ni­fic­ant due dili­gence is advised here).

Will social net­works last? Prob­ably, for a time at least. They are bound to evolve and there will be the occa­sional back­lash against them (espe­cially if they try to hold onto their mem­bers too tightly). For tech­no­logy mar­keters they rep­res­ent an inter­est­ing oppor­tun­ity (I would argue espe­cially in the B2B space where no one has done any­thing too smart yet). It will be inter­est­ing to see our panel’s view at the bubble.