Rethinking Marketing.docx

1、Rethinking MarketingListen Pause Loading Download MP3 Help Because companies can now interact directly with customers, they must radically reorganize to put cultivating relationships ahead of building brands. Imagine a brand manager sitting in his office developing a marketing strategy for his compa

2、nys new sports drink. He identifies which broad market segments to target, sets prices and promotions, and plans mass media communications. The brands performance will be measured by aggregate sales and profitability, and his pay and future prospects will hinge on those numbers.Whats wrong with this

3、 picture? This firm-like too many-is still managed as if it were stuck in the 1960s, an era of mass markets, mass media, and impersonal transactions. Yet never before have companies had such powerful technologies for interacting directly with customers, collecting and mining information about them,

4、and tailoring their offerings accordingly. And never before have customers expected to interact so deeply with companies, and each other, to shape the products and services they use. To be sure, most companies use customer relationship management and other technologies to get a handle on customers,

5、but no amount of technology can really improve the situation as long as companies are set up to market products rather than cultivate customers. To compete in this aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value.

6、That means making products and brands subservient to long-term customer relationships. And that means changing strategy and structure across the organization-and reinventing the marketing department altogether.Cultivating Customers Not long ago, companies looking to get a message out to a large popu

7、lation had only one real option: blanket a huge swath of customers simultaneously, mostly using one-way mass communication. Information about customers consisted primarily of aggregate sales statistics augmented by marketing research data. There was little, if any, direct communication between indiv

8、idual customers and the firm. Today, companies have a host of options at their disposal, making such mass marketing far too crude.The exhibit Building Relationships shows where many companies are headed, and all must inevitably go if they hope to remain competitive. The key distinction between a tra

9、ditional and a customer- cultivating company is that one is organized to push products and brands whereas the other is designed to serve customers and customer segments. In the latter, communication is two-way and individualized, or at least tightly targeted at thinly sliced segments. This strategy

10、may be more challenging for firms whose distribution channels own or control customer information-as is the case for many packaged- goods companies. But more and more firms now have access to the rich data they need to make a customer-cultivating strategy work.B2B companies, for instance, use key ac

11、count managers and global account directors to focus on meeting customers evolving needs, rather than selling specific products. IBM organizes according to customer needs, such as energy efficiency or server consolidation, and coordinates its marketing efforts across products for a particular custom

12、er. IBMs Insurance Process Acceleration Framework is one example of this service-oriented architecture. Customer and industry specialists in IBMs insurance practice work with lead customers to build fast and flexible processes in areas like claims, new business processing, and underwriting. Instead

13、of focusing on short-term product sales, IBM measures the practices performance according to long-term customer metrics.Large B2B firms are often advanced in their customer orientation, and some B2C companies are making notable progress. Increasingly, they view their customer relationships as evolvi

14、ng over time, and they may hand off customers to different parts of the organization selling different brands as their needs change. For instance, Tesco, a leading UK retailer, has recently made significant investments in analytics that have improved customer retention. Tesco uses its data-collectin

15、g loyalty card (the Clubcard) to track which stores customers visit, what they buy, and how they pay. This information has helped Tesco tailor merchandise to local tastes and customize offerings at the individual level across a variety of store formats-from sprawling hypermarts to neighborhood shops

16、. Shoppers who buy diapers for the first time at a Tesco store, for example, receive coupons by mail not only for baby wipes and toys but also for beer, according to a Wall Street Journal report. Data analysis revealed that new fathers tend to buy more beer because they cant spend as much time at th

17、e pub.On the services side, American Express actively monitors customers behavior and responds to changes by offering different products. The firm uses consumer data analysis and algorithms to determine customers next best product according to their changing profiles and to manage risk across cardho

18、lders. For example, the first purchase of a upper-class airline ticket on a Gold Card may trigger an invitation to upgrade to a Platinum Card. Or, because of changing circumstances a cardholder may want to give an additional card with a specified spending limit to a child or a contractor. By offerin

19、g this service, American Express extends existing customers spending ability to a trusted circle of family members or partners while introducing the brand to potential new customers.American Express also leverages its strategic position between customers and merchants to create long-term value acros

20、s both relationships. For instance, the company might use demographic data, customer purchase patterns, and credit information to observe that a cardholder has moved into a new home. AmEx capitalizes on that life event by offering special Membership Rewards on purchases from merchants in its network

21、 in the home-furnishings retail category.One insurance and financial services company we know of also proved adept at tailoring products to customers life events. Customers who lose a spouse, for example, are flagged for special attention from a team that offers them customized products. When a chec

22、king account or credit-card customer gets married, shes a good cross-selling prospect for an auto or home insurance policy and a mortgage. Likewise, the firm targets new empty nesters with home equity loans or investment products and offers renters insurance to graduating seniors.Reinventing Marketi

23、ng These shining examples aside, boards and C-suites still mostly pay lip service to customer relationships while focusing intently on selling goods and services. Directors and management need to spearhead the strategy shift from transactions to relationships and create the culture, structure, and i

24、ncentives necessary to execute the strategy.What does a customer-cultivating organization look like? Although no company has a fully realized customer-focused structure, we can see the features of one in a variety of companies making the transition. The most dramatic change will be the marketing dep

25、artments reinvention as a customer department. The first order of business is to replace the traditional CMO with a new type of leader-a chief customer officer.The CCO. Chief customer officers are increasingly common in companies worldwide-there are more than 300 today, up from 30 in 2003. Companies

26、 as diverse as Chrysler, Hersheys, Oracle, Samsung, Sears, United Airlines, Sun Microsystems, and Wachovia now have CCOs. But too often the CCO is merely trying to make a conventional organization more customer-centric. In general, its a poorly defined role-which may account for CCOs dubious distinc

27、tion as having the shortest tenure of all C-suite executives.To be effective, the CCO role as we conceive it must be a powerful operational position, reporting to the CEO. This executive is responsible for designing and executing the firms customer relationship strategy and overseeing all customer-f

28、acing functions.A successful CCO promotes a customer-centric culture and removes obstacles to the flow of customer information throughout the organization. This includes getting leaders to regularly engage with customers. At USAA, top managers spend two or three hours a week on the call-center phone

29、s with customers. This not only shows employees how serious management is about customer interaction but helps managers understand customers concerns. Likewise, Tesco managers spend one week a year working in stores and interacting with customers as part of the Tesco Week in Store (TWIST) program.As

30、 managers shift their focus to customers, and customer information increasingly drives decisions, organizational structures that block information flow must be torn down. The reality is that despite large investments in acquiring customer data, most firms underutilize what they know. Information is

31、tightly held, often because of a lack of trust, competition for promotions or resources, and the silo mentality. The CCO must create incentives that eliminate these counterproductive mind-sets.Ultimately, the CCO is accountable for increasing the profitability of the firms customers, as measured by

32、metrics such as customer lifetime value (CLV) and customer equity as well as by intermediate indicators, such as word of mouth (or mouse).Customer managers. In the new customer department, customer and segment managers identify customers product needs. Brand managers, under the customer managers direction, then supply the products that fulfill those needs. This requires shifting resources-principally people and budgets-and authority from product managers to customer managers. (See the sidebar What Makes a Customer Manager?) This structure is common in the B2B world. In its B2B activitie