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The Digital Marketing Value Loop

INSEAD’s David Dubois on how companies and their customers communicate in the digital age.

Marketers today have unprecedented access to their customers’ preferences and behaviors. Social media platforms, in particular, have made information ripe for the picking. But knowing how to sort through it all, separating the noise from the best opportunities, can be challenging. “In the sea of new digital possibilities,” explains David Dubois, an assistant professor of marketing at INSEAD, “it takes time to recognize which new practices prove to be systemic, not cosmetic, changes to marketing.”

The French-born, U.S.-educated Dubois — he earned a Ph.D. in marketing from Northwestern University’s Kellogg School of Management in 2011 — wants to help the next generation of marketing leaders learn how to identify the most promising and meaningful new trends. A social scientist by training, he studies the dynamics of social influence: what makes people spread news or adopt trends, both online and offline.

Dubois’s work on the impact of digital and social media on marketing, first at HEC Paris and now at INSEAD (where he joined the faculty in 2012), aims to explain how the digital landscape has changed the way consumers think, feel, and behave. Raw digital data, whether it’s online search or social media activity or even geolocalization data, can produce valuable insights. But if companies take those insights to the next level — putting data to use by integrating consumer insights, comments, and criticisms into their products and services — they can generate a game-changing “value loop.” It’s a continuous, collaborative process, he told strategy+business in a recent interview — one that many marketers are still untangling.

S+B: How are digital platforms and social media changing marketing strategy?
DUBOIS:
Marketing was always the showcase of the organization — you could see a company through its products. Now, marketing increasingly involves a constant back and forth with different stakeholders.

Companies will continue to “push” out information into the marketplace. But they also now have to “pull” in the responses they get from their customers and other stakeholders in a dynamic conversational manner, and see how this information can be used to fuel the development of new products or services. This “push–pull” of message and feedback and integration creates a value loop between companies and the market.

In our recent case study on [the French hotel group] AccorHotels, my colleagues [Inyoung Chae, Joerg Niessing, Jean Wee] and I found that in order to incorporate the information the company was receiving from customers through online feedback and other surveys, it had to break down the traditional silos between functions — marketing, strategy, finance, and HR. That’s because a multitude of previously separate functions are involved in integrating digital insights and transformation. For instance, the effort also entailed changing the incentive system to incorporate the group’s e-reputation as a factor in employees’ bonuses.

S+B: Nearly every company has a digital presence. What steps can leaders take to maximize the information being gathered from customers?
DUBOIS:
There are essentially three stages. The first is “social listening” — basically being in tune with the online social media environment, using simple analytics tools to access online conversations and customer experiences about brands and topics. This involves constant monitoring, and can reveal opportunities to increase brand awareness or reputation. A good example occurred during a power outage at the 2013 Super Bowl. Creative teams at Oreo immediately began tweeting, “You can still dunk in the dark.” As many fans were already on social media to distract themselves from the disruption in the Super Bowl, the tweet was widely seen and retweeted.

 
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The second stage is “digital insights.” This entails linking digital data from social media to Web data and research capabilities to optimize operational decision making. A good example is INSEAD’s case involving L’Oréal Paris. The company discovered, on social media, consumers’ increasing interest in the multi-shadowed ombre hair coloring style in 2011, and decided to closely monitor the trend. This led to the company’s engaging its industrial teams to develop a new hair dye solution. Other insights were integrated at different points on their value chain, from branding to positioning to product development.

The third stage, “digital foresight,” integrates different digital footprints — consumers, competitors, media — at the strategic level, and often reveals new insights into the brand. For example, the search analytics company Tsquared helps companies understand opportunities and threats for expanding their brands. They help companies understand when it makes sense to enter new categories and when there could be competitive overlap in making such a move. The aim is for companies to integrate this analytical knowledge into their business models going forward without having to rely on outside companies.

S+B: What mistakes do companies make in “going digital”?
DUBOIS:
Digital transformation is a minefield. One of the biggest mistakes I see CEOs making is falling for technology without taking the time to integrate it into their strategy. For instance, I cannot tell you the number of companies that decide to create an app or put together a viral campaign without a clear goal in mind. They’re digital fashionistas, because they go for technology as someone would approach trendy fashion. You have to remember that the music isn’t in the violin; technology without strategy behind it is a plaything.

Music isn’t in the violin; technology without strategy behind it is a plaything.

I have spoken with a number of CEOs who say they believe in going digital, but many make the mistake of outsourcing the required capabilities to others. This carries two inherent risks: First, they lose the ability to become familiar themselves with various technologies, which is at the heart of the digital revolution. This can mean they will fail to keep up with communications abilities over time. Second, they lose control of data, which means they fail to fully leverage it within the company, losing out on the ability to increase organizational learning.

S+B: How do you advise making a digital transformation in-house?
DUBOIS:
First, you need to create a digital memory — a repository of the efforts made across the company’s various departments — and measure that against expected outcomes. For instance, looking at the digital initiatives that have been carried across different countries: What resources went to these initiatives? What were the results? This can be done in a simple spreadsheet, and it significantly helps a company master new technologies.

Next, you need to acquire digital and social media analytics to have the ability to listen to how the customer and the public feel about your company’s efforts. This essentially shows you your e-reputation with the public. AccorHotels, for example, started to monitor online conversations about its hotels and competitors, and created weekly e-reputation scores for its employees based on customer feedback and conversations.

Finally, by integrating the above into your daily operations, you become digitally autonomous. You have the ability to track data about processes and customers and then to integrate it into your own operations and corporate culture. For example, a large manufacturer of athletic shoes inserted electronic chips in its shoes, which told the company where and when a runner would use the shoes. This gave the manufacturer tremendous insight into how its customers operated and allowed for continual product improvement based upon those insights.

S+B: “Influencers” have been an important marketing tool since the discipline began. Who are the influencers in today’s digital marketing?
DUBOIS:
The process of marketing communications is now much more interconnected than before the use of digital platforms and social media. Today’s marketing is accompanied by the rise of new sources of trusted influencers perceived as authentic — for example, bloggers or people with large Twitter followings, not just celebrity spokespeople.

We’re seeing the end of focus groups as a means of judging consumer sentiment. Now we get sentiment directly from the consumers themselves — and in some cases we turn that response back on the consumers to encourage even more conversation about the brand. In the case of L’Oreal, the company assists influencers in setting up YouTube channels to display their at-home experimentation with hairstyles and colors.

Even large industrial companies can use social media to enhance their customer outreach. For example, Maersk — one of the shipping industry’s largest players — built a Facebook community of more than 1 million people to drive engagement and involvement of customers to increase value.

The marketer needs to understand how to manage all the influencers out there in the digital space in order to highlight those that best suit the brand.

S+B: Finally, what does the marketing landscape look like today, given the emergence of social platforms and changing consumer behaviors and expectations?
DUBOIS:
Digital and social media platforms have done away with the idea that marketing is a one-way street where clients receive information and a call to action. Now the marketing message itself is shared by and among consumers and therefore becomes part of the story of the brand.

Digital and social media platforms have done away with the idea that marketing is a one-way street.

Digital and social platforms also accelerate the move from what my colleagues Frederic Dalsace and Coralie Damay and I once called “Procterian Marketing” [a reference to Procter & Gamble] toward “Potterian Marketing.” By this we mean that the way in which we seek to retain customers is massively changing. Classic Procterian marketing practice typically focuses on a single, cross-sectional target, which implies regularly rejuvenating the brand. This strategy is expensive, as it involves both recruiting new customers and letting older customers leave the brand to avoid the risk of aging it.

The Potterian model, in contrast, is based on the idea that brands can be built along generational cohorts by engaging in a lifelong conversation with customers: Basically, the brand evolves with its customers. This is akin to a writer producing a story that coevolves with its readers, such as J.K. Rowling’s Harry Potter series, in which the characters themselves age along with their readers.

Additionally, digital channels — from online search to social media — are particularly fit to Potterian marketing. Online influencers’ base of influence is essentially Potterian: They age together with their fans, and are influential precisely because tight bonding with their communities increases the relevance of their message.

Finally, the shift to digital has increased the importance of content and content management, and emphasized the importance of narrative building. In a digital world, every detail matters, but if the story isn’t there, customers are not going to buy it.

Overall, it’s only by unpacking the mechanics of how people share information and how people are influenced that businesses will be able to communicate effectively on digital and social media. I like to say that the four Ps of marketing — product, price, promotion, place — have to be supplemented by the four Cs: culture, content, community, connect.

Author Profile:

  • Shellie Karabell is a writer, editor, and communications consultant, based in Paris, France.

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The Digital Marketing Value Loop