Edelman Canada’s head of digital Matt Collette has been diving into tactics that can help brands build an arsenal of zero and first party data to help them compete in a new era of privacy, as well as forecast the future of the changing relationship between brands and consumers. Today, he looks at why community marketing is making a comeback and how “Super Customers” can have an outsized impact on your brand.
With every pendulum swing, what was old is new again.
With the death of the media flywheel and changes in consumer behaviors, marketers are re-assessing their strategies to focus more on retention and CLV as a driver of growth than media driven acquisition. This is a logical outcome, because we default to the tactics that are more effective and efficient.
When it comes to retention, focusing on your most loyal users to drive growth is critical. Tapping a strategy called “Private Traffic” to mobilize “Super Customers” might just be the path forward for many companies.
“Super Customers” refers to a group of consumers whose time and spend with media and technology far exceeds that of their peers – on average, they spend 7 more hours a day consuming content than other customers. In the U.S., they account for 26% of the population but 70% of total ecommerce spend, over-indexing on grocery, apparel, electronic, furniture and household product purchases. They are also younger, more affluent, have higher levels of education and are more likely to be early adopters.
Super Customers have the power to change a business’s trajectory. But they crave personalization, a seamless experience and a stronger relationship with the brand. Up until now, the majority of companies have focused on the entire population, rather than nurturing their Super Customers, building long lasting relationships with them or leveraging them for growth.
But there are exceptions.
In China, marketers have relied on “Private Traffic,” a strategy developed as a result of low email penetration, data privacy practices and higher costs of acquisition that forced marketers to find alternative engagement strategies. Sound familiar?
Private Traffic is essentially brand communities or 1:1 relationships that, in China, were initially facilitated mostly through WeChat, but could also be done through social platforms, branded apps and messenger platforms. Brands in China build and nurture these communities as part of a broader CRM strategy. It is called Private Traffic because brands “own” the relationship with the consumer, as well as the zero and first party data related to them. They can activate these consumers around different products and campaigns, driving traffic from members or via friend and family recommendations.
Private Traffic is built on trust, high accessibility and a bilateral relationship that benefits both parties. Brands benefit through reduced customer acquisition cost – it is five to ten times more expensive to retain an existing customer than acquire a new one in China – improved loyalty, increased brand value and awareness and great stability/low churn.
Customers join these Private Traffic pools because they love the brand or its products, enjoy preferential treatment and receive information from the brand faster than other consumers. A good old quid-pro-quo.
While the tactics we deploy in Canada or the U.S. will be different, the underlying motivations for brands and consumers will be the same. In the North American context, we can think of Private Traffic as brand communities, an old idea that has become a lot more accessible, cost effective and efficient because of technological advancements and the pandemic.
And there are companies that have shown us these tactics can work.
Adidas has been using WhatsApp since 2015 as a direct marketing channel to build 1:1 relationships with consumers and a community. The brand has created a “Tango Squad”: groups of young footballers in Europe who are given exclusive access to the brand before their peers.
With a mix of offline and online events, activities and ambassadors, Lululemon maintains a high level of engagement with its Super Customers. Its announcement in April that it would launch a membership program is another example of how the company is doubling down on community as a driver of their future growth. According to Lululemon, these tactics can help the retailer’s lower CAC and build the “most immersive fitness marketplace” in the industry . Best of all, Lululemon community assets will drive considerable growth for them in the future as they have yet to meaningfully monetize this group to drive sales.
One brand that is doing so is Halfdays.com, a women’s cold weather active wear company. It enables Super Customers to monetize their advocacy for the brand through a simple link that is unique to them and through which they are rewarded for traffic and sales. Brands can monitor this traffic and reward their users for helping to build the brand.
There are examples outside of the apparel industry which point the way forward with robust loyalty and community programs, including Starbucks, which recently announced the integration of Web3 technology to augment this program and initiative. Walt Disney, Inkbox, Spotify and Harley Davidson are just a few more examples, while in B2B, companies like Geckoboard and Microsoft’s MVP program demonstrate this is not just for consumer-facing brands.
Private Traffic is a trend I expect to gain more popularity in Canada and the U.S. in the coming 12 months. Why? Because many of the challenges that marketers faced in China are challenges that marketers in Canada and the U.S. are dealing with now. Super Customers are key to unlocking growth in a world where retention and CLV matter because they are 69% more likely to talk about products/service with others and 72% more likely to recommend their purchase to friends and family. As we look to new digital strategies to regain lost efficiencies from the death of the media flywheel, Private Traffic is one area to keep an eye on.
Matt Collette is head of digital at Edelman Canada, as well as the agency’s global managing director of digital growth.
