blog: business continuity

How does customer service fit into your marketing mix?

This question was asked by Marketing Magazine to Longo’s Grocery Chain (see the November Special Issue on Customer Service).

I didn’t get to the answer. The question short-circuited my frontal lobe so I stopped reading. Let me explain.

I have, for the past 16 years, had a mania about customer-centric marketing. I have also been a critic of brand-centric marketing. I have never had a problem selling the strategy, but I have sometimes been a bit disappointed by the casual observation that “It doesn’t look much different”.

It has been a splinter in my brain to characterize the contrast between the science of customer-centric marketing and brand marketing without reaming off thousands of words.

Don’t breathe!  I may have found a solution. I am going to reword Marketing Magazine’s question:

HOW DOES MARKETING MIX FIT INTO YOUR CUSTOMER SERVICE?

(I feel a bit dizzy. Need to take a moment.)

Customer-centric marketing takes brand ego out of the equation and replaces it with brand empathy, at every touch-point. It focuses your value proposition, media execution, product delivery, customer service and relationship management on the customer’s values.

“How does Customer Service Fit into your Marketing Mix?” vs. “How does Marketing Mix fit into your Customer Service?” It is an 180 degree flip. And it is a mind-set. Perhaps you can’t see the difference until you feel the difference.

Is it easy to make the transition?
No.

Is it so obvious when you have?
It may not be so noticeable to the casual observer, but it is very significant to the target audience and to your customer retention, share of wallet, marginal cost of marketing and all those other important variables.

So, how does your marketing mix fit into your customer service?

Written By |B2B, B2C, Customer Focus, In the News, Marketing Strategy, Relationship Marketing, Sales & Marketing, Uncategorized|Comments Off on How does customer service fit into your marketing mix?

The Customer is Queen (not King)

You know the old aphorism: “The Customer is King”. It turns out that nobody really means it. You have to wonder why. Let’s take a look….

WHAT IS A KING, ANYWAY?

Kings are confrontational — whatever conflicts with their rule must be challenged. Two kingdoms in conflict have limited choice: to conquer, negotiate, submit, or make an alliance.

What does it mean when we say that ‘The Customer is King’?

Most business owners would answer that it helps them to remember the ‘significance of the customer’. But it doesn’t mean the customer should have the power to dictate terms to the business. The Business is really the King.

WHAT IS A QUEEN?

In metaphor – the Queen is the consort to the ruler of the kingdom. If a King wants to extend his rule, he needs a loyal, supportive Queen who can raise princes that won’t challenge him, to keep the peace in his kingdom.

The ‘King’ is your business and the ‘Queen’ is your customer. The princes are your growth in market share, share of wallet etc. Be disloyal to your customers and they will rebel or defect.

 

Treat your customer like a Queen: two heads sharing common goals, values and interests. Don’t treat your customer like a King. You’ll butt heads and they’ll replace you with a competitor.

 

Play your cards right by reinforcing customer values to create a loyal, profitable and long-term relationship.

IT’S NOT A FAIRY TALE

It is in your best interest is to build long-term relationships with your customers by understanding and anticipating their values.

This is the top-spin that we put into Customer-centric marketing, to create, grow and sustain your customer relationships. It’s more than creative, more than branding, and more than rewards.

TRAVERSE MARKETING

You have your product and your partners in place and core of customers that value what you offer who maintain your cash fl ow and profitability. Opportunities beckon in other markets, providing chance to duplicate your success. You scope out thepotential and speak to a few people. The board is supportive, you give it your best shot and in a few months you are seeing a sizeable return on your investment. If only it were that simple. For more see: Traverse Marketing

The Government is the Nanny of the State

It could have been the worst teaching night of my experience, talking for 2.5 hours about the role of government in business to first year Under-Grad Business students. (okay, we took a five minute break). It ended up not quite so bad after I hit on the metaphor of the Government being the Nanny of the State.

When the children play nice, Nanny gets on with her knitting. Catch a boo-boo? Run to Nanny. Misbehave? Watch out for Nanny. Playing the bully? Nanny takes the bully down. Best case scenario, Nanny stays away until it’s time for treats.

The consensus of the class was: “Keep Government out of business as much as possible.” “Only as a last resort.” “Well, if the economy is completely failing, then of course we do need Government to step in.” I will not rant politics because the general consensus is “Right now we need Nanny”.

One part of my presentation to take home for the customer-centric marketer was ‘The reason why some industries self-regulate: to avoid the imposition of external regulation’. The ad industry is a good example in many countries, where advertising standards are self-adopted, rather than deal with the government as the ombudsman of integrity in advertising. Financial markets were also self-regulating (:o(.

The key point to be made is that, when an industry regulates itself, it generally does so with the goal of protecting itself from the consequences of being regulated from elsewhere. Regulation that is seen to be done, is not designed to protect the average Joe. It protects the industry it serves from a greater imposition of authority. Kids playing by the rules to keep Nanny out, rather than to be really, really fair. Did I mention that Financial markets were self-regulating (:o(

I believe increasingly, that the standards by which all commercial activity will become judged is through the regulatory lens of the CUSTOMER. The customer represents the primary moral imperative to ensure business continuity, customer frequency and loyalty. I wonder how the class would have reacted if I had inserted the word CUSTOMER in place of government throughout the entire presentation? We are not so resistant to the actions of our customers within private enterprise as we are to the Nanny of the State..

The Nanny of the State certainly has the customer in mind in times of crisis. Stimulation of retail activity, Keynesian economics to prime the pump of consumer spending et al. When will the penny truly drop that, by applying the right integrity and values within our business and our marketing, we can bypass the Government and do very nicely?

Written By |Advertising Truths, Marketing Strategy, Uncategorized|Comments Off on The Government is the Nanny of the State

Honesty In Relationships: Part II

Honesty In Relationships: Part II

Absolute Truth

If there is such a thing as absolute truth, it exists outside of this world. As much as we regard honesty, integrity and trust as roadmaps for relationships, they are relative terms. This represents a risk to business continuity. Any decision you make could compromise your business relationships because of the external impression created by your actions. This occurs even at the most basic level: to choose with whom you want to have a relationship. It is a practical need, yet it is also confining. Since “you can’t be all things to all people” your representation of your well-intentioned relationship is exclusive to these choices. When those whom you exclude put you on the wrong side of their loyalty values we call it pigeon-holing. Marketers are often confounded by typecast restrictions that have been molded around a business by customers with whom it has never had a relationship. And most customers depend on pigeon-holing to sort through their decisions.

Theory of Relativity in Business Relationships

There is a relativity formula to relationships:

THE BENEFIT DERIVED FROM A RELATIONSHIP IS COEFFICIENT TO THE PERCEIVED VALUE OF THE RELATIONSHIP.

From this we learn that the perceived value of the relationship will increase or decrease depending on the value of the benefits gained. Also that the desire to establish a relationship is based on the expectation of its rewards.

Value-Add

The critical idea is that, whenever the benefits gained exceed the perceived value of the relationship, then the perceived value will increase to match the benefits. This is how ‘value-add’ expands loyalty and frequency into business continuity. Adding value makes the difference between a performer and a super-performer in business relationships. It is the ingredient that can break a business out of the mold of typecasting e.g. to enable a volume discount producer to enter a luxury market (Toyota/Lexus). It is also the most challenging component of sustaining a relationship, as the constantly rising of the bar of expectations represents greater consequences to underperformance. You can never go back to ‘ordinary’, because that would be a reduction in value. But, that issue aside. everyone can live with thought that continually adding value creates a consensus in relative truth.

Pull the Wrong Lever And You Fall

Perceived value and benefit rewards are so closely linked that misguided use of any levers in the relationship can create schism and distrust.

Take, for example, wholesale price discounting: once the customer has experienced a price discount, this benefit reward can easily become a defining aspect of the relationship. The customer expects the lower cost. In counterpoint, the retailer gets reduced benefit from the transaction, so its sense of value decreases. We now have relativity divergence in truth and trust: the customer’s benefits have increased and the retailers value of the relationship has decreased. Consequently, the retailer may compromise the value of the relationship to the customer, by merchandising lower quality goods, reducing customer service, reducing product selection etc. Retailer’s view of truth: my customer is a price chiseller.

Customer’s view of truth: my retailer is a price chiseller.

Neither position might be true. The reason for the contradiction is that the retailer used a market lever that was counter-productive to increasing the value of the relationship.

The 365-Day Sale

Price in retail has become the most common lever used by retailers to lure customers, and in juxtaposition, customer service and satisfaction has dropped. It has been replaced by refunds, warranties, and call centres. Recall our formula for relativity: the customer expects more from the relationship relative to price, but experiences the negative impact on other important components of the relationship such as service, quality or choice. When relative truths are in conflict, each party will withdraw to its corner, exploit for its own interests and abdicates loyalty when these are not served.

Addiction Vs. Loyalty

It is the predicament of our market mentality that the most successful business is the bottom-feeder in the cost/price matrix. I would argue that customers are not loyal to Wal-Mart – they are addicted to Wal-Mart. Wal-Mart has built its customer relationship on the price lever, and expands the benefit rewards it brings to its customer by expanding its range of merchandise with the same promise. By focusing on this one lever, Wal-Mart has worked this relativity formula consistently into tremendous profitability. How does the formula work for Wal-Mart? The benefit its customer gains from shopping at Wal-Mart (price) is maximized by consistently shopping at Wal-Mart for all its needs, and so the perceived value of the relationship to the customer has matured into a dependency. The consequences to the retail sector are widespread. Everyone is chipping away at price and we live with a discount mentality. There is no consumer segment that Wal-Mart will shirk from if it can consistently achieve its goals. PRICE is now the relative truth that has redefined many marketing relationships and reduced them to just this one lever.

But price-sensitivity is not the only lever for the sustainability of a relationship. As long as it is built on honesty and trust as defined by the customer’s needs within the relationship there are other levers that influence purchase decisions.

Segue

I had planned to spend more time in this entry discussing these other levers. Let’s say for now that the purpose of this entry – to demonstrate how truth is relative to the customer and that a practical business action could have a correspondingly unfavourable customer reaction – is served. Every action a business takes has consequences that are broader and deeper than it usually prepares for. This is because it rarely focuses on truth relative to its customer’s perspective.

Written By |Advertising Truths, Brand Integrity, Customer Focus, Marketing Strategy, Relationship Marketing, Uncategorized|Comments Off on Honesty In Relationships: Part II
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