By ERNEST NORTH, co-founder at Naked, the AI-driven car insurance provider
Over the past 10 years, we have seen digital technology reconfigure the relationships between brands and consumers. The rise of globalised competition has given people more choice than they have ever had before, while social channels mean that consumers have the ability to organise into communities of interest as well as a louder voice in their interactions with brands.
This shift means that big branding campaigns no longer have the power they once had. Though mass media campaigns can be prestigious and impactful, they are also expensive and untargeted. This approach also suffers from diminishing returns as dozens of brands in crowded, commoditised sectors compete to shout the loudest, trying to overwhelm consumers with hundreds of billboards, radio ads, sponsorships and other untargeted advertising.
Breaking through noise and clutter
Typically, in markets that are not very interesting or where the products themselves are not particularly differentiated, the goal is to break through the clutter and noise so that the brand’s name can be top of mind for the average consumer. These big campaigns lead to high customer acquisition costs—costs that traditional brands typically pass on to their clients in the form of higher fees or prices.
Ah, but this is all changing because of the shift to digital advertising, some might say. The reality, however, is that most digital advertising is not as personalised, efficient or non-intrusive as it is meant to be. The approach for most brands is to use crude demographic and behavioural data to target consumers with ads across a range of digital platforms.
For example, a property developer may use a social media platform’s data to target all 30-35-year old females in Johannesburg with a certain estimate of minimum income with an ad showing a residential estate close to a prestigious school. And once someone searches for home loans online or uses a bond repayment calculator, she will see popup pages for home financing wherever she may roam on the Internet for the next two months.
This approach—which essentially is a move from shouting to stalking—is flawed for a number of reasons. For starters, it still depends on intruding in the consumer’s life with dozens of marketing and advertising messages they might or might not want. Targeting people along lines such as age, race, gender, education, and suburb is not bringing a real personalised touch to marketing.
We are not our demographic data
As humans we are not defined along demographic lines, but by our mindsets and beliefs. What matters to most people is their definition of what’s right and wrong, their feelings about certain social trends, and their attitude to embracing new technology and new processes to lead better lives. Targeting people according to age or gender is ultimately as unfocused as putting up a billboard for everyone to see.
The other major problem with this approach is that customer acquisition costs remain high because one is paying to reach large audience segments that are not going to be interested in the brand or product. It does not scale into a way to bringing marketing and advertising costs down over time by talking to the customers that will relate most to the brand.
There is another way.
We are seeing many brands shift towards more personalised, granular and direct ways of reaching their customers. Many new-age brands such as Uber and Airbnb have grown more on the back of social media and word of mouth than through massive campaigns in mainstream media—and they have done so by focusing on connecting to people on the levels of values and lifestyle rather than demographics.
Such brands focus on reaching a ‘tribe’ through more sharply focused micro-campaigns on social channels and even in the real world. A ‘tribe’ refers to a group of people whose interests, values and behaviour align with those of a brand. When people buy from the brand, they are purchasing because they feel aligned with a tribe rather than because of features, functionality or branding power.
Scaling up personal storytelling
The beauty of tribal marketing is that customers tell the brand’s stories through authentic social media and word of mouth testimonials. People in the tribe feel as if they’re investing in the other members of the group (and earning themselves social credibility) by sharing the good news about a brand they love. The customer growth curve becomes exponential, and the marginal cost of acquisition becomes almost zero.
Brands have long tried to cultivate tribes using mechanisms such as loyalty clubs and in-house magazines, but today, the combination of social media and data enables us to take tribal marketing to the next level. Rather than spending lots of budget on big brand campaigns, the brand can use its money to reduce prices or create better customer experiences.
Tribal marketing will only work when the brand embeds the values and philosophies it promotes into everything it does. We can expect to see many companies try to create tribes in much the same way as every brand a few years ago desperately wanted to ‘go viral’ with its social campaign. A tribe needs to be built organically, with a product experience as the first building block.
In many industries, this means leaving behind legacy issues and processes and tricks and systems that have made consumers cynical. For some businesses, consumer unfriendly policies and systems are so deeply ingrained into the way they operate that it can be difficult to change. This has created fertile conditions for startups to challenge incumbents in industries as diverse as banking, insurance, transport, and retail.
These challenger companies will compete in different ways to those that came before them: by building enduring relationships with people who don’t just buy their product or service, but their purpose, values and community. Their customers become true fans of the brand, retelling its story to other people who share their values and interests.
This creates a virtuous circle—it enables the brand to grow without significant spending on traditional advertising and brand building, which allows it to drive down customer acquisition costs and deliver better value for money, which in its turn drives further growth and creates more advocates and fans for the brand.
It’s printing, Jim, but not as we know it
Selling printing services is not only about the hardware anymore, writes ARTHUR GOLDSTUCK
The seminal science fiction series Star Trek generated many catch-lines, like “The Prime Directive” and “Live long and prosper”. One of its most parodied lines, however, is Doctor Bones McCoy’s words to Captain Kirk on encountering an alien species: “It’s life, Jim, but not as we know it.”
That’s exactly the way one could describe the printer industry today. Every time an HP, Epson or Konica Minolta releases a new machine for this sector, one can sense the puzzled frowns of people taken by surprise that it still exists.
The difference is that it has evolved from a focus on paper to an emphasis on document management.
One of the first companies to spot that shift in the market, Japanese-headquartered Konica-Minolta, pioneered the concept of a dedicated printer company introducing its own software development division.
“We’ve always believed our role is solving problems for the customer, and not just to provide print, copy and scan solutions,” says Marc Pillay, CEO of the company’s South African division. “Our primary focus is multi-functional devices, but we always look at adding value to clients. Our real job is to assist in achieving a better return on investment.”
The proof of the pudding is that the local division is one of the biggest Konica-Minolta distributors in the world. The reason is simple: unlike most other countries, the South African operation has both a direct and indirect channel. That means it is able to supply companies through its reseller network, while also having a presence on the ground in the form of a dealer network across the country. That, in turn, has given it access to municipalities and other organs of state.
“Our value proposition is based on quality products, service and an unparalleled supply chain,” says Pillay. “When everyone was afraid to do business with government, we thrived on it. It comes from being located in areas where it’s easy to do business with us.”
One could call that the secret of success for existing demand. The coming era, however, will require an appreciation of the next big shifts in printing, says Pillay.
“We’ve seen the big shifts from analog to digital, from monochrome to colour, and from decentralisation to centralisation of printing. The next shift is unbundling printing into a hybrid approach, using both cloud and managed solutions. It’s all going to become subscription-based, and it will be print-on-demand. The high-end customers go into that very quickly, but we still have to cater for people who just do copying.”
Pillay believes that the opening of Microsoft’s Azure data centres in South Africa in March has already made a difference.
“Now you can scan from a device into Microsoft’s SharePoint online or Google Drive. It’s not about screen size anymore, but what you can do to make an impact.”
Where people don’t print, says Pillay, they’re absorbing documents digitally.
“We have to make sure that, where we lose the print, we are gaining the management of the scan, digitisation of the document or management of the workflow. Our income will come out of the workflow.
“Clearly, we’re not just focused on selling a piece of hardware anymore.”
- Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee
SA chooses most loved local businesses
A new World Wide Worx research report identifies and names South Africa’s 12 Most Loved Local businesses, and places the spotlight on the vital role commercial businesses play in the South African economy. The country’s favourite local businesses include the Chapman’s Peak Hotel in Hout Bay – famed for its calamari, celebrity chef David Higgs’ Rosebank eatery Marble as well as Rouge Day Spa with branches in Kenilworth and Constantia in Cape Town run by a dynamic mother and daughter duo.
The aim of the Most Loved Local report was to celebrate those businesses South Africans love the most and to investigate exactly what makes consumers big fans of these entities. It further offers these enterprises insights into what it takes to succeed in business, highlights the qualities that convert clients into fans and encourages more South Africans to ‘shop’ local.
Commissioned by Santam, results were compiled using a combination of digital listening tools and traditional research. Social media listening using organic search analysis looked into which business categories were being searched for most. This was followed up with a trend analysis to assess whether a business category was growing in popularity, keyword volume analysis to refine the categories and finally social listening within the categories which businesses were being spoken about in the most positive terms. Thereafter, a poll was conducted among 2 489 respondents to find out what made them love a local business – or not. The sample was nationally representative and aligned to the economically active population per province. A respected independent research house World Wide Worx conducted the research.
The full list of businesses that came top across 12 categories are:
- Place to Stay: Chapmans Peak Hotel (Cape Town) – the one with the perfect calamari
- Eatery: Marble (Johannesburg) – the one with the celebrity chef in the kitchen
- Butcher: The Butcher Man (Cape Town) – the one that people cross town for
- Bakery: Fournos (Johannesburg) – the one that is way more than a bakery
- Spa: Rouge Day Spa (Cape Town) – the one run by a dynamic mother-daughter team
- Entertainment Spot: Gold Reef City (Johannesburg) – the one with the heart of gold
- Gym: Dream Body Fitness (Johannesburg) – the one that is completely unintimidating to work out at
- Interior Designer: By Dezign Interiors (Johannesburg) – the one that really, really gets its clients’ style
- Market: Bryanston Organic & Natural Market (Johannesburg) – the one that was an organic market before it was trendy to be an organic market
- Laundromat: Exclusive Dry Cleaners (Johannesburg) – the one that treats every single client like family
- Car Wash: Tubbs’s Car Wash (Johannesburg) – the one that cleans your car while you have a haircut
- Construction company: Radon Projects (Pretoria) – the one that is ready all day and all night
Delving into what makes a consumer go from ‘client to fan’, the key factor standing out above all others was service. Arthur Goldstuck, CEO of World Wide Worx, says it seems South Africans will forgive a multitude of ‘sins’ if they are treated well. “Good service was the number one factor that makes 40% of those surveyed support a local business. This was followed by quality products at 18%. Third place went to value for money at 10%, proving the old adage that competing on price alone is not a sound business strategy,” said Goldstuck.
When asked what makes them loyal to a local business, some interesting views across age groups emerged. “Younger clients are more swayed by quality, while older ones are impressed by service. This seems to fit with younger people wanting the status of nice things, and older people wanting to feel valued and respected,” said Goldstuck.
Unsurprisingly, all 12 Most Loved Locals called out service as one of their guiding lights and core pillars when interviewed. Theo and George Parpottas, owners of Exclusive Dry Cleaners, the selected company in the laundromat category, believe when someone walks into their shop, they should be greeted with smiling faces and courteous people. “We don’t care if it’s the president or a beggar, from the moment they walk in, they are a client. We greet them, we are courteous, and we treat them with respect. It doesn’t matter what they bring.”
For Gary Karycou, who co-owns Marble in Rosebank with celebrity chef David Higgs, it is all about attitude. “You can teach someone anything if they want to do it, but we employ on attitude. You get the basic skills but if someone really wants to learn, you can transform them.” He continues, “Giving the best service to our clients, is our motto. It’s something that’s lacking in South Africa and even globally. Businesses just become a bit complacent.”
Famed Green Point butchery and restaurant, The Butcher Man, is owned by Arie Fabiani. He says people will drive past other butcheries and come all the way to the Butcher Man because “we deliver a great service. Good service is critical, and our team knows it.”
Another key finding was that people are more likely to recommend a business if there is a good deal or excellent value for money. Mokaedi Dilotsotlhe, Chief Marketing Officer at Santam, says this is an interesting finding. “Perhaps we are more likely to share a good deal with others and keen to help others find great nuggets of the positive trade-off between value and price. So, it is worth ensuring that, in addition to service and quality, your clients feel like they are getting value for the money they spend with you. That way, they are more likely to tell family and friends the good news!”
Dilotsotlhe added that the report’s release has been well-timed as the need to stimulate sectors of the economy which can create jobs has never been more vital. Commercial enterprises are responsible for a significant percentage of the labour-force in South Africa, and the impact thereof is significant. Due to the fact that these enterprises remain a largely underinsured sector, the campaign also seeks to highlight the need for insurance as a vital aspect of business continuity. When they thrive, it benefits the whole nation, and from a Santam perspective, this translates into sustainable growth for our business.
To download the full report, click here.