The Business of Badassery
Plus: The Power of One Single Negative Review | The Decline of Incentivized Loyalty | 6 Big Retailers Are Changing CX With AI | And more...
Aloha! October’s coming to a close. Did you get your Black Friday and Cyber Monday plans all squared away? Today, let’s talk about why every brand should be in the badass creation business.
Editorial: The Business of Badassery
The Latest: The Loyalty Shift: The Decline of Incentivized Loyalty
BX: Birkenstocks: Turning 'Ugly' into a Pretty $8 Billion Valuation
MX: Rob It To Get It: A Guerilla Marketing Campaign from Distance
UX: The Power of One Single Negative Review
CX: 6 Big Retailers Are Changing CX With AI
EX: Reinventing Sick Days
DX: Predictive Analytics Crash Course
Let’s jump in.
The Business of Badassery
In the past few newsletters (first and second), I explained the concept of Relational Commerce, and how the current and dominant Transactional Model just won’t cut it anymore, particularly with how macro trends are playing out in real time.
In other words, the Transactional Commerce model is, to put it nicely, suboptimal, and requires an evolutionary step, which naturally, Relational Commerce complements and enhances quite neatly.
Will Relational Commerce replace Transactional Commerce? No. They're like peanut butter and chocolate—good enough on their own, but phenomenal together. Combined, they form a larger, grander vision of what commerce can and should be. I’ll hint to this at the end of this piece.
Can’t we all just get along—and do something bigger together?
So, let's start building a bridge to that grand vision. Today, we're answering this: HOW does the relational model unlock the true potential of commercial activities?
And to get there means answering a much larger question: why relationships?
The Purpose of Relationships
Not to get all philosophical on you, but have you ever thought about why we have relationships? What purpose they serve?
One constant for everyone and everything on this planet is that we are all in relationship to someone, something, or some idea or concept.
Think about the most important relationships you’ve ever had. From your parents to your first love, to your most recent spat with a friend, to even those who have hurt you—each relationship has shaped who you are today.
And you’ll find that, no matter what, the meaningful relationships in our lives always help us learn & grow. They help us realize our potential. And they somehow find a way to entertain us.
Then why would that change for commercial interests? Why should it?
Your relationship to brands and products also contains the seed for your own growth and enjoyment.
And because relationships are so primal, so baked into our DNA, it’s natural for people to seek these same benefits in ANY relationship we have—including, yes, brands and products.
Relational Commerce: What’s the point?
The premise behind jobs-to-be-done theory is that every product (or service) offers three primary benefits:
Sounds very relational doesn’t it? We use terms like customer engagement or user experience or brand loyalty. Or any of the millions of metaphors we use in business to describe our relationship to customers and vice versa.
The opposite is also true. What do terms like “churn” or “retention” or “bounce rate” say about your relationship to your shoppers? And we talk about loyalty, but it cuts both ways, right? How many times do the same customers show up to our store, but we treat them like they’ve never been here before?
So what’s the point? If people are naturally inclined to form relationships, because we, either consciously or subconsciously, expect to grow and enjoy the process of relationship building, then why aren't more companies investing in creating stronger, more meaningful relationships with their customers?
The answer is simple yet complex: because it's hard. And not everyone sees the world through a relational lens.
The Science Behind A Bestselling Product
So how do we apply this relational model to everyday business to create the next bestseller?
Well, business success, or building the next bestselling product, really depends on two things:
Are you helping people to be more badass?
Are you doing it in an enjoyable or entertaining way?
That’s it. Nothing more. Want to create a bestseller? Then help people become more badass in the arena or context that surrounds your product.
Here’s what I mean.
So, I bought a Sony camera, and they gave me an instruction manual. That’s nice of them. You’re training me to be badass at using your product. But that’s not why I bought the camera. I bought it because I want to be a badass photographer or Youtuber — not awesome at using your features with no context.
As business people, we want to build badass products. But what if we changed our mindset to building badass people instead—in the arena or context in which our product sits?
Streaming Service → Film Buff Status
Gardening Supplies → Green Thumb Mastery
Travel Booking Site → Cultural Explorer
Fitness Tracker → Health Transformation
Language Learning App → Cultural Immersion
Home Improvement Store → DIY Mastery
Website Builder → Digital Brand Architect
These are the things that people really want. They want to be awesome functionally, emotionally, socially, physically, etc. And your product is either in the way of them getting there, or helping them get there faster.
And why are badass customers absolutely critical to your business? Because a badass customer talks. If you were instrumental in making them badass at anything, they will tell everyone that matters. They’ll leave reviews. They’ll talk about you at dinner.
And telling everyone, or word of mouth, is how bestsellers are made. Not your paid media strategy. Not your cool interactive ebook. Not your awesome video.
No. Bestselling products are a result of people who talk. And people who talk are people who learned, grew, realized their potential in some way, and enjoyed the process—through you.
And it takes time to become more badass at anything. And a transactional relationship was never designed with ‘time’ in mind.
Becoming badass takes time and energy
Sony sold me a camera. That’s it. It’s over. They never helped me become badass. They never even offered. I had to find a Youtuber (or two) who did.
A "badass” customer base implies an ongoing relationship with them. You took the time to help people jump those hurdles, learn your software, get more out of your apparel, or become part of a community of mountain bike riders.
A badass customer can only exist within a relationship. And that relationship is the foundational journey towards badassery.
And this is the leap that your business must make. This is the next era of commerce that you must traverse. Because if you don’t, if your competitor decides to do this before you, well, then you’re toast. It’s a matter of time.
We need to go from:
Customer satisfaction to customer empowerment
NPS to MVPs
Customer Lifetime Value (CLV) to Customer Lifetime Transformation (CLT)
So remember. Badassery can only exist in an ongoing relationship. And bestsellers only exist because of badass people. Why? Because they’re genuinely thankful that you came into their lives.
Which is why you must make the shift to a more relational model, and help people become more badass at something.
Next week, I’ll share some practical examples on how you can make people more badass using a simple framework. And we’ll also talk about the exciting future of commerce.
What’s the future of commerce?
And special thanks to Kathy Sierra for the inspiration.
The Latest News
The Loyalty Shift: The Decline of Incentivized Loyalty
Time to rethink your loyalty & rewards strategy
What: There’s a significant decline in brand loyalty among U.S. consumers, as revealed by the SAP Emarsys Customer Loyalty Index 2023. The study shows that incentivized loyalty is plummeting, and consumers are demanding more value in exchange for their loyalty.
Why It Matters: "Incentivized loyalty" is essentially transactional loyalty. It's based on the idea of "you give me X, and I'll give you Y." There's no deeper emotional or relational connection; it's all about the immediate benefit.
This type of loyalty is often short-lived because as soon as a better deal comes along, customers are likely to jump at it. Again, it's “deal” loyalty, not brand loyalty, so it’s bought loyalty, and not earned.
In an era where transactional relationships are no longer enough, this decline also signals the shift towards a more relational commerce model.
Incentivized loyalty is on the decline, making room for more value-driven, relational or experience-driven interactions between brands and consumers.
Personalized attention is key; 52% of consumers will switch brands due to poor customer experiences.
Despite the decline, the U.S. still leads globally in retaining brand-loyal consumers, but there’s plenty of opportunity for brands to redefine what loyalty means in this new landscape.
Even big, successful brands like Sephora could be missing an opportunity to deepen their relationship with customers by focusing too much on transactional incentives.
It will be interesting to see how this space evolves.
Yes, Google’s Search Generative Experience Will Show Ads
What: An AI search on Google will show ads. They’re also exploring new ad formats that are native to this AI-powered Search Generative Experience (SGE).
It’s extremely important to us that in this new experience, advertisers still have the opportunity to reach potential customers along their search journeys.
Why It Matters: If Google can successfully marry AI search and advertising, it could offer some never-before-seen advantages for you. Here’s what I mean (or my personal dream scenario):
Hyper-Personalization: AI can analyze user behavior and context in real-time, allowing for more personalized ad placements. This could mean higher conversion rates for you.
Efficient Spending: With smarter targeting, instead of casting a wide net with generic keywords, AI could help pinpoint exactly when and where an ad should be displayed for maximum effectiveness.
Dynamic Pricing: AI could potentially analyze market demand, competitor prices, and other external factors in real-time to automatically adjust ad bids. This could lead to more cost-effective ad spend.
Better Analytics: The data collected could be far more granular, helping you understand customer behavior better.
Enhanced User Experience: If ads are more relevant and less intrusive, this could enhance the user experience (Google’s ideal).
Competitive Edge: Early adopters of this technology could gain a significant advantage over competitors still using more traditional online advertising methods.
More efficient targeting could mean you're not wasting money on clicks that don't convert, effectively lowering your cost per acquisition. Conversely, as the technology proves its worth and demand increases, the cost will likely go up.
It's a bit of a "watch this space" situation, so let’s see what happens next.
Birkenstocks: Turning 'Ugly' into a Pretty $8 Billion Valuation
Choose wisely, Wall Streeters
What: Read how Birkenstock transformed an "ugly" orthopedic shoe into a brand worth billions.
Why It Matters: It's a masterclass in how a brand can pivot from a niche market to mainstream appeal without losing its soul, all while becoming a financial powerhouse.
"Ugly" can be a brand asset, not a liability. Birkenstock turned its unique design into a symbol of authenticity, comfort, and anti-status symbol.
A great example of "bubble-up" theory, where trends start in subcultures and move up to the mainstream, rather than the other way around, say from high fashion.
Even Barbie swapped out her stilettos for these iconic sandals.
Rob It To Get It: A Guerilla Marketing Campaign from Distance
Thought this might inspire you…
What: French retail brand Distance launched a, let’s just say “unique”, campaign inviting customers to steal from their store—yes, you read that right—but only if they could outrun French elite sprinter, Méba-Mickaël Zeze.
Why it Matters: In an era where so much of sportswear or “athleisure” is more about fashion than function, Distance's campaign brings the focus back to athleticism in a real way, challenging the norms of traditional retail marketing.
Two. Yes you read that right. Two people actually got away with a new pair of kicks, out of 74 runners.
This campaign serves as a tribute to the running community, emphasizing that Distance's products are for true enthusiasts.
Distance's approach is a lesson in brand authenticity, daring to be different in a saturated market.
It’s not the first time Distance tried something like this. But it’s a great lesson in aligning brand values with your market.
The Power of One Single Negative Review
What: A single negative review among a sea of positive ones can make people 42% less likely to buy a product, according to a study by scientists at Bocconi and INSEAD.
Why It Matters: In the world of eCommerce, it's not just about maintaining a high average rating; it's about the psychology of first impressions and the ripple effect it can have on consumer behavior.
People were 41.80% less likely to buy a product if the first reviews shown included a negative one.
Each negative review seen made people 26.87% less likely to buy—ouch.
Negative reviews have a stronger impact when the product's average rating is high and when the review is about the product’s functionality or customer service.
Addressing negative reviews promptly and thoughtfully can turn a potential deal-breaker into an opportunity for deeper engagement.
6 Big Retailers Are Changing CX With AI
What: Insider talked to six industry leaders from Walmart to Instacart to Little Caesar’s to see how they’re leveraging AI to revolutionize customer experiences from retail to food services.
Why It Matters: They’re not just using AI for automation, but are integrating it into the customer journey in innovative ways. For example, Walmart uses AI to power customer-care chatbots and text-based shopping tools, while Little Caesars employs its "pizza forecasting" algorithm to ensure hot pizzas are always ready for customers.
As you strive for deeper connections with your customers, AI is emerging as a powerful ally in understanding customer needs and preferences, thereby enriching the overall shopping experience.
AI is enabling more personalized and efficient customer experiences, from GE's Flavorly AI that suggests recipes based on what's in your fridge, to Instacart's AI that helps answer the perennial question, "What should I make for dinner tonight?"
You can also use AI to influence product development, inventory management, and even predictive sales analytics. In the end, how will you continue to improve CX?
We knew that voice is going to be everywhere and conversational AI is going to be a future.
The Erosion of the Corporate Soul
What: Robert Greiner gives us his perspective into the loss of human essence in corporate culture. Sure, technology brings more efficiency, but it also strips companies of their soul, according to him. Cue the metaverse.
As companies have scaled, the human element has been stripped away piece by piece.
Efficiency vs. Humanity: Companies prioritize productivity and risk aversion so much that they're losing the human element that brings color, spontaneity, and meaning to work.
The Way Forward: He suggests that companies can inject a little soul back into their organizations by celebrating collective experiences, spotlighting employee and customer stories, and making human-centric decisions.
In the end, it comes down to this: What’s the balance needed between scalable processes and human individuality in order to create a company with "soul"?
Reinventing Sick Days
Interesting article from The Wall St. Journal. According to data from Gusto, 30% of white-collar workers have taken sick time this year, up from 21% in 2019. The age group 25-34 is leading this trend, with a 45% increase in sick days since the pandemic.
The reasons for taking sick days have also evolved. More workers are using sick days for mental health and other non-traditional reasons. Younger workers, in particular, feel more entitled to use their benefits fully, a sentiment bolstered by the current low unemployment rates.
Should you be concerned? Well, it’s all a matter of perspective. Some complain that this trend is driving up costs, but others see it as a way to show they care about their employees.
Which one are you? Or both?
Check out the conversation here:
Predictive Analytics Crash Course
Predictive analytics is a game-changer for eCommerce. Imagine forecasting consumer behavior, optimizing inventory, and even personalizing marketing to an unprecedented degree.
This isn't just data; it's data with foresight and pattern recognition. Here’s a mini-course on this new superpower so you’re up-to-speed on the latest.
Marketing Measurement 101
Need a crash course in measuring what really matters in your business? The Data & Marketing Association from the UK has put together a set of handy guides for you.
Their latest, a guide on Marketing Measurement Framework 101 is free to download. It also comes with a video.
It’s just an overview, but sometimes that’s what you need so you can ask your team the right questions.
Hope you enjoyed it. See you next week.