Our customers are in control – that
much we know. Anyone else claiming to be in charge is faking
it.
Meanwhile back at our companies we are running around trying to keep technology
from killing us; looking for ways to create new stuff; wrestling with the
gross inefficiency of working in silos; and most of all trying to improve
the performance of our people in order to generate some profitability.
It just seems that there is a huge disconnect in here somewhere. Is that just
me or do you feel the same way?
I was working on our corporate website finishing up a piece about how most
marketing strategies are tragically out of date when it crossed my mind that “performance
improvement” also needs to be part of this discussion. There is no
point in talking about performance in isolation of the customer – and
strangely that is what happens a lot.
Just as corporations need to ensure that all strategies and decisions are based
on customer perspectives – because that's when the money will start
flowing in and customer loyalty becomes a major competitive reality – we
need to have the same reference in thinking through how we manage the performance
of our people.
The days of business being generated because you have the cheapest product,
or the most colors, or the most availability are gone. Those things are no
longer differentiators – they are the entry fee just to play the game.
So let’s look at performance from a marketing perspective.
It is true that traditional marketing approaches have served most businesses
well over the past few decades. But as Babe Ruth said: Yesterday's home run
won't win tomorrow's ballgame!
Leading executives know they have to constantly challenge their assumptions
and the way they look into the future. While the complexity and potential
of technology has amazed us, it has also created unparalleled discontinuity.
The global economy questions our application of global branding in relation
to our intuitive desire for localization of product and message. Everything
is blurry - the distinction between product and service; between buyers and
sellers (simply asking who the customer is results in hours of debate in
most companies); and between companies and their traditional environments.
All of this blurriness results in incredible frustration with the task of establishing
a sustainable differential advantage in our particular industry. Heck - it's
even hard to tell where one industry ends and another begins!
Here is the critical marketing transformation that is happening
today:
OLD
Organize by product units
Focus on profitable transactions
Judge performance primarily by financial results
The Marketing Department does the marketing
Focus on satisfying shareholders
Build brands primarily through advertising
Emphasize customer acquisition
Measure customer satisfaction
Over-promise to get the order
Make the firm the unit of analysis
New
Organize by customer segments
Focus on customer lifetime value
Look at marketing metrics as well as financial ones
Everyone in the company does the marketing
Focus on satisfying several stakeholder groups
Build brands through customer behavior
Emphasize customer retention
Measure customer value and loyalty
Under-promise and over-deliver
Make the value chain the unit of analysis
Did you pick up on that line about everyone in the company doing the marketing?
I’d bet serious money most of your people don’t know they have
that responsibility. The guy out there driving the company truck is actually
marketing. Your switchboard person is marketing at every incoming call. Same
is true for people in the warehouse picking, packing and shipping. And of
course, those of us in HR should be the ultimate marketing force! Hopefully
you’ve shared the HR marketing strategy throughout the company.
Two other things have to be considered as well, namely; that brands
are looking more and more alike and brand loyalty is decaying faster
than your 401k. Mass advertising is loosing its effectiveness and
is being replaced by direct marketing and public relations.
Here is the frightening reality - markets
are changing much faster than marketing! Chances are your marketing
strategies are obsolete.
But hey – we are supposed to be talking about performance
improvement aren’t we?
Here is the net of it all.
What your company shouldn’t do in the confusion of the
marketplace is rush to protect your profits by cutting costs hither
and yon. (This is not to say you shouldn’t look for efficiencies – believe
me in your supply chain alone there is a fortune waiting to be
discovered.) In case after case of those taking this pillaging
approach the evidence shows they also fail miserably in growing
revenue and profitability. And revenue and profitability is what
performance improvement is all about!
Instead companies must rethink the processes
by which they identify, realize, communicate, deliver and recapture
customer value. They
need to seed, feed, and weed relationships with their community
of customers and their community of allies – and that gets
right down to the behavior of your people – which in turn
gets down to you!
To put this marketing transformation yet another way - companies need to shift
from fixed to adaptive product and service offerings; from planning to discovery;
from interpretation to facilitation; from competition to collaboration; and
from value chains to business webs.
For us with the strongest belief in the power of our people, this transformation
also means changing from the orientation of customer-as-target to customer
as a relationship. In other words performance improvement should be measured
by an increase in the value of relationships – certainly within the company,
and most importantly with your customers.
Ian Percy is an international speaker and
consultant and can be reached at www.ianpercy.com
The following quotation
must be printed at the conclusion of each reprinted article:
"Copyright
The Ian Percy Corporation."
Ian Percy is one of North America's most inspirational speakers.
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