Why walled gardens are the biggest threat to your ability to foster customer relationships

Martech guru, David Raab, highlights the importance of customer data and how brands outside of Amazon, Facebook and Google can compete

David Raab
David Raab

Walled gardens such as those built by Google, Facebook and Amazon are the deepest threats to another brand’s customer data and survival, martech guru, David Raab, claims.

During a presentation at the recent CMO Momentum conference, the principal of Raab & Associates described the explosion of customer data off the back of the Internet as the biggest game-changer to hit marketing in the last 20 years, both in terms of opportunity as well as complexity. Data is the cornerstone of how brands build enough of a relationship and experience with customers to survive the onslaught of disruptors and digital-first competitors.

“Data is the lifeblood – it lets you know what you need to do for each individual, is what gives you the basis for training the AI, and it’s what provides insights for core treatments across channels,” he told attendees.

However, a number of threats can limit how marketers gain access to data. Internally, Raab cited data management and accessibility, along with martech complexity and the data skills gap, as key challenges. But it’s the external threat of being cut off from customer data sources that he was really worried about.

While changing privacy laws and a general lack of consumer trust in brands and institutions are concerning, Raab’s biggest warning was around the rise of data-driven walled gardens being built by Facebook, Google and Amazon. These companies gather and lock down customer data, fostering ever-stronger connections across their networks that can increasingly stop other brands from finding customer favour, he said.

The driving force is the personal network effect. “The bigger the network grows, the more value exponentially grows across each node,” Raab explained. “As a single company controls more of those nodes, each of the connections has more value. It’s very useful, for example, to have an app that keeps your calendar, or that does mapping. But if I have both of those together, I can proactively lay out the person’s schedule in advance.

“The more nodes in the system, the more data sharing I have, and the better treatment I can give my customers. It’s all about giving customers things they want, and the more value they get, the more willing they become to give me another node.”  

In the case of a company like Google, Facebook or Amazon, getting the customer to use their financial service then becomes more valuable than it is to the bank only selling them one service, or with only one connection to that customer, Raab said.

“A lot of activity you see in the business world and what’s happening in marketing and advertising is related to this phenomenon,” he claimed.  

Because building that personal network is so important, whichever brand gets there first has the best shot of starting that connection of nodes, Raab continued.

“There’s this leapfrogging going on. You used to go to a store, with a shopping cart, then Amazon got you before you went to the store,” he said. “Then Google got you searching before you got to Amazon. Then Facebook got you before you searched, so you didn’t get to Google.

“Moving forward, Alexa [a voice controlled unit in the home], will get you before you even go on to Facebook. You can just order a pizza without going to the computer. There’s this goal of intercepting the buyer and getting there first so you get to be the one building the social network and multiple connections with that person.

“It’s a really important dynamic to understand.”

It’s also why Raab predicts more organisations will invest in subscription services. “Having a subscription means you never ask Alexa to buy you a pizza, you’re already subscribed to it,” he pointed out.

“There’s no purchase decision on the individual transactions. That’s why people like Amazon and so on are very eager to get on top of subscriptions. That’s what allows you to get to the customer before they even articulate a need.”

It doesn’t have to all be in the hands of the big digital three, however. “What subscription services give players is a way to prise a customer out of a personal network,” Raab said.

“If I’m really great at delivering personal transportation services, that might be more important to me as a consumer than Facebook sending me stuff. I can possibly be a single product business. And if I can sell a subscription, I can get around the wall being set up by these digital giants.”

How to avoid being locked out of the customer's network

Outside the subscriptions prediction, Raab said the way to overcome the trap of being excluded from a personal network is to build such strong relationships, customers will voluntarily jump out of their personal network to buy from you.

“Customer relations are the only way this happens,” he said. “Building relationships is the absolute only way any business survives in the future.”

So how do you achieve that? Raab’s first piece of advice is to create customer-first, analytical engines that unify data and support personalised experiences en masse. He also advised training artificial intelligence platforms to support customer activity.

“Don’t be distracted by the bright and shiny objects. AI does cool things, but if it’s not strategic or solving a specific customer problem, don’t mess with it,” he said. “The real value of AI is that it’s going to make the complex systems work more easily and be more usable. It’s going to let the systems do things our customers expect us to do, that there aren’t enough people in the world to perform.”

It’s also about starting with the applications that deliver real benefit and incrementally build your experience maturity, Raab said.

“Then do little things that move you in the right direction. Start in one channel, or start collecting certain data now,” he advised.

Marketers also need to recognise technology will keep changing and solutions aren’t fixed. “Don’t be afraid of buying things that will become obsolete. You’ll get short-term value and learn something, and you’ll build an infrastructure you can take and replace pieces out of along the way,” Raab added. “But if you don’t get experience putting the pieces in place, then it’ll be impossible to catch up later.”  

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu

 

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