September 21st, 2010

10 Ways to Make Your Marketing Organization More Strategic and Effective

One of the biggest challenges for marketing professionals is to determine how to balance their time to work on both tactical and strategic marketing activities and actions. Left to natural tendencies, most marketing people and teams will work on short-term activities that help drive the business for the next month or quarter. An old HP colleague of mine calls this the “tyranny of the current.” Most organizations naturally assume that the primary role of marketing is to help sales close short-term and mid-term business. And that certainly is an important part of the marketing function. After all, we are trying to create new products, brand awareness, and demand for something! If it is not for sales – or to generate incremental revenues or market share – then what is it for?

Yet at the same time, when marketing teams focus only on the short term, they miss some of the strategic roles that marketing can and should play within the organization. From experience, I know that tactical, short-term focused marketing teams are not very well-respected. In order to be considered a strategic function (like finance, operations, R&D, etc.), there are other critical roles the marketing function must play. I listed those key areas in the blog entry 6 Key Roles of Highly Successful Marketing Organizations. I won’t repeat them here.

What I would like to do is highlight 10 distinct ways marketing can become more strategic in any organization. They include:

1. Bring more customer insights and the voice of the customer into the organization.
2. Write a strategic marketing plan, budget funds towards it, and execute against it.
3. Focus a few key positions on strategy (long term) and keep those people focused on longer term activities and goals (such as planning, strategic initiatives, etc.) vs. execution (tactical).
4. Separate sales or business development functions from marketing, if they are organizationally together. When marketing is imbedded within the sales department, it makes it particularly difficult to be strategic.
5. Separate marketing operations (the business of marketing and reporting, forecasting, pricing, sales response, etc.) from marketing management. Give it focus within an organization.
6. Set objectives, accountability, and metrics for short and long-term team objectives and hold your people accountable for delivering results for both. After all, what gets measured gets done.
7. Hire the right people for your organization. You need people who have the skills to operate at both a strategic and tactical level.
8. Learn to prioritize and say no. Of course, this is very hard to do. But stick with activities that are aligned with the organization’s objectives, not the “issue du jour” advanced by an aggressive sales manager or the sales response team.
9. Read Marketing Managementby Kotler and Keller. This is a great book to learn about strategic marketing management.
10. Set expectations around long term focus with senior management. With constrained resources, a common feature to most marketing organizations, certain tactical activities will need to be de-prioritized in order to spend time on the longer term, strategic elements of the business plan. These strategic elements should contribute to the company’s longer term revenue and profitable growth.

Effective marketing requires a balance of strategic and tactical work. Too little tactical work and marketing will be seen as working “in the clouds.” Too much tactical work and marketing will not be valued as a strategic function but as a “sales assist” team.

I would be interested in hearing your thoughts on how you have balanced these orientations within your own marketing teams.

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Posted By Vince Ferraro

September 6th, 2010

The Zen of Marketing Management

Courtesy of Filomena Scalise / FreeDigitalPhotos.net

I was thinking about how, as marketers, we are so completely focused on end results, whatever they may be. We are obsessed about new product intro dates, pricing, social media impact, web site hits, sales, profit, market share, and the list goes on. We are whipped into a frenzy around measurement and ROI of our marketing investments.

This in turn reminded me of a Zen story that will shed some light on another important aspect of marketing. It goes something like this:

A student asked a Zen Master,
‘If I work very hard,
how long will it take for me to realize Zen?’
The Master replied,
‘Ten years.’

The student replied,
‘If I work very very hard,
how long will it take for me to realize Zen?’
The Master replied,
‘Twenty years.’

The student replied,
‘If I work very very very hard,
how long will it take for me to realize Zen?’
The Master replied,
‘Thirty years.’

The student replied,
‘But, I don’t understand…
why does it take longer when I work harder?
The Master replied,
‘When you have one eye on the goal, you only have one eye on the path.’

Too often in marketing we are obsessed with the goal, to the point that we fail to understand that the path, or the process, we used to reach the goal is equally, if not sometimes more, important. Oftentimes, marketing professionals fail to invest adequately in infrastructure and business processes that will ultimately help us achieve the expected business results. In marketing, it is often hard to rise above the challenges of the quarter to quarter “what have you done for me lately mentality.” Truth be told, businesses need to ensure that the right processes and tools are in place to reach those treasured results. Having a processes-oriented mentality (following the path if you will) will achieve many important things. First and foremost, it will help you build a better framework for problem solving.

For example, do you want to build a more effective new product launch capability?  In order to do that, you need to map out all of elements of a successful product launch – the timing, actions, owners, and interdependencies. A second important outcome is that a well-defined process should improve overall operating efficiency. Build the process out and you will find what you really need (and don’t need) to run the business efficiently. A well-defined process also optimizes workflow, making the overall decision process more efficient. That could mean reductions in people, time and money. Great BPO projects don’t add resources—they take resources away, because they are more automated, require fewer steps, and so forth. Finally, there is the matter of effectiveness. The path will lead to more effective decisions. The results include (among many other things) better product designs, enhanced time to market for new products, more accurate forecasts and improved pricing. One shortfall of the marketing function is that it is not always favorably viewed as being a tightly-run ship, due to all of the processes, metrics, and control systems such as the supply chain or the financial aspect. Because of this, we get a bad rap; but I think we are getting better and improving over time. Having said this, we still have a long way to go, and a long path to follow!

Therefore, the path to great decisions is as important as the goal. Being more process-oriented will help you keep your eyes on the path. Marketing professionals who focus only the goal will miss the enlightenment that can be found by following the path.

What is your marketing Zen?

Resources:

http://www.amazon.com/Z-B-Business-Administration-Practice-Transform/dp/1577314697

http://www-usr.rider.edu/~suler/zenstory/zenstory.html

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Posted By Vince Ferraro

June 29th, 2010

Using the Model

The principle behind using the model is that you identify and choose 1-3 key issues or opportunities that would improve the total customer experience across each phase of the model. This approach would generate a list of 8-24 opportunities that you could work on that would improve upon the existing total customer experience.

Here are some examples of how we used the model at HP.

1)      We used the model to improve our understanding of how customers used our LaserJet printers in emerging markets. We learned that many customers buy lower end products and used them like higher performance products in high dust/dirty environments. These combination of factors lead to increased product failures and some customer dissatisfaction. By better understanding this, we could improve the way we developed products for emerging markets. Perhaps by offering a different product platform or attaching dust/HEPA filter to printers sold there.

2)      We also used the model to create printer-based MFPs that would deliver a better total customer experience than existing copiers coming from established companies like Xerox or Oce. HP wanted to enter this market, but we wanted to build a better mousetrap and have a more differentiated product. We looked at specific things we could improve on our product line that enhanced our existing customer experience as well as what was being done by our competition. As a result, we made changes in our product designs, usability, and messaging. Our changes worked and we achieved #1 market share in the IDC S4 monochrome speed segment. For example, when Xerox tried to emulate we were doing I was able to show how HP’s total customer experience was better in performance, installing, and using the product.

TCE reports help us understand quantitatively how hp and our competitors perform and compare at each of the lifecycle stages and touch points.  Areas for improvement were identified and projects initiated to close the gaps.

The way to use the model would be to decide how to improve or maintain customer experiences for a product in each of the 8 areas of the ACOILUSD model. It might look something like this.

Click to Enlarge

It is important to make an additional comment about B2C vs. B2B TCE models. They are virtually the same with one exception. Often times for consumer products, “USE”is broken into less than 30 days and more than 30 days. Here is the reason. If a consumer has a dissatisfying experience, he is likely to return the product to the retailer in the first 30 days rather than try to solve the problem. Therefore, companies must do everything that can to help a customer achieve a great customer experience in those crucial first 30 days. If a product breaks or the customer cannot use the product, it is highly likely he will return it and buy something else in those first 30 days.

The TCE model is also very steep in buyer psychology and behavior. The goal of any customer experience system should move buyers from emotional disloyalty (I hate it) and rational dissatisfaction (nothing special) to rational satisfaction (this works very well) and emotional loyalty (I can’t live without it). Properly done, it moves behaviors of loathing and functional to enjoyable and almost a Zen-like level of satisfaction. Wouldn’t that be a great place to be with your customers?

How do you measure success? In terms of measuring the results from improving customer experience, I propose three methodologies. The first is to actually compare your company’s TCE to the competition for the 8 segments of the wheel.  If your company’s experience is best in class in 6 of the 8 categories, chances are you are doing a great job. Other methods of measuring include looking at brand preference, especially if brand preference is significantly lower than brand awareness. If brand awareness is high and preference is lower, chances are something is happening in the sales process that needs to be looked at. It could be a variety of things – pricing, channel switching, not enough product differentiation, etc. In addition, I have found that the state of the TCE can also be a very big contributor. Finally, look at your company’s Net Promoter score. This is probably one of the best measures and can be used as a reliable and important measure of TCE success or failure.

Companies that don’t feel comfortable driving this process on their own can employ a third party to company to help them  with elements of their total customer experience. Companies like Frog Design and Touch360 are examples of firms that can help move a company down the road of improving their TCE.

In conclusion, total customer experience (TCE) is a powerful tool that can improve customer satisfaction, loyalty, and provide meaningful competitive differentiation for your company and its products. It is a significant commitment in both time and money and spans across many functional areas within a company – marketing, sales, channels, operations, product development, etc. At the same time, TCE initiatives are also a great way to engage the overall company in programs and activities that are extremely customer-centric and focused.

Please share your stories of total customer experience on this blog by replying to this post!

Additional Resources:

http://www.1000ventures.com/business_guide/crosscuttings/customer_retention.html

http://wehner.tamu.edu/mktg/faculty/berry/articles/Managing_the_Total_Customer_Experience.pdf

http://jobfunctions.bnet.com/abstract.aspx?docid=149049

http://www.ibj.ca/view_article.asp?intArticle_ID=299

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Posted By Vince Ferraro

June 20th, 2010

Overview

I want to devote this blog post to building and using a customer experience models as part of your overall marketing mix. If you have a new or mature business, developing and delivering great customer experiences can be one of the most important ways to create sustainable, differentiated competitive advantage for your company and products. Think about it, if you have a product line where performance and price are roughly comparable to other market share players, what levers are left that are going to truly propel you to a differentiated market position? I believe there are two key things companies can do beyond executing their core business and marketing strategy. First, build exceptional customer experiences and second, drive more customer-appreciated innovation.

Why do we, as marketers, care about all of this? The economics of customer retention and defection and its impact on profitability are very high. According to research I read, the cost of acquiring new customers costs 5X more than retaining and satisfying existing customers. Average satisfied customers tell 5 others. Very satisfied customers are 6X times more likely to repurchase your products and pay higher prices. On the other hand, consider the economics of dissatisfied customers.  On average, companies loose 10-15% of their customers annually. As a result, average unhappy customers tell 9 others and 91% of them will never buy your products again. Finally, loyal customers are not as price sensitive and research has shown a 5% increase in retention can lead to a 25-80% boost in profits!

Although, HP did not develop it, I believe the ACOILUSD total customer experience framework is one of the most valuable models out there that can help a company document existing and improve future customer experiences. In fact it is so important to HP, that they actually have a patent on the process that uses it. Interesting … don’t you think?

The ACOILUSD model of total customer experiences is a fairly straight forward approach. This model proposes that there are 8 stages of a buyer’s customer experience, which are touch points to a buyer’s entire evaluating, buying and usage cycle. If company’s can improve their products’ total customer experience at strategic touch points, the theory is that brand equity, preference, market share, and product satisfaction/loyalty will increase. These enhancements will ultimately drive more revenues and enhanced profitability. My experience with the model would validate this claim. I will talk more about specific examples in a minute.

Here is the model:

8 Phases of the ACOILUSD TCE Lifecycle

The model simply breaks down a product’s evaluation, purchase, and use lifecycle into 8 discreet components.

The idea being that customers touch a company (and their products) at each phase of the lifecycle wheel and (as a vendor) we should strive to enhance our TCE delivery in each phase. Also, the phases are interconnected and work together to build the overall customer experience.  Therefore, the experience in one phase, can affect the experience in other phases.

The Model

Below are summarized descriptions of each segment of the TCE lifecycle wheel with some examples of what is contained in each one

Aware – What customers hear and read about the brand is the way they become aware of us.  It’s the first opportunity we have to make a genuine, personal connection with customers – to show that we are people dealing with people that care – not a corporation dealing with an impersonal set of customers.

Choose – Once customers know about our products and services, they decide whether or not to choose the brand to meet their needs.  Well-made, dependable products that can be adapted to future needs are one reason customers choose your company’s products. Customers rely on us to help them find a solution that’s right for them.

Order – We inevitably touch customers when they order our products—whether it’s through our Web site, at a retail outlet or over the phone. Ordering is often where customers find out how genuinely friendly, approachable, and easy to do business with we really are.

Install – Quick and easy installation can be facilitated by solid reliability and quality that is built into everything we do. This component can also be applied to opening the box and assembling the product for first use. This is often referred to as the “out of box experience” or OOBE. A very helpful and informative presentation on the topic can be found here.

Learn – Everything from the clarity of our printed instructions to the effectiveness of our training courses impact the learning segment of the customer experience.  Learning is an especially important way to show that we are inspired – passionate about helping people achieve their goals and enabling smarter ways of working and living.

Use – The ability of your company’s technology to perform as it should and deliver what the customer needs every day demonstrates that we are dedicated to making things better for our customers, and results from applying intelligence, innovation, and inventiveness.

Support – Support is a key touch point for retaining trust, demonstrating that we are best at partnering with customers and industry leaders, and treating customers with care and respect whether their support is web-based,  call center, or on-site.

Dispose/Upgrade – Environment-friendly disposal is just one way we make things better for our customers, and upgrades at the right time and right price help people to continue to achieve their goals. Think green programs, recycling, and sustainability initiatives.

Relationship: The relationship phase reminds us about the personal connection we need to make with our customers.  Whether the relationship is directly with your customers or indirect through partners, resellers, and/or retailers – we want all our customers to feel that the company cares about them and treats them well.

In Part 2,  I will write  about how to use and apply this model in your company’s overall strategy and how to analyze results from the efforts.

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Posted By Vince Ferraro

May 21st, 2010

Elements of a Successful Partnership

If you haven’t already, sooner or later you will need to develop a business alliance or marketing partnership with another organization or company in order to deliver a product or service that is greater than what could be brought by your company on your own. 

Alliances and partnerships can take many forms. But the usual goal of an alliance or partnership is to drive market share or revenues by strengthening one (or more) of the elements of a marketing mix – be it price, distribution, promotion, branding, awareness, or technology/product. 

Here are a few examples of successful partnerships.

Apple partners with ATT to establish the iPhone on its 3G network

HP is kicking off a series of online photo contests that merge themes from the movie “Shrek the Third” with contestants’ family memories. Beginning today, participants will have the opportunity to win one of more than 3,000 prizes, including a grand prize of an HP Digital Home Entertainment package and a trip for four to attend an upcoming DreamWorks Animation movie. “Life, like ‘Shrek the Third,’ is full of enchanted moments, and great photos are what make them last,” said Kathy Stromberg, vice president of marketing, North America, Imaging and Printing Group, HP. “This photo contest provides an engaging and dynamic new way for users to creatively showcase photos of their families’ heroic, adventurous and funny moments.”

Legoland and Hyundai in Germany have announced a new partnership that will see the Korean automaker providing the theme park with a total of 25 vehicles ranging from the small i10 city car to the new iX35 SUV for service and shuttle rides. The two-year long sponsorship deal also includes the branding of the toy cars used by Legoland’s driving school for children aged 3 to 7.

Ocean Spray and PepsiCo today announced a long-term strategic alliance in which Pepsi-Cola North America will market, bottle and distribute single-serve cranberry juice products in the U.S. and Canada under the Ocean Spray name.

Microsoft and HP announce a $250 million technology development partnership and a series of software/hardware/service rollouts that HP CEO Mark Hurd called “the deepest level of collaboration and integration” in his company’s history. The agreement, which appears to have no official name, is to develop a comprehensive software/hardware stack that is preconfigured, tested and optimized for use in public and private cloud data center environments.

A few key questions can quickly establish the benefits of a partnership to each party.

 1. Why do we want to partner with each other?

• What specifically does the partnership do?
• What is the end benefit – to the customer and each of the partners?
• How does is it tie back to the company’s strategy, business goals, market access?
• How does the partnership strengthen the results and of both companies? For example, I bring a product and you bring customer segment access to me that is my target market.

 2. What does each party bring to the table?

• What specific capabilities or assets of does each party bring to the table?
• Who does what? How does the partnership translate into what each company brings, provides, and has to do?
• What investment dollars will each party bring to the table to launch the marketing alliance?
• Is one party more dependent on the other, bring more to the table, leading the alliance, etc.?

 3. What does the end result look like? 

• Describe the completed partnership in 1-2 sentences?
• What is the end game or result? 
• What does success look like?
• What does the PR/messaging, strategy, and content look like?
• Is it a low key or big bang alliance launch?
• What is the partner commitment and effort going to be? The sum of the parts should lead to a better end result than going alone.

 4. How do we each make money? 

• How does each party derive a financial or market benefit from the partnership?
• Where does the benefit come from – a financial perspective, distribution perspective, market access perspective, brand building perspective (the list of possibilities could be broad)?

Alliances and partnerships should not be confused with sponsorships.

There is often times a fine line between marketing alliance and partnership and more strategic business development or strategic partnership. The more inclusive the partnership is of licensing, joint research, IP sharing, operations, etc., the less it looks like a marketing-only play.

A strategic marketing partnership is different than a joint venture. In a joint venture, the parties agree to create, for a finite time, a new legal entity and new assets by contributing equity. They then share in the revenues, expenses, and assets and “control” of the enterprise.     

Additional Resources:

Improving Alliance Marketing

Organizing Successful Co-Marketing Alliances

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Posted By Vince Ferraro