Engage or Die: John Hagel of Deloitte on The Next Era of Marketing

New Year, New Era In Marketing


Posted: January 6, 2015 | Engagement Marketing

This is going to sound like a bit of a no brainer, but I love the holidays. Largely because I get an opportunity to spend time with my family and friends but also because it’s the perfect time to take a really deep breath, wipe the slate clean and collect all the learnings from the past year. And I have to say, I’m truly excited for 2015.

For those of you just joining us (and perhaps still devising your New Year’s resolutions), welcome. I encourage you to check out my post kicking off this series. The posts are focused on conversations that The Economist Intelligence Unit has had with six marketing visionaries, folks like Seth Godin and Aditya Joshi, who discuss the next era of marketing.

During a recent conversation with the EIU, John Hagel, co-chairman of Deloitte’s Center for the Edge, shared his “formula” for marketing success in the future. Here are some of his key points that resonated with me:

  1. “From Push to Pull”: Traditional marketing has typically focused on the three “I’s” – intercept, isolate and insulate. I don’t know about you, but none of those jump out to me as having a positive connotation or strike me as the ideal way to deal with our company’s most valuable resource – customers. Rather, John says, we should be looking to employ the power of the three “As” – attract, assist and affiliate.  If marketers don’t make this shift and engage customers, they will be displaced by entrants that will.
  2. “There is a new ROI metric”: According to John, the “I” stands for information. It’s about “return on information” versus investment. With so much data available, marketers must start to carefully track how much it costs to accumulate information about a customer and divide that by what they can earn by using that information more effectively.
  3. “Privacy is different under pull”: John notes that privacy is a core issue in collecting information – but, that in a ‘pull’ model, the marketer is serious about being more and more helpful to the customer.  And, that most people don’t care about disclosing information if they are confident it will be used to help them.  I often talk about this as the ‘relevancy’ factor.  If it’s used for relevant and useful purposes, you actually will find people wanting to give you *more* data.

So much more on each of these points in the full interview below. Give a read and let me know what you think. I’d love to hear what you or your marketing teams are striving to do better, more of, or less of in 2015. And, for more great stuff, visit www.marketo.com/next-era.

Economist Intelligence Unit: Marketing has changed pretty dramatically in the past five years. Where do you think it’s going to be five years from now?

John Hagel: Oh [chuckles], it’s definitely heading for a major transformation. If you think it has changed over the past five years, you ain’t seen nothin’ yet. Part of it is the technology–the evolution of the Internet, digital, mobile and so on. But the more fundamental part is the fact that over time more and more people and companies are going to be competing for our attention. If you’re a marketer, you’re going to have to do some fundamental rethinking of your approach to marketing.

The three I’s…

One way to frame it is to say that we’re moving from push to pull. The traditional marketing model has been driven by what I call the “three I’s”: intercept, isolate and insulate. “Intercept” means getting people’s attention wherever they are and whenever you need them. My favorite example is video screens above the urinals in the men’s room. Talk about a captive audience.

First you intercept. Then you “isolate”. It’s you and me and nobody else, I’ve got you and I can get my message to you without interference or distraction. Finally, you want to “insulate” people over time– create a walled garden where it’s just you and me forever.

EIU:  But people won’t stand for that anymore. That’s going to annoy them and drive them away.

…versus the three A’s

John Hagel: That’s right. The three I’s are increasingly challenged. So let me pose an alternative. Instead of the three I’s, think about three A’s: attract, assist and affiliate. “Attract” means motivating people to seek you out, to find you. “Assist” means finding ways to help people, both before and after a purchase, to get more value and use from the product or service.

Ultimately that leads to a third “A”, which is “affiliate”. Instead of one-to-one marketing, the affiliate idea suggests bringing in any and all participants that could be helpful to the prospective buyer at relevant points in time. It’s about creating a broader ecosystem of participants who can be more and more helpful to the customers you’re trying to reach.That’s a very different model that goes against the most basic assumptions of traditional push-based marketing.

EIU: That’s a pretty radical change. How would it happen?

John Hagel: The market will force us to change. The traditional approach of push-based marketing is not going to work as well as it has in the past when there are more and more things competing for our attention. It’s going to be a painful migration. Companies are going to have to walk away from a method that got them where they are today.

Engage or die

EIU: And if they don’t?

John Hagel: They’ll be displaced by entrants who will come in and engage the attention of the people they’re trying to reach.

EIU: What do you think the most effective marketers will be doing five years from now? What should marketers be doing now to make sure they’re in that group?

John Hagel: Technology is a key catalyst for these changes, so marketers are going to have to become more and more focused on the Internet to connect and build relationships. The core of the marketing budget used to be traditional media; now that will migrate to the periphery. And what used to be on the periphery will become more and more central to how you pursue these pull-based models. Mobile phone technology will be very important. And we’ll have to figure out how to co-ordinate activity across a large number of participants to build relationships with the customer and ensure that they’re getting the value at the appropriate time.

EIU: How will the way marketers use data change?

John Hagel: The Internet allows you to collect rich records of interactions, which can lead to much more insight about customers and their needs in real time. That requires deep skills in terms of taking what is usually not very clean or comprehensive data and finding patterns that can be helpful.

Waiting to be asked is not enough Assistance is not just waiting for the customer to ask you something; it’s being proactive and becoming in effect a trusted advisor to the customer who says, “You know, I have some information about you and based on that information I can give you some recommendations that are going to be really valuable to you and save you time and money.” That requires a different level of skill than waiting for the phone to ring and taking an order. It’s being thoughtful.

The risk is that if you misuse the data and bombard the customers with unwanted recommendations, they’re gone. The challenge is how to be helpful in modest ways initially and use that as a basis to build trust, get permission to access more data and become even more helpful.

One of the things that I recommend is using a different set of metrics. We all know traditional metrics like ROA and ROI. The new metrics measure what I call “return on attention” rather than return on assets.

EIU: So the numerator is how much it costs to get the attention of a customer. What’s the denominator?

John Hagel: It is the economic value of that attention, which is the value of the relationship that you can expect based on that attention. It may be a small number, but the cost of attracting that customer attention is also low under the pull-based model.

The new ROI

EIU: Are there any other new metrics that you recommend?

John Hagel: The other measure is ROI, but it’s not return on investment. It’s return on information. It’s starting to track carefully how much it costs to accumulate information about a customer and divide that by what I can earn by using that information more effectively.

Both metrics are central to pull-based marketing. Both help executives start to think about a pull-based versus a push-based approach.

EIU: To make your initial recommendations, you need information about the customer. But the customer may not want to give it to you. How do you deal with privacy concerns?

John Hagel: I think the privacy concerns are more of an issue with the push-based model. I have an incentive to generate revenue not just by selling you more products, but also by selling the data that I’ve accumulated about you, the customer, to as many third parties as I can.

Privacy is different under pull

Pull is different. With pull, you’re serious about being more and more helpful to the customer. Your focus is on, “How do I take this data that I have acquired through prior interactions with the customer or third parties and use that to be helpful?” Most people don’t care about disclosing information if they are confident it will be used to help them. Their concern is “Are you going to take advantage of this data to do something that’s not in my interest?” or “Are you going to give this data to somebody else who will misuse it?” That’s the privacy concern.

You overcome this by taking action in small steps. You think, “What small steps using existing data can I take to demonstrate how helpful I can be to a set of customers?” That builds trust. They think, “They had information about me and were able to give me advice that I hadn’t thought of.”

That’s ultimately going to be the key to addressing the privacy issue: demonstrating through action that the data you’re accumulating is for the benefit of the customer.

EIU: How would you define the concept of engagement marketing or customer engagement?

John Hagel: This idea of anticipating needs and getting permission to make recommendations is one level of pull-based marketing. A further dimension is inspiring people to act and motivating them to learn. That’s engagement.

The power of narrative

EIU: How do you get engagement?

John Hagel: One way is to move from stories to narratives. We’re all familiar with the notion of stories as a powerful way to attract attention and create emotional engagement. But I make the case that there is an even more powerful approach, which is what I call “narratives”. Most people use these terms interchangeably.

EIU: I certainly do. How are they different?

John Hagel: Stories are self-contained: beginning, middle, resolution. Something happened, here’s how. A story is about me, the storyteller, or some other people over there. It’s not about you, the listener.

EIU: You can certainly put yourself into the story. That’s a key to good storytelling: a character that the listener can identify with.

It’s not about you

John Hagel: You can use your imagination and figure out how you might have acted, but the story is not about you. In contrast, a narrative is open-ended, about some opportunity, and whether the listener gets the benefit depends on the listener’s choices. The resolution has not yet occurred. You’re talking about some opportunity that hasn’t yet materialized and the ability to embrace this opportunity hinges on the listener’s actions. A narrative is a call to action. It says, “How it ends is up to you. What are you going to do?”

It’s a different approach. I don’t deny the power of stories, but millions of people have given their lives for narratives–religious narratives, revolutionary narratives, social narratives of various types–that are so powerful they move people to actually sacrifice the most precious thing, their life, in order to influence the ending.

Very few companies have harnessed the power of narrative. Apple is one. The narrative of Apple’s early days was captured in a tight slogan: “Think different.”

EIU: What is it that gives that slogan its power?

John Hagel: The short form of the narrative was the idea that generations of technology had forced us to become cogs in the wheel, standardized units, numbers in a big machine. For the first time we now have technology that enables each of us to achieve our unique potential. But this is not a given. It is not going to happen automatically. It requires you to think differently. Are you going to think differently? The choice is yours.

The narrative wasn’t about Apple. It was about the people that Apple was trying to speak to. It was a call to action: “Think different.”

EIU: Apple is almost a religion.

John Hagel: That’s how many people perceive it. Few companies have been able to create the inspiration, motivation and engagement that Apple has. A lot of it has to do with the narrative Apple communicated every day.

EIU: So when you make your pitch about the power of narrative, how narratives are more motivating and inspirational than stories, how do businesspeople react?

John Hagel: They say, “This is great. I’m going to call my PR department and my marketing people and get them to write me a narrative.”

Narratives don’t come from PR

But narratives don’t work that way. Your PR people may be able to come up with a good story. But with narratives you’ve got to demonstrate day-to-day your own commitment to that narrative. One of the things that made “Think different” so powerful was the examples of Wozniak and Jobs. Those two guys were the perfect examples of people thinking different and expressing their unique individuality. They lived the narrative. How is a big company going to live a narrative that will engage and motivate the audience they’re trying to reach?

EIU: One of the other challenges that marketers always face is getting people in the company to keep the focus on the customer–the outside-in perspective. You said that the narrative is about the listener, not the speaker. That has to be difficult for executives whose first impulse is to tell customers how great their company is.

John Hagel: I also see that when I speak to executives about narratives. They often have this reaction, “Oh, we have a narrative. We came from humble beginnings. We overcame incredible challenges. We did awesome things. And our story is open-ended, because who knows what kinds of awesome things are yet to come?” But the problem with that narrative, of course, is it’s not about the people you’re trying to reach.

EIU: You’re asking the audience to sit there in wonder and awe at all the amazing things you’ve done. And of course buy your products, which is the unstated goal here.

Do something extraordinary

John Hagel: The narrative is a call to action that says, “You have an opportunity to do something extraordinary in your life, but you’ve got to make choices and take action that go far beyond the purchase of anyone’s products.”

EIU: Let’s get back to nuts and bolts for a minute. How do you see marketing operations changing over the next five years? How the function is organized, the skills marketers are going to need, budgets, that kind of thing.

John Hagel: From an operations viewpoint, I see three big changes. First, finding better ways to integrate technology with marketing initiatives. Second, learning how to identify relevant third parties–influencers or potential affiliates, for instance–and motivate them to get onboard your platform and find ways to help them become more helpful to customers. It’s a job of orchestration. Third, getting up to speed with the analytics around big data is going to become more and more critical. My experience is that most marketing departments have very limited capability on that front.

EIU: How is the skill set of marketers going to change? Either the type of person who works in marketing or people who bridge marketing and other functions?

If you have the passion, you’ll get the skills

John Hagel: I think it’s less about skills and more about passion. Ultimately what we need in marketing departments are people who are really passionate about the customer and can cross the table and put themselves in the customer’s shoes and say, “What does the customer need and how can I help the customer get it, wherever it resides?” or “How can I motivate the customer through a narrative that identifies an opportunity that’s meaningful to the customer?” or “How can we act in ways that will again communicate and demonstrate that narrative?”

At the end of the day passion trumps skills. If you have a passionate commitment to make an impact on the customer by being more and more helpful to them, you’ll either develop the skills yourself or you will find ways to connect to the skills wherever they reside. It may be in other functions within the organization. It may be in third parties. If you have the passion, you will find a way.

Sanjay served as Marketo's CMO for nearly five years, leading the marketing department through its worldwide expansion and IPO. He joined Marketo from Crowd Factory, where as CEO he was responsible for the strategic direction and vision of the company. Sanjay holds a bachelor’s degree in economics from the Wharton School at the University of Pennsylvania and an MBA in strategy and marketing from the Kellogg School of Management.

Read Sanjay's Blogs

What's the "formula" for #marketing success in the future? @Jhagel of @DeloitteUS shares his predictions:

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