October 27, 2019

The Transactional Brand

Sometimes business changes, and when it changes, nobody notices.

Tell me how you'd use Google Analytics (without writing any supplemental code) to determine if your customer base is more loyal or less loyal? More specifically, tell me how you'd use Google Analytics to determine if you have a customer loyalty program.

Here's a huge change I've observed over the past decade.
  • 2009 = It was common for a B2C brand to retain 37% of last year's customer base.
  • 2019 = It is common for a B2C brand to retain 20% of last year's customer base.
For all of the wonky nonsense you read about how to retain customers, none of the wonky nonsense is working anymore.

Oh sure, I see brands that retain 45% of last year's customer base. It happens. But it used to happen ALL THE TIME ... and now it RARELY HAPPENS.

Don't tell me that this is because of Amazon. Amazon isn't big enough to make a difference. Walmart is big enough to make a difference, and Walmart was dominant when retention rates were 37%. So this isn't an Amazon issue.

This is an issue of how you "transact" with channels.

What do I mean by "transact"??

Marketing shifted. Ten years ago we were in the final days of "relationship branding". The goal was to build a relationship with the customer. The goal was, of course, expensive ... darn expensive. 

Since then, digital analytics have stripped anything expensive from the profit-and-loss statement. Everything today is a transaction. You look to convert the customer, you try to extract every penny of profit from the customer, and then you move on to find the next customer looking to buy something RIGHT NOW.

Customer Relationship / Loyalty discussions are just that ... they're discussions. The discussions don't reflect reality.

Since the economic crash, now more than a decade ago, we shifted from relationships to transactions. Think I'm wrong? Look at the desperation in a typical email marketing message. Everybody is trying to get you to buy something RIGHT NOW and they'll give you free shipping and 40% off and loyalty points and additional 20% off on top of the 40% off to get you to buy RIGHT NOW.

It's all about Transactional Commerce now. This is one of the reasons mall-based retail is dead. Mall-based retail requires a relationship ... nobody gets in a car and drives 15 minutes to visit a mall unless a relationship exists. Shift the relationship to transactions, and the mall serves no purpose.

Transactional Brands aren't good, and they aren't bad. They're just different. The issue is if you think you are managing a Relationship Brand and you focus your efforts on Google / Facebook / Instagram / Digital, you are sub-optimally managing your brand. And here's a strong hint ... the vast majority of my client base thinks they're a Relationship Brand but their marketing team focuses on being a Transactional Brand. Align the business properly, and the p&l will work just fine.

The vast majority of folks I speak with or work for are managing Transactional Brands when they think they're managing Relationship Brands. Please align your goals with your marketing efforts, and then results might just improve, ok?

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