Some of the most important data available to companies concerns what customers think. The role of corporate communications is no longer only outward, but as a two-way conduit for opinion and opportunities. Ford’s Jim Farley not only serves as corporate CMO, but also runs the Lincoln division, and is on the front lines of a new way to develop and market products.

Read the full transcript below. (Transcript by Realtime Transcriptions.)

Kirkpatrick:  Jim Farley is somebody who I have a huge amount of respect for, and we’re very excited to have him. Not only is he the ground-breaking CMO of Ford and doing all kind of things doing that; but he also runs the Lincoln division, and that’s kind of an odd thing, but a very unusual and powerful one, and gives some insight he wouldn’t have otherwise.

We have Ford cars outside. Don’t forget to drive them, by the way. So we are happy to have Ford as a partner here at Techonomy; but the reason we wanted to have Jim on stage is that he really is thinking harder about some of these things than a lot of CMOs.

We have heard a lot here about data. Data is a theme that’s endlessly repeated in the Techonomic precincts. How big of a change is that for what you do, and what is it changing most?

Farley:  Well, it is allowing us to make better decisions. In the past, we’d have to guess how many rental cars is the right mix to not hurt or residual values, to make leases more affordable for people. We never had a tool, but now we built a mathematical model using all sorts of data inputs. We know exactly the tipping point down to like 100 vehicles of when a residual starts to deteriorate because of how many rental cars we sell.

That’s a very practical solution; but on the other hand, as a company, one of the modes on the Internet of things, the data of consumer data is kind of scary when you think about how much we know in a car company about what our customers do, and how little they know about how we could use that data.

Kirkpatrick:  Back to the last panel, right.

Farley:  Yes. On one hand, data can make us better marketers, more targeting, looking at trends and much better revenue managers; but there’s a whole piece of data, consumer data we haven’t figured out yet that we have to have principles around. In big companies, that’s important. I watched carefully how Facebook and others have managed the kind of privacy issue. Just think about what that means for a car company when I know where you go every time, I know how you drive.

Kirkpatrick:  Now you have transmitters in all these cars.

Farley:  Collect all the data, right. So think about all that data and think about the contract with the customer in terms of our responsibility to handle that just right. I’m sure we get calls from law enforcement and all sorts of things, but there’s another kind of sense of responsibility to consumer data we have to think through.

And in different countries, it’s different, which adds another level of complexity. So data is, kind of in one hand, a very scary thing in a sense that we have to figure out something we’ve never figured out before. On the other hand, it’s been an incredible tool as a marketer to know exactly what that elasticity is between more advertising versus discounting the product. I mean, wow. I never had those tools. Now we have those tools. I know exactly what the elasticity is.

Kirkpatrick:  And you and Ford in particular have been out front in working with companies like Facebook. I wrote an article about building apps on Facebook. You had a hackathon with Facebook. First big company to do that; but the thing that I think’s interesting about what you were just saying is if you can navigate that corridor of the data that you describe or whatever, the mountain or whatever, with the customer doing so much and you knowing so much about them, ultimately you can get to a co-creation point, right, where you are really letting that help you help them, not only in a day-to-day basis, but in terms of what you build next, and build a community that includes you and them. I know these are the things you think about.

Farley:  You are spot on. And I remember meeting Steve Jobs at an opportunity many years ago, and he basically said kind of, in so many words, not as polite as this—

Kirkpatrick:  Not known for politeness.

Farley: —”Why do I have to step back so far when I get inside a car.” Our devices are so cool; but when you go past that, say we figure out the connectivity issue, brought in applications in the cloud, a really cool thing, but you look at the active part of that, where we can actually build an experience of operating a car that’s connected to your social graph, where it’s informing you about things you didn’t even know about, and how to operate the car efficiently and effectively.

You can see very soon, with sharing some of the data from the vehicle intelligently, with a whole set of apps that run in the cloud, you can foresee a really different experience of owning and operating a car. And as you said, a dialogue with the company that’s constant.

And the question is, the million dollar question is, will we, as an industry, try to monetize that, or will we serve the customer? And the great companies, I believe, build apps just to help the customer. They figure out the monetization after; but as a big company, our tendency is to figure out how to monetize that process immediately. And that’s, I think, the journey we are all going to figure out together.

Kirkpatrick:  That’s like the kind of challenge any big company faces; how do you stay close to the customer, even when in the short term it might have a revenue implication; because in your long-term best interest, you have to say close to them.

Farley:  So should we develop an app so that people can electronically cash out of our dealerships with their PayPal account or whatever, or should we use that money to develop an app that monitors your car so precisely that any time there’s a technical problem, the customer’s going to go into the dealership to fix it. That’s the choice. Those kind of choices we’re talking about a lot nowadays.

Kirkpatrick:  You have already said several things that have to do with the phone. What is the relationship you see developing going forward between the phone–Ericsson is our partner. We said yesterday 5.6 billion smart phones predicted by 2019 in the world, so pretty much all your customers are going to have a smart phone soon, if they don’t already. What’s the relationship of that to the car and to what you do, and how do you think about it?

Farley:  I was at Toyota when Ford launched SYNC. And most of us were kind of like really? You ask a customer to bring in their own technology and that’s what the car works with? We were all thinking we’d have call centers filled with people, and the car would talk to the call center and it would be a concierge service. I think Fords turned out to be much more intelligent.

So it’s fundamental. The most fundamental thing for our industry is the fact that most people’s lives are on their mobile device; and when they get in a car, they expect everything, all the data and all their apps to run perfectly in the car in terminal mode, and you should also be able to operate the car, so that if you have to defrost your windshield at 60 miles per hour because it just froze over, you can quickly go from their UI over to the car; but it’s not that simple, because some mobile ecosystems are closed, others are open. They don’t know much about our data sharing principles, our operating system. We don’t know much about theirs.

There’s going to be a whole transition that’s going to happen in our industry over the next several years, just like it will be for refrigerators in homes and jet aircraft and everything else; but in our case, it’s probably one of the most compelling mobile apps. A car, you spend a lot of time there, and you want to–most people want to be more efficient than they are today, so it’s a huge use case.

And I think at Ford, the mold device to us is a big bet. You bring it in, and the issue is the migration isn’t really ubiquitous. Feature phones are still the standard in India, and we want to do well in India, too, so it’s easier to say in five years it’s going to be all one thing, but the transition won’t be.

Kirkpatrick:  But you think of the car almost like a big version of the physical part of an app like a Fitbit or something, but it’s got to work on every platform too. Just talk a little about marketing, because you are chief marketing officer. We had a great discussion on targeting and data and privacy. How good can targeting get, first of all, and what does it–you talk about being digital first and that being the direction that you have to go in, although even Ford’s not really there yet. Talk about that.

Farley:  Well, first of all, probably the most fundamental change of the connected car in my life in the auto industry will be just the marketing paradigm. Customers are already there, so it’s time for us to catch up with them. To do that, we need a publishing strategy. We can’t have campaigns like we used to, launch a new Mustang or whatever. Those days are over.

We need a news room. Something happens in the Philippines, we have to tell what’s happening relative to Ford and how we’re helping, how that’s relevant to us.

Kirkpatrick:  Are you doing some things?

Farley:  Yeah. And especially when you look at big social events, like the Super Bowl, is it better to run an ad on the Super Bowl or better to have a news room to publishing content during the Super Bowl when everyone’s listening? It’s kind of a 50/50 call today, but in the future, it won’t be a 50/50 call.

So what it means for us is a different whole rhythm. It’s like snowboarding and skiing. The digital advertising model is always on, publishing model. It’s very different than the campaign models we were used to with radio and TV. In the interim, we’ll have a lot of mixed campaigns, obviously, but it’s very clear where it’s going. That’s one thing.

The second thing is we have to have different talent. The third thing we have to have is what you touched on, which is a whole other level of targeting and affecting this data, brand sentiment, change of intention to buy, control versus the people you advertise to. And I think as the digital media companies, I would call them, Google, Facebook, Twitter, Instagram, Pinterest, Linked In, whatever it is, they all are evolving in their targeting mechanisms.

Now, some of them are getting better than others, but they’re all moving forward. The challenging thing for a marketer is that each of the platforms are different, so advertising on Foursquare or advertising on Twitter is very different than advertising on Facebook.

Kirkpatrick:  Not to mention Tencent.

Farley:  So how do we, as a company, figure out all these targeting mechanisms, if they’re all different? Like maybe the way to find out if someone is in market shopping for a car on Twitter is different than that same targeting tool on Facebook. We have to keep track of all that. The cool thing is that in the past, we kind of threw our ads up.

Now, with targeting, we can be more effective, because we are talking to the right people. Maybe people don’t like our brand or people are shopping. And traditionally in our industry, most of the advertising has gone to search and shopping sites, Kelly Blue Book, Google, Bing, whatever, because those people self-select. Shopping site, you know they are looking for a car. They put in “Ford, new Fusion,” you know they are looking for a car.

The opportunity, I think, is the targeting tools on the more general digital media ad platforms, and how do get to that same customer. We may have to provoke them into giving us information about where they are, because it’s not natural, because they haven’t self-selected in. Though, maybe other tools like search will be added to those platforms that will help.

Kirkpatrick:  Your news room could help with that too.

Farley:  That’s what I mean. That’s a perfect example of publishing content people may find interesting; and therefore, volunteering where they are in the process. And if we’re relevant and interesting and they want to learn more, it’s time to go.

We learned something very interesting on Lincoln Challenger brand, in many ways a brand that people discounted. And we launched this 24-7 online concierge. We kind of did it just to see if it would work, we put–if you go to and you go to the concierge at 2:00 in the morning, if you want to talk to someone about Lincoln, they are there.

And we have been shocked at the response. It is far beyond what we expected. It’s a software tool basically that allows people to kind of shop in their bunny slippers, and it’s gone beyond what we expected. I think not only is it the outward marketing and promotion of the products, but also actually the interaction with the customer, like we found in concierge that are going to be changed.

And we do not have the talent. We aren’t set up to do this. It takes a lot in a three-tier marketing system to get the dealer ad groups and individual dealers to move over to a digital-only platform. They don’t have the expertise, so we are very much a vertical in transition.

Kirkpatrick:  I want to take a couple questions or comments, but I want to throw out one word and see how you react to it:  Tesla. They are sort of trying to shake up your entire industry, coming from a fundamentally different mind-set of be geeks. What’s the impact of that on Ford and your industry generally?

Farley:  Way to go.

Kirkpatrick:  You admire them?

Farley:  I think there’s a lot to appreciate. All of us in the car business want everyone to love the driving experience, and I was Jimmy Car Car when I was growing up. To have an electrified experience where people love, whether it’s a Fusion, plug in—last month we sold 3,500 plug-ins. I think we’re 35% of the U.S. market. That’s exciting for us. So–

Kirkpatrick:  We have a Fusion–

Farley:  So I think that’s great for our industry. The experimentation on the distribution model, how they sell and service the products, it’s fantastic. We’ll learn a lot as an industry about range anxiety, because they are putting new infrastructure in.

I think for us as an industry, electrification of the powertrain is one of the most fundamental changes, along with the mobile economy. And so we’re all experimenting. We sold 3,500 plug-ins last month. Ford.

Kirkpatrick:  Wow. 3,500 plug-ins.

Farley:  Not battery-electrics or hybrids; but plug-ins, we were 35% of the market. That’s very exciting for us, but there’s a fundamentally different relationship when your car is electrified with the consumer than when it isn’t. You want to be smart about when you charge it, because electricity rates really change during the day. So all of a sudden, mobile apps become super-important.

The other thing is, with electrified vehicle, people tend to be more educated, they are more open to great interfaces, more apps, they want to use the Internet radio. So I think all that has to come together, and I think Tesla’s certainly done a great job. And so I would say so have we; largely unnoticed, but that’s okay.

Kirkpatrick:  I notice. I have a C-MAX. I think it’s incredible. Fantastic car. Quick comment, question. Right there, I see a hand. Can we get a mic to this person?

Sundararajan:  Hi. Arun Sundararajan, from New York University. So Jim, you mentioned measuring brand sentiment, you measured your 24-7 concierge. One of the challenges that I see a lot of brands dealing with now with the social media space, especially for brands that are used to being high-end or exclusive, is how much engagement, like what’s the right level of engagement with your consumers?

I think it’s an easier problem to solve from a mid-tier brand, sort of an easier problem to solve for a low-end brand; but for an exclusive brand, you have the trade-off of the down-side risk that comes from too much engagement potentially and the need to maintain exclusivity, but also the desire to engage your customers like the other brands are doing.

So I’m curious as to how Ford thinks about this, given the range of brands that you have and sort of the range of customers that you have.

Farley:  It is a great question. I guess from my standpoint, luxury in the past has been kind of an elitist idea, luxury cars, but that’s really changed. I think since all of us, the mobile economy’s really changed our minds, kind of targeted it before mobile economy, that everyone should expect great design. The democratization of technology should be kind of an expectation.

I think I look at engagement the same way. As a brand, there’s nothing more important and exciting than a consumer that cares enough to share their ideas and interact with you. And so over time, I imagine–it’s a great question. I will give you an example. We have a lot of data about satisfaction and engagement.

Someone who’s satisfied isn’t any more loyal than actually someone who is dissatisfied with your brand. Hard to believe; but someone who’s engaged with your brand is twice as loyal as someone who is not engaged. And someone who’s disengaged will actively hurt your brand. So engagement is now the most important metric for loyalty.

Kirkpatrick:  You think that’s true across all products?

Farley:  Yes. And it depends how you engage. That’s the point. You want to make sure that engagement fits the brand. So 24-7 concierge, it fit the Lincoln brand. We want to be a personalized brand.

We don’t want to be popular. We just want a few people to really get the brand and have a personal experience. We don’t want people walking into a Lincoln dealership and have a big box retailing experience. We don’t want 400 people in the waiting lounge.

We want a one-to-one relationship, like a tailor. It’s a very old idea of retailing. It’s going to take us a long time to get there, but 24-7 concierge allows us to have that one-to-one relationship and engagement, because it fits the brand. Other brands will be different.

I think the larger luxury automotive brands are in a dilemma. They’re bringing down the product intro price points to compete against mainstream brands. CLA is a good example. You will continue to see that accelerate. There won’t be any difference between a luxury brand and a non-luxury brand in terms of price points or segments they enter. It will be the execution of product and the brand. So this engagement thing is kind of–it’s going to make–and you want that to happen as a brand, but it’s got to fit the brand is what I’m saying.

For Lincoln, it’s personal. So 24-7 concierge made sense for us. You don’t want to just have chatter. You want to have an engagement that fits the brand, if that makes sense.

Kirkpatrick:  Unfortunately, we have to wrap. Fantastic having you up here. You have a lot of things to say that I think a lot of companies should be saying, and I’m so glad to hear you saying them.

Farley:  Thanks to you for the opportunity.