The Backbone of An Organization
Marketing is an extremely multifaceted discipline. Accomplished marketers are therefore multi-skilled individuals. They may be specialists in pricing, marketing communications, product support, channel management, and other functions – or they may be generalists responsible for all of them. As a result they usually show interest in a variety of topics, “snacking” on many of them. Here are a few “bite-sized” nuggets for marketers to visualize new marketing strategies and tactics.
Strategic Market-Based Planning
Strategic Market-Based Planning was a 3-day public workshop for managers. It was offered for many years through what is now UW-Madison’s Center for Professional and Executive Development (CPED). I’ve updated and supplied the presentation materials I used in teaching that course.
“Translating brand promises into behavioral performance standards is a step toward creating authentic brands.”
Succession Planning Your Brand
Although many businesses carefully evaluate who will succeed existing leaders, they don’t always consider the potential impact that choice may have on the corporate brand identity. And the selection can have a profound impact on whether the brand identity continues or dies. What changes have you noticed in Wendy’s without Dave Thomas? What can Apple expect without Steve Jobs at the helm? Is Walt Disney the same company it was when its founder was alive?
Ben & Jerry’s, the Vermont-based ice cream manufacturer founded by Ben Cohen and Jerry Greenfield, was built on the values of innovative products and social responsibility. These values became part of its brand identity. When Unilever purchased the company in 2000, there was concern that this identity would be lost – and indeed, there were changes. Then in 2001 Unilever hired a new chief marketing officer, Walt Freese, to maintain the corporate culture. According to Advertising Age magazine, Freese was appropriate for this goal as demonstrated by his statement, “I really wanted to work for a values-driven business with a sense of social mission; that was probably the driving factor for me.”
A strong brand has a clear and unique image that stands for something important to targeted customers. Green Mountain Power Corporation has established a reputation as being an environmentally sound energy company. It actively focuses on renewable energy and publishes a sustainability report to demonstrate its environmental commitment – even while striving to maintain competitive rates. Customer communications are wrapped around an environmental message, even to the detail of printing on recycled paper. Several years ago, spruce seedlings were sent to select customers to emphasize the importance of renewing the environment. Not all customers value this approach equally, but those who do are key targets for the company.
As you begin succession planning for your corporate brand, think about who your target customers are. What is the demographic profile of the individual consumers, or the firmographic profile of the business customers? What’s important to them? What keeps them up at night? This knowledge will be necessary to help you refine and deliver your core brand promise.
Developing – and maintaining – a solid core brand is important for most organizations, but particularly so for service and business-to-business firms where the customers are buying the company as much as its products and services. Even when the existing corporate identity is not tied to a single individual, consideration should be given to how to maintain (or modify) the identity throughout management transitions. To accomplish this, existing leaders must work to establish a strong corporate culture that will withstand their departure, select a successor supportive of the culture and brand, and develop performance systems that tie to the brand.
Start by examining the values and culture that exist in your organization. Look at the culture from both an internal and external perspective. Ask yourself the following questions.
- What values does the company embody? Friendliness, speed, attention to detail, work-life balance, integrity – or lack of any of these – can be values.
- Have these values been consistent over time?
- Do you want to continue these values into the future?
- Would your customers describe the firm the same way as employees?
- Is the image as described by customers differentiated from the competition – and do customers care?
Not only is it important to assess what customers believe your values to be, but also to know what they believe those values translate to in terms of performance outcomes. Customers expect Ben & Jerry’s to be philanthropic because of its value system. They expect Walt Disney to provide family-centric offerings. They expect Southwest Airlines to be friendly because of the people-centric policies. What do customers expect from your organization? Really think about it.
- What do customers expect when doing business with your company? Be sure to include both the rational (“I expect consistent quality”) and emotional (“I want to trust you”) expectations.
- Are there implicit promises that, if not kept, would cause customers to lose trust in your firm?
To be able to keep the implicit promises mentioned above, it is useful to have appropriate standards of performance. Bill Marriott many years ago conceptualized the service quality wheel that suggested that true customer satisfaction is not attainable as a goal in that business unless employees are motivated in that direction. This implies the need for a system of training, processes and rewards that support the end-goal of customer satisfaction. Winning brands, similar to the Marriott example, are built on carefully designed business systems and processes that are part of the corporate strategy. If customer service is part of the brand promise, are there performance measures for customer responsiveness? If quality is part of the promise, is there a comprehensive quality control system in place? Consider a few more questions:
- Are customer promises aligned with internal policies and procedures?
- Is there clear responsibility and accountability for these policies and procedures?
By translating promises into standards of performance, you increase the likelihood that employees will live the brand promise – that you will be able to deliver on the promises customers believe you have made to them. An average brand becomes a great brand only when employees live its values, and when the result is ongoing customer satisfaction. A strong brand, therefore, is a deliverable promise of future customer satisfaction.
Stay true to your brand. If the brand promise is safety, deliver on safety. If the brand promise is excitement, deliver on excitement. If the brand promise is trust, deliver on trust. And be sure that any intended successor to leadership believes in the ideals and related policies that are linked to this brand delivery.
“Even good ideas, carried to an extreme, can have unintended consequences.”
Take this quiz
Connecting with Customers
Imagine doing a warehouse audit for your company and discovering that 15% of your products are missing. What would you do? Most likely you’d launch an investigative study to determine what happened. Why don’t companies to the same when they lose customers? What steps should YOU take to connect with customers, both current and prospective – as well as re-connect with lost customers?
Let’s start with a quick quiz. Respond to the following statements before jumping ahead to the answers.
T F 1. Your top customers should be your largest customers.
T F 3. Customer loyalty results from customer satisfaction.
T F 4. It’s wise to develop separate strategies for acquiring new customers and retaining existing customers.
T F 5. You should plan carefully to be in charge of your company’s future.
Let’s see how well you did. “Your top customers should be your largest customers.” This statement is false. Although large customers might be A-customers, it’s not always the case. Your top customers should be your highest-equity customers. Many companies have key account programs, but the selection of these accounts is often based on size rather than strategic importance. Typically, high-equity customers are those whose needs fit your capabilities, who can grow with you, and who you can honestly define as strategically important. Revenue and profit are just two factors to consider in this evaluation. Your strategy with these types of customers is to increase share of wallet, extend the length of their relationship with you, and/or avoid losing their business to the competition. To increase share of wallet, look for cross-sell and bundling opportunities. To extend the length of their relationship with you, explore time-based (cumulative) reward offerings. To avoid losing them to the competition, demonstrate appreciation for their business.
“The customer is always right.” This statement is true only if you are listening to the appropriate customers. In other words, the customer is always right IF it’s the right customer. Identifying high-equity customers (as discussed previously) helps in this task. Consider what the target (high-equity) customers want in terms of products, services, advice, price points and buying factors and build those into your strategies. Focusing on the right customers will help you use your resources more effectively (with less waste), and increase customer profitability. But you may also need to say no to the wrong customers. All companies have customers who demand special services (with no additional revenue generated), who demand “rock-bottom” prices for everything, or who require changing the basic product or service to fit their unique needs. When this is the case for non-target customers, there are only a few options available: raise the price, reduce the cost of servicing the customer, or discontinue doing business with the customer.
“Customer loyalty results from customer satisfaction.” False. Although customer satisfaction is a necessary prerequisite to customer loyalty, it is insufficient in and of itself. How strong are your competitors and how easy is it for customers to switch to the competition? Sometimes customers seem to be loyal because it is currently too hard or inconvenient for them to switch to competitors. Once the switching costs (monetary and non-monetary) are reduced, turnover begins. Frederick Reichheld, in his December 2003 Harvard Business Review article, argued that perhaps the best question to determine loyalty is to ask customers if they would recommend you to their friends and colleagues. Customers who are willing to promote your company or its products become “sales ambassadors” for you. These are the truly “loyal” customers.
“It’s wise to develop separate strategies for acquiring new customers and retaining existing customers.” This statement is true. Different customers require different marketing approaches. Customers who don’t know what you stand for have different information needs than those who are familiar with you. If you discover non-customers with needs and profiles similar to customers, ask yourself what is preventing them from buying from you, and work to make changes in those areas. You may need to establish new channels or expand media coverage to reach new prospects. And in addition to the acquisition and retention strategies implied here, you might also consider separate strategies to re-connect with lost customers. The first step in the process is to determine whether the lost customers are “high equity” as defined earlier. If so, determine why they left you, acknowledge their past patronage, and point out what you have done to re-earn their business.
“You should plan carefully to be in charge of your company’s future.” Another false. You should plan carefully, but realize that customers are in charge of your company’s future. Too often companies look into the rear-view mirror of historical data to anticipate probable tomorrows. How will your customers of today be different five or ten years from now? Is a generational divide, a shift in lifestyle preferences, or a different attitude toward certain technologies taking place? Not everything about the future is knowable, but there are clues out there if you are open to them. Identify catalysts to and predictors of change in your customer base and prepare for the impact of the changes.
Understanding and managing these customer connections is at the core of successful strategy and competitive differentiation. Identify and profile your high-equity customers and use the information to grow you business. Determine whether acquisition, retention, or re-connection strategies and tactics are most important and allocate resources accordingly. But don’t get so caught up with the present that you ignore the strategies necessary to be successful in the future.
“Most B2B purchases are complex and require a different approach to sales and marketing. Think about what drives purchase behavior.”
Marketing strategies and tactics
B2B And Considered-Purchase Marketing
Envision a continuum with impulse buys on the left and considered purchases on the right. Most consumer packaged goods (CPG) items fall on the left side of the range and business products on the right. Somewhere in the middle are durable consumer goods like cars (which are not typically impulse buys) and low-cost discretionary or routinely-purchased business items (which do not require significant consideration). While there are emotional and rational factors that could affect purchases anywhere along this continuum, the impulse side involves comparatively heavier emotional drivers and the considered purchase side comparatively heavier rational drivers. I’d like to focus on aspects of marketing to the considered-purchase (primarily B2B) side of the continuum.
Let’s elaborate on what might be involved in marketing a B2B considered purchase. Most of these purchases have complex products, embody greater risk of a wrong decision, comprise a long purchase/sales cycle, are quite costly, and involve multiple influencers. Some may also have specific time sensitivities, use a multi-step distribution process, and/or require specific customization. The impact on marketing of these factors will be discussed below.
Complex products, especially innovative breakthroughs, can be exciting to customers – but also carry risk. Sophisticated items such as anesthesiology equipment require proof of safety, ease of use and error-proofing features. Physicians who are purchasing pharmaceuticals want clear proof of efficacy. Product managers and upstream marketers will need to focus on both the technological/medical aspects of the products, as well as more traditional branding and marketing issues. These marketers will likely spend a substantial part of their time visiting hospital accounts and prospects to observe existing equipment and potential requirements for change. Marketers must explain the relevant benefit without what is sometimes perceived by business buyers as “marketing fluff.” Marketers need to find credible ways of minimizing risk in the decision.
In situations where there are long purchase cycles, salespeople often take the lead in maintaining contact with prospects. Executives, physicians and other influencers want to understand how the equipment and other products will increase efficiency (and ROI) without sacrificing effectiveness in treating patients. Marketers should avoid being lulled into the role of sales support when that happens.
The costlier the decision, the more important it is for marketing to provide rational justification for the decision. Even if the actual decision was made on emotional grounds, the buyer will want to justify the decision to others. Information on reliability, uptime, turn-around, ROI and similar factors will be useful for that purpose. Downstream marketers need to help salespeople understand the funding mechanism of the target accounts, how the organization buys (e.g., whether the hospital is part of a GPO or group purchasing organization), the long-term strategy and who are the influencers and decision makers.
When multiple people are involved in the purchase decision, marketers should understand the different mindsets and the relative weight each plays in the overall market. While the one-on-many interactions will likely be handled by the sales force, marketers must provide them with the best “ammunition” possible. The different influencers might also look for different information on the firm’s website and the marketer must ensure appropriate navigability by segment.
Marketers who deal with two-step (or three-step) distribution face additional challenges. While some clients have disagreed with me on this point, the sale is not consummated when a distributor buys; it must flow through to the end-buyers. Marketers must identify primary targets at the end-user level and work back through the channel to be sure they have the correct channel partners to be effective.