Why Marketing isn’t working any more – Part 2.

MyCustomer.com
10

The biggest change in consumer – business relationships in the past 50 years is not the move to CRM, not the introduction of the call centre or the internet, but the inexorable shift to self-service, at least that’s what Professor Jim Norton, executive chairman of Deutsche Telekom UK Ltd, proclaimed at a recent conference, and I can find no reason to disagree with him. From the development of the D-I-Y industry, to self-service in restaurants, from ‘make your own furniture’ from Ikea, to the introduction of the ATM by retail banks, self-service plays a bigger and bigger part in our lives. Why is self-service so popular? I argue that it has the double attraction of shifting cost out of the supplier’s business, and providing consumers with more direct access to the goods and services they need, at attractive prices.

How does this relate to Sales and Marketing and CRM? I hope to show you that in this article. Comments from members on a recent editorial, Why Marketing isn’t working any more, and my conclusions from a recent Internet Usage survey (!!! Link to BCCF Internet Usage survey presentation, please), has played a significant part in that thought process, so let me use those to illustrate it.

Let’s start with the survey. The British Life and Internet Project undertook a survey of Internet usage patterns in Christmas 2002, and the results were recently published. This week we publish a presentation which outlines my conclusions from reading the full report. Let me summarise them here:

• Firstly, the time people spend on the internet, is being taken from time they used to spend in more conventional channels, and in particular, TV, newspapers and the retail channel

• Secondly, despite the conventional wisdom, internet users are comfortable purchasing online. 80% had done so in two or three categories of goods in the past year, and 16% in the last week.

• Such purchase activity is ‘self-service’ activity, and, in my view, is likely to educate consumers to prefer it to the more traditional ‘push’ sales and marketing approach.

• Finally, the growing habituation of users to such self-service purchases is likely to add to the momentum of the move to buyer-centricity (see A comparison of buyer-centricity, customer-centricity, and customer-managed relationships (CMR)).

Let’s return to my recent editorial, Why Marketing isn’t working any more, The main point I was trying to make was that traditional marketing techniques, as practised by Proctor & Gamble and many others, are beginning to stop working. In particular, the outbound ‘push’ channels of TV, newspapers, mail, email, and various forms of internet advertising, are becoming more and more of an irritation to most consumers, and so are becoming less effective, whether used for branding, sales promotion, or to meet other marketing objectives. The editorial attracted significant interest – triple the readership of a normal editorial, and a number of comments from members, adding significant value to the debate. Let me summarise some of the main points made:

• Firstly, many pointed out that marketing goes much wider than just advertising, and that what I was attacking was some ‘traditional’ marketing techniques. I accept both of this points, and would agree that there will continue to be a need for other marketing functions, from market research to price fixing, from business forecasting to market segmentation. In addition, marketing techniques even in the advertising space can and must change to use new techniques. My real issue is that marketing isn’t changing fast enough.

• Secondly, and of direct relevance to CRM marketers, Chris Lawer pointed up that need for change even with relationship marketing techniques. Chris quotes some recent research from the US that demonstrates that many relationship-marketing techniques (designed to create relationships) are often the ones that are destroying relationships. In an HBR article in 1999, Susan Fournier and her colleagues describe the negative influence on end-user outcomes of the proliferation in computer-generated personal communications, the one-way exchange of personal data, and the problems of gaining access to human operators.

• Gavin Merriman raised a very perceptive point. When potential customers are searching the internet on product-related queries, what are they searching for? The general belief is that consumers are looking for products, but I question this seemingly obvious point. We have just about accepted in the business-business area that customers don’t want to buy product but are looking for solutions. Solutions selling is the name of the game in the B-B market, but doesn’t that also apply to the end-consumer? Frequently a consumer product query or even purchase, is only a symptom of a much wider need, which most companies fail to address. I have often quoted the two consumers who each want to purchase a refrigerator. One is buying the white goods needed for a new kitchen; the other is replacing a broken refrigerator that is filled with soon-to-be-rotting food – a very different set of needs. There’s some interesting work going into understanding these ‘personal scenarios’, and How to be a hero - by using Personal Scenarios, outlines one way of trying to incorporate this approach into marketing activities – all part of the move to buyer-centricity.

Now, both the survey and these comments from members suggest that some fairly radical changes are taking place in the marketplace. How are we to make sense of them? The key element seems to be that there is a shift in the locus of control in sales and marketing inter-actions. As Steven Greenberg said in a comment, ‘it’s about the buyer being in control, not the merchant’. This shift goes under many names from customer-managed relationships (CMR) to buyer-centric commerce. I’m a fan of the second expression, but today, I want to focus on the self-service aspects of this shift, as I think it makes it easier to understand.

One of the key issues facing organisations is how to offer high-quality customer service whilst keeping the costs of running the business model to a minimum. We see this dilemma frequently in CRM implementations where there is a tension between removing cost from the business, whilst maximising the value of the relationship with the customers. Many organisations have taken cost out of their call centre environments, for example, but at the expense of making customers suffer long call queues, or navigating unfriendly IVR menus. It is possible to err on the other side. When First Direct was relatively new, a frequent comment from US visitors was that although the customer service was excellent, it was provided (by answering each call with an operator) at a cost that significantly raised the cost base of the business, perhaps making it, in the long term, difficult to compete with best-of-breed low-cost producers. This particular problem for First Direct has been significantly reduced by the introduction of the Internet as an alternative low-cost channel for transacting, by reducing the number of calls to be handled.

This gives the clue to a more general solution to the cost / service dilemma. If we move to a ‘self-service’ environment for sales and marketing, through the provision of web-sites, this can take significant costs out of the business. If those sites are designed with the customer’s (or better still, the buyer’s) needs in mind, it should be possible to provide better customer service whilst reducing the cost base.

However, if the end-consumer converts to self-service for sales and marketing, and adopt more of the behaviour of I-cons (see Where is the Customer in CRM?), we’re likely to see a number of significant changes in how sales and marketing works. For example:

• The role of broadcast direct marketing communications by mail, email, and phone, etc is likely to significantly diminish), though we anticipate an increase in event-driven communications, where the relevance is much higher.

• The call centre and web-sites are likely to become much more closely integrated, with ‘call me’ buttons leading to direct contact from the web-site to an operator who can assist the consumer. In a sense, one of the roles of the web-site is to replace the IVR as the ‘director of calls’ to the appropriate place.

• Consumers are going to want support in understanding how their needs can be met. We expect significant increase in the provision and use of ‘community’ sites where consumers can get advice from their peers. I have personally used such sites in the selection of goods varying from DVD+RW writers; home cinema gear; and digital cameras over the last year. In addition we expect a new class of software to arise – ‘personal scenario planners’ which enable consumers to explore what they need to meet a particular scenario facing them, from moving house, to planning a holiday, or dealing with the death of a parent.

• Consumers will want to find some way of improving their negotiation with suppliers, and so we can expect further developments in the consolidation of consumer demand to negotiate best value with suppliers

• For ‘cash poor – time rich’ consumers, self-service provides a way of reducing cost, but ‘cash rich – time poor’ consumers will not be so interested in saving cash. We anticipate growth in the provision of ‘consumer agent’ services to take away the burden from such consumers, much as some individuals make a living by assembling Ikea products for consumers without the time, or perhaps the ability, to do so.

• For suppliers, the biggest challenge is how to interact with a consumer when the consumer is driving the conversation, whether it’s introducing sales messages into a web-site interaction driven by the consumer, or adding sales content to a customer service call. There has been some work done in this area, but we’re a long way from understanding how to undertake this most effectively.

These are just some of the changes that we think are likely to take place. Of course, this isn’t going to take place overnight. The timescales for these sorts of changes tend to be generational rather than 2-3 years. However, there is no cause for complacency, as many companies are already taking steps in this direction (see Buyer-Centric Markets Survey 2002 Summary and Recommendations for examples from UK companies moving in this direction).

So my previous editorial was wrong. Marketing won’t disappear. However, we will see significant changes in its role and functions over the coming years. We live in interesting times.

As always we’d like to hear your comments. Make them below or email me at mailto:[email protected]

Regards,

Richard Forsyth

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By admin
14th Mar 2003 22:11

Ah, Richard, dear heart, you still have to delve into the costs of marketing and the ROI of marketing. Now there's the rub! It would seem, from reading the HBR et al that our Dilbert "two drink minimum" clubbers in marketing doth protest an awful lot about what they do. Yes, market analysis is vital, but it's relatively quick and easy to do these days with the assistance of analytic hierarchy programs. I won't be maudlin here about our old days of 10 button calculators and slide rules for doing such measures. But you are indeed addressing the most visible marketing efforts with the "push" campaigns when you attempt to explain why marketing isn't working anymore.

I have an auto-mute button on my tellie for ads during programs (for the very few weekly hours I do that leisure activity), I stop at the trash bin to deposit unopened unsolicited advert mailings, I immediately fling the adverts section of the Sunday Chicago Tribune into the paper recycling bin before I settle into my comfy chair with my coffee, I have long-since had an ad pop-up blocker on my computer, and I have caller ID to avoid telemarketers. Still, I am a consumer and my accountant can tell you that I DO spend. So, am I a-typical for most consumers? Not according to University of Michigan's most recent study on consumer reactions to advertising and marketing campaigns.

Your concept concentration on the consumer/buyer centric scenario is right on target. SSSSSSSoooooooo..... back to CRM.

One of the cost benefits of CRM information gathered at point of contact is supposed to be vital and timely market campaign feed-back. I got to witness such an initiative at General Motors years ago, when the customer "care" CSRs asked each caller to answer two brief questions at the conclusion of their contact. Understand that this was the caller's option to participate in this brief survey, but more than 80% of the callers DID do so "to help us serve you better." Both questions asked were tied directly to marketing and advertising campaigns. The goal, obviously, was to determine the efficacy of those campaigns. What a great feed-back loop! This provided timely evaluation information for measuring the cost benefit analysis of each campaign untainted by the arm-around-the-shoulder relationship between sales and marketing.

Who is doing this now? Where are the evaluations of the costs and effectiveness of marketing? If marketing has to go under the same cost scrutinies as operations, especially for bugetary funding, me thinks the Dilbert "two drink minimum" marketing fraternity might have to be dropped to a short single shotglass.

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avatar
By admin
14th Mar 2003 22:11

Ah, Richard, dear heart, you still have to delve into the costs of marketing and the ROI of marketing. Now there's the rub! It would seem, from reading the HBR et al that our Dilbert "two drink minimum" clubbers in marketing doth protest an awful lot about what they do. Yes, market analysis is vital, but it's relatively quick and easy to do these days with the assistance of analytic hierarchy programs. I won't be maudlin here about our old days of 10 button calculators and slide rules for doing such measures. But you are indeed addressing the most visible marketing efforts with the "push" campaigns when you attempt to explain why marketing isn't working anymore.

I have an auto-mute button on my tellie for ads during programs (for the very few weekly hours I do that leisure activity), I stop at the trash bin to deposit unopened unsolicited advert mailings, I immediately fling the adverts section of the Sunday Chicago Tribune into the paper recycling bin before I settle into my comfy chair with my coffee, I have long-since had an ad pop-up blocker on my computer, and I have caller ID to avoid telemarketers. Still, I am a consumer and my accountant can tell you that I DO spend. So, am I a-typical for most consumers? Not according to University of Michigan's most recent study on consumer reactions to advertising and marketing campaigns.

Your concept concentration on the consumer/buyer centric scenario is right on target. SSSSSSSoooooooo..... back to CRM.

One of the cost benefits of CRM information gathered at point of contact is supposed to be vital and timely market campaign feed-back. I got to witness such an initiative at General Motors years ago, when the customer "care" CSRs asked each caller to answer two brief questions at the conclusion of their contact. Understand that this was the caller's option to participate in this brief survey, but more than 80% of the callers DID do so "to help us serve you better." Both questions asked were tied directly to marketing and advertising campaigns. The goal, obviously, was to determine the efficacy of those campaigns. What a great feed-back loop! This provided timely evaluation information for measuring the cost benefit analysis of each campaign untainted by the arm-around-the-shoulder relationship between sales and marketing.

Who is doing this now? Where are the evaluations of the costs and effectiveness of marketing? If marketing has to go under the same cost scrutinies as operations, especially for bugetary funding, me thinks the Dilbert "two drink minimum" marketing fraternity might have to be dropped to a short single shotglass.

Thanks (0)
avatar
05th Mar 2003 23:24

This is a topic of some breadth! Whether marketing works or not is dependent on many factors: Mass vs. niche, fashionable vs. functional, luxury vs. economical etc., but an even more fundamental distinction is that of product vs. service.

The lack of time consumers have (mentioned in the comments to part 1) has been demonstrable in the rise of Services. Suddenly everything can become a Service. For example, you can buy Fairy Liquid and clean busy neighbour's dishes for a fee. Probably you cut costs and choose an own brand. P&G have a different sort of buyer on their hands there. Hotels and coffee shops (referring to another post from Part 1) are arguably mostly service. I'd venture branding & marketing is more relevant there.

In any case, the strategic importance of the service element in your business needs to be re-evaluated as competition grows, regulation changes, etc.

Customer Service is actually a misnomer. Product companies maybe, but when your business is a service, it should be avoided because of potential confusion. Relationship is to be preferred, it emphasises the two way nature that the seller-buyer interaction really is, especially when those are repeat or loyal buyers that you want. In those cases, it won't do to cut corners on CRM.

(I had some comments on the "self-service" concept, but at this late hour I'd rather just perform it instead and go home).

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By jorgos
14th Mar 2003 13:41

Marketers need to understand the following axioms:

1. If something is PERCEIVED as a commodity, spending enormous amounts on mass messages to convince that it is actually a valuable BRAND is an enormous waste.
2. I, as a consumer, am willing to entertain the proposition that there is value in a particular commercial message if that message is relevant to my needs and is presented in a context which suits me.
3. With regard to the particular problem faced by P&G (and most other FMCG manufacturers), it is a function of the following issues:
- they never really know who their consumer actually is (only the retailer does)
- generations of product & brand managers have been brought up with the mass broadcast message as the Holy Grail of reaching their audience
- they have failed (with some minor exceptions) to realize that, for the modern consumer, the context of the engagement with a brand (=experience) is becoming at least as important as the underlying commodity/product/service

So, marketing may not be dead but it is certainly long overdue for a radical overhaul.

Thanks (0)
avatar
08th Mar 2003 23:31

Reading through the responses, you get the idea that Marketing is dead and buried. To be replaced with… well… what? Unfortunately, nobody has yet come up with a real alternative for traditional marketing.

Sure marketing has its problems; the chief one being that it is a producer-driven, inside-out, push activity that takes scant regard of customers’ real needs, wants and expectations. This has resulted in your typical customer being bombarded with thousands of marketing messages every day in an ever-increasing war for attention. Customers manage by focussing on the messages of interest and ignoring the rest. And marketers manage by experimenting with new approaches to capture the attention of the customer, like using new channels, getting friends to promote their products and dating their customers.

But business has always been like that; an escalating war by producers, for the attention of customers? This continuous evolution of transactional relationships is what underpins almost all market interactions, whether you are looking for a tin of beans, for a reputable builder, or for the best deal on a new car. Some producers will compete on the lowest costs, some on the best products, and some on trust-based relationships. The best will probably do a bit of each. It is still the most effective market informing (and clearing) mechanism available for the huge volume of transactions carried out each day.

Would a customer-driven, outside-in, pull approach to business work better. I very much doubt it. The difficulty lies in who does the thinking. Today, it is the billions of customers deciding what to buy. To transfer anything but a small amount of this thinking from customers to companies is just not practical. And that is assuming that companies actually do understand customers’ needs, wants and expectations. As Gerald Zaltman’s research shows, understanding how customers sense, feel and think is a much tougher problem than we first thought.

So what can we do? Well, we can experiment with buyer-centric approaches to business, but I for one am not holding my breath. My money is on the continuous development of traditional marketing aided by better customer information, better analytics and faster computers.

As Mark Twain might have said: “The death of marketing has been greatly exaggerated”.

Graham Hill
Independent CRM Consultant

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avatar
03rd Mar 2003 14:28

Marketing - as we have come to know it, has indeed changed ...and we need to modify our approach to it with careful consideration! Why? Quite simply because the consumer
'sheep' are just not being good sheep any more.

I have always considered marketing communication to be driven by two complimentary processes: a 'promise' (wrapped in a brand) and the 'consumption' experience that goes with it. (Such experience usually rubs off on the brand - one way or another).

When we were 'disconnected' from each other, brand architects became very good at making promises, and wrapping them in clever messages and memorable brand icons. The mass communication channels delivered these promises with abandon.

The consumer had little choice but to pay some attention - mainly because they were hungry for more information in an information-scarce world.

When we became 'connected' the game changed for ever. The consumer is no longer at the tail-end of the foodchain, dependent on marketers to keep them informed.

The bottom line: Marketing isn't working any more because consumers are just not as dependent on it - to the extent they once were!

What bothers me more is the belief that anyone should be in control at all. Relationships have to be shared, and therefore promises and experiences should both be made and delivered on the basis of both parties being equal 'partners' to the brand relationship!

Most human beings simply want to be recognised for the part that they play in ANY relationship - and the same goes for marketing!


Thanks (0)
avatar
08th Mar 2003 23:31

Reading through the responses, you get the idea that Marketing is dead and buried. To be replaced with… well… what? Unfortunately, nobody has yet come up with a real alternative for traditional marketing.

Sure marketing has its problems; the chief one being that it is a producer-driven, inside-out, push activity that takes scant regard of customers’ real needs, wants and expectations. This has resulted in your typical customer being bombarded with thousands of marketing messages every day in an ever-increasing war for attention. Customers manage by focussing on the messages of interest and ignoring the rest. And marketers manage by experimenting with new approaches to capture the attention of the customer, like using new channels, getting friends to promote their products and dating their customers.

But business has always been like that; an escalating war by producers, for the attention of customers? This continuous evolution of transactional relationships is what underpins almost all market interactions, whether you are looking for a tin of beans, for a reputable builder, or for the best deal on a new car. Some producers will compete on the lowest costs, some on the best products, and some on trust-based relationships. The best will probably do a bit of each. It is still the most effective market informing (and clearing) mechanism available for the huge volume of transactions carried out each day.

Would a customer-driven, outside-in, pull approach to business work better. I very much doubt it. The difficulty lies in who does the thinking. Today, it is the billions of customers deciding what to buy. To transfer anything but a small amount of this thinking from customers to companies is just not practical. And that is assuming that companies actually do understand customers’ needs, wants and expectations. As Gerald Zaltman’s research shows, understanding how customers sense, feel and think is a much tougher problem than we first thought.

So what can we do? Well, we can experiment with buyer-centric approaches to business, but I for one am not holding my breath. My money is on the continuous development of traditional marketing aided by better customer information, better analytics and faster computers.

As Mark Twain might have said: “The death of marketing has been greatly exaggerated”.

Graham Hill
Independent CRM Consultant

Thanks (0)
avatar
05th Mar 2003 23:24

This is a topic of some breadth! Whether marketing works or not is dependent on many factors: Mass vs. niche, fashionable vs. functional, luxury vs. economical etc., but an even more fundamental distinction is that of product vs. service.

The lack of time consumers have (mentioned in the comments to part 1) has been demonstrable in the rise of Services. Suddenly everything can become a Service. For example, you can buy Fairy Liquid and clean busy neighbour's dishes for a fee. Probably you cut costs and choose an own brand. P&G have a different sort of buyer on their hands there. Hotels and coffee shops (referring to another post from Part 1) are arguably mostly service. I'd venture branding & marketing is more relevant there.

In any case, the strategic importance of the service element in your business needs to be re-evaluated as competition grows, regulation changes, etc.

Customer Service is actually a misnomer. Product companies maybe, but when your business is a service, it should be avoided because of potential confusion. Relationship is to be preferred, it emphasises the two way nature that the seller-buyer interaction really is, especially when those are repeat or loyal buyers that you want. In those cases, it won't do to cut corners on CRM.

(I had some comments on the "self-service" concept, but at this late hour I'd rather just perform it instead and go home).

Thanks (0)
avatar
03rd Mar 2003 14:28

Marketing - as we have come to know it, has indeed changed ...and we need to modify our approach to it with careful consideration! Why? Quite simply because the consumer
'sheep' are just not being good sheep any more.

I have always considered marketing communication to be driven by two complimentary processes: a 'promise' (wrapped in a brand) and the 'consumption' experience that goes with it. (Such experience usually rubs off on the brand - one way or another).

When we were 'disconnected' from each other, brand architects became very good at making promises, and wrapping them in clever messages and memorable brand icons. The mass communication channels delivered these promises with abandon.

The consumer had little choice but to pay some attention - mainly because they were hungry for more information in an information-scarce world.

When we became 'connected' the game changed for ever. The consumer is no longer at the tail-end of the foodchain, dependent on marketers to keep them informed.

The bottom line: Marketing isn't working any more because consumers are just not as dependent on it - to the extent they once were!

What bothers me more is the belief that anyone should be in control at all. Relationships have to be shared, and therefore promises and experiences should both be made and delivered on the basis of both parties being equal 'partners' to the brand relationship!

Most human beings simply want to be recognised for the part that they play in ANY relationship - and the same goes for marketing!


Thanks (0)
avatar
By jorgos
14th Mar 2003 13:41

Marketers need to understand the following axioms:

1. If something is PERCEIVED as a commodity, spending enormous amounts on mass messages to convince that it is actually a valuable BRAND is an enormous waste.
2. I, as a consumer, am willing to entertain the proposition that there is value in a particular commercial message if that message is relevant to my needs and is presented in a context which suits me.
3. With regard to the particular problem faced by P&G (and most other FMCG manufacturers), it is a function of the following issues:
- they never really know who their consumer actually is (only the retailer does)
- generations of product & brand managers have been brought up with the mass broadcast message as the Holy Grail of reaching their audience
- they have failed (with some minor exceptions) to realize that, for the modern consumer, the context of the engagement with a brand (=experience) is becoming at least as important as the underlying commodity/product/service

So, marketing may not be dead but it is certainly long overdue for a radical overhaul.

Thanks (0)