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A Masterclass With Mastercard’s CMO on Values, Loyalty, and Rethinking Brand

Mrinal Parekh Mrinal, Senior Product Marketing Manager at CleverTap, excels in B2B strategy, market planning, and product launches. Proven success at Razorpay and Amazon.
A Masterclass With Mastercard’s CMO on Values, Loyalty, and Rethinking Brand

Global events have not only accelerated business transformation and change, they’ve upended consumer perception of what brands must do and stand for in challenging times. 
It’s down to values and building the capabilities to show, not tell, according to a recent report from data intelligence firm Morning Consult.* The findings reveal that more than 8 in 10 US adults are inclined to purchase products from companies that they feel help people and treat their employees well. “It’s no longer about talking about values,” the report concludes.”It’s about demonstrating them.” 
Put another way, marketers should focus efforts to offer consumers helpful advice rather than a hard sell.

It’s a bold statement echoed in Quantum Marketing, the best-selling book by Mastercard Chief Marketing Officer Raja Rajamannar. In it, he shares the forward-thinking ways all businesses must reevaluate their entire marketing landscape to remain relevant and successful. 
In his view, it’s no longer enough to declare a set of values. Marketers need to earn loyalty by making consumers experience what a brand stands for and demonstrating its ability to solve their problems and positively impact their communities and society as a whole. In short, he says, brands need to serve first and sell second. 
On a new episode of CleverTap Engage — our podcast and video interview series where we shine a light on leading CMOs achieving meaningful and memorable customer engagement, hosts Peggy Anne Salz and John Koetsier recently sat down with Rajamannar to discuss the dramatic paradigm shift in marketing and approaches that allow marketers (with the right skill sets and mindsets) to deliver experiential marketing that drives results.

Key Takeaways

Experiences are Everything

“When people hate ads, you have to recognize that,” Rajamannar says. The popularity of ad-free environments like Netflix and Amazon Prime has eroded the share of attention available to conventional marketing. But he does get our attention with the purposely provocative statement that advertising is dead. 
Now, he says, the pressure is on marketers to create and deliver priceless experiences.  It’s not just good advice, it’s best practice at Mastercard where his team has “moved a lot of money away from traditional advertising into experiential marketing where you’re not telling stories, but you are helping consumers make stories by giving them experiences that money cannot buy.”

The Creative Renaissance

Marketing must fuse the art of creativity with the science of analytics. It’s a huge opportunity for marketers who master the tasks and talent we attribute to the right and left hemispheres of the brain.* (The right is associated with critical thinking, while the left side is associated with creative thinking.) But right now, Rajamannar observes, the marketing profession is dominated by creative experts, not data scientists. 
This is the biggest challenge facing the industry. “Today, without analytics, without technology, you cannot do marketing. You cannot survive.” To complicate matters, marketers must brace themselves for “almost two dozen new kinds of technologies that are coming at us,” ranging from AI to blockchain. “They can totally enable marketing, or they can totally render marketers obsolete.” 
Success belongs to the marketers that combine right-brain thinking with left-brain creative. “It’s kind of a ‘back to the future,’” Rajamannar says. These “da Vinci marketers” are the answer. “But they don’t grow on trees.” Marketing teams that can’t find and hire this talent have to cultivate it. “Everything has to be taken into account to make sure that you are leveraging both sides of the brain collectively.”

Loyalty Needs a Reboot

Marketers must understand that the fundamental concept of brand loyalty is thought of entirely backwards, Rajamannar says. “It is the brands which should be loyal to the consumers, not the other way around.” 
First marketers have to accept that they “got loyalty wrong,” he says. Then they have to reexamine the value exchange. If we look at the way most loyalty programs are run today, it’s obvious that the perks and incentives are part of the pricing equation. So, Rajamannar reasons, a loyalty program is a misnomer. “Loyalty has to be redefined completely,” and this rethink starts with the hard truth that marketers can’t buy love — and shouldn’t try. 
Put another way, marketers shouldn’t rely on plastic cards or prizes to cement relationships and drive customer loyalty. Instead, they should focus on architecting relevant experiences and adapt those experiences to individual needs.

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Full Podcast Transcript

John Koetsier
Peggy, I am super excited. We have an absolutely huge guest for this show, the Chief Marketing and Communications Officer at Mastercard. 

Peggy Anne Salz
Absolutely and beyond that, and in addition to that, John, the author of the bestselling book, Quantum Marketing, which is in itself a must-read. He is also an amazing speaker, bringing together not just the intelligence and the actionable advice of the book but also emotional intelligence and empathy, so knowledge and expression, a fantastic combination.

John Koetsier
Fantastic combination and you know what, everything that he says is smart and apt. He also tosses out a number of thought grenades, he has some unconventional opinions, and he’s not afraid to share them. Tell us one of those thought grenades, maybe two of them, Peggy.

Peggy Anne Salz
Write it down, John. Loyalty is dead. Ouch. Now, if that doesn’t send you back to all of the theories and all of the frameworks to work them over, nothing will and if that wasn’t enough, talent, not just theory, talent. So, you need to have da Vinci marketers, either hire them or become one. Learn to balance the left and right hemispheres of your brain.

John Koetsier
It can’t be hard? Hey, da Vinci, I mean, scientist, global artist, I mean, pretty easy. Sounds good. The other thought grenade he had, which really resonated with me, was the whole idea of brand requires rebranding. What a brand is, how you build a brand, what a brand means, what it looks like, feels like, tastes like. All those things require rebranding. We’re going to jump right into our conversation right now. Enjoy. 

So, we all know the phrase, ‘may you live in interesting times.’ What is it like to be a global CMO right now, Raja?

Raja Rajamannar
John, I think being in the global role right now is more 24/7 than any time before. Right management is a high-touch sport during normal times and during a crisis, it is even more so. You have to be constantly in touch with your people and I think people management is probably what dominates the situation right now. The second is for any CMO, not just a global CMO, the challenges are extraordinary at this point in time. In many industries that demand is coming down or actually there is complete shutdown whether it is the airline industry, hotel industry, car rental, etc., they are slowly coming back up, but very, very slowly. 

So that puts a lot of pressure on the revenues of the companies. That, in turn, puts a lot of pressure on marketing budgets. So, you’re constantly repurposing and optimizing your spend, which is heavy lifting in normal times. This time it is even more so. The third, I would say, is in terms of the need for every brand not to go dark because actually, at times of crisis like this, the customers, the consumers, the clients all expect brands to show up and show up not just with some pretty advertisements or clever advertisements, but show up with authenticity, and doing something about the situation as opposed to pushing their products. 

So that’s a complete shift compared to BAU, where you’re actually trying to win sales all the time. But this is not the time to win sales. This is the time to serve. There are times to sell but this is not the time to sell. This is the time to serve. 

So, it’s a total paradigm shift, I would say, from being a CMO, first and foremost, then being a global CMO, secondly. So this is what it has been. I feel very blessed to have an outstanding team around the world who are highly committed and who are extremely competent and very, very good human beings. Collectively, we are putting our shoulders to the wheel and making sure that we don’t miss a beat. 

If I can just take one little detour, I must also say that three and a half years back, I put in place what they call a ‘risk management function’ within marketing. So, they look at all the risks that marketing faces, from cyber threats to data security risks to privacy risks, to brand disintermediation risk, financial risk, everything across the board. They then put plans in place to either avoid those risks from materializing or, if the risks do materialize, to do something very quickly about it. One of those risks we forecast at that time three and a half years back was probably that there would be some natural calamity or man-made disaster because of which people will not be able to go outside their homes. That was a fortuitous forecast, I would say, though unfortunately, of late has materialized.

So we actually had our contingency plans and the building blocks in place. When COVID hit us, which we never anticipated something like this at this scale and to this extent, we could actually quickly cut over to our contingency plans without missing a beat. So, that also helped quite a lot, so this is how it has been and it is at this point in time and we’re doing our best.

John Koetsier
That is amazing. Peggy, we’ve talked to hundreds of marketers and CMOS. I have not heard one say they had contingency plans for risks, including something like a global pandemic that would keep people indoors.

Peggy Anne Salz
No, absolutely not. Not at all and not also thinking about the ups and downs, complete lockdown, then reopening, then locked down again, completely caught by surprise here. I think it’s really exciting what you’re saying here, Raja because what you’re saying is do not disengage as a brand, right. If you look at it, many brands did exactly that at the beginning. They didn’t know what to do, like well, our advertising is showing a lot of people outside so we can’t show any advertising at all. We can’t get the advertising through quickly enough to show people in their homes but still enjoying the product or experience. What was this disruption for you? You had a contingency plan? How did this affect the marketing?

Raja Rajamannar
So firstly, in fact, we had to do a significant alteration to our mix, to our marketing mix. First and foremost, not just during the pandemic but as early as about seven years back, we started moving a lot of our budget away from traditional advertising into experiential marketing and into influencer marketing. 

The whole idea is that advertising is becoming extremely crowded and people hate advertisements. They are putting ad blocks at scale, more than 600 million people and people are going in droves to ad free environments like Netflix and Amazon Prime, YouTube Red, and so on. Or YouTube premium now it is called. So, where there are lots of hours consumed, our people are spending tons and tons of hours in front of those channels, where we cannot put advertisements.

It’s a narrower inventory of attention, a humongous amount of clutter and a reduced span of attention of people. When people hate ads, you have to recognize that and I keep saying, just to be provocative to my team, that advertising is dead, as we know it at least. 

So, we have moved a lot of money away from traditional advertising into experiential marketing where you’re not telling stories, but you are helping consumers make stories by giving them experiences that money cannot buy but they can get through Mastercard. So that has been the whole premise and it has been doing very, very well for us and bound by the fact that we moved all the way from being eighty-seventh brand, I believe, in the top 100 to now being a top 10 brand.

The momentum is fantastic, in the right direction but then when the pandemic hit, how do I deliver those experiences? Because most of these experiences are, if not all of the experiences are in a physical space. You are meeting your favorite idol, or you are attending a great concert or a game or whatever else it is when everything has come to a standstill. That was where our contingency plan came in. 

We said if people are not able to go out and experience those kind of great things that we are doing, we call them priceless experiences. How do you take priceless experiences into their homes? So digital experiences, now digital is not quite as immersive as physical experiences but we said we have to really see how best we can do it and we were pleasantly surprised. 

So, we have many of our ambassadors, for example, curating experiences for us. If you are a Mastercard customer, the Ambassador of Mastercard will come online with you and you can actually book that experience with that Ambassador and you have a 15-minute chat and then some tips. 

In fact, whether it is golf lessons or cooking lessons, it’s been across the entire board and then we back it up with some kind of merchandise, which is autographed and all that and we do it very nicely. The team does a brilliant job on that, so truly make it as a priceless experience. 

Also, now because there are many people at home, the household in total, the family in total, can have that experience as opposed to just one individual. We get to the family more in that sense, plus the scalability of these experiences has been terrific. With the digital, well, everything is one single global village. You can go anywhere virtually. And if from that point of view, we could truly make our experiences global on the one hand, scalable on the other hand, and highly economical compared to physical experiences from that point of view. 
It’s a new learning. I see that even after we come out of COVID, life is still going to have the hybrid in the sense we’re going to heavily use our digital experiences in conjunction with the physical experiences.

John Koetsier
I love the irony. You’ve got a payments company, a Fintech company that is providing priceless experiences. That’s great.

Peggy Anne Salz
You’re talking about being real and you’ve also discussed how important it is to have IQ and EQ for success. But being ‘real’ also means having DQ a decency quotient, which is amazing. I’d like you just to define that but what is it and how can companies actually raise it?

Raja Rajamannar
Yes, I think probably this is one of the most difficult things to accomplish. Most of us keep talking about when you’re selecting candidates, that they should be highly intelligent, have learning agility, have the right attitude, and have the cultural fit. They should have interpersonal relationships and all those kinds of things. We summarize those into essentially IQ as an intelligence quotient and emotional quotient as an EQ. These are the two we keep talking about. 

But when you talk of culture, and if you want to create a culture, which is based on people being real, people being decent. You can be ruthless and brutal. Well, we don’t want that. We don’t want people to stand on other people’s dead bodies and then sort of keep rising and then play politics. You have to be a decent human being first before you’re an intelligent professional and a highly successful professional. 
This is the philosophy of my previous CEO, Ajay Banga, who is now the Executive Chairman of Mastercard. He was the one who came up with this and he is an extraordinary human being and very decent and very humane, I would say, and very empathetic. In fact, for example, when this pandemic happened, the first thing he said is “the people will be very scared, they’re very anxious, there are people all around them, who are losing jobs, who are being furloughed. It’s a huge crisis from a family’s financial perspective.” He said, “the first thing we need to do is we need to make sure that nobody loses their jobs during this pandemic.” So, he went out on a webcast and told the entire staff, “don’t worry, simply relax, your jobs will be safe, you will not lose your jobs because of the pandemic.” He said, “look, I cannot do it in perpetuity. It depends on how the whole thing goes. But as of now, till the end of this year, we will make sure that nobody would lose their job.”

The amount of reassurance it left people with, the peace of mind, the gratitude, it’s extraordinary, now that is a decent company. In the process, we took a whole bunch of other cuts, we tightened our belts on so many other things, but we preserved people’s jobs. That is decency, right, as an example of one manifestation of decency. So, he said, these are the values that we have to sit through. Look at me, for example. I don’t fall into a traditional prototype of what a marketing person is imagined to be. Somebody who is say now, partying, dashing, glamorous, the whole Mad Men kind of thing.

Peggy Anne Salz
Well, we don’t know you that well yet, Raja.

Raja Rajamannar
And coming from India, with my strong Indian accent. I’m a vegan. I don’t touch alcohol. I’m very disciplined in my practices. It doesn’t naturally fit into what people think about a marketing person stereotype. But I had been given this extraordinary opportunity, for which I’m incredibly grateful. Whether it is new product creation, whether it is hiring of people and given the opportunities, irrespective of how they look and how they speak, it’s about how they think and how they behave. That’s what is most important for us and so that decency quotient is something which is there.

Now how do companies actually embrace it? I think culture actually gets distilled or disseminated into the company from the top of the house. It has to be the CEO, or the Chairman, call it whoever it is, that he or she has to be completely committed to it and embrace it. When that person is actually practicing and talking about it constantly, making this topic a ‘Top of Mind’ topic for discussion all the time, it seeps in. It goes to the management committee from management committee to senior leadership, senior leadership to middle management, and before you know, the whole company is actually behaving in a very decent way. Because the decency is recognized, celebrated, acknowledged, and anything to the contrary, which is not, you call it out. It’s, hey, that’s not how we should be behaving. We should be good people first and foremost.

John Koetsier
You’re clearly a different kind of CMO with a different background and a different way of looking at things. And you’ve talked about the need for da Vinci marketers who use the right brain and the left brain, both perhaps with a decency quotient. What do you mean by that and how do you find those marketers?

Raja Rajamannar
If you look at the traditional marketers, they have come from the qualitative side of the house, which means they’re very creative, they’re intuitive, they’re very aesthetic. Their appreciation and sensibilities around aesthetics are fantastic and that’s how they come up with beautiful ads and beautiful communication and wonderful packaging, and so on and so forth. All this predominantly requires the use of the right brain, which is the creative brain. Now, on the other hand, when you look at the new ways of doing marketing, it is heavily technology-driven. It is data-driven. It is analysis-driven and that kind of approach, or need, is through the left brain. The left brain actually is the one which processes these kinds of things, the data, the numbers, analytics, and so on and so forth. 

Today, without analytics, without technology, you cannot do marketing. You cannot survive. Actually, that is the predominant part now of marketing, and performance marketing is all about that. Even other forms of marketing are heavily driven by data analytics and all these new technologies like AI and augmented reality, virtual reality, blockchains. You need to understand, and you need to get your head around those. If not, you’re actually not able to fulfill your job properly.

So, at the same time, what happens is, in my book Quantum Marketing, I talk about the impending fifth paradigm. As we get into this fifth paradigm, we are on the cusp between the fourth and the fifth. We are going to be bombarded by almost two dozen new kinds of technologies that are coming at us. They can totally enable marketing, or they can totally render marketers obsolete. It’s a point of inflection and in that kind of scenario, what happens is when data and technology establishes itself so solidly in that space, the entire marketing field becomes very democratized. 

So even a tiny company is able to compete very effectively against a very large company. So, scale is not going to be an advantage in the future. In that kind of situation, everything looks right and everybody else can easily match the products. The one differentiator will be creativity.

Raja Rajamannar
Okay, so it’s a kind of a back to the future in some sense. In that scenario, you need your right brain thinking. So right now, to survive and thrive, you need left-brain thinking. And in future, in addition to the left brain thinking, you also have to be immensely right-brained. Otherwise, you will not be able to differentiate. You will not be able to aspect those kinds of software things that you need to understand to be able to be effective. So, therefore, I say you need to have both left brain and right brain functioning. That’s what Leonardo da Vinci was known for, there was a scientist on the one hand and he was also an artist on the other hand. An amazing, extraordinary individual.

Now that is, of course, the aspirational model. Very few people are blessed with that kind of capability of left brain and right brain thinking. Those people who have, I don’t believe they would want to join marketing. They would want to go and start their own startups. They would want to go to some investment bank or get into some other kind of profession. 

Sadly, today an AMA survey has shown that marketing as a field is preferred behind nursing and accounting. It’s way down in the food chain. So, if there are da Vinci kind of people, it’s not easy to attract them at this stage into marketing. So, what do you need to do? So, if you’re not a da Vinci marketer yourself and you don’t have that kind of talent, at least make sure that as a team, you’re a da Vinci team. Have consciously, people who are right-brained on your team, people who are left-brain thinking in your team. Let them complement and the team construct, the structure, the strategy, everything has to be taken into account to make sure that you are leveraging both sides of the brain collectively as a team.

That I think is very, very critical and in terms of the immediate future, like I said, marketing is going to be a pivotal function for many companies to succeed, to win in the marketplace and to thrive. That means we need to invest in making sure that we have the right kind of marketing people who will take advantage of that situation. The existing marketers have to be retrained, cross-trained. They should get job rotations and make sure that they are fully equipped. This training can be online training, sent up to universities or training programs, or whatever else it is, on-the-job training, call it whatever it could be. 
You need to train them. You need to equip them and, on the other hand, job rotations. For example, today, marketing cannot just be an isolated function that is sitting on the side. It has to be integrated into the core of the business. So, it would be great for marketers to get a couple of rotations, at least in other areas outside of marketing in the company. So, when they come back to marketing, they are much more well-rounded, better well-rounded. They’re also able to connect the dots between the marketing actions and the business outcomes very effectively. They’re able to talk the language of the business. That will leave job rotation to be very, very critical. 

The other thing is to really go to the colleges and the universities, which is where the future talent, the future generation of marketers, is being actually developed. We need to work with the professors at the various colleges and universities to give them the latest case studies. Many of these professors have transitioned to academia several years back, but in these years, life has changed. Marketing has already transformed and it is going to transform even more. We need to make sure that we help the professors give them the right material. In fact, what I do is actually invite professors to come and chat with me. So, they can understand what the life of a current CMO is like. So, they are able to then translate that learning with their theoretical understanding and their own practical experience and really give outstanding inputs and inspiration to the students.
Because there’s no other function, honestly, as exciting as marketing is, we should be able to inspire them. But if it is coming below accounting and nursing, not that I have anything against accounting and nursing but the point is marketing cannot be that low.

I think with that point of view; it’s extremely critical for us to inspire these kids, which means the practicing marketers have to go and give guest lectures and give a practical tonality and context to the students to understand and to work with the professors to change the syllabus. In fact, I’m right now working with a consortium of professors in terms of how ‘the future of marketing’ syllabus should be looking and how marketing should be taught.

This is largely based on my book, where I have propounded some concepts and they seem to really resonate very well with the academic community. They said they would actually be very seriously exploring it and so I’m working with them. This is just one tiny bit that I’m doing but every marketer can offer so much to the academic world. They should make the extra effort and then do it.

One last point, when students come for an internship, typically, many of them are viewed, or most of the marketers probably view them as a nuisance value. Okay, they’re coming, they’re going to take your time, keep them busy by giving them some survey. Okay, go ahead and do these 2000 questionnaires and then compile them and analyze them, which of course, nobody is going to look at those analyses. That is very demoralizing for the students. When you’re getting these students, they are really bright, fresh with ideas, and want to conquer the world. Don’t kill their spirit, let them come in, give them a real project, take chances on them and of course, have a light touch from behind. But then let them actually do stuff and nothing like seeing something they do that takes life right before their eyes in the marketplace. That can be so inspiring for them. We have to give those kinds of projects to the students. 
There is a whole set of recommendations that I have been working, as I said, with this consortium of professors. I think that’s what we have to do to make the transformation. Otherwise, marketing will lose its opportunity to once again claim its seat at the table, and to really be the driving function, that it deserves to be.

John Koetsier

Peggy Anne Salz
That is, and it means John no spreadsheets, right?

John Koetsier
I think there’s some room in a da Vinci team for a few spreadsheets.

Peggy Anne Salz
There’s so much here to unpack, Raja. I just want to bring some of it together before I take us off in another direction. So, what I’m hearing is that the CMO has a squad, right? It’s orchestrating; it’s finding the da Vinci team, bringing it together and then being as you said before, it’s all about people management. So that’s the role, perhaps, of the CMO. I do want to get there but you brought up another point, it’s so low right now in the ranks. And I’m wondering what happened to the perception of marketers and you’ve said yourself, you have to work, or there has to be work done to transform the perception of marketing as a con game about deception, selling things you don’t need, to something else. So how do you shift that perception because that’s core, to getting these marketers and to moving all this forward?

Raja Rajamannar
Particularly now, the younger generations are more ethically conscious. They are more conscious of the societal values and that’s brilliant. Actually, it’s a blessing. I can tell you very clearly, in terms of our own research, which shows, as well as interactions that I have, the kids of this generation, the students in the colleges are much more conscientious than their previous generations, like for example, my generation. They are very socially conscious. They want to protect the planet. They want to work in society, and so on and so forth.

Now, one of the key things is, again back to the AMA survey, when they asked students about marketing, the expression was marketing is a ‘manipulative game, it is a con game,’ which is sad and I think marketers have unfortunately done it to themselves because of their own practices, which have been deceptive for decades. 

I can give any number of examples, simple things like packaging design. The package looks so big, and the content inside is so small. You don’t have to be deceptive; you can make your package attractive, which might require more space, that’s fine. But if the idea is to give a false perception to the consumers that there is a lot more content than there is, that doesn’t cut it. Whether the consumer explicitly states it or not, they feel it. All these feelings will start stacking up over a period of time because trust is very critical. And marketers have been consistently breaking that trust, unfortunately, and that’s what has landed us in this place. 

In fact, ethics, and integrity, are going to be so critical for the future. Like I said, when all the products look similar in functionality and capabilities, with the impending technological transformation and tsunami that is going to happen, that is right ahead of us. The one big differentiator from brand to brand will be trust. Is this brand trustworthy? Are they doing good by society? Are they doing good by me as a consumer? Are they respecting my privacy? Are they deceiving me? Or are they being transparent? Even if they are at a disadvantage, are they being transparent? 

People respect somebody or a brand which says I have ‘messed up’ as opposed to being stubbornly defensive and stonewalling any logic or logical discussion. So, I think brands have to change their mindset completely at this point in time. And lastly, I would say it is in a period of crisis, for example, when I said, you’re trying to serve and not sell. When you serve in a very genuine, sincere way, consumers make a note of it. They remember it. Again, it could be subconscious, but there is a positive impact and when you stand by the consumers during the crisis, they will stand by you when you come out of the crisis and that’s very important. You have to shift your focus to more long-term, as opposed to how can I maximize my sale for today, for this month, for this quarter. I would also say that serving and selling don’t have to be mutually exclusive. There is maybe a lag, but that lag is not humungous, and the crisis will not last forever. So, the key thing I’m trying to say is, we need to do everything to build trust, consistency, authenticity, transparency, right practices, it’s a whole package of things that marketers have to do and that’s the only way we can actually regain some of the trust that we have lost as a complete community.

Particularly now, if you look at consumers, they’re being surrounded by an environment full of trust deficit. They don’t know what to believe or whom to believe. They can’t believe the radio stations, they can’t believe the TV stations, they can’t believe the news media, they can’t believe the social media, they can’t believe the brand. They can’t believe the politician. It’s like across the board. So, somebody or some brand, which stands out of this, in a world of distrust, the brand which stands for trust will be the winner. It will stand out and that is very critical and it’s such a wonderful opportunity for marketers. I do hope that this has been wholeheartedly embraced by marketers and then practiced accordingly into the future.

John Koetsier
This is an amazing time. You’ve been wonderful so far. There’s more that we want to get out of you and that was a great segue actually because you’ve got quite a few one-liner’s as Peggy said, and one of them is that ‘loyalty is dead.’ That’s frightening for a lot of people in marketing. That’s frightening for a lot of people in branding. What do you mean by that and why is loyalty dead?

Raja Rajamannar
I think today, as a marketing community, collectively, we spend hundreds of billions of dollars every year behind the loyalty programs. Now, I came across an article, that’s what started my questioning the in the world of loyalty. I read an article on It said that almost 70% of people who are in a relationship have admitted to cheating on their partners. Now, that sent me really thinking. 

So, in the case of a relationship, (a) people are making an explicit commitment or there is an implicit commitment of a partner to stay loyal, and (b) if they are found not being loyal, there are consequences. That can be emotional consequence, reputational consequence, financial consequences, or whatever. In that kind of a scenario, you would expect people to be loyal because of the commitment they have made a commitment, or they have implicit commitment, and they have consequences. But in spite of it, if a vast, overwhelming majority of the people are not being loyal in their personal lives, my question is, ask brands are we foolish to expect people to be loyal to us. If they’re not loyal in their personal lives, we as brands, we rate so low in people’s hierarchy of needs and hierarchy of things that matter, why would they be loyal to us? So, this is the first question I had and I started diving deeper into the entire field in trying to see what studies are there, etc., etc. 

It is the brands which should be loyal to the consumers, not the other way around. And if you ask consumers, that’s exactly what they say, so we got loyalty wrong. Firstly, we expect that we are running loyalty programs to enable consumers to be loyal to us. Loyalty cannot be bought, so there itself is another big fallacy. Finally, if you look at any executive in the country, how many airline loyalty cards do they have? If the person is a frequent flyer, they practically have all the airline frequent flyer cards. I have, for example, American Airlines card, I have United Airlines card, I have a Delta airlines card, I have all the airlines. For me, the card is not going to do anything. I just look at what’s a convenient time, what’s the best price and am I getting an upgrade in some flight versus some other flight. I’m calculating my miles better than some other flight for the right kind of equation. 

So, the loyalty programs are nothing, in the way they are being run today, a part of the pricing equation, nothing more than that. So, if it is just a part of the pricing and giving it is a misnomer to call it a loyalty program, loyalty has to be redefined completely. So, therefore, it’s a loyalty, the way we know it is dead. That’s not loyalty, to begin with. We need to look at a completely different perspective. I actually outline the framework in my book but the key thing is, this is my assertion. I have done a lot of work on this and I can confidently tell that we got the equation pretty wrong.

John Koetsier
Quantum shift, quantum shift.

Peggy Anne Salz
I’ll stay with the one-liners. Another shocker, really one because brand is such a concept and you’re saying the whole idea of brand needs rebranding. What do you mean by that?

Raja Rajamannar
You see, the key thing is, firstly, if you were to look at the fundamental principle of what a brand is, that doesn’t change. A brand is something which stands for a set of values, characteristics, images, functionalities of something, it could be a product, it could be a service, it could be an entity, whatever. This particular thing called brand embodies everything about it in a holistic way. Now, the key thing is many of the times, marketers look at brand as probably the name and the logo as the brand. It’s not just the name and logo of the brand. The name and the logo of the brand are the physical, visual identifiers of that brand. That is not the brand in itself. The logo and the name are just a way to identify that whole concept of brand. It has to be embodied into every aspect, how, for example, let’s take the physical aspect and then I’ll come to the second part, then the third layer of brand. 

The physical aspect, now, I said that brand need not be perceived only through the medium of vision, which is what I said we predominately too. You need to have brand represented in an audio form as well. Okay, because that’s a second sense that you have and it’s an identifier, so an audio, for example, why is it important? If you have a smart speaker at home and you say, hey, Alexa, I want to buy something, and Alexa gives you an answer and then you make your purchase and go. Throughout this entire transaction or interaction, there is no brand that you can show because the medium is audio. You need to have an audio form of representing your brand, which we call it sonic branding, as an example or your sense of smell. So, are we leveraging the sense of smell to be able to create a branding identity? Some brands do and some brands do not. Some brands are just scratching the surface, but that’s a huge opportunity. So, leveraging all the five senses is in front of us to be able to leverage to create the right kind of a brand identity and a recognition of that identity. Then when you go to the functioning aspects. So physical and then we take the functional aspects, how does this brand treat me? How does this brand make my life easy? How interesting and exciting is it for me to interact with this brand? How stylish is this brand?

People very often mistake that the product physicality is what is driving people’s perceptions. But it is actually the product physicality that is associated with the brand that drives the branding. iPhone, for example, it’s a fantastic product. I love it. I have it. So, this iPhone is got complete physical design that is outstanding. The user interface, which is fantastic. Now I can show you ten other phones, which have got better looks than iPhone, that are coming from the Far East that have got better and more aesthetically superior interfaces. It looks exotic. Now, if you start marketing iPhone purely based on its look, feel and design interface, you are missing an opportunity, in the medium and in the long term, in the short term, you’ll absolutely gain. But when these other guys who have got a superior product, superior design, superior everything at a better pricing on top of it. If they start building a brand judiciously and consciously, you will be routed in the marketplace. Right now, that threat if it is not imminent, you can get complacent. And it’s ahh that’s all theory but it need not be. I’ll just give you the example of Korean cars. A few decades back, in fact, I would say maybe even 20 years back, Korean cars mean the quality is cheap and the cars are awful. Fast forward 20 years now.

Hyundai actually has such phenomenal brand equity. It’s unbelievable. Much, much better than many other top brands and they are backing that and they’re building the brand promise and the brand value in such a thoughtful, methodical way. It’s amazing. 

The point is that is the functionality and the design aspects of it. The third aspect I would say is the values. The values are basically, if you look at somebody like a Patagonia, people who start off to buy Patagonia and then support the brand, etc., they do so not just only because of the quality of the product, because anybody else can match the quality of the product and designs are not necessarily copyrighted. So, I’m sure somebody else can do it and most of them may even be producing things out of some other country altogether. But the point is, they have strongly associated themselves in such a brilliant way through environmental preservation and conservation. That sort of matters to people a lot and therefore, they say they’re willing to even pay a premium. That is their value-based branding, so when you look at branding, it is a composition of all these. It is not just a single dimension of a nice name and a beautiful logo. That’s such a narrow interpretation of what branding is. So, I hope that clarifies branding.

John Koetsier
That clarifies it an awful lot. 

Now we have to bring it to a bit of a close here but I want to touch on technology because marketers have often struggled with technology. On kind of two levels, on the one hand, running to it and shiny new object syndrome, on the other hand, being afraid of it.

But you’re pretty bullish on technology, biometrics, blockchain, 5G, wearables, telemedicine, AR, and VR. Talk to us a little bit about timing and advice for marketers who want innovation but don’t want to just jump on the next train and get disappointed again.

Raja Rajamannar
Yes, so most of the technologies that I talk about, those two dozen-odd technologies, they are not some Star Wars kind of technologies that are going to happen ten years down the line, 20 years down the line. Those technologies are here today. They are rapidly taking root into our society, into our day-to-day lives. Things like augmented reality, things like artificial intelligence, virtual reality, smart speakers, wearables, blockchains, 5G, 3D printing, they’re all here today. 

If you look at something like an artificial intelligence, it has already entered the world of marketing in a big way, whether you know it or you don’t know it. All the way from understanding consumer insights or insights in general, not just consumer insights, analyzing humongous amounts of data, and giving you such powerful patterns that give you insights that are truly actionable almost in real-time today is amazing. If you don’t deploy AI, you’re going to lose an advantage and worse, if your competitors are using it, they gain a leg up over you. That’s number one. 

Second, if you look at AI, today, we have actually created an engine in Mastercard in Asia. This digital marketing engine looks at everything that’s happening in social media, for example. It predicts what is going to be the next micro trend. Having identified the micro trend or micro-trends, it then says what is potentially the commercial opportunity that can be plugged into this particular trend that is going to happen soon. Or what is the promotion that you can print, or what kind of communication can you give in that context? 

John Koetsier

Raja Rajamannar
It creates a small banner or a small poster with that message that can be straightaways served automatically into the various social media channels. And it dynamically does A/B testing and optimizes it and then you have the measurement thereafter and the next trend starts off. Now, this is something which is happening. In the past, if you had to create a digital media campaign, it will probably take us about a few days. Now it’s a matter of a few minutes and the effectiveness is like four to eight times of what we used to do before. So, from those perspectives, I think it’s going to be seeping into every single step of the marketing value chain.

You cannot ignore it and it is just AI and I can talk about every single technology of that sort. So, marketers, what they have to do is, first and foremost, understand these technologies. Technologies, the term might be daunting for many marketers. There is a lot of available material where these technologies are explained in very simple, demystified, plain English. One of those sources, of course, it’s a plot for my book. I write about it in my book, Quantum Marketing, each one of these technologies in plain English demystify the whole thing. Say what is the impact it’s going to have on marketing and what should marketers do about that technology, in terms of learning or deploying it in their own business context, and they have to start doing those pilots, get into the situation now. They have to build the talent. They have to build the infrastructure starting today because these technologies are the same. They are here and now.

John Koetsier
Raja, this has been wonderful. This has been amazing. I really want to thank you. On behalf of Peggy as well, who’s having connection difficulties. This is 2021. It’s the legacy of 2020.
Raja, it has been a real treat to be here. It’s been a real treat to hear you speak. You have amazing insight. Thank you so much.

Raja Rajamannar
Thank you so much, both John and Peggy. Wonderful connecting with you. 

Thank you

Raja Rajamannar
Hopefully, we will do it again some other time soon.

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Last updated on March 14, 2024