A few items before jumping into the fourth topic in our Strategic Foresight series – if you are new to our series, I recommend reading the intro article which provides concept details and overall context. You can find that article here.
I also want to reiterate a key principle of Strategic Foresight: We are not predicting the future. Rather, we are taking a structured approach to exploring possible future-world scenarios based on the information available today. This enables brands to make strategic planning decisions today with an eye on tomorrow.
Here is a look at the five topics included in this article series:
Part 1 – Life From Home (Read Here)
Part 2 – Global Social Responsibility (Read Here)
Part 3 – Reputation Currency (Read Here)
Part 4 – New Rules of Engagement
Part 5 – Hyper-Personalization (Read Here)
Today, I will be discussing a trend that is emerging as brands further engrain themselves in consumers’ day-to-day lives: New Rules of Engagement.
Consumers interact with brands in a variety of ways, and engagement touchpoints are becoming increasingly clever – sometimes to the point where customers are unaware what is occurring behind the scenes or how their actions are benefiting the brand. So, to maintain a balance of consumer consent with brand benefits, expanding regulatory guidelines and accountability measures are being established.
Unfortunately, not all brands operate in the best interest of their customers, which is why new rules of engagement are being formed as competitive markets continue to evolve.
The Rise of New Rules of Engagement: Hesitant Consent
Over time, especially since the introduction of digital platforms and online engagement, brands have prioritized customer relationship building within their marketing strategies. While conveying product or service details is still an important objective, the idea that consumers buy from brands they feel connected with has taken center stage.
For brands to build strong relationships, they must know their customers on a deeper level; going beyond transactional data or contact information. As levels of engagement evolve, so will the regulatory guidelines to establish boundaries and accountability as brands seek a connection with the person behind the purchase.
There are A TON of data supporting the effectiveness of customer personalization, which is why marketers are committed to this strategic approach. Nearly 75% of consumers say they would find “living profiles” valuable if they could be used to curate the experiences, offers, and products they receive (Source: Accenture, 2020). Furthermore, 83% of shoppers would voluntarily exchange their data for a more personalized experience (Source: Accenture, 2020).
So, brands are free to snag any-and-all data they can from customers, right? Not exactly.
A 2019 study found that 79% of consumers believed companies knew too much about them (Source: SmarterHQ, 2019), and another study revealed 25% of consumers who received a personal brand experience say it was because the brand had information about them that they did not share knowingly or directly (Source: Accenture, 2020).
All that said, data capture and personalization are only slices of the brand engagement pie. Just as our personal relationships are complex, so are consumers’ relationships with brands. Since engagement technologies and creative marketing strategies are evolving at a rapid pace, the adage people don’t know what they don’t know rings true. In order to protect consumers from brands, and themselves, we will continue seeing new regulatory measures emerge.
The Effect of New Rules of Engagement: Accountability & Action
Traditionally, consumers only know what brands tell them. People operate with the assumption that any information relevant to them will be made clear, but as we know that is not always the case. Even when brands do provide detailed information about their operations and intent, consumers pass on the opportunity to review (i.e., accepting terms and conditions without reading them). It usually takes something going wrong for underlying truths to emerge, and when things go wrong the hope is appropriate actions will be taken.
In the case of brand engagement, accountability measures are being taken, but they are often reactive rather than proactive. The course of a free market is actively set by the companies, and it is passively allowed by the consumers participating. If consumers are blind to the actual long-term course, whether intentional or unintentional, then their passive allowance becomes an ethical gray area. This question of ethics applies not only to personal data, but it also applies to every/any interaction between brands and the public. If brands operate under false pretenses, that is a problem. If brands find loopholes in existing regulations, that is a problem. Even if brands operate legally but are disingenuous, that is a problem.
For consumers wanting to protect themselves against “unfair or deceptive trade practices,” there are a fragmented network of laws that vary by state, industry, and medium. For example, since there is no comprehensive federal law governing data privacy, the Federal Trade Commission Act assigns broad jurisdiction over commercial entities allowing the FTC to enforce and take action against the varied laws that presently exist.
There is also the EARN IT ACT of 2020 (Eliminating Abusive and Rampant Neglect of Interactive Technologies) which provides government agencies with the authority to access private data from corporations or uphold liability on behalf of consumers. But again, data privacy is only one aspect of brand engagement, and there are many others with intangible attributes; such as a brand following through on its promises or having a positive social impact. These attributes fit into that aforementioned ethical gray area which cannot be regulated by any law or agency. So, it becomes the responsibility of consumers themselves to be the enforcer of right-and-wrong through their purchase power and loyalty.
The Future of New Rules of Engagement: Collective Control
While we cannot know what they will be, we can safely assume the future will present innovative technologies and new engagement platforms beyond what exists today. So, it is in everyone’s best interest that brands take a proactive rather than a reactive approach to ethical business practices. Brand reputation and customer loyalty are strengthened through honesty and trust. By proving there is a vested interest in the wellbeing of its customers, a brand will be an accountability leader rather than a follower.
To expand on this topic further, here are a few trends and strategic initiatives to explore:
Data privacy and security were included with our Part 3 article about Reputation Currency, and it plays a similar-yet-different role within New Rules of Engagement. The current chain of events tends to be a problem is identified, then a solution is presented, then actions are taken. In this scenario, a problem is a driving force behind action. However, consumer patience and acceptance of this approach are running thin. A relatively new rule of engagement allows consumers to opt-out of data tracking and gives them control of what companies can know about them. This action was the result of a problem, but it serves as a precursor for what can be expected in the future.
The underlying point of data privacy laws is to ensure consumers have direct control over their information. Brands used to leverage cookies, cache, and data capture technologies – which operated silently behind the scenes – to fuel their customer personalization strategies. While consumer demand for personalized experiences has not changed, a brand’s ability to provide high levels of personalization has changed. As new technologies, digital platforms, and engagement strategies emerge in the future, new rules of engagement will require brands to be forthright and transparent about what they are doing and how they are doing it.
Allowing consumers to take full control of a brand’s processes and strategic direction might not sound like a recipe for success, however current trends indicate this will be the only way for brands to succeed. This does not mean handing over the keys to the kingdom, rather it means all decisions will need to be made based on consumer thoughts, opinions, concerns, and preferences. While customer feedback is certainly common practice today, as a customer insights expert I can attest to the reluctance many decision makers hold when taking action based on that feedback.
In the future, it is reasonable to assume everything within an organization will be driven by customer preference and demand. The obvious brand attributes such as social impact and product/service development will continue being driven by customer feedback, but there are less obvious operational elements that will be influenced by customers as well such as employment practices, internal culture, and revenue allocation. Today, consumers are demanding control of their own information and engagement details. In the future, they may be expecting a more direct say in the entirety of a brand’s operations as well.
Brands playing an active role in regulation development will become a differentiator and competitive advantage. By contributing to the solutions and participating in their own governing guidelines, it will convey and sincere and authentic interest best serving the customer. Today, laws and regulations are placed and enforced by external organizations. Companies are required to abide by these laws and regulations on their own accord. As previously mentioned, there will invariably be strategic and operational challenges that arise for companies as they adjust to new laws, but that is of no concern to the consumer who is protected by such laws.
For companies willing to participate in regulation development, not only will there be goodwill established among their customers, they will have the opportunity to shape regulations in ways that serve their interests. Having a voice in any matter allows for a sense of control, which is exactly what consumers are wanting from the brands they support. A more collective and cohesive approach to economic development with consumers, brands, and governing entities all working together will create a unique dynamic that has the potential to benefit all parties involved.
Final Thoughts & Action Items
As a friendly reminder: Strategic Foresight is NOT predicting the future. The objective is to explore possible future-world scenarios based on the information we have available today to identify emerging trends that are shaping and influencing your business, market, and consumers. From there, expand your time horizons and consider what your business, market, and consumers might look like if those trends continue.
In terms of the New Rules of Engagement, proactivity is the name of the game. For brands looking to remain competitive and relevant in an unknown future, they will need to actively invite consumers to participate in their strategic development process. Brands will need to proactively address consumer concerns around data privacy, social impact, and employment practices. In other words, customers want to know they have a meaningful voice within the companies they support.
These efforts can start today by leveraging customer feedback in ways that may feel uncomfortable or unnecessary. Brands that collect feedback but do not apply the resulting insights will start to see their customer relationships fade. On the flip side, brands that walk the walk and follow through with their commitment to best serving their customers will see those relationships grow. Data-driven customer insights hold all the answers a brand could ever need, so it is a matter of when customer feedback plays a primary role within the organization… not if.