The Marketing Consortium

Passing the Baton

As May turns in to June, it's time for me to pass the keyboard along to our next blogger. Unfortunately we only scratched the surface of marketing buzzwords, and of customer-centric marketing, in the past few weeks. We'll flesh out the rest of the 8 prerequisites for customer-centric transformation into a white paper, so anyone interested in following that thread through to its conclusion can just drop me an email to get it ([email protected]). It'll probably take a few weeks to complete.

Next up is Alan Bunce, our Senior Product Marketing Manager for Marketing Resource Management. Throughout the month of June, Alan will be discussing marketing operations. It’s an important topic for all marketers, but one which doesn’t get nearly as much attention and coverage as the more customer-facing aspects of marketing. I’m sure Alan will do his best to make up for that, and we look forward to your continued active participation through reading and commenting.

Best regards, Andrew

Customer-Centric Marketing Prerequisite #2: 350 Degree View of the Customer

Who first came up with "360 degree view" and when? This buzzwords feels mid-Bronze Age, like "1-to-1." Not quite paleolithic like "customer centric," but certainly old enough to have helped power the growth of billion-dollar businesses in ETL, data quality, systems integration.

For the uninitiated, "360 degree view of the customer" is about creating and providing access to a comprehensive collection of information about individual customers. It's the corporate memory for customer interactions. Without it we're like the character in Memento with no short-term memory, doomed to continually re-acquaint ourselves to customers, unable to differentiate between customers we've known for years and prospects we've never met. If we don't have data on our customer, we cannot know them, respect their preferences, develop new offerings they will value, etc.

Mature principles, tools, and practices underpin customer data warehousing, so organizations that haven't yet laid this steppingstone to customer-centric marketing can proceed with confidence. But if "360 degree view of the customer" is a worn-out buzzword, why is it still alive and kicking here and many other places? Probably because it's a moving target. Our digital economy produces a growing flood of types, sources and volumes of data that will keep our partners in IT running up the down escalator in perpetuity. For example, even obviously important data like on-line customer behavior was missing from more than four fifths of customer databases when Forrester last conducted their "State of the Customer Database" survey. Hence the "350 degrees" in today's title, which is a more realistic goal than a full 360. Openness and flexible data access on the part of marketing systems is the key to surviving and even thriving with this constant change. You don't want to be stuck waiting for IT to integrate any and every source of data you may need.

But now that creating the 350 degree view is largely a solved problem, providing access becomes the limiting factor to organizations fully harnessing customer data to drive customer-centric marketing. Generally speaking, only specialists in database marketing, analytics, and similar functions work directly with customer data. Some leading companies use EMM software to serve individual customer insight to real-time touch points like web, POS and call center. But the complexity of customer data and the tools used to access it prevent the majority of marketers from being able to make decisions based on their own analysis of customer data. Business intelligence vendors may claim to offer tools for "business users" to do their own analysis, but the truth is that the vast majority of marketers do little more than view canned reports.

The situation described by the head of customer insight for one of our customers, a leading West Coast retailer, is typical. They have a great customer data mart (one of the 18% will click stream data fully integrated) and implemented best-in-class OLAP technology to provide ad hoc analysis capabilities. But in the end merchandise managers and other marketers still email query requests to the customer insight team rather than leverage customer data themselves. Why can't they just slice and dice to their own answer to how many blue sweaters were sold in New England last quarter, I asked? "Well," he replied, "what is blue? Is 'aqua' blue? Our product hierarchy is huge and complicated, so marketers can drown in the data." The analysts understand the data. And, even the best OLAP tools are still just rows and columns. That may be fine for business users in finance, but it's not the way most marketers think about customers.

Unica has learned from our web analytics product, Affinium NetInsight, that data analysis can be democratized if marketers are given the right data, specific to their domain and questions, and the right way to look at it, through visualizations specific to marketing. We've just launched Affinium Insight for more general cross-channel customer analysis. We believe it will help IT and analytics teams derive more value from the 350 degree customer view they've worked so hard to create by extending access to non-specialists. After all, how customer-centric can marketing be if only a few marketers hear the voice of the customer?

Customer-centric Marketing Prerequisite #1: Executive Coercion

These days, advocates claim the need for "executive support" for any corporate initiative beyond switching #2 pencil vendors. But what's needed for real, down-to-the-bone customer centric transformation is of a different order entirely. As an early poster observed, focus on the customer doesn't come naturally to most of the thousands of front-line employees that interact with customers on a daily basis. Silos must be blown up and attitudes changed. What's needed is more akin to coercion and support.

Fortunately, in many cases the ball starts rolling with an executive-level decision to adopt a customer-centric business strategy, so there's buy-in at the top to begin with. The reasons for the shift in strategy vary. It is often prompted by the imminent slowdown in traditional sources of growth. Best Buy decision-makers, for example, foresaw the limits to geographical expansion. Wachovia needed to generate organic growth while consolidating a string of acquisitions. Hyper-competitive markets also spawn customer-centric strategies, often by those firms a rung or two down from the top. OCBC, Singapore's 2nd largest bank, turned to service excellence and relationship management to stand out in their hyper-competitive market, where any product differentiation is rapidly imitated and banks share similar distribution networks. In case you missed it, in August, Forrester Research's Elana Anderson posted a great entry about three different approaches to customer-centric strategy that companies can take.

Once the journey is begun, highly visible and enduring executive support must make it clear that customer-centricity is more than the latest corner-office fad. KeyBank CEO Henry L. Meyer III went on the record, saying "I want KeyBank to be at the forefront… of a movement away from an obsession with selling products to one that emphasizes meeting client needs." Best Buy Vice Chairman and CEO Bradbury H. Anderson made things clear in his 2005 letter to shareholders: "only those retailers who stay close to their customers can flourish." This commitment must be sustained across the multi-year time frame required even for leaders like Best Buy, whose marketers still don't feel they've gone as far as they need after 5 years.

During the years of customer-centric transformation, proper executive coercion manifests itself by driving the the other seven elements in our list of key criteria. Most importantly,

• Organizational change: creating ownership for the "voice of the customer" and re-engineering business processes around these teams
• Culture change: instilling a customer orientation into organizational values, principally through hiring, measurement, and compensation practices
• Investment: investing in infrastructure, such as data integration, Enterprise Marketing Management, as well as people, both training and skills for existing employees and headcount growth for customer segment managers, analysts, etc.
• Cheerleading: internal salesmanship through highlighting accomplishments and promoting tangible business benefits

While most of these points relate to customer-centric transformation of entire companies, we also see many marketing organizations successfully pursuing customer-centricity within their organizations in a more ground-up fashion. But executive sponsorship (if not coercion) is still needed. Peter Kim's blog entry on "Reinventing the Marketing Organization" highlights the need for culture shift, investment, and redesigned P&Ls and metrics, all of which clearly require executive buy-in. More even than changing pencil vendors.

Next, we'll cover customer-centric marketing prerequisite #2 (and perennial marketing buzzword), "360 degree view of the customer."

From talking the customer-centric talk to walking the walk

Last week we discussed why the "customer-centric" buzzword has shown such staying power. Most importantly, because (a) powerful market dynamics are reducing the efficacy of marketing tactics that are not customer-centric, and (b) achieving truly customer-centric marketing has proved very challenging. Much ink has been spilled discussing the former, especially Web 2.0 (the buzziest of marketing buzzwords right now) but less on the latter, and we here at Unica continue to sense a thirst for practical advice on how to walk the customer-centric walk. So, our next set of blog posts will capitalize on Unica's experience working with hundreds of marketing organizations, many of whom have tried and sometimes succeeded in orienting their marketing (and broader organizations) around customers.

In Unica's experience, organizations that are successful with customer-centric transformation meet eight main criteria, across the three main dimensions of organization, resources and technology infrastructure. In roughly chronological order, these are:

1. An executive-level decision to adopt a customer-centric business strategy; sustained, long-term executive commitment
2. A "360 degree view of the customer" data infrastructure (there's another buzzword!)
3. Strategic segmentation, built from solid customer data (#2) by skilled analysts and refined through surveys, etc.
4. A team to "own" the strategic segments and be the voice of the customer (from a business results perspective, not an analytical perspective), and an organizational structure that facilitates their success
5. Detailed, segment-by-segment business strategies and marketing tactics
6. Processes and customer experience (and compensation) re engineered around customer and segments
7. Broad socialization of segment personas and communication of resulting business benefit
8. Customer and segment-oriented metrics on scorecards, dashboards, and reports

Let me be clear that this is what we've observed in the subset of successful, customer-centric companies that are also Unica customers. Are there other factors that we haven't picked up? Are there entirely different formulas all together?

In subsequent posts, we will delve into each of these criteria.

Eternal Marketing Buzzword #1: Customer-centric Marketing

I want to tackle "customer-centric marketing" first because it’s the phrase that got me thinking about marketing buzzwords in the first place. Customer centric marketing was the theme of the Forrester Marketing Forum last month. Days later, there it was again, the subject of an airline exec’s welcome letter in the front of the Northwest Airlines in-flight magazine. And then this week, the drive for customer-centricity featured prominently in the presentations of three of the four finalists for our "customer success award."

At no point have I heard an exasperated cry of "enough!" Quite the opposite; our customers seek any help and advice we can provide. Customer-centric marketing has some buzz left in it. I have a few notions why:

• It’s difficult. As the title of blog thread reads, it’s easy to say but hard to do. Very hard.
• There’s no alternative. The underlying marketing mega-trends driving it (competition, channel proliferation/fragmentation, consumer empowerment, and ad saturation) continue to grow.
• We didn’t really mean it before. Putting the customer first was initially a branding strategy, a tag line like "Have it Your Way." Then it graduated to lip-service since no company wants to admit being self-centered rather than focused on the customer, though the "shareholder value" mantra comes close.
• It’s self-serving. As Marketing usually represents "the voice of the customer," customer-centricity elevates our importance.
• It works. Many of the companies wiping the floor with the competition these days visibly and successfully adopted customer-centric strategies.

Next, we’ll tackle the "hard to do" aspect of customer-centric marketing by describing some common characteristics of Unica customers that have made it happen.

Marketing-speak, disconnected from reality?

Kevin Hilstrom's post raised a couple of important points:

• Marketing's credibility gap
• The need for executive sponsorship for customer-centric change
• "Ownership" of voice-of-the-customer

The credibility gap seems to be getting surfaced and discussed already, at least judging by the number of times conference presentations reference the old hack about knowing half our marketing is wasted but not which half. But the trend seems to be in the right direction, and not just because we've taken the first step of admitting we have a problem or because measurability and accountability are high on the buzzword meter these days (also easy to say, hard to do). Orgs are investing in capabilities, the media mix itself is becoming more measurable as it shifts to direct and online channels, etc.

Regarding the necessity of executive sponsorship for a company to become customer centric, please allow me to defer to a later post that will discuss this and the many other things that, from our observations, are the necessary preconditions for a successful customer-centric strategy. Suffice to say, it's high on the list. BTW, at some level customer-centricity is a business strategy, not one of the Ten Commandments (oops, I was told to stay away from religion in posts), and will not be right for all business. So never will all CFOs and CEOs be interested. Check out what Elana Anderson wrote in an earlier Marketing Consortium post about different degrees with which companies pursue this business strategy

Third, Kevin is right that the database marketing organization is bound to be instigating or at least mixed up with customer-centric strategies. Since C.C. relies on understanding individual customers, they hold the keys to the kingdom to some degree. But it rarely goes anywhere if exec sponsorship and several other preconditions aren't in place.

In the mean time, I wouldn't hold my breath waiting for the end of vendor hype or consulting punditry, which have joined death and taxes as fixtures in our firmament.

Easy to say but hard to do: marketing’s immortal buzz words

Hello. I’m Andrew Hally, head of segment management for Unica and this month’s Marketers' Consortium host. I’ll be blogging about topics that predate blogging by decades. Tired, threadbare subjects like “customer-centricity” and “one-to-one.” Might even touch on “closed-loop,” or (heaven forbid) “cross-channel marketing.”  Why? “To improve search engine rankings!” cry the cynics. No, for reasons far more selfish than that: in the hopes of understanding something that’s been bugging me for months. Why are we marketers are still talking about these things?!?

It’s been 14 years since Pepper & Rogers published “The One to One Future.” 23 years since customer-centricity went mainstream with Burger King’s  “Have it Your Way.” Few seriously challenge how critical it is to focus on the customer, yet the ranks of those companies who can walk the walk remain thin. Those that can, like Best Buy and Southwest, become Wall Street and media darlings. But most companies are stuck somewhere between knowing and doing.

Clearly, these immortal marketing buzzwords are easy to say but hard to do. This title was inspired by the refrain from Peter Kim’s great presentation at the Forrester Marketing Forum earlier this month that drew a parallel between being customer-centric and saving the environment. Peter showed how it is easy to talk about “being green” yet quite an effort to sustain the day in, day out commitment to recycling, conserving, etc. Even though the fate of the planet may depend on it.

Unica has the good fortune to be working with hundreds of marketing organizations across the world, including those like Best Buy who have attained buzzword compliance and those still striving. This provides some perspective on the obstacles preventing marketing organizations from being the accountable, closed-loop, customer-centric Superstars that our salespeople and customers alike wish we were. I look forward to sharing some observations and remedies over the next month. And, to your feedback, validation, refutation, expansion, or whatever. Part of the culture here at Unica is what we call “brutal honesty.” We believe in using discussion and debate to separate the wheat from the chaff. What could be better for this than our blog?