Monday, June 26, 2006

Causes of Marketing Misalignment

Marketing carries with it a lot more challenges today than it did even five years ago. Many internal and external forces work to undermine the prospects of marketing alignment in ever more subtle ways.

  • Target audiences are fractured into smaller and smaller segments, each with unique needs and definitions of value.
  • Media options, already highly fragmented, show every indication of becoming more so (perhaps by yet another factor of 10) over the coming decade.
  • Data, which only a few years ago was unavailable to marketers, is readily accessible to almost everyone in the organization and consequently open to interpretation by nearly every parochial interest.
  • An explosion in the number of marketing programs or initiatives spawned by these factors makes it increasingly difficult to determine the results of any single effort; a melting pot of tactics all lay claim to the desired outcomes.
  • Web-enabled data sharing has given birth to geographically scattered work teams that may be closer to the customers but often are held together only by a common logo on their paychecks.

Peer Pressure
As if these factors weren’t enough, today’s marketing organization likely attracts the keen interest of the CMO’s peers on the executive committee as they all struggle under the weight of escalating topline growth expectations.

These new realities are corrosive influences on old marketing organization models, eating away at both effectiveness and productivity while simultaneously causing marketers to work harder to protect the illusion of control.

Today’s model organization seems to create customer value in a matrixed collaboration of all major functions of the company. The departments work together on strategic development, value propositions, channel management, information and communications management, and performance measurement.

Many of these historically marketing-driven activities have expanded to include finance, human resources, information technology, operations, and other internal disciplines, putting quite a few cooks in the kitchen. And while it would be difficult to argue that the end product isn’t bettered by cross-discipline scrutiny, “efficient” isn’t often a word applied to this collaborative effort.

Conforming Amid Complexity
So how do you stay focused and aligned in a world requiring the assimilation of more facts, more data points, more options, and more opinions than ever before? How do you continue to improve efficiency and effectiveness when the very definitions of both seem to be in a perpetual state of flux? And how, in the era of Sarbanes-Oxley, do you maintain the proper balance of controls and freedoms to juggle discipline and responsibility with creativity and innovation?

A few ideas and examples of reorganizing marketing for greater success follow. If you haven’t already read it, you might also want to re-read the entry titled “Note to CMOs: Get a Contract.”

Monday, June 19, 2006

Alignment: The First Ingredient of Marketing Accountability

Psst. Want to know the secret to better marketing ROI? Just hire a statistician, add some complex analytical models to measure the marketing mix, and VOILA! you’ve got it.

That is overly simplistic and wrong, isn’t it? If it were that easy, we’d all know exactly what we were getting for our marketing dollars. The truth is that it isn’t even close to being that easy.

Many ascribe the difficulty of marketing measurement to the unique art/science blend of marketing. This is partially true. Marketing is certainly not as much of a quantifiable science as we’d sometimes like to believe. However, marketing is not alone in that boat. Information technology, operations, and even finance feel similar pressures to and pain from quantification. Yet what separates these other functional areas from marketing and gives them the appearance of greater accountability is the degree to which they have organizationally, culturally, and operationally embraced the acceleration of science within their disciplines to reduce uncertainty.

If marketing is to make a successful transition from its creative roots to its true strategic calling, we need to look at how we use our political capital to organize, structure, train, and manage our human capital. We need to establish an irrefutable reputation for accountability and gain recognition as excellent stewards of the company’s resources.

The very first ingredient of marketing accountability is alignment — alignment between CMO and CEO; alignment between company goals and marketing goals; alignment between marketing and the rest of the organization; and, last but not least, alignment within the marketing organization itself. After all, absent strong alignment behind a shared set of clear and measurable goals, no one is really accountable for more than his or her own interpretation of his or her individual job responsibilities.

Monday, June 12, 2006

Satisfaction is NOT Loyalty

Over the years, most companies have acknowledged that happy customers are more likely to be repeat customers than unhappy ones. Owing to the difficulty of defining “happy,” loyalty indicators predominantly have been linked to satisfaction measurement. Some have even gone further, setting their sights on nothing less than “delighting” customers or eliciting the rare reaction of “wow.”

Yet none of these descriptors has proven sufficiently objective to span business units, channels, or customer touchpoints so as to create a consistent standard for managers to achieve. Nor has any been more than loosely correlated to incremental profitability because few attributes are so distinct that they exceed the matching efforts of competitors. Nevertheless, the majority of mid-sized to large companies today have some sort of measurement system for customer satisfaction, if for no other reason than to ensure continued performance at or above their category’s competitive standard.

Satisfaction = Loyalty?

Satisfaction, though necessary, is an insufficient solo condition for loyalty. You can achieve high levels of satisfaction yet not inspire any real loyalty. For an example, look no further than your local car dealer. Automotive companies have been fast — and thorough — in their willingness to embrace satisfaction metrics. But anyone who has bought a car knows how sales reps manipulate the satisfaction scoring system. In a quiet moment during the new car delivery process, when one might reasonably expect the customer to be at the very peak of happiness, salespeople blithely inform their customers of the impending arrival of a J.D. Power satisfaction survey. Even if dealerships play it straight and work hard to meet customers’ needs, the manufacturers they represent have no better insight into customer loyalty.

That’s because functional satisfaction doesn’t necessarily ensure that either behavioral or emotional loyalty will follow. Satisfaction rates among U.S. auto buyers are often reported in the upper 80th percentile range — this past summer Toyota Motor Corp. topped the University of Michigan’s American Consumer Satisfaction Index with an 87 — but actual manufacturer repurchase rates hover in the 30th to 40th percentile range. Dealer loyalty is even worse, with only about 20% of customers returning to the same dealer to purchase their next car. This suggests that even though customers may want different car experiences every three to five years, no one auto manufacturer is meeting their needs. Loyalty is low in the category, regardless of what satisfaction scores say.

To reinforce the point, a number of academic studies in recent years have shown that satisfied customers don’t necessarily buy more or more often, in any category. Satisfaction as a proxy for loyalty is relative to each brand’s position in the market at any given time. If we accept that the perception of value most heavily influences comparative purchase decisions at any point in time, and past satisfaction is but an element of that perception, then if company B offers me greater value, all my satisfaction with company A likely will not prevent my switching for greater relative value.

Monday, June 05, 2006

Making Six Sigma Work IN Marketing: 7 Things the Black Belt Can Do

According to marketers who are admitted reluctant converts to Six Sigma, there are a few things the Black Belts can do to ensure a faster adoption curve and achieve better results within marketing.

  1. Learn the language. Six Sigma is as foreign a language to most marketers as marketing is to Six Sigma. If your background is in operations, engineering, IT, finance, or any related functional area, you had an easier time absorbing the concepts and lexicon of Six Sigma than the marketers will. Your ability to understand the key drivers and challenges of the marketing department will springboard your acceptance. You need to make the effort first.

  2. Emphasize the common ground. Both Six Sigma and marketing place a premium on getting at the voice of the customer and seeing it reflected throughout the company. Work to understand the perspective marketing has on that voice and compare your notes (and the notes of others around the organization) with theirs. Frame your questions, observations, and suggestions in the context of the customer and you will be readily accepted.

  3. Start with some visible victories. Nothing builds success like success. So when it comes to defining and selecting projects, start with a few that seem tailor-made for quick success. Start small if necessary. It’s important that the first few projects be seen as quick, focused, and relevant. It also helps if your initial focus is on topline growth vs. efficiency so your efforts aren’t seen as a prelude to budget-cutting. Be careful not to get drawn into trying to solve the biggest, hairiest problems facing the marketers — many of them appear seductive but are sinkholes with ambiguous outcomes. It’s unlikely (and maybe unwise) that you’ll succeed immediately where generations of MBAs and Ph.D.s have fallen on swords before.

  4. Don’t preach, teach. If your audience was infected with Six Sigma enthusiasm, it likely would have volunteered for training much sooner. Enthusiasm will build in proportion to the relevancy of your examples, not the abstract appeal of the concepts. Introduce tools in the context of pursuing projects with the highest priority. Otherwise, leave them in the bag.

  5. Avoid the square peg/round hole syndrome. Evaluate projects to determine their fit with Six Sigma. If the fit isn’t right, don’t force it. Find ways to help adapt your Six Sigma skills to solving the problem, even if the approach isn’t right out of the playbook.

  6. Embrace variability. Black Belts have been taught to see variability as a process defect and stamp it out in favor of standardization and reliability. Marketers have been taught to avoid standardization (which they equate with commoditization) in favor of differentiation. Find ways to separate good variability from bad without being seen as the enemy of creativity and innovation.

  7. Promote the learning dialogue. Remember that the value in analytical models is rarely found in the numbers themselves, but often in the dialogue they stimulate.

Overall, recognize that your marketing audience has skills very different from yours. Marketers are more likely to be goal-oriented than task-oriented, conceptual than analytical, and appear unstructured or undisciplined when in reality they are processing decisions on the basis of years of experience, filtered by a large community of conventional wisdom.