How to Do Business in the 21^st Century Digital Age

One strategy of doing business in today’s “new digital world order” will produce a multiple of revenue performance now and will grow into the future!

While a flawed strategy (or more precisely a misguided tactical approach) will cause ever-eroding results, diminishing access and estranged connection between your company and your customers.

Which will you ultimately choose?

It’s no surprise so many organizations and individuals are taking so long to adapt to the upheaval caused by the Internet. But every day of deliberation, every well intended commitment of misdirection, every level of flawed thinking---drives a bigger, deeper wedge between your brand and your fan’s and lessens your ability to fully relate and reward your efforts and intention. Online technology has initiated the biggest change in how customers interact with companies that most businesspeople have ever seen. Regrettably (we believe) almost everyone has been wrong in the way they’ve reacted.

The wide scale adoption of the Internet has flipped this age-old dynamic on its head. For the first time in memory, consumers are the ones that hold the bulk of the power when it comes to controlling the terms of every sales interaction. More importantly it’s the consumer that drives the connection/bond of the relationship—if allowed to!

It’s completely understandable why so many businesspeople have been thrown for a loop by these massive changes. For centuries, being an expert in one particular field (or facet of the process) was the surest path to fortune. When the only way to bring a product/service to market was through a labyrinth of intermediaries, competitors

stood on equal footing. Those who were the best in their silo won. Intermediaries, distributors, and service providers oftentimes represented true competitive advantage for the producers. Not any more! Today intermediaries are—unintentionally or intentionally—dangerous to your company’s business wealth!

Your online marketing strategy is either a multiplier (it grows/expands) of your marketplace impact (it grows/expands)—or it’s a diminisher (and it erodes the bond and frequency of digital interaction). It cannot be neutral!

Fortunately, there is a way to take advantage of the inherent attributes of digital technology to reclaim control over your brand. In the process, you multiply your revenues and profit performance by orders of magnitude. We have the consistent, well-documented results to prove it’s probable—not merely possible!

In the following pages, you’ll discover…

• The new rules 21st century organizations must follow to ensure their digital brands survive and thrive.
• Where most ecommerce initiatives go off track.
• How you can out-compete the vast majority of other companies in your industry by changing the way you think about digital communications.
• Why “connecting” no longer means third-party moderated/interventional access or intermediary-driven revenue sourcing
• Why almost every artist/company is wrong and their advisors are erroneously misguided in the monetization/maximization strategy they’ve followed
• Why almost every artist/company is wrong in the way they build their digital connection strategy with their fans…and the right way it’s done
• How strategic minded new-world marketing minds are taking back control and command of their brands from the intermediaries by applying a new model and total paradigm shift to everything they do.

As tech journalist Joe Safran writes in a recent CNBC article, “Today…the only way to make money in the music business is to turn an artist into a brand—then do everything in your power to maximize that brand’s value.” ⁱ He failed to add, “Then you must learn how to fully control that value and not abdicate or defer it to some third party provider”.

In an environment in which the average cost of a music purchase ranges from free to a dollar twenty-nine, survivors have figured out they need to sell an immersive experience—one guided by the tastes and preferences of the listeners. In short, the product (i.e., song) is no longer the primary driver of the market; the entire experience of finding, using, and living with the product is. A direct and sustaining “connection” with the fan is the way to create a meaningful “pipeline” that transports the economic power this all represents into recurring, ever-multiplying revenue growth.

In order for an artist—and by extension, an organization or company—to ensure it can consistently create and deliver the custom-tailored experiences necessary for survival today, it must implement a system to capture relevant data from any potential customer that visits them online. Moreover, that data must drive the ability to achieve continuous, ever-evolving and expanding connectivity with your market. Only then can your company truly optimize and fully monetize the relationship with each fan, prospect, or customer.

According to a recent Wall Street Journal article, the value of capturing the email address of each site visitor comes out, on average, to four dollars per customer. That’s more than three times the value of the price of a downloaded song.ⁱⁱ Yet many music artists work tirelessly to drive traffic and then neglect to capture data once people arrive. 

Stated differently—more painfully and graphically--- when you have 2 million people on your twitter list, but only 180,000 ( typical percentages) flow to your website—you just left a real-world $7,280,000 of future income “on the table”! 

Part of the problem is that brands regularly send their fans, customers, and prospects to third-party shopping carts and ecommerce vendors to actually make the transaction happen. As a result, it’s these vendors that get to collect vital customer information and, accordingly, to reap the bulk of the benefits stemming from the relationships the brand has worked so hard to build.

You build your brand with blood, sweat and tears. You earn your market, winning it over one fan at a time—then your service provider/intermediary gains the bulk of the profit. It’s as if you set about personally working your entire life, building your career— doing it all for them, not yourself or your family or your own stakeholders!

Moreover, even companies that do maintain an on-site shopping cart often miss the boat because they don’t drive people to buy in context with content and conversation. In other words, companies that rely on external social media sites and third-party legacy content providers regularly lose the chance to capitalize on moments when customers’ are most primed to buy. Why? Because they are not thinking organically, strategically or critically…they are thinking in silos.

“Executives charged with growing a bank’s business have probably heard enough about fundamental threats to the banking business to send them permanently to the analyst’s couch,” writes Amy Ter Harr, CEO of social commerce company Flow, Inc., “Paypal, Google, Apple, Samsung, Square…Bitcoin, retailers uniting around MCX, the telcos who own the lines, you name it, are all taking a bite out of banks.”ⁱⁱⁱ

Why? Because they are intermediaries and intermediaries mostly divert…then take a huge portion of the profit and the relationship away from the brand that toiled to create the relationship.

Just as the Internet allows individuals to bypass intermediaries like record labels and big publishing houses, the above mentioned apps and software products let people directly receive the service they have always gotten from banks without having to rely on them.

Traditional financial institutions are certainly trying to adapt but so far their efforts are falling short.

“Of course banks have invested huge sums in technology,” writes Peter Sands, Group Chief Executive at Standard Chartered Bank, “but we haven’t yet seen the fundamental transformation of business models that have taken place in other sectors, such as music. It will happen, and when it does it will have a huge impact. Some of the consequences are clear from other industries. Intermediaries disappear or get marginalized unless they discover new ways of adding value. Banks are the primary intermediaries of the financial world, so their margins will fall unless they reinvent what they offer their customers and how they work.” ^iv

When the primary function of an organization is to be a middleman, and technology makes that function irrelevant, it faces a perilous future. As such, the only thing to do is to pivot sharply. Organizations that have traditionally acted as intermediaries must offer bundled, ultra-personal services that customers cannot get elsewhere. Failure to adapt has already destroyed a lot of companies in a few industries. It’s only a matter of time before the virus becomes a plague.

We have been here before.

After the Second World War, huge numbers of people left the city for the promise of backyards and picket fences in the newly affordable countryside, a trend that gave birth to the suburbs.

While people did love their big new houses, many of them came to miss the city centers that featured all of the shopping they needed in one concentrated area.

The First Rule of Business: where there is a need, an entrepreneur will step in to fill it. And that’s exactly what happened with the birth of the indoor shopping mall.

Yes, suburban malls offered shopping and plenty of it. Surprisingly, though, that wasn’t the biggest reason for their phenomenal success. The reason was an immutable human psychological need. It drove massive opportunity for need filling then…just as it is a primary driver of unfathomable opportunity for your brand today. Suburban residents, with their big lots and fenced off yards, were more isolated from each other than city dwellers had ever been. As a result, malls became their “Main Streets,” the places where they came to spend time together. Shopping was simply a byproduct of the experience malls provided.

Whereas the Greatest Generation and their Baby Boomer kids migrated from the city to the suburbs, their children (and to a certain extent they themselves) are migrating into cyberspace. Back then stores that lined real Main Streets across America closed left and right, just as malls and traditional businesses of all kinds are collapsing now. Migrating from city to “burbs” to cyberspace…the outlet may be different but the motivation is the same.

During the middle of the last century, savvy businesspeople built communities and hubs of interaction by following where their customer base was traveling.

Businesspeople who want to survive and thrive at the beginning of this century would be wise to follow their example. Where are your customers and fans travelling to emotionally and experientially?

While many dread this intimidating technological evolution—it’s actually—potentially— the greatest multiplier of your brand growth and prosperity that’s ever occurred. Think digital marketing now on 24/7.

As shown by the numbers below, 21st century consumers not only crave connection; they crave it at all times, in all areas of their lives. But connection comes with interaction, interaction translates to engagement. There is a dramatic correlation between continuous engagement and monetization.

According to the US Digital Future in Focus Trend Report…

• 50% of mobile phone users in 2012 are smartphone users, and the rate is growing rapidly. You should rejoice every year that multiplies because your odds of multiplying your profits multiplies commensurate. 
• There are 58 million tablet owners in the US out of 300 million people. That means that 1 out of 5 Americans bought tablets in the roughly 3 years since they were first released. Think about it…now you have access to your customers and fans 24/7 anywhere, everywhere. Your revenue potentially keeps expanding exponentially…IF you shift your strategy. 
• Mobile sales grew from 2% of all ecommerce in 2010 to 11% of ecommerce in 2012, and are expected to be 29% by 2017. ^vi
• In 2013, desktop sales have declined 8.4% year over year.^vii

Yet many organizations—even those that have fully embraced the potential of interactive media to drive sales—are still trapped in a deskbound mode of thinking. They rely on ecommerce sites designed to be viewed on a computer and which; as a result, do not translate well to mobile platforms.

In reality, layout, user interface, and customer interaction all need to change between the computer screen and the mobile device to make sure the experience remains intuitive for customers regardless of where they are interacting with the site.

Whether a consumer is using a desktop, laptop, tablet, or smartphone, there’s a simple truth that never changes: the easier it is for a consumer to buy, the more likely it is they will buy. Regardless of whether a screen is big, medium, or small, companies need to not only consider how to make it as pleasant as possible for people to engage in a transaction but how to get them to hang around once their initial purpose has been satisfied.

Consider that between October 19, 2012 and November 17, 2012, less than 2% of fans looking to engage with rap superstar Eminem went to his website. The rest went to sites like Facebook, Wikipedia, and Twitter. ^viii In other words, Eminem and his marketing team have no control of how they are engaging online with 98% of the artist’s fan base. And the reality is similar for many non-entertainment enterprises as well.

However, many organizations continue to work tirelessly to amass a huge number of followers for their Facebook pages, Twitter accounts, or whatever platform is currently in fashion. Unfortunately, there is no correlation between the number of people that follow an organization on its social media page and the strength of the connection those people have with its brand, which, above all else, is what drives sales. When you abdicate command and control of your most valuable asset—your direct relationship with your customers and fans—respectfully but regrettably, you pretty much get what you deserve.

If you do choose to dump a lot of resources into building a social media following, the one thing you can be certain of is that your social media company of choice will benefit from your efforts and your brand equity will be diluted.

Let’s take Facebook as an example. When it comes to business brand pages on the site, Facebook only permits a fraction of followers to see any posts. To reach more followers, the business has to pay for a “boost”…charging you to access your own dedicated fans and restricting your access, while allowing your competition (through advertising) to poach your fans and siphon off what you worked so hard to build.

According to recent reports, an unpaid Facebook page post reaches less than 2% of fans that “like” your brand. In general, it costs thousands of dollars to reach any considerable portion of the fan base.

As an example, it would cost the Doors, who have 16.2M Facebook likes, $81,000 to reach 100% of their likes for just one post…at the current rate of a penny per 2 “likes”. Assuming one post per day over a year, that would cost the Doors $30M a year ($81k times 365). Assuming you valued that network at a 10X multiple, the Doors would potentially dilute their brand by $300M, whose value has gone to Facebook. 

On top of that staggering amount, social media companies make money from businesses’ social marketing campaigns by selling targeted advertisements to other businesses based on the user data they have aggregated.

Think of it this way. An organization invests large amounts of money and time into promoting its brand on a third-party social media platform. That platform maintains the right to access any and all information about the organization’s customers for its own profit, while withholding that same right from the organization itself.

Is there any other scenario in which a company would stand for this dynamic?

When an organization doesn’t have its own central data system for storing and analyzing who their customers are, they are placing themselves at a distinct disadvantage. Stated differently, companies who are in direct contravention of your best economic and commercial interests know more about your fans and customers than you do. It’s essential for any digital brand to know the profiles of its customers from a global perspective, not to simply settle for picking up bits and pieces of information thrown at them by social media companies.

It’s really nothing more than being controlled vs. being totally in control of your business world.

From the perspective of the social media companies, this paradigm makes all the sense in the world. They provide businesses with the illusion that they are building for them a “following” in exchange for receiving the greatest transfer of brand equity in history. It’s no wonder these organizations are worth billions.

Despite all the hype about social media, the sales numbers aren’t playing out in reality. A recent study by Custora, a marketing data provider, shows that over the past four years, Facebook and Twitter have had no discernable effect on helping

companies increase their sales. During that same period, online retailers have quadrupled the rate of customers acquired through email.^ix

Furthermore, when a digital brand relies on a social media site as its primary marketing vehicle and all of the customer data it collects remains fully under that site’s control, a downturn in fortunes for that social media company can be disastrous for the brand.

Remember MySpace?

At one time, it was nearly as hot as Facebook is today. Organizations spent countless dollars and hours building up their MySpace followings and MySpace marketing campaigns.

Now that MySpace is basically defunct, all of that priceless customer data, and whatever engagement was forged along with it, have been wiped out.

The good news is that more businesses are finally starting to attack the problem head-on.

The bad news is that, despite their best efforts, many are still failing to capitalize on opportunities. It’s not their fault. They’re merely following the lead of their advisors, most of whom are truly well intentioned—but misinformed as to what true digital business really means today. While ecommerce platforms are more high-tech than ever before, a good percentage of them are in fact little more than digital brochures that link to a shopping cart hosted by a third-party provider and which deliver your hard-won customers over to third-party service providers. Others focus on supporting one-off digital campaigns rather than building lifelong brands.

The concept that an ecommerce site is nothing more than an engine for immediately pushing people to a shopping cart to collect their dollars in exchange for a product is a relic of the pre-digital business era. It rarely if ever makes sense. The same goes for an interactive digital media push that becomes stagnant the moment the song leaves the charts, the movie leaves the theaters, or the product leaves the shelves. All that effort, resources, passion and momentum…it all dissipates…UNLESS… 

Powerhouse 21st century businesses operate online with an eye not only to what revenue they can generate today but also to how their marketing efforts fit in with the brand’s past and future. The key to strategically and continuously growing and, most importantly, to expansively monetize your brand, is to completely control and command the totality of your customers’ interactions.

For an organization to engage its fan base in any real way, it must present itself as the definitive authority on its own brand, which means it needs to find a way to bring together everything fans want to see, hear, read, use, and purchase in one central location. Its site should serve as a hub that delivers a fully immersive, ever sustaining and masterfully controlled experience. Prospects and customers must have the ability to optimally engage with a brand wherever, whenever, and through whichever device they happen to be using. The presentation of the brand’s most recent content must come across as a natural extension of the entire history of available content. You…the creator/producer of your product/work… should be the only viable source fans/customers want to turn to first and foremost.

The idea is to create an online location that fans, prospects, and customers will always think of first when they need content or information that has anything to do with the brand. Another benefit of becoming a brand’s primary content creator is that it will lead to significantly higher search engine rankings and visibility as a result of Google and other engines recognizing the site as the dominant authority in its space.

An organization’s sales interface should be integrated with the rest of its site. Users should be able to buy everything related to a brand in one place, which should be seamlessly integrated into the site’s channels of content and communication. Product offerings should be as comprehensive and well thought out as other curated content on the site, ideally featuring products that aren’t available anywhere else. For example, a music fan might have the chance to purchase an interactive package that combines a digital download, a piece of authentic memorabilia, and a personal chat with a band member instead of a standalone song or album. A luxury clothing shopper might get an appointment with a digital stylist as part of the package. A bank’s customer could receive a consultation with a top-tier financial expert who would usually be out of reach. And so on.

Furthermore, when a fan, prospect, or customer makes a decision to buy something from a brand’s website, the process of returning to the other parts of the site to continue engaging in the overall experience should be natural and intuitive. Having a single, unified shopping cart that a customer can access at any point during their experience will increase purchases. Having a single unified database will allow for the optimal management of the brand.

Our result-proven research confirms that businesses that master control and don’t let their customers leave to third-party intermediaries generate an unimaginable 18X multiple on their financial payoff.

1. Safran, Joe. (August 2013). How Rockers Make Money Now That Records Don’t. Retrieved from CNBC website: http://www.cnbc.com/id/48488073
2. Safran, Joe. (August 2012). How Rockers Make Money Now That Records Don’t. Retrieved from CNBC website: http://www.cnbc.com/id/48488073 
3. Ter Haar, Amy. (October 2013). How to Turn Mobile Apps Into Customer Acquisition Centers. Retrieved from Banktech website: http://www.banktech.com/management-strategies/how-to-turn-mobile-apps-into-customer-ac/240162597
4. Sands, Peter. (July 2013). How Digital Will Change Banking Forever. Retrieved from LinkedIn website: http://www.linkedin.com/today/post/article/20130701090017-250074528-how-digital-will-change-banking forever
5. Kravco: The Making of an American Business by Arthur L. Powell
6. US Digital Future in Focus Trend Report 
7. Darrow, Barb. (October 2013). Tablet Sales Are on a Tear While Desktop Swoon Continues. Retrieved from GigaOm website: http://gigaom.com/2013/10/21/tablet-sales-are-on-a-tear-while-desktop-soon-continues/ 
8. Compete com/Next Big Sound 
9. Wohlsen, Marcus. (July 2013). Email Is Crushing Twitter, Facebook for Selling Stuff Online. Retrieved from Wired website: http:// www.wired.com/business/2013/07/email-crushing-twitter-facebook/