In May 2010 IBM conducted its fourth biennial survey of CEOs conducting over 1500 interviews.[i]For 88% of them their top priority was getting closer to the customer, an overwhelming result. In 2011 IBM followed this up with a global survey of survey of 1,734 Chief Marketing Officers.[ii]Asked the same question less than 40% gave the same answer, a clear disconnect with their bosses. Armed with all sorts of digital tools with which they can track blogs and customer views nevertheless they seem market rather than customer focused. There has been an explosion of data which may inhibit rather than empower them. There is a paradigm shift in the use of social media, a lifestyle choice rather than a change of channel. Indeed there has been a proliferation of new channels and new devices to access them. To some extent the surfer of these channels has become the product. With people living longer and longer (see my Blog The Demographic Time Bomb 21st April, 2012) this is the first time in history that we are marketing to four generations. There needs to be a strategy for dealing with the customer, not least to answer the question in an organisation: Who owns the customer?
In 1991 I spoke at the Marketing Society Annual Conference and shared the platform with Stan Rapp, a pioneer in database marketing. Stan made an impassioned plea for us all to get the message that data was the most powerful marketing tool. In 1993 Don Peppers and Martha Rogers wrote a ground breaking book, The One-to-One Future -Building Relationships One Customer at a Time.[iii]In it they proposed a revolutionary alternative to mass-marketing. Rather than selling to as many people as possible, it focused on selling as many services or products as you could to one customer at a time. To some extent it was a form of classic segmentation, finding out the 20 per cent – or even 2 per cent- of your customers who were the most loyal and offered the biggest opportunities for future profit. But they also spoke of collaborating with each customer, on an individual basis, as you would with your individual suppliers. They had the temerity to suggest that we should cultivate our relationship with each customer by using new, one-to-one media – the fax machine, voice mail, touch-tone telephone, cellular phones and (eventually) interactive TV.
Of course, they could have little idea that all or most of these technologies would be superseded or at least radically altered by subsequent developments. At the time the technologies of which they spoke were not in fact well adapted for such use. Companies who followed this advice finished up developing horribly impersonal implementations of this strategy with aggressive cold calling, clueless call centres, robotic voice messages and worse. Pepper and Rogers also exhorted us to develop new marketing ideas to make the most of this new one-to-one reality. Perhaps it was that insight that inspired the guys at Dunnhumby to develop their research techniques that analysed supermarket sales data and led to the Tesco Clubcard. It is popularly assumed that it was clever use of the Clubcard that helped drive Tesco to its dominance of the supermarket scene. But I have my doubts. Was it really so clever to offer me so-called loyalty discounts on future shopping? My doubts were personally reinforced when I received a discount voucher from Tesco for a dog food product. The problem was our 16 year old family dog had died just three weeks before. Tesco’s computer had recognised that we had failed to buy dog food for a few weeks and assumed that we had bought it elsewhere and needed an incentive to buy Blackie’s next meal at Tesco. Unfortunately Blackie was now buried in the garden.
One of the CMOs in IBM‘s survey was quoted as saying “The perfect solution is to serve each customer individually. The problem? There are 7 billion of them.” But increasingly technology is not a barrier. There are appropriate software tools and they are ready to roll out. The customer now decides how to manage the relationship. But it may require a realignment of the organisation. At a Criticaleye event I attended recently Bill Payne of IBM argued that we need a single view of the customer across the channels. Travers Clarke-Walker of Barclays questioned whether marketing departments are fit for purpose in this world of exploding data. Padraig Drennan of World Duty-Free admitted that the more we understand, the less we understand. Bill Payne thinks one answer is for the appointment of a Chief Customer Officer (but see my blog Too Many Chiefs 20 November 2010) Two years ago in seminars he would ask the question: How many of you have a Chief Customer Officer and noone would raise his hand. Now it remains like that in the UK but in the US about 10% raise their hands while in Asia it’s about 30%. The smart CMOs, says Bill, should put their hands up for this.
Another solution might be what is being proposed by David Thorp, Director of Research and Professional Development at The Chartered Institute of Marketing. I attended the launch of his paper Marketing and sales fusion[iv]in November 2011 in which he argued that the growing divide between marketing and sales departments is wrong and he predicts that “In 10 years from now there will be no such thing as separate marketing and sales departments. There will be one team comprising two interdependent disciplines.” The distinguished Professor Malcolm McDonald, Emeritus Professor, Cranfield School of Management, supports this stating “the organisational separation of the two functions of marketing and sales is nonsensical in the extreme. It is a bit like separating market research, sales promotion and advertising from marketing.”
Greg W Marshall is the Charles Harwood Professor of marketing and strategy, Crummer Graduate School of Business, Rollins College, Florida, and professor of marketing and strategy at the Aston Business School in Birmingham. He has spent years researching the interface between sales and marketing and is an advocate of integration and mutual understanding. His research, and the work of others in the area, suggests the following general principles:
· Cross functional exchange programme: ensure that marketing people spend time in the field every year and invite sales people to focus groups or ad agency meetings.
· Overlapping metrics: have at least one or two KPIs that apply to both functions.
· Sales advisory council: to keep marketers and their agencies up to date on what the trade is thinking, and to share their own direct consumer experience.
· Jointly develop and own the value proposition: traditionally the remit of marketing, input from sales in the early stages of development could not only provide valuable insights but also a sense of shared ownership and commitment to making it work.
· Communication and fun: do more to ensure regular communication through conferences and planning sessions. Have some fun together.[v]
In my career I have known and experienced probably all the different organisation structures. I have had the benefit of working both as a sales manager and as a brand manager before moving into general management and wresting with this dilemma. As a marketing man I thought like a salesman. As a salesman I thought like a marketing man. In one organisation, Pillsbury, I ran a business unit with my own marketing, manufacturing and R&D but sharing a sales force with two other business units. This structure, justified on grounds of cost and influence with the trade, nevertheless caused immense frustration and mutual recriminations. A partial solution was for me to hire a so-called Trade Marketing Manager, but of course this weakened the cost argument. At Sony I inherited a split structure with deeply different cultures. After a while I knocked it together into a series of business units focused on the Tokyo factory groups and had great success as a result. In the process I created several new general manager positions with consequent gains in personal career development and succession planning.
However, I could see a need to separate the voice of the customer, i.e. the consumer or end user, from the voice of the customer, i.e. the retailer. In a B2C environment these voices should both be heard in the Board room otherwise a noisy dominant customer i.e. retailer might drown out the views of the consumer who ultimately pays all our wages. In a B2B environment this distinction may be less relevant particularly if the company sells a product or service to another company who then uses that product or service directly.
But perhaps in this new world of One-on-One Marketing the reference to B2B or B2C has also become outmoded. Perhaps we should now be saying B2P or Business to Person.
Copyright David C Pearson 2012 All rights reserved
[i]“Capitalising on Complexity: Insights from the Global Chief Executive Officer Study.” IBM Institute for Business Value. May 2010. http://www.ibm.com/ceostudy
[ii]“From Stretched to Strengthened: Insights from the Global Chief Marketing b Officer Study.” IBM Institute for Business Value. October 2011 http://www.ibm.com/cmostudy2011
[iii]“The One-to-One Future: Building Business Relationships One Customer at a Time.” Don Peppers & Martha Rogers Judy Piatkus (Publishers) Ltd 1994
[iv]“Marketing and sales fusion.” David Thorp, Director of Research and Professional Development, The Chartered Institute of Marketing. November 2011
[v]“Chalk and cheese.” Helen Edwards Marketing 26 October 2011