Brand Management in the Age of AI

It's Analytical Branding!

It is now the era of Analytical branding!

This is the notion that data equity is more powerful than brand equity! Data can be placed in the service of the brand by creating powerful experiences for your “power customers” basis her data!

Devices like smartphones and tablets have transformed consumer behavior. Today’s consumer has multiple paths to purchase-they discover & explore brands through a variety of touchpoints making the consumer journey a very fragmented one!

The traditional view of brand management derives from the 1930s when P&G created an organizational structure where the brand manager was the mini CEO for the brand. P&G built this around the Camay soap brand. Analytical branding goes beyond the old-fashioned product-based approach of classical brand management. It builds on psychology, behavioral economics, neuroscience, and technology to provide us with a new worldview on brand management.

Jim Stengel, a former CMO of P&G, was an expert at traditional branding. The heritage of traditional companies, says Stengel, is built on an "industrious dedication to creating products." The brand got built on top. Insurgent brands, says Stengel, "reverse that process, starting with personality, then tribe, and then brand and product."

Consumers realize that they are giving away data to brands and they want fair value back in exchange. Analytical brands understand this trend and look at ways to create hyper-personalization that can change the game for end consumers. As brands get commoditized, intelligence is a way to differentiate and provide a service of value. IKEA has built the new IKEA Place app with augmented reality that allows users to virtually place furniture in their living rooms at scale with 98% accuracy and alongside real-life objects. Purina Puppy Chow has created a microsite for everything customers need to know as new puppy owners, including training tips and interactive tools like a breed selector and name generator. The Sephora app uses augmented reality (AR) technology to overlay makeup product shades and styles on users' faces and then places a buy button at the bottom of the product's trial screen, guiding users through an easy checkout process. What I would like to see brands doing is using more of this interaction data to power customer experience & customer benefits.

Analytical brands will use exponential technologies such as AI, Internet of Things (IoT), cloud computing, mobility, and augmented and virtual reality in a way that “adds value to the customer”. Analytical brands will completely reimagine their customer experiences, adding value in unique, differentiated ways. Enabling consumers to have one-on-one conversations and tailored recommendations is a big shift for most brands. Most CMOs believe that "one-on-one conversations can't scale yet." However, the power of artificial intelligence (AI) technologies will change the game in the next decade. With Up to 40 Million Users Daily, Alibaba's Chatbot Enables Contextual Experiences at Scale.

Analytical brands will use consumer neuroscience to access clues in the mind and body to better understand consumers' behavior. Analytical brands will use applications like Affectiva's webcam-based emotion-recognition studies for more complex FMRI studies that analyze blood flow to regions of the brain. They will use neuromarketing to improve their measurement of ad testing, UI design, in-store experience, and brand equity assessment.

Analytical Branding will give rise to 2 large trends:

1.     Analytical Brands will create power customers by shifting the mindset from monologue to dialogue:

For too long brands have reveled in controlling the conversation with consumers. Today that is no longer possible! Your power customer knows more & is willing to communicate that to the world. Marketers must shift from the Monologue style of traditional brand management to a more inclusive “dialogue” orientation. Nike relinquishes control of the conversation about its promise to "bring inspiration and innovation to every athlete in the world" by inviting people to submit photos that convey motivation, which it then posts on its Instagram feed and for which it solicits comments. Oreo recently encouraged its fans to design unusual cookie flavor combinations through its #MyOreoCreation campaign. Oreo packaged a small number of submissions and mailed them directly to the creators with a heartfelt note.

Analytical brands will use dialogue to engage with customers. Customers will expect to be treated as individuals whichever channel they use, excuses about broken data silos will not be acceptable to the power customer of tomorrow. Customers will expect brands to recognize them. And recognizing does not only mean knowing their name, but also the entire history of how they have interacted with the brand to date & what their needs are.

Analytical brands will also add value to the power customer with information that is timely and relevant. The Royal Bank of Canada's NOMI Find & Save analyzes customer spending to seek extra money that can automatically be set aside as savings. Active users are saving an average of C$180 per month. So even banks are now engaging to build this two-way dialogue! BCG estimates that for every $100 billion in assets that a bank has, it can achieve as much as $300 million in revenue growth by personalizing its customer interactions.

Analytical brands will use their contextual engines to trigger dialogues. They can help customers by providing relevant and contextual information. In the US, Huntington Bank's "Heads Up Messages" makes customers aware of the predicted activity on their account, warns them when a free trial of a subscription service such as Amazon Prime might have ended, and alerts them to possible duplicate charges.

Analytical brands will be masters of 1:1 marketing, which was earlier called Relationship marketing, this is grounded in the idea of establishing a learning relationship with each customer. A relationship that gets smarter with each interaction. Analytical brands will use their data about customers to make it easier for customers to buy and use their products.

Customers like the fact that an enterprise now knows them better and gives those marketers a disproportionate share of their business. But companies who do this well, have to make changes in their product or service to adapt or personalize their offering to customers. And this is not easy! I still remember as the CMO of Shoppers Stop in the late 1990s, it was a struggle to make changes to the Loyalty program we had launched called First Citizen. We wanted to offer an exclusive cash counter for Gold First Citizen members. I remember what a battle it was to get alignment with Operations and other functions. And later, as the CMO for HDFC bank, I found the bank to be a “gold mine” for customer data. And yet, it needed a deep partnership with the CIO and the Technology organization to really extract the gold. And yet, the 1:1 marketing future is not a mirage. The new-age companies seem to be all about 1:1 marketing.

Except that, 1:1 marketing is not a type of marketing, it is a “type of business”. And that makes all the difference because then you create a company where process, structure, and customer engagement are built around data. Amazon does remember its customers’ individual tastes—and not just for the top few, but for millions. As a result, Amazon is able to create the kind of learning relationship with its customers that will keep them loyal.

It’s been my experience that implementing a “1:1program” tends to motivate a company to take a more enterprise-wide view of its customers. This leads to far more integration across the various silos. It also leads to a lot of strategic issues being raised: How do I host my customer information? What processes do I need to change to be able to deliver the 1: 1 promise? How do I measure revenue per customer? Should the company package more services with the products it sells? If so, how should those services be delivered?

Today there is no shortage of profile, preference, behavioral, and contextual data that can be collected from customers. But this flood of information leaves many marketers paralyzed because they don’t understand the steps and strategies to take to make the data actionable.

So how can CMO’s accelerate their One to One business approach?

Firstly CMO’s need to make this a company transformation agenda. It will not happen only because Marketing wants to run a few 1:1 Marketing programs.

Once you have created a transformational agenda, marketers need to be comfortable about asking customers for more information. Marketers need to learn how to add more information about customers. Most databases still have sketchy information about customers. As consumers, we don’t give marketers information unless there is a valid reason for it. Gartner says: “Consumers are in a privacy paradox: They value their privacy but will happily divulge their personal information in return for free access to a service or financial benefit”. Personal data has become a new currency of the digital age. Consumers are happy to share data if you offer them enough value in return & you give them control over their own data.

AI will create more complexity in this too. Until recently, customer dialogue still meant that two people would talk with one another. Soon, it may well be bots that exchange information. The way to look at this is to clearly predict that the consumer is seeking “simplicity” & those technology components that provide simplicity will gain in adoption. Here is an interesting prediction from Stephen Brobst, Chief Technology Officer, Teradata Corporation, “I don’t think customers want to communicate. Communication is a waste of time and effort. My digital assistant will communicate on my behalf. And I will communicate with my digital assistant to express my preferences and all that kind of stuff and I will do that by recording the data in my personal data warehouse. I want to spend my energy with my family, friends, and loved ones."

Analytical brands will give customers access to their information. Amazon customers can, for example, mark a product purchase as a gift to avoid irrelevant ads. Spotify customers can mark songs they particularly like in order to receive better recommendations. This will be a real-time data dialogue between customers and brands.

2.     Analytical brands will give birth to Data fueled products

Companies are starting to combine data science and design to create data-fueled products based on pattern-finding algorithms. Now companies will capture usage data by designing intelligent products. Nike recently launched a new shoe concept called Nike Adapt, which tracks the performance of the sportsperson in real-time. The data tracking capability of the shoes gives Nike a personalized snapshot of the customer’s performance. The product is privacy enabled with customers having the choice to opt out-they will miss out on many product features if they do so. The shoe has no laces & self-tightens to an athlete’s preference and is adjustable via an app. The products carry sensors, accelerometers, and gyroscopes that can give Nike a complete performance view.  Early last year, Shiseido bought MatchCo, a venture-backed startup that makes customization software meant to help users find products that match their skin. Another brand,Prose combines up to 75 active ingredients in unique combinations to create haircare solutions for each customer. SKINSHIFT sells custom skincare products based on a DNA test. MIT engineers use algorithms to design shampoos at Function of Beauty.

These new pattern recognizing algorithms are based on machine learning & they are much more advanced than the earlier rule-based pattern recognition algorithms. And using them to alter customer experiences is giving rise to something new that Forrester calls a data-fueled product: A digital product that recognizes patterns and anomalies relevant to a user's goals in large quantities of data and adjusts parts of its user interface in response.

So what should CMO’s be doing

Analytical branding goes beyond the antiquated product management approach of classical brand management. It builds on advances in psychology, behavioral economics, neuroscience, and technology to provide marketers with a new perspective on how brands can be built!

CMO’s must take learnings from diverse industries and embed customer dialogue at the heart of their strategy.

As consumers now connect with legacy brands directly through a large number of digital interfaces, there is a treasure trove of engagement data you can harness to improve your brand. CMOs need to have the curiosity and tenacity to leverage this data.

Brands must have a direct relationship with every single person who buys something from them, the creation of a long-term relevance-based relationship is the only way forward!

Marketers need to watch out for Privacy. The struggle between privacy and individualization is the most critical part of the puzzle for CMO’s to grapple with. They must embed privacy into the design of every marketing initiative.