The subject of customer loyalty is guaranteed to get the attention of virtually anyone involved in marketing. The cost of acquiring new customers always massively outweighs the cost of retaining existing ones (although sadly retention is still given too little meaningful attention by too many companies). And with so many technologies approaching parity, switching brands has never been easier.

Of course, exactly what marketers mean by loyalty is often a somewhat fuzzy idea. Generally it comes down to a desire for existing customers to carry on doing what they’re already doing (with a hope that they may do a little more too). As a result, many ‘loyalty programmes’ use classic behaviourist ideas of rewarding desired behaviour and habitual repeat buying. This is fine when we’re talking about getting some points on a store card for buying sugar but doesn’t stand up to anything more complicated than simple reflex purchases. This is because it is focused almost solely on habits of mind rather than anything deeper (what academics term ‘routinised response behaviour’).

A truer definition of customer loyalty is whether people will wait for your product if it is out of stock (or still in beta). Whether they will recommend it to their friends (or blog favourably about it). And whether they’ll forgive you when you make mistakes.

But in a 2.0 world is anyone really ‘loyal’ to brands anymore (especially in the tech sector)? Loyalty is, to some degree, a measure of permanence. Yet as we all know, technology is about relentless change. The technology graveyard is littered with the remains of brands and products that at one time attracted many loyal users. And we are potentially seeing a new wave of change with the move to webOS-based services.

It was unthinkable at one time that Sony Playstation users might defect instead of waiting for the next version. Yet right now the brand’s position seems more precarious than ever as PS3’s release date and availability moves ever farther away and the competition gets its act together.

Likewise, until Firefox came along, Internet Explorer had effectively won the browser war. Sadly, having won, there was no need to remain focused on improving the product (ie better serving users) and, from a technology standpoint, Microsoft has been playing catch up ever since.

Even Apple, one of the more bomb-proof tech brands, only had to have a few scratched Nanos and discolouring MacBooks to see once ‘loyal’ customers fall out of love with the brand.

One reason for this is that there is no habit of mind for most technology purchases. They are two infrequent, too expensive and the next purchase is almost never a like-for-like replacement of an older product (tech moves on too quickly). Buyers are also more informed than ever before (and far less scared of technology than they used to be). They are more willing to adopt earlier because on the whole the consequences of getting it wrong aren’t too worrying.

So where does this leave tech marketers?

The first thing to do is turn the whole loyalty question on its head. Instead of asking how loyal your customers are to you, ask how loyal you are to your customers. What can you do to help them get through their day? What would you do if you really were on their side? Find ways to be loyal to them (their wants, needs and aspirations) between purchases.

Secondly, involve customers in refining existing products and developing new ones. Work as partners with them. The open source ethos of co-creation comes into play here. If customers have some skin in the game then they are more likely to stay the course.

Finally, never, ever compromise on support. For most tech companies, this is the prime communication customers have with the brand between purchases. Yet examples of great support are considerably rarer than those of diabolical support. There is no faster way to squander hard earned brand equity than to deliver a crappy support experience.

So is loyalty dead? Yes and no. Traditional notions of brand loyalty are, in the tech sector at least, gasping their last breaths. But in their place could come a more authentic, more effective relationship with customers.

I’m not around for the next week so no postings. Normal service will resume on the 30th (as soon as I’ve deleted several thousand emails and caught up on an encyclopedia’s worth of RSS feeds).

This is rather lovely. Yahoo! has worked with Jonathan Harris to create a digital time capsule. The capsule is open for 30 days ending 8th November and allows Yahoo! users to contribute content (written, photographic, video, audio) under 10 broad categories. After this date, the resulting capsule will be will be ’sealed’ and entrusted to Smithsonian Folkways Recordings based in Washington.

The capsule’s creator explains:

The aesthetic of the Time Capsule is that of a ball of thread, spinning like a globe, its shifting surface entirely composed of words and pictures submitted by people around the world. The thread ball concept relates to threads of memory and threads of time, where threads are taken to be any continuous and self-consistent narrative strand. When the Time Capsule opens, it displays the 100 most recent contributions, which form the spinning globe. The ten themes orbit the globe in a pinwheel pattern. At any moment, any individual tile can be clicked, causing the globe to fall away and the selected tile to expand, revealing detailed information about the tile and the person who created it. Using a search interface, viewers can specify the population they wish to see, exploring such demographics as “men in their 20s from New York City”, and “Iraqi women who submitted drawings in response to the question: What do you love?”. There are an infinite number of ways to slice the data, and each resulting slice then becomes its own thread, which can be browsed independently, tile by tile, like a filmstrip.

Jonathan Harris specialises in creating wonderfully evocative digital experiences. They tend to have a touch of whimsy about them. They are also addictively compulsive with beautifully intuitive interfaces. If you haven’t already, be sure to check out 10×10 and we feel fine (as well as his other work here).

As promised, we’ve created a video of the highlights from the Inside the Bubble event. It’s on b1.com but I thought I’d put it here too.

Enjoy.

You can also read thoughts from one of the panellists here and one of our attendees here.

So you’ve heard about the technologies, you’ve read a few blogs, and watched something hilariously funny on YouTube – but from a marketing perspective, what should you actually be doing about Web 2.0? And where do you start?

Sometimes it can seem as though unless you immediately launch a blog, put up a wiki, tag all your content and host an unconference, you’re being left in the dust. But there are some relatively simple things you can begin doing right now.

1: Hear the conversation

Go to Technorati and set up a watchlist to track blog mentions of your company, your products and key team members (eg your CEO, your CIO etc). Do the same for your competitors.

2: Join the conversation

Begin to engage with those who post about your brand and market. Nominate people internally who can talk passionately (and helpfully) about the industry. Give them the freedom to be themselves.

3: Cultivate advocates

Consider giving prolific posters more privileged access to your company. Invite them in, show them around, drink tea together. Don’t merely spin the company line to them. Don’t PR them. Don’t try to place product on their blogs. Find out where they are coming from, get to know them better. Then as stuff happens, keep the conversation going with them to give your perspective on events.

4: Think community

Look for opportunities to bring groups of customers together to work with you. This might be to develop new products and services, it could be to open new ways of communicating with them, or it could be any number of other ways to collaborate. Importantly, this is not a ’seminar’ or a ’showcase’. The best model for this is the BarCamp series of events and the Yahoo! Open Hack Day.

5: Bring a little 2.0 to your site

Start to look at how you can use some of the Web 2.0 technologies on your corporate site. This could be as simple as incorporating the Google Maps API on your contacts page or as complex as developing an AJAX self-service configurator to help customers get the products that are best suited to them. There are so many useful technologies and services being developed – it seems rude not to extend them to your customers.

That’s it. Of course this is not rocket science and is far from the cutting edge. But it’s a start and, judging by some the conversations I had at the Inside the bubble event, right now that’s what many in marketing seem to need.

Thank you to everyone who came to the Inside the bubble event last night. It was great to see so many people (there were over a hundred of you) looking to get to grips with what Web 2.0 means for marketing.

A special thanks to our panellists, Jose Adams of Visit London, James Cashmore of Google, Simon Grice of eTribes, Ian Jindal and Sam Sethi of TechCrunch UK / Vecosys for opening themselves up to interrogation. We filmed the event and will put it online at b1.com as soon as it’s edited, compressed and all that other good stuff.

In the meantime, there is a photo set up on Flickr (which also gave me the excuse to try out their geotagging for the first time. Have a look here – the hybrid view is best).

The event has given us lots of food for thought and the conversations after the event (and through the day today) have kept us buzzing. We’ll be taking the ideas on further both here on the blog and in person at Marketing Focus Europe in just over a week.

Continuing to set the scene for our Inside the bubble event, today I’m going to look at open source. While open source is not strictly speaking core to Web 2.0, the thinking and philosophy behind it is. And, I believe, it is the open source way of working which will have more impact on the way clients and agencies work together in future than anything else.

Of course, open source for many of us in technology is synonymous with software and the high profile of Linux, OpenOffice et al. The open source ethos has also spawned the Creative Commons approach to licensing intellectual property and the release of the APIs that have been used to create so many mashed-up applications and services.

This is all very well for creating new applications but what has it really to do with marketing communications?

For me this is at the core of the difference between Marketing 1.0 and Marketing 2.0. We can characterise ‘old marcoms’ as essentially a one way, blunt, broadcast affair that distributes largely sanitised “over polished” communications.

These communications talk at people rather than with them. This is now out of step with the new reality of blogs, wikis, ad blockers, Sky+ etc. It is the kind of approach that audiences mentally tune out of as fast as the messages hit their retinas.

The creation of Marketing 1.0 communications is also increasingly out of step. The days of the client handing the problem to their agency who vanish into a closed room for a couple of weeks and the return with the answer that they then must sell to the client must be numbered (and are already vanishing in more enlightened agencies).

Essentially, the old way is closed source.

One way of constructing a route forward is to look at the model offered by open source (the bazaar model) and apply this to the agency/client relationship. The result is to change the way agencies work with clients.

This model has 6 core principles:

1: Users should be treated as co-developers

This means embracing journalists, customers, bloggers, analysts etc as co-developers of the messages and strategies we create. While traditional agencies have always used research to pre-test their ideas, by the time it gets to that stage, there is little chance to change course (except when the feedback is so bad that it’s a rip and replace exercise). Co-development doesn’t mean abdicating responsibility for the message to 6 customers behind one-way glass. It does mean that you get more informed, more insightful input as the project progresses. Input that offers a more rounded view of the market, the challenges and potential solutions.

2: Early releases

Marketing 1.0 emphasised that the final communication be totally finished, totally polished and then rolled out. In contrast open source-based Marketing 2.0 means that messages are not over-polished. We put ideas out there and work with our co-developers to evolve them. We encourage them to gain a life of their own, to keep pace with the market.

3: Frequent integration

Building on the idea of early releases, we need to constantly farm for new ideas and insights from other disciplines and industries and integrate them often. The project keeps moving forward. This is, of course, easier for integrated agencies as they have less of the silo-mentality that afflicts old-school single-discipline agencies.

4: Several versions

If Web 2.0 teaches us anything, it’s that the media are fragmenting. For any message, there are a multitude of ways to connect with customers (even with ad-blockers, RSS and SKky+/Tivo etc). To succeed means ensuring you have a truly media-neutral idea driving the brand which can be re-configured in a wide variety of ways. It could also mean creating more stable (polished) campaigns for mass media and more ‘buggy’ (unpolished) campaigns for relational media (eg blogs) which can be further co-developed.

5: High modularisation

In a Marketing 2.0 world, every campaign is a holistic campaign. It’s not enough to run an ad and think the job’s done (actually, this has always been the case). Even on limited budgets, it’s still vital to think through all the modules that are needed to make the campaign successful (again this is something that comes more naturally to integrated agencies). It means being able to create modular campaigns that allow for parallel development (possibly by multiple partners). And, of course, none of this must negatively impact upon available timescales.

6: Dynamic decision making

Speaking of deadlines, it is vital that clients and agencies have a way of making strategic decisions quickly and effectively within a changing environment. With the latest workflow systems and development wikis this is now easier than ever but on international assignments with layers of sign-off this still presents challenges for everyone involved.

The open source model presents a compelling blueprint for how Marketing 2.0 will develop.

Are we there yet? No. While today’s integrated agencies are adopting some of these ideas, embedding them throughout both agencies and clients will take time and commitment. This will be less a case of if than when.

I look forward to seeing what visitors to the bubble think.

In part two of our run up to the Inside the bubble event I’m going to be taking a whistle-stop tour of blogs within a marketing context. It’s a big topic so I appologise in advance for not doing it justice.

So much of the background to blogs and blogging has already been written (mainly on blogs) that I won’t do the whole 101 thing in this post. If you want a good overview look here.

The debate for marketing is around just how important blogs are in the mix. This tends to get pretty polarised.

On one side are those who believe that blogs are the future and represent the authentic ‘markets are conversations’ approach of the Cluetrain Manifesto. They point to the exponential growth of the medium (23,000 more a day according to some estimates), the massive popularity of the leading blogs and and the critical mass that can be achieved when an idea takes hold.

In the other corner are those who believe that the importance of blogs is massively over-stated (by anyone who is not a blogger). They argue that outside of the blogosphere (where most people live) the impact of any blog is close to zero. And for marketers, when there’s never enough budget to do the basics as well as they’d like, they’re not about to start throwing money with no ROI in sight.

So where do blogs fit in the overall scheme of things?

To date, brands have used blogs in a number of ways. The first is to show the human face of the company. Blogs offer the possibility of a less mediated view of a brand. So when we hear that CEO of XYZ company is blogging, we believe that we’ll get a less spun picture of the business. It is also an easier podium for admitting to mistakes and expressing dreams for the future. And it’s not just the CEOs, this same role can be played by people throughout a corporation (Robert Scoble was the perfect example of this when at Microsoft).

Blogs also offer a more immediate view of a company. I don’t know about you but I habitually check the timestamp on any entry (in a way I never would on a brand’s main site). A blog is intrinsically more dynamic, more vibrant than the corporate .com. You get a far better sense of the community behind the facade. And when you bear in mind that in the final analysis people do business with people (even when it’s a six-figure capital expenditure) this can be a major asset.

Some brands try to influence the influencers. As everyone knows, word of mouth is powerful stuff. If an a-list tech blogger says my product is cool it’s way more believable than if I say it. Of course this has led to legions of old-school PR people inundating bloggers with shotgun emails regardless of the relevance of their message to the blog or its readership. The ones who appear to be more successful are those that are upfront about their motives and highly specific to the blog they are targeting. This, however, takes far more effort.

Of course, a real conversation is a two-way affair. Blogs, through their comments feature, allow for a brand to engage in debate with its customers. Sadly, many of the comments sections of blogs are being spammed into oblivion, but this is where the guard is really dropped. Again, the time involved for a brand in keeping up to date with the conversation should not be underestimated.

Much has been said about the destructive power of blogs. Take one tetchy blogger, give them a bad experience of your brand and stand back to watch the fireworks. There is after all no editor. And as they say, information wants to be free (especially information fueled by a self-righteous mindset and a desire for revenge). That’s why it pays to keep an eye on how your brand is being discussed on blogs. I have perpetual searches running on all of our clients and on Banner itself. I would prefer to enter a debate early than when it has begun to snowball. Just because you’re paranoid doesn’t mean they’re not out to get you.

On the flip-side of the above point, the converse is also true. Brands can to some extent insulate themselves from this kind of avalanche. By engaging with bloggers, taking time to build relationships, addressing their concerns, they can build a community of people who when the wheels fall off will stand up and offer a more reasoned view.

The bottom-line, I believe, is that technology brands should take every opportunity to join the conversation. While blogs are, despite their growth, still relatively embryonic, the number of tech buyers reading them is becoming significant.

As I said at the beginning of this post, it’s a huge topic and I’m undoubtedly oversimplifying it. It’ll be interesting to hear what the panellists at the bubble think.

In the run up to our Inside the bubble shindig, I’m going to start looking at some of the tools and challenges of marketing within a Web 2.0 world. First up: social networks.

It seems as if you can’t move right now for talk about social networking. Of course, what most people are really talking about is MySpace (with some stateside widening this to include Friendster and Facebook). MySpace gained its 100 millionth account this August and is reckoned to be the world’s 4th most popular English language website. It has also attracted massive marketing attention among those looking to target its users (who are the same people who are switching away from traditional media) as well as a pretty lucrative deal with Google for search.

One of the real triumphs of the mass-appeal social networks is to create a net within a net. (It’s surprising in some respects as this is where Compuserve and AOL were a decade ago.) The networks become self-referencing which binds them ever closer together. You stay on the same site for content and communication, and you gain prestige from the number of links you have (encouraging users to make even more connections). Of course from a marketing point of view, this further insulates users from push-based messaging.

So how have marketers been trying to break through?

The first way is by creating their own branded personas and setting up pages for them. This is the approach Wendy’s took in the US to promote their square burger (generating over 100,000 ‘friends’ in the process). VW USA went further to create a living breathing character in Helga, an über-minimalist icon for the brand. These have succeeded through tapping in to a kind of post-modern, ironic attitude within the networks where users certainly aren’t fooled and are willing to play along (for now). But for how long? This is a trick that can only be pulled so many times and will almost certainly see diminishing returns over time.

Another approach is seeding, whereby influential users carry messages/recommendations out to their contacts. Essentially a word of mouth strategy, this approach is wrapped up in an ethical minefield. How upfront should a brand or seeder be about their motives? Really effective word of mouth works because of its authenticity and the trust that generates. Paid-for opinions are by their very nature less authentic and less believable. And any brand that gets busted is likely to see the downside of social networking pretty quickly. The people behind BzzAgent in the US seem to have a good attitude to this (see their code of conduct). Personally, I would be wary of this approach unless your seeders are 100% transparent and offer something of real value to the community.

A third route is viral content (this could be the something of real value mentioned above). Viral is still largely synonymous with video (probably even more so now with the growth of YouTube) but it does’t have to be. It can range from useful written content to wallpapers, from browser pug-ins to online games. The exact nature depends on relevancy (to the brand and the audience) and on its likely infectiousness. This can include user-generated content which has worked well for some (eg Converse, JetBlue and MasterCard where customers engaged with the brand) and disastrously for others (eg Chevy Tahoe where customers were enraged by the product’s impact on the environment).

Of course, all of this very B2C. What about B2B?

Ironically, social networks in the B2B space predate those in the consumer space. It’s just that they weren’t called social networks, they were called user groups. Of course today we have the likes of LinkedIn, OpenBC and AlwaysOn (which is the one most like a B2C network) as well as forum sites for specific technologies.

With B2B networks, the keys are engagement and usefulness. I remember a few years back when we were pitching for a broadband ISP, I was doing the initial crash course work on them and the business broadband sector. I ended up on a forum dedicated to broadband where there was vigorous debate on the issues of the day. On there was a relatively senior person from the ISP (not a marketing guy) who was endlessly patient and helpful to other forum members. He did more to raise my opinion of the brand than any material I had read to that point.

Of course, dedicating people to this kind of task is expensive (in time and money). Other options revolve around sponsoring sections of a network and facilitating the debate there (no hard sell). Or creating tools that help users find what they need easier. You can evolve the white paper into something more interactive (wikis are perfect for this). Or you can create your own social network around your area of the industry if one does not already exist and there is a clear need for it (significant due diligence is advised here).

Will social networks last? Probably, for a time at least. They are bound to evolve and there will be the occasional backlash against them (especially if they try to hold onto their members too tightly). For technology marketers they represent an interesting opportunity (I would argue especially in the B2B space where no one has done anything too smart yet). It will be interesting to see our panel’s view at the bubble.