blog: archives

The Good Old Days or The Good New Days

If population, technology and economic growth were predictable then the value of a product’s unique selling proposition would also be predictable and the stable growth of a business would be assured. There was a temporary experience of this phenomenon in the post-war 50’s in America when industrial technology released from the war effort into a stable market hungry for innovation created a boom in both the economy and the birth-rate.

However population mobility, economic volatility, technological innovation, geopolitical instability have since created such unpredictability that consistent values seem impossible to gauge. These destabilizing factors weaken the corporate armor of even the most dyed-in-the-wool product icons for competition to attack. And the greater the proliferation of choice, the more unpredictable the customer appears in how they make choices.

Stuck In Tunnel Vision
Despite all this uncertainty the most common practice of businesses and organizations is to mold their values around a core leadership within the business. And they define their marketing assets based on the values that are business-centric, such as described above.

A business that blends this cocktail of assets successfully will achieve growth and achievement within a specific window of oppportunity. And, if it can generate enough capital within that window then it will be able to sustain itself through the inevitable redundancy of the product or service that built its financial base to adapt to changing market conditions. If it misses that window of opportunity, then so much innovation and investment will be flushed down the toilet. This is the scary and unpredictable world of venture and risk capital. It has become the roulette wheel of corporate fortune and misfortune.

Get Out of the Tunnel
But, if you think about it more deeply, the ability to sustain coporate performance throughout all the environmental and economic changes and fluctuations really depends on one thing: Customer values. Customers make all their choices based on their values. And there is ample proof in population statistics to demonstrate commonalities in customer values to sustain both mass market and niche markets for products and services. You can look at this as the basis for forming your Customer Value Grid.

Customer values form a totally different grid to the corporations. Each product is a fraction of the customer’s total spectrum of activity. So the product or service provider is only addressing a small fragment of the customer’s needs. Understanding the full spectrum of customer values will inform the marketer how to place its products within the Customer’s Value Grid. Rethinking your approach along these lines is your first step to keeping customers engaged for loyalty, frequency and continuity. What does this mean? It means stability within the context of change, or the reduction of unpredictability within your business.

The first step we mentioned is to classify the assets of your product or service in relation to a comprehensive customer needs system of classification:

  • How does your customer look at your product?
  • Achievement: how well will this product or service help me to achieve my goals?
  • Convenience: how easy is it to locate, engage or acquire this product or service?
  • Comfort: can I use this product in a comfortable way or to increase comfort.
  • Esteem: will the use of this product/service equate with or raise my esteem?
  • Pleasure: will this product/service directly or indirectly enable me to increase the amount of pleasure in my life?
  • Trust: is this product, service or company a reliable source for all of the above.

Don’t be surprised that affordability is not represented as a customer value. Customers will expose themselves to financial risk to maximize comfort, esteem or pleasure. A house purchase is a fundamental example of this. Few homebuyers purchase a house that is easily affordable. In a consumption-driven society customers will invest disproportionate to their means to maximize these values. Wal-Mart’s value pricing simply enables their customers to maximize convenience and pleasure, often at the expense of comfort, through over-consumption. Although one the world’s largest retailer has built its business on the value of affordability, this is because price is only a function of the degree to which all the above can be satisfied.

A business that builds its values on the ACCEPT Customer Value Grid and maintains this focus can realize stability and predictability within its financial model.

Written By |Customer Focus, Marketing Strategy, Sales & Marketing, Uncategorized|Comments Off on The Good Old Days or The Good New Days
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The Vicious Circle of the Marketing Cycle

I have spoken throughout this blog about the problems of the goals-driven enterprise, as opposed to the customer-driven enterprise. The goals-driven enterprise has one mandate: to leverage its assets to achieve maximum wealth. The fastest way to do this is to tender shares publicly. This is how the shareholder becomes more important to the enterprise than the customer.

In an economic downturn, in order to maximize shareholder value the enterprise cuts prices to stimulate demand and cuts costs to maintain a margin. Marketing investment becomes highly expendable. What the enterprise is effectively saying is, “My products and my customers are now worth less to me so I am going to invest less in them so that my shareholders don’t complain about achieving a lower rate of return on my customer investment.”

This is perfectly reasonable accounting view of the marketing cycle. The Corporate Treasury says “When I am profitable I don’t mind risking some of that money in marketing as as long as I can see growth. When there is no growth then marketing is futile and it will be erased from the bottom line as long as I can prove in the books of accounts that it does not fuel growth.”

Let’s look at the possible consequences of this strategy:

– When you stop communicating with your customer and lower the price of your product, what does that do to the perceived value of the product, service or business? It creates a ‘new normal’. The value of the relationship with the customer flies out of the window and the product becomes a commodity item, indistinguishable from other low-cost solutions available.

– What happens when the economy comes back? The compelling reason customers bought your product/service in the past has been lost as the relationship linked through COMMUNICATION was severed by the Treasury. You find that your competitors have caught you up, or overtaken, and you realize that your name no longer carries weight. So what do you do? You hire an expensive branding or rebranding consultant and revamp all of your marketing literature and advertising to overcome the inertia caused by the vacuum that you created.

This gamble might pay off. But if it doesn’t the shareholders will excoriate you for failure and try to eject the Board. Or another competitor that did not cut of communication with its customers steamroller you into being bought. If you don’t believe this happens then you aren’t looking.

So how to get out of the vicious cycle? Be a customer-centric enterprise. When there is an economic downturn adapt to your customers new realities without divorcing the relationship and cutting off communication. Work with your marketing partners to find more cost-effective solutions that keep the customer dialog and relationship going. Find ways to add value better than cutting your price.

Those who say it can’t be done do not deserve the title of Marketing. Marketing is the meeting point of customer need and product supply. There is always a way to communicate value that supports this relationship connectivity. You may have to be more creative and give up on some of your personal goals achievement in the short term. But, customer-centric marketing establishes loyalty, frequency and continuity as its scale of success. If you cannot align your business to a customer’s values in an economic downturn then you are a goals-driven enterprise and you will be punished by your shareholders at some point for failing to engage customers over the long haul.

That’s when the vicious cycle comes and bites you where it really hurts – at the peak of your career development.

Written By |Marketing Strategy|Comments Off on The Vicious Circle of the Marketing Cycle
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  • Attracting Customers
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