It’s 2018 Last Call for Customer Centricity
THERE’S NO DENYING:
It’s the Age of the Customer, and not surprisingly, customer centric marketing has evolved to become a serious priority across the entire enterprise.
Last year, IBM released a compelling study forecasting the Top 10 success factors for businesses in 2017. Customer marketing was a central theme in six of these ten factors. Its importance has only intensified in 2018.
LEARNING FROM THE LEADERS
Companies like Amazon, IBM, Netflix and Harrah’s are leaders in the customer centricity space because they broke down the walls between technology, marketing and finance long ago. They were early investors in customer data collection, customer-oriented technology, and analytics. They looked to their customers to help shape their organizations and evolve their brands. Their moves are worth following.
Harrah’s was one of the first to embrace customer segmentation and assign segment managers to each specific customer set. Check out the classic case study. Segment managers owned customer P&Ls, looked to establish unique segment-level journeys and even evolved products and services unique to their segment population.
Today, Amazon has matured to a position in its culture where segment ownership is empowered by Amazon Prime. Prime members are privy to a unique customer centric journey, exclusive offers and even a curated product portfolio. These are all deliberate and innovative platforms that make customers feel recognized and appreciated—this emotional bond has incredible power.
Case in point: Amazon and Samsung both rolled out new product innovations that failed. Amazon customers who bought the Amazon Fire Phone were generally forgiving because they believe that Amazon’s quest to innovate stems from its desire to make customers’ lives better. But when the Galaxy Note 7 literally went up in flames, customer confidence quickly eroded. Customers had a limited relationship with Samsung and, therefore, concluded that Samsung cared more about product innovation than consumer safety. The downstream benefits of a customer centric approach to marketing are evident in this comparison.
BALANCING BRAND MARKETING VS. CUSTOMER MARKETING
Over the last 25 years, I’ve had a front row seat in watching the evolution of marketing. I’ve seen brand and direct marketing give way to the speed of technology, the birth of digital and the explosion of data as critical tools for marketers to drive strategy and business.
While brand and direct marketing campaigns are still important to today’s marketing strategy, customer marketing has put a spotlight on the importance of maintaining a strong long-term relationship with customers. Unlike short-term campaigns, customer centric marketing requires a longer attention span. You must pay attention to the emotional value your customers place on your brand; the economics of each customer relationship (today and tomorrow) and the role customers play in revolutionizing your business and then act accordingly.
It takes more patience, but the payoff is worth it: Customers become brand fans, brand fans become advocates, and advocates become the influencers of new business or business growth.
You can rely solely on traditional marketing where the brand leads the way to creating awareness, interest and consideration, but that’s a costly endeavor. We need to recognize that customer marketing is a tool—one that, if leveraged correctly through customer centricity, can help create a groundswell of awareness or comprehension.
“Our business is based on repeat customers and word of mouth. There’s a lot of value in building up our brand name and what it stands for. We view the money that we spend on customer service as marketing money that improves our brand.” Tony Hseih – CEO, Zappos
AGE OF THE CUSTOMER, NOT THE PROSPECT
We live in the age of the customer, not the prospect. But many businesses didn’t get this memo. Wireless companies extend amazing offers to new customers, but consistently ignore existing customers. Once the customer’s been acquired, there’s no effort to strengthen the relationship. Why not proactively message prospects and existing customers?
Acquisition is just the first in a long series of touchpoints a customer will have with your brand. If you want your customers to become engaged, empowered, passionate supporters of your brand, you have to keep giving them reasons to believe you value the relationship.
THE SHIFTING ROLE OF THE CMO: SURVIVING THE CHURN
To make room for the new power in their business dynamic, businesses are being restructured and reshaped in order to put the customer at the center of everything. The divisions between technology, marketing and finance are disappearing and roles and responsibilities within all levels of the organization are shifting. A recent Wired article reveals how today’s CMOs are now seeing the addition of a new C-level partner position as the Chief Customer Officer (CCO), or they’re seeing their role morph into the CCO role in order to better deliver on customer-centricity from first touch to repeat use.
I’d argue that customer marketing is now (and will be) the future leadership position of the marketing industry. But, it’s a difficult position to maintain. A recent Wall Street Journal article reported that the average tenure for chief marketing officers working for the country’s biggest brands has fallen for the second year in a row to 42 months in 2016. The higher turnover rate is being driven, in part, by the tough business conditions that many industries are dealing with, from retailers to consumer-goods companies.
To stay afloat, CEOs are changing the playbook and the players. CMOs who have adapted to make room for the customer within their business dynamic— who have built their careers on the stability and dependability of customer revenue—are going to be able to weather the churn.
MEET THE EVOLVED CMO
With the maturation of customer centric marketing, marketing leaders have had to respond not only in their understanding and value of the customer, but also by enhancing their own skill set. The fundamentals that drive solid customer marketing require an evolution of today’s marketing leadership, and an expertise in a variety of disciplines.
The way I see it, a customer marketing-oriented CMO needs to act as:
• A Creative Director with strong brand storytelling skills. Engaged customers are the most at-risk investments that businesses have and need to be fully connected to (and recognized by) the brand.
• A Chief Data Officer with a solid comprehension of the “data world.” Knowledge of robust data, advanced analytics, stratified customer mapping and cognitive insights are musts.
• A Chief Financial Officer who is metric-driven and fully understands financial attribution of marketing expense to both revenue and margin creation.
• A Chief Customer Officer who protects and embraces customers. A leader who drives the organization to pivot around the customer and determines how the brand turns along the way.
TURNING THE TITANIC: IN 5 STEPS
With any behavioral change, CMOs need to start by understanding this simple five-step approach to becoming a leader in customer marketing.
STEP 1: ASSESS THE STATE OF YOUR CUSTOMER COMMITMENT
This is a difficult step for many marketers. Once you admit that you don’t value your customers enough, and that you’re ready to do something about it, it’s time to assess the current state of your commitment by evaluating the business from multiple vantage points:
Financial review: What resources are dedicated to my customers?
Creative review: Do I speak to my customers as customers or individuals?
Technology review: Does my technology infrastructure identify, isolate and engage customers in a unique fashion?
Strategy review: Do I have a deliberate focus on how to grow customers, enhance my relationship with them, path them to advocates and continue my innovation around them?
STEP 2: CREATE A CUSTOMER MARKETING VISION
A strong customer centric marketing vision entails using the desire and needs of the customer to guide the expansion of the brand and the innovation of the business. As basic as that sounds, a customer marketing vision needs to be primarily focused on how innovation for the business is derived and defined by the customer. This is truly the power of an effective customer marketing strategy.
STEP 3: PARTNER WITH KEY CONSTITUENTS TO JUSTIFY THE PIVOT
In order to pivot away from the brand and towards the customer, you need to establish strong alignment and partnership with the finance and technology leadership of the organization. A customer centric marketing strategy and enterprise are dependent upon a solid financial and technology foundation that recognizes the value of customers (today and in the future) and how to effectively use technology to prioritize, engage and enhance the customer relationship. Without committed partners, the evolution of the business and brand will be slow and inefficient.
STEP 4: REMEMBER, YOU’RE TURNING THE TITANIC, SO SUBTLE SHIFTS ARE BEST TO START
What you’ve been building and leading as a CMO will not evolve overnight. You have a brand strategy, an acquisition franchise, revenue commitments, and a business to sustain. Venturing into a strong customer marketing strategy will need to be a deliberate, thought-out series of tactics. In parallel, you need to lay foundational elements of technology, data, marketing, and resource reallocation. These changes will need to have defined KPIs and correlated testing strategies—so that successes are true successes that can lead to scale, and failures are clearly identified, understood, and limited.
STEP 5: TRANSITION A VISION INTO A PLAN, A PLAN INTO A PILOT, A PILOT INTO A PROJECT
As your organization begins to turn and you build on success and learn from failures, it is important to define a path forward that is guided by the vision, but facilitated by a plan through linked or associated pilots. Pilots are very effective tools in validating the hypothesis involved in migrating your organization around customer centricity. They provide proof points for your team, your leadership peers and your customers. A good pilot strategy can tackle parts or elements of your plan that enable you to build upon each one and justify continued investments, evolution and resources. Pilots are critical.
IT’S NOT TOO LATE. BUT IT’S ABOUT TO BE.
Today, the evolved CMO is really the business leader at the center of creating a customer marketing strategy that needs to be the beacon for the business. He/she must focus on both revenue generation and expense management, return on investment and innovation, and evolving the brand position to meet an ever-changing market dynamic and customer demand.
Ultimately, today’s CMO needs to lead the way for energizing the organization, cutting through internal politics, and creating support and commitment to the customer. This seems like a different type of role than the traditional CMO plays; however, when you look at market-leading brands, where most (if not all) place a significant amount of resource on customer marketing and customer centricity, the evolved CMO is driving their position.
The challenge is real for both the CMO and his/her business, but with the right guidance, partner and even some relevant strategy consulting, successful customer marketing can redefine both near-term and long-term business opportunities and enable brands to connect with customers in unmatched and mutually profitable ways.