The Inside Story of Microsoft's Strategy to Delight Customers Through Experiential Marketing
With products like Office 365 and their Platform/Infrastructure as a Service (PaaS/laaS) cloud computing ecosystem, Azure, Microsoft has taken a sharp turn away from the licensing model that built one of the world's most successful companies in history, towards a profitable future in subscription and usage-based pricing structure.
Concurrent with this move towards SaaS and cloud-based services, Microsoft has fully embraced a marketing strategy focused on storytelling and forging emotional connections between the company and its customers. One of Nadella's signature goals when assuming the CEO role, according to the bestselling book, Hit Refresh, was to "build new and surprising partnerships in which we can grow the pie and delight customers."
One way Microsoft is doing this is through partnering with brands and artists to create unique, often immersive, experiences that exist at the intersection of culture and technology. This form of branding is known as "experiential marketing."
To gain an insider's perspective on how one of the world's most recognizable brands is putting experiential marketing to work, SaaS Mag landed an exclusive interview with Jeff Hansen, leader of Microsoft's Brand Studio team.
With over 25 years at Microsoft, Jeff Hansen has a unique vantage point from which to observe Microsoft's recent evolution. Hansen currently oversees Microsoft's global brand, creative, and partnership/sponsorship strategies.
Can you tell us about yourself, your current role at Microsoft and your mission at the company? What about your previous experience leading up to that role?
I've been really fortunate to have several careers within the company. I've done a range of things, from HR recruiting to market research to working in a startup within Microsoft that shipped Azure. I now work in branding and on global partnerships. It's my mission in this role to drive more emotional connection—for both current and potential customers—with the Microsoft brand.
For the vast majority of my career, I've been in roles where the focus was on the customer. Market research means being the voice of the customers and expressing the reality of what they're experiencing. Shipping products is all about meeting customer needs. And of course, branding is customer-focused, too. That's been the enduring theme across my career: taking the outside-in view on customers.
You have been a part of Microsoft's journey for a long time including most recently its shift to Cloud computing with Office 2013 and Office 365. Can you speak about any branding challenges involved with this move to the Cloud? Is it hard to reconcile the divide between early adopters of the Cloud and those who are more reluctant to get on board?
The shift to the Cloud has been an interesting brand challenge and opportunity. We really spent time finding that balance between signaling something new and innovative versus
appropriately leveraging the number of strong brands that we already have. Take Office 365. We wanted to signal that it's the Office you know, love and rely on, but available to you in a new way. In terms of grappling with early adopters versus more reticent users, we had a unique opportunity with Microsoft Azure—a net new offering. In the early days, everybody talked about "software as a service" as an either/ or equation. But we actually used a different mantra, which was "software and services"—a blend of both. There are times when traditional software is best, and others when cloud is better. We have expertise in both. That really helped us with appealing to early adopters while also bringing more reluctant customers along. That's why we called it Windows Azure in the early days. Everybody knew Windows. It signaled that you could continue to manage infrastructure with Windows, but also add Azure to find a new balance. We really tried to create choice and not have the tyranny of "or."
This migration was shortly before Satya Nadella became CEO of Microsoft in 2014. How has Microsoft's approach to branding changed since Nadella took over?
Nadella really recognizes the value and strength of the Microsoft brand. We're fortunate to have a portfolio of strong, well-recognized brands—the company as a whole, but also Windows, Office, Visual Studios, etc. Obviously, all of these matter. But we used to be overly product-centric, and Nadella has helped us strike the right balance. Rather than managing all those brands independently, we now consider them collectively as "One Microsoft". Nadella instinctively gets the portfolio approach to our brand, while still leaning into adopting the One Microsoft' mantra and driving that internally and externally. Customers want to know, value, and respect the company they're doing business with.
What is the most crucial metric or piece of information you have about your customers when it comes to shaping your branding and advertising strategy?
I point to two things: 1. In a world where the customers' endorsement and word-of-mouth are so important, it's essential to understand which customers are fans, We have a clear and consistent definition of what a fan is, both for our key products as well as for our company. 2. We also know that the level of technology sophistication and how people perceive or think about that tech is hugely important. You have to talk differently to different customers. Tech-savvy early adopters really want to know the latest and greatest and get into all the details, whereas customers who view tech as a tool to make life easier and more efficient actually want to spend less time engaging with their technology. So how we reach and communicate with them is different. How do they perceive technology? That really has an impact.
What role does experiential marketing play in your brand strategy?
It's hugely important, as it's become harder to reach customers with traditional marketing. Experiential is more important in terms of reaching people, and our approach has the added benefit of being authentic. We apply our tech and expertise to help people engage with things they're passionate about. This creates a tangible demonstration of what our product can do when it's applied to something people are excited about. In many ways, it's a deeper, more tangible form of marketing.
How do you measure ROI on these types of projects?
It's a tough challenge. There are two aspects to it. First, it's a leap of faith—after you spend a lot of time getting clear on strategy, it's about delivering authenticity through product truth. So, you have to get everybody informed and aligned internally on strategy, have confidence, and see if you're delivering on that product truth. That's harder to measure. Second, we do measure each individual partnership and activation, given that so much of our storytelling is digital. Social, web—all of that we can measure. We measure each execution point to tell a story and see if our metrics are hitting our high bar.
Of course, there will always be the goal of getting a certain number of people to say they love Microsoft. But I can't isolate all the things that go on that might impact a customer saying they love Microsoft. I tell my team, "If we want to take credit for love when the company has wind in our sails, then when something happens that frustrates customers, are we ready to take blame as well?"
What do you feel has been the most successful brand partnership/collaboration that you've been involved with at Microsoft?
There isn't any single one. Given the diversity of our business and product lines and audience, the thing I love about our approach is the breadth of our partnerships. That being said, we've been very intentional about the passion areas we focus on: social good, sports, music, arts, and fashion. It was a customer-centric, data-driven process to choose these five partnership areas, so it's not really about holding up any one project.
How do strategic partnerships fit into the larger picture for Microsoft's SaaS strategy?
We think of it in terms of building connections for Microsoft and growing the brand as a whole. We understand that Microsoft is a well-known brand that performs well according to traditional brand measures, so we wanted to think beyond that. We also know that you can never have enough emotional connection to a brand - and that's what drives our partnership strategy, our focus on passion areas, and our goal of delivering a meaningful partnership truth. How can we make fans of sports, or an artist, or a nonprofit, fans of ours as well? Partnerships offer an exciting and tangible storytelling opportunity to showcase our products and what they can do.
On the business side, let's say we have a customer that makes widgets. I can go have a conversation with them about how our various technologies can make their widget-making process better or more efficient, sure. But what we're trying to do here is acknowledge that people have things they're passionate about outside their businesses.
So, if we can show how our technology is being used by the Renault Formula 1 team to make logistics more efficient, or impact real-time decisions during a race, then we've actually demo'ed how our technology applies to the widget business too—but we've done it in a way that's authentic and that customers care about. We want to do storytelling that's both rational and emotional.
What has been the public response to these initiatives?
Really positive. Since so much of our storytelling is digital, we can track how many people engage and how deeply. By those measures, the response is very positive. We also look at signals from our partners themselves. So many times, our partners come in with a traditional model in mind—they want us to write a check, and then they'll showcase our products. But when they really experience and realize how tech has transformed what they do and helped them reach their fans, our partners end up singing our praises in a very tangible and authentic way.
What collaborations do we have to look forward to in 2019?
Going back to that brand portfolio concept, there's a wide breadth of partnerships coming up. All the data I've seen over the last couple years gives me more confidence that we're on the right strategy with our passion areas in terms of conveying that authentic product truth through a variety of stories from around the globe.
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