The Circularity dilemma. If you move, you fail. If you stand still, you fail.
The current Covid-19 situation will not change anything.
Let me clarify. The big strategic shifts that Branding needs to embrace are not different vs. the pre Covid-19 era. The must-do is known: be transparent; be circular; be sustainable. Brands have individual and social responsibilities, like all of us do. We please our needs, while respecting the planet. There is no compromise on the path towards a fair world and a livable environment.
This emergency shows very clearly the weaknesses of those who are not adapting their agenda. And, this emergency makes people wonder why they should buy this or that Brand in the first place. Branding needs new substance, made of resilient craftsmanship, social ethos and 360 degree sustainability. However, most Brands will not substantiate their propositions with new meaning and will not transform their supply chain, as they don’t have the right incentives in place. If they embraced circularity, for example, they would fail faster than if they stood still, as most of their fans will not be willing to pay a ‘circular’ premium. Consumers on a budget will go cheap. It’s a hard one to solve. Most companies know what to do. If they decide to act, they will collapse, with very few exceptions. The dilemma seems to be between economic stability vs. sustainable future. This is wrong, and our descendants will pay for it.
Love rides on a declining curve The Fan/Brand interaction follows a fairly standard curve. More precisely, that relationship is monogamous, silo-ed and always declining.
There are very few Brands that we truly love, and, once the ‘honeymoon’ period is over, we tend to settle on a plateau, which remains unchanged, unless the Brand completely repositions itself and introduces some breakthrough innovation, which is rare. Plus, the majority of the exchanges between Fans/Brands are functional (no love; I am giving you my money; give me what I want). Lower funnel tactics, whose purpose is to nurture loyalty, are made of set rewards, which are working on people’s perception of value for money, and are always given out in an inefficient manner (ex., time-delayed satisfaction of limited rewards, low redemption rate of coupons, promotional mechanics that are mostly cannibalistic). The inefficiencies secure powerful Marketing claims with a reasonable burden on companies’ P&L-s. Finally, Brands are totally detached from people’s lifestyle, let alone life per se. Brands inspire people’s heart, individually and by category, leaving aside any action that can tangibly transform their real world, their communities and their environment, unless it’s a PR stunt. Brands are the by-product of Capitalism, and they talk to the rational utility of each one of us. Marketing is, after all, customer satisfaction at a profit. Actually, it is the management of declining satisfaction, at a profit. Marketing 1.0, created in the 1950s, is now and finally obsolete. Marketing 2.0 does understand the world we live in.
Most Brands are too small to afford equity building programs and too small to invest in sustainability, which increases their overall costs. Most Brands follow their declining curve, while cashing in their fair share of the category, ideally at a profit. Why should they do anything different? There is no incentive. Consumers say they care about waste and sustainability, and yet they will never pay a premium. It is a paradox, as everyone clearly sees what’s needed. Are we hopeless?
Not really. We need a new Marketing approach and some technological innovation.
- Make Marketing about People only, not Brands. Marketing is about the role of a Brand inside the full life of each one of us. Marketing takes a position in favor of a lifestyle of social responsibility. Marketing is empowering the You out there, to impact their world via all of their purchases.
- Monetize inefficiencies. If we were to find a way (ex., block-chain) to monetize the purchasing power of Fans in full, across big and small Brands, and make that power liquid and exchangeable, we would unlock the right incentives towards circularity, by turning purchases into true value creation.
To showcase the benefits of a potential new model, take a look at the chart here below. Consumers have a set propensity to spend and save. If the rewards from any loyalty program were federated (open-sourced), liquid and exchangeable between Fans, that would represent currency to be re-invested into virtuous Brands, while minimizing inefficiencies.
As a matter of fact, governments, investors and companies should subsidize the rewards of those Brands that are transparent, circular and sustainable, via a ranking system that is public, compelling and widely shared. As you can see from the table here below, we would justify the premium of circularity via a set of higher rewards, which again are totally liquid and exchangeable among users. The monetization of rewards solves, unlocks and democratizes equity building via circularity. The post purchase incentives for virtuous Brands would significantly mitigate the inflation of sustainability. Monetize purchases and chase alliance with other change-makers, and you will fund any sustainability agenda.
I don’t think we are an evil or masochistic bunch, hoping for the world to explode. I think it’s only a matter of the right value to be created for Fans and Brands to do the right thing.
This is only a proposal. The main point of the piece is to turn the Marketing focus onto people’s full life and to reward virtuous behaviors with a pay-back that is liquid and exchangeable, thus creating a marketplace for behaviors. We need to change behaviors, in order to change the world. And, we need to establish the right incentives to make virtuous behaviors economically irresistible.
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