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PR Contributes to the Digital Power of Companies
As a company, you are in the relationship economy. In this new reality, it is of the greatest importance to build and maintain a relationship with fans and customers. PR helps to build that relationship.
Relationship Economy
A while ago, Matthijs van de Peppel, Xavier van Leeuwe, and Matt Lindsay wrote a book titled "The Relationship Economy". The authors researched (and worked at) NRC Handelsblad, a media brand that manages to innovate and even grow (!) successfully. At the heart of "The Relationship Economy" is the shift from the transaction economy to the relationship economy.
This change means that the focus is no longer on the number of subscribers (transactions) but on the relationships NRC maintains with subscribers, suppliers, and partners. These relationships must be optimized, argue the authors. It's no longer about optimal profit per relationship but an optimal relationship with all stakeholders. This ensures, for example, that the newspaper values digital subscribers as much as those who receive the newspaper in their mailbox every day.
Digital Power
Denis Doeland, business hacker, consultant, and author of management books, has reflected on the practical implications of the relationship economy. His vision: the relationship built with fans and customers has a value on the balance sheet. He calls this value the Digital Power. Doeland describes Digital Power as follows: Digital Power (or digital capability): rights and non-physical assets consisting of digital connections and contextual data, which gives a company a competitive advantage in the market, and represents a financial value because it optimizes and accelerates current and future cash flows. (2017, Doeland and van Berkel).
This Digital Power – the value of digital connections – impacts the valuation and even the actual sale price of companies. Consider, for example, the sensational acquisitions of ID&T (by SFX) and Spinnin' Records (by Warner), involving at least one hundred million euros. These sale prices were partly due to the potential of the digital relationships coming to fruition.
Reach Needed for Fan Relationship
To build the best possible relationship with as many fans and customers, it is necessary to be trustworthy, high-quality, and innovative. That is what can be expected from a company or brand. Besides, it's crucial to publish relevant content. This ensures that fans and customers remain bound to the company or brand. It transforms companies from merely suppliers, producers, or service providers into publishers, thereby creating a relationship. That is the promise on which content marketing is founded: brands become publishers and thus become more relevant in the lives of users or customers.
However, maintaining a relationship with fans and customers is not the whole story. It’s also necessary to build a relationship with new fans or customers. Without the influx of new (potential) customers or fans, it is not possible to grow. PR is one of the tools with which this influx can be achieved.
AARRR Funnel
One way to look at content marketing efforts (of which PR is a part) is through Dave McClure's AARRR model. The five metrics correspond to the different stages that a customer goes through.
These metrics answer the following questions:
- Acquisition – How do customers find the digital channels of a brand or company? PR plays a major role here.
- Activation – Do customers have a positive first experience and are they willing to do something for the brand or company?
- Retention – Do customers return to the digital channels or engage with a revenue model?
- Revenue – From which part of the customer journey is money earned?
- Referral – Do customers refer other customers within the channels?
This funnel works as follows. In each 'step' down the funnel, a company or brand typically loses some of its new prospects. Hence, the number of customers also tapers down into a triangle. In concrete terms: not everyone who hears about your company will eventually become a customer, and not every customer will refer your company to other potential customers.
PR for Digital Power
The value encapsulated in these metrics ultimately influences the value of the company. In other words: by ensuring that this funnel is well-stocked, entrepreneurs can increase the value of their business. By using PR, companies can expand their network and, thereby, increase the value of their business.
