Fruitful

Creating competitive advantage through sustainability

I just published a post on my business blog outlining the five steps to creating competitive advantage through sustainability. Go take a peek and let me know what you think. 

More on positioning

I've been thinking a bit more on positioning lately, and want to expand on some of the issues that have been brought up here and here.

In an earlier post, I say that Microsoft doesn't need classic positioning because it's a virtual monopoly. To clarify this statement, let's define 'classic positioning' as the old domain of the ad agency. The JargonUniverse calls it Brand Positioning, or: "The distinctive position that a brand adopts in its competitive environment to ensure that individuals in its target market can tell the brand apart from others. Positioning involves the careful manipulation of every element of the marketing mix."

The goal here is, let's look at everyone else's advertising in the category and "stake out a position" in our advertising that promises something unique and different. We'll create a new tag line and develop some cool ads and "reposition the brand" in the customers' minds. That's classic positioning. If I can borrow a phrase from Tom Asacker, this is the part of positioning that's dated and dying. Advertising and a tag line alone cannot reposition a company in the customers' minds. In Microsoft's case, they can run just about any advertising they want; everyone knows them and everyone has a mental perception of them... good or bad, regardless of the advertising message.

Conversely, 'holistic positioning' is something Microsoft (and every company) should be doing. And that is gaining a much better understanding of customer perceptions of the company and (if necessary) changing the fundamental structure of the organization to better deliver on customers' wants and needs, both now and in the future.

JargonUniverse's definition of Brand Position (as opposed to Positioning) is: "The entire collection of thoughts a client has in his or her mind about a professional services firm, service or product learned through contact, experience and communication."

Now we're getting into the macro view of the brand position. It's holistic because there's an implicit recognition that customers, employees, channel partners, location, management and the actual product/service itself all interact to create the collection of thoughts -- or 'experience perception' -- in the customers' minds. There was a question in an earlier post on whether one can consciously manage the brand position. Absolutely. It's important to not only understand your position in customers' minds, but where you want to evolve that position (especially if it's undifferentiated or negative). It's just like personal branding; if I learn that you have a negative perception of me, I must change my behavior to shift your perception to a positive one. I can't tell you I'm different ("Hey, trust me!") I must prove it. And that's what 'managing your brand position' is all about. Operations. Customer service. Product development. Every customer touchpoint proving to the customer that he or she is valued, that the company can be trusted, that the customer can not only feel good about using the product but recommending it to others.

Positioning is hard work. It is not the domain of an ad agency or a marketing department. It is aligning the corporate mission and structure to one that best supports customers, connects with them, and creates customer evangelists.

Buyer-centric no more

With his recent comment to my Semantics post, Damon B. resurrected the customer-centric versus buyer-centric debate:

CC, while it does have its short comings, is far superior to being BC. Buyer centricity leaves out some very important customers - most importantly the internal customers. Sure, a CC company can start looking at customers as acquisitions or transactions, but that's a result of the company failing to properly implement the policy. Claiming CC is not correct is like claiming fishing line is inferior b/c it broke when there was too much weight on the line. It's not the fishing lines fault, it was just poorly used.

If a company can not fully grasp how to be CC it will also fail at being BC.

Excellent point, and one we've been exploring in the running "Role of Marketing" dialogue. My most recent definition of marketing's role is to "catalyze communication and relationships between stakeholders." And, of course, that can best happen in a stakeholder-centric organization.

As Damon pointed out, buyer-centricity leaves out the internal customer. But customer-centricity comes with its own problems:
- Is commonly interpreted as the end-user or buyer
- Leaves out other stakeholders such as distribution channels, partners, key influencers, investors and the community in which the company operates.

On the other hand, a stakeholder-centric company is keenly aware of every group that is influenced by its policies and decisions. I'd like to revisit John Moore's definition of marketing as "resolving the conflicting needs and interests of stakeholders" and apply it instead as the definition of the stakeholder-centric organization (SCO). Executives of an SCO must make a comprehensive list of stakeholders along with their respective needs and interests, identify areas of conflict, and actively seek solutions that will resolve those conflicts. This is a great idea-generating exercise for innovative products, services, policies, operational enhancements, etc. that could reside at the intersection of those conflicting interests.

A stakeholder-centric marketer, then, would be involved in identifying core needs of stakeholders (specifically buyers and distribution channels), participating in stakeholder issue-resolution exercises with the executive team, and catalyzing relationships of the various stakeholders according to the resulting objectives, strategies and tactics that emerge from those issue-resolution exercises.

I like where these running blog dialogues are ending up. I'm officially changing my Buyer-Centric category title to Stakeholder-Centric. If anyone has additional thoughts on the subject, fire away!

What's the Purpose?

The following quote is attributed to Peter Drucker:

"Because its purpose is to create a customer, the business has two basic functions: marketing and innovation. Marketing and innovation produce results, all the rest are costs."

Hmmm. A company's purpose is to create a customer? I can think of plenty of companies who 'created' customers... and have since gone out of business. But according to Peter's statement, these companies successfully accomplished their purpose.

A business' purpose is to attract and keep customers. Its one basic function is to reliably solve customer problems... through innovative products, or exceptional customer support, or a powerful customer experience, or even low price (ie. WalMart). What attracts and keeps customers is the value offered by the company. Marketing comes second.

The Secret to Cisco's Success

I just read this article on BrandChannel about Cisco. The author opines that the company's success is due to its advertising and tag line. Wrong. Sure, advertising helps, but the secrets to Cisco's success are: the products are reliable, their customer support exceeds expectations, and customers are fanatical.

I did some focus groups a couple years ago among IT Directors in 5 major markets. Whenever Cisco was mentioned, almost every group member had a great story to tell. My favorite: one guy's network went down at 3:00 in the morning. His Cisco rep showed up at his office at 3:30 and helped him get it working again. No one in the group had ever had a vendor go the extra mile like that.

Here's what Kirby Drysen, Director, Customer Success Engineering at Cisco, has to say about their customer-centric corporate culture:

At Cisco, we view customer satisfaction as a continuous process rather than a singular event. This process is based on two principles: 1) maintaining a continuous flow of customer feedback, and 2) engaging our field teams and business units in the survey process.

The continuous flow of customer feedback is an ever-present reminder that customer satisfaction is achieved or destroyed with each interaction or customer experience. Rather than wait for an annual satisfaction score, our employees can identify problems almost as soon as they occur and work to resolve the situation quickly. And, access to real-time information promotes accountability rather than excuses for why the customer complaint was not resolved.

By involving those who work with our customers in the survey process, we ensure the questions we ask customers are relevant and actionable. In turn, this drives a strong sense of personal ownership among our field teams and business units to take action on the information, and allows us to maintain constant energy for driving customer satisfaction.

With a culture like that, advertising is secondary. Is it any wonder that they maintain 42% market share in networking products? Cisco is a great case study of brand rule #1: build a strong customer-centric brand and sales will follow.

Marketers: Stop the Madness!

To expand on Chris Lawer's thought on plentitude in modern society, here's an exerpt from today's Reveries called "Curbed Choices" that discusses the customer trend of "Enough already!"

Christopher Lee, a former Reebok creative director, just opened a shop in a converted warehouse in the Islington section of London. Called Microzine, the idea is to "dose consumer fatigue with the tonic of quirky but well-chosen goods." Says Christopher: "Everyone's got the same product, and consumers are fed up. They want something exciting and they want it edited down." He says he understand this because he, himself, hates to shop!

Barry Schwartz, a Swarthmore psych professor and author of The Paradox of Choice: Why More Is Less, says Christopher represents growing numbers of consumers who "have begun defecting from the culture of shopping, surfeited with information and alienated by what increasingly seems like the mere illusion of choice." He explains the problem this way: "You've got an economy that is 90 percent driven by consumers and reliant on convincing people to keep buying stuff ... You also have a culture in which people are saturated, looking for ways to simplify their lives and to reduce time spent trying to figure out what to buy." Or, as Christopher Lee puts it: "If you buy a stereo, you don't want to see 400 stereos."

Times like this, it's tough to be a marketer. When our product is one of too many choices and it doesn't have a significant, meaningful point of difference, we've got a tough row to hoe. I'm glad to see this consumer trend of "Enough!" because it sends a strong message to management teams in every industry: focus and innovate, or die. Instead of coming up with the 400th model of TV, create Tivo. Instead of producing the nation's 400th coffee brand, launch Starbuck's. Instead of operating the 400th grocery store, Whole Foods.

I was musing on how marketers could earn their spot at the executive table to have more influence on core business decisions, break down silos, and impact internal stakeholders. I think the two primary ways are: measurable results and customer-driven innovation ideas (I'll deal with measurable results in a later post). Marketers have their fingers on the pulse of their customers. Marketers are driving customer research and have the ability to act as the voice of the customer in their organizations. When the marketing department chooses to drive customer-focused innovation (proactive) instead of simply selling whatever comes out of product development (reactive), that's when we come into our full power.

This power for too long has been held by sales and distribution channels -- especially in the B2B world -- who cry to management, "We need more options in our bag! We need lower prices!" And too often, management concedes... because sales is "closest to the customer, so they must know what customers want," when in fact sales just can't sell what they've got. Either the existing products don't really fit customer needs, or they're too similar to competitive products. The answer isn't to give customers more options, but less. The answer isn't to lower prices so customers will buy, but to come up with a simple, innovative solution to meet their needs... and customers won't hesitate to pull out their checkbooks.

It's time for marketers to recognize when prospective customers are oversaturated with choices. It's up to us to say "Enough!" before our customers do it for us. We are the bridge between customers and corporate decisions, and it's up to us to stop the madness.

Forecasts for 2004

Thanks to Conversations with Dina for this link to Euro RSCG's trendspotting forecast for 2004:

Marketing communications agency Euro RSCG Worldwide has released forecasts for year 2004, drawing insights from ongoing research by the agency's S.T.A.R. (Strategic Trendspotting and Research) team and from a global panel of colleagues in 75 countries who report in regularly on local trends and information. Nice to see Blogging mentioned as one of the key trends - and the hope that marketers realise its potential as a powerful medium of communication!

Not your typical x-boxer

Had a blast in New York this weekend, despite the freezing cold weather and swarms of tourists and shoppers. But of course, the primary factor of enjoyment while travelling-- at least for me -- is who I'm with. The trip was one of my Christmas gifts from the guy I'm dating, who just moved to DC for business (and when he starts keeping his blog up-to-date with his cool ideas, I'll include a link!). While we were in NY he gave me another gift: an Xbox, complete with an 'Enter the Matrix' game and an Xbox Live kit so we can play against each other while living in different cities. Earlier this evening I hooked it all up and started playing the Matrix... what a hoot. The last home video game I played was probably my Atari Space Invaders 20+ years ago. They sure have come a long way!

John Porcaro, who's on the Xbox marketing team at Microsoft, would probably confirm that a 41-year old CTO and a 34-year old female marketing consultant are not typical representatives of the Xbox target audience... or maybe so, depending on how they define their market. I just find this a great real-life example of why demographic target-audience profiling is so woefully insufficient. When we place logical but arbitrary boundaries on our target audience by age, income, etc. we miss out on some interesting ideas and applications for our products and services. Conversely, profiling customers by mindset can open up some new doors.

Two years ago while working for a regional phone company, I reviewed some very interesting research by the Network of City Business Journals called 'Getting into the Minds of Small Business Owners.' It identified 6 psychographic segments based on Motivation (like Money, Fame, Self-Reliance, etc.), Personality Traits (Competitive, Analytical, Helpful, etc) and Management Skills (Delegating, Organizing, Technology Capability, etc). By comparing the different mindsets, it became fairly easy to see the types of business owners that would be most receptive to my company's services... and this in turn was used to develop specific messages to appeal to those groups. Much more useful than the company's previous target audience classification: business owners with 4 to 24 business lines. If you market to small businesses, you can probably get a copy of this insightful research from your BJ rep.

Also, if you're interested in delving deep into how your customers think, pick up a copy of "How Customers Think" by Gerald Zaltman. Classic account planning how-to book, although it gets a bit creepy in a psychological, mind-control sort of way. I read most of it to and from NY, so I'm looking forward to finishing it.

So to wrap up my ramblings: Sure, there's a point of diminishing returns on how far you go with segmentation. If there are only 5 single men in America over 40 who would purchase an Xbox, then this segment certainly doesn't justify a new marketing initiative. However, I think it's worth the effort to break out of our self-defined limitations to learn -- to as great an extent as possible -- who's using our products, for what purpose and for what emotional benefit. Who knows, we might discover an opportunity to create a new marketing strategy, or even a whole new category.

Community, clarified

Thought I should clarify my earlier post re: community... it's not an effective brand-building tool without the fundamental customer experience supporting it. An online discussion board hosted by a company that lacks loyal and passionate customers does not a community make. Build the brand experience first, then facilitate the community. It can't be created in a vaccuum.

Community: the most powerful brand-building tool

We could debate all day long on the most powerful branding tool, but after reading this article on Reveries about the power of community, I think this gets my vote. The article features companies like Saturn, eBay and Starbucks (Paul, I expect a blog post on this one!) and it's a good read. We already know that customers are our best sales force... when they're rallied together into a community, their individual powers are combined into a brand-building force to be reckoned with.

Let's hear it for Vinnie

A follow-up to my last post...

Vinnie was the last customer service rep I spoke with and he seemed to have taken care of everything. Credited my $20 for the CD and gave me free shipping. He then apologized that it took so long, but he had to call customer service to find out how to order my CD-ROM... turns out he was in tech support. So even though I got transferred to the wrong department FOUR TIMES (that's got to be a record), Vinnie felt bad about all my transfers and sought the answers to help me himself. Vinnie just restored my faith in Intuit (not really, but I feel better).

Still on hold with Intuit

If you hadn't read my first post on Intuit, here's a quick recap: I called Intuit last week because I lost my CD-ROM and needed a new one sent (I should have been able to download the software from their web site, but that's another story). They charged me $20 plus shipping for a new CD and told me I'd get it in 5 days. That was 8 days ago.

I called to track the shipment. The CSR told me that the CD had been ordered on the 8th and that I should get it 'any day.' I then asked if it had actually shipped on the 8th and he didn't know. He transferred me to someone who had access to that information. I spent 5 minutes with the next person who determined that it was shipped to the wrong address... but he couldn't send another CD because he was in the Payroll department. He transferred me to someone else who would be able to help me. I waited on hold (again) and told my story to the 3rd person, who then informed me that he couldn't help me because he's in Technical Support... but he'd be happy to transfer me to someone who could help me. I'm now on hold with the 4th person who, it seems, can actually send out a new CD to the correct address for delivery tomorrow. This has got to be the worst customer experience I've ever had. What a colossal waste of time.

Just thought I'd share the antithesis of the buyer-centric philosophy for your enjoyment. I'm still on hold.

Volvo car for women

This is a marvelous example of building a product using customer input up front, rather than simply testing an idea after it's been created. Thank you, Volvo, for having the courage to break out into completely new territory. Here's the article from Reveries in its entirety:

Volvo, the Swedish carmaker that's owned by Ford, wants to "shake up the male dominated culture" within its company, the car industry, and society as a whole, as reported by Noelle Knox in USA Today. And so, a year ago, ceo Hans-Olov Olsson earmarked $3.3 million dollars and allotted 15 months to a temporary team of about 120 employees (about 100 of them women) to create a concept car for women, now set to be unveiled at the Geneva Auto Show, http://www.salon-auto.ch, in March 2004. With three months to go, the project already appears to be a huge success: With three months to go, the project already appears to be a huge success: "When you talk to the guys in the Concept Center, they never had a concept project that's been so on time and orderly as this one," says Lena Ekelund, an assistant project manage. She says the women tend to talk a lot in meetings but that typically leads to quick consensus. Men are not permitted to make any decisions about this car.

The team began by surveying 400 Volvo colleagues, and discovered that about three-quarters of them raised the same issues: "Storage, parking, ergonomics and maintenance." The team's solutions were anything but half-measures. First of all, there's no hood on this car, because most women never lift it anyway. The front end is instead designed to be lifted by a mechanic, whose oil change services are required only at 31,000 mile intervals -- and the need for it is sent by "wireless message to a local service center" that will then call up the owner to schedule an appointment. The car has no gas cap, instead featuring a race-car-style "roller-ball valve" where "the nozzle goes in through an opening." The windshield washer fluid goes in right next to it. It "has wide, gull-wing doors" affording easy access, and the rear seats "fold-up," theater style, for extra storage space.

The emergency brake is electric and the headrest has a channel in it for ponytails! Seat covers are machine washable and come in a variety of styles. On the outside, the car "has dirt repellent paint and glass." I want that. And yes, the car can parallel park by itself and also tells the driver whether a parking space is big enough for the car. If the car goes on the market, it is expected to sell in the $30,000 to $50,000 range. Volvo can't be blamed for expecting it to be a hit: Women accounted for 65 percent of all cars purchased in the U.S. last year, and although Volvo, http://www.volvocars.com, claims just one percent of the U.S. market, it attracts 53 percent of all female buyers of luxury cars. Hans-Olav Olsson, the ceo, sees a larger mission, however. He says he hopes Volvo will inspire young women to want to "work with cars ... and work with Volvo. If we can achieve that," he says, "I am very happy. It works on the broader perspective for society and the car industry."

Semantics, semantics...

I asked Chris Lawer about the difference between customer-centricity and buyer-centricity. Just semantics? Here's his answer:

I was asked by Jennifer Rice of Brand Mantra, what is the difference between customer-centricity (CC) and buyer-centricity (BC)? Never one to refuse a challenge, here is my late night attempt to answer!! It can be semantics but sometimes we need new language to distinguish new thinking and concepts, So my summary is that BC is the link (hence PATCH) between customer-centric and Support Economy (www.thesupporteconomy) thinking. Basically it argues that businesses, even customer-centric ones, dont serve people as individuals and address the value-gaps we have - time, attention, knowledge, privacy, trust - which are marketer- and commerce-created. The only way to address these forms of intangible value is to step outside of our organisational mindsets and put ourselves totally in the frame of people as individuals. Customer-centricity tries to do this but it is still geared to selling more stuff - done BY the orgn TO the consumer to max the orgs goals, and not looking at things the other way around - which naturally implies an inversion in the marketing process - hence "reverse marketing"

I like this answer since it relates to my last post on acquisition versus attraction. Since words are abbreviations for concepts, new concepts require the use of new or different word choices. Customer-centric, although an improvement over company-centric, still can treat customers as objects to be acquired (see last post). Buyer-centric requires companies to view their brand from the outside-in.

Customer acquisition versus attraction

Chris Lawer had some great comments about an opinion piece by Scott MacStravic on capitalistic conceptions of customers. Scott's position is that companies will either treat customers as objects, subjects or partners.

Object

Modern marketing, indeed, market capitalism itself, treat customers as objects to be attracted, retained, developed and “mined” as exploitable resources for the benefit of the firm. CRM has instituted a new era of “scientific” exploitation, aiming to “manage” customers, demand chains, interactions and transactions to continuously improve the effectiveness and efficiency of sales, marketing and customer service functions.

Subject
Consumers are deemed to be tiring of both traditional marketing and CRM with their exploitative aims and devices. Rather than let sellers control marketing and sales communications, consumers are taking over, with phone and spam lists attempting to deny sellers access to consumers, permission marketing controlling whom they will listen to, TiVo and remote controls “zapping” TV commercials, and other techniques enabling consumers to dramatically decrease the numbers of commercial communications they are forced to attend. Instead, consumers are going online in droves to search out independent, objective information about available offerings, controlling when, how and where they learn about sellers and their products.

Partner
The “partnership” model envisions sellers and buyers sitting on the same side of the table, working to solve a problem or achieve a goal for both parties simultaneously, i.e. realize WIN/WIN rather than WIN/win or win/lose outcomes... When major transactions are involved, and consumers wish to do more than rely on others -- for independent comparisons of sellers’ options, for consumer agent expertise in handling the whole affair, or for “solution assembly” by trusted sellers – a partnership model may apply.

I like Chris' comment that buyer-centric relationships are fluid and can shuffle between subject and partner depending on the scope and size of the customer problem. And the knowledge gained from the partner relationship can and should be used to make simple transactions more seamless.

Overall I thought Scott's views were right on... although I have to disagree with the use of the word "attracting" customers in the definition of Customer as Object. Perhaps this is just a semantic difference, but I find that Customer-Object companies use the term "acquire" rather than "attract." One cannot acquire a customer in the same fashion as one acquires a company. Acquire is the ultimate Customer-Object term, and though customer accounts and information can be temporarily gained through a corporate acquisition, customer "ownership" does not transfer (there is no such thing) and neither does customer loyalty. If the acquiring company doesn't meet or exceed customer expectations, those customers will defect.

I contend that Customer Attraction is the corporate philosophy that will be successful in the new Customer-Subject/Partner marketplace: its emphasis is on learning customer needs and delivering a true value proposition that catches the eyes of those customers who are seeking solutions to their needs. I suppose you could say that this is still Customer-Object mentality, but if that's the case, then it follows that singles shouldn't make themselves more attractive in order to catch the eye of a potential mate. A customer must first be attracted in order to become a Partner. And a customer's expectations must be met or exceeded in order to be 'retained' in either Subject or Partner status.

Buyer-Centric framework

Kudos to Chris Lawer for an excellent, thought-provoking white paper entitled, "ValuePATCH: A framework for building positive brand, marketing and customer context". A quick scan of the contents (and diagrams! I love diagrams) has gotten me pretty jazzed to spend some time digesting -- and hopefully contributing to -- this open-source tool.

The new brand imperative

Read a great story this morning on Dave St. Lawrence's blog that compared his experiences at two different wineries. At the first winery,

"We admired the appointments, drank our lattes and left, feeling that we had somehow missed the point of going there. It had been an interesting experience, to say the least, but not very satisfying, like going to the Museum of Fine Art for lunch. We recovered from our puzzlement by stopping in at the Jefferson winery on our way home. The wine drinkers in our party sampled everything in sight and we ambled out of there with arms full of wine bottles and other purchases."

A perfect example of the new brand imperative: creating customer experiences. A brand is no longer just for show, especially in today's society where customers have more choices than ever before. Successful companies take the time to understand the type of experiences that customers want. Reminds me of a gift that I once received that was more reflective of the giver... I had absolutely no desire or use for a see-through phone that lit up when it rang. I knew this person well enough to ask, 'did you really think I would like this?" and after a moment's reflection, he responded, "no, I guess you wouldn't like it. I just thought it was cool."

I'm not advocating a purely altruistic 'we gotta do whatever the customer wants whether we like it or not' philosophy. There's a happy win-win zone when you can create the kind of customer experience that's both in alignment with your values and vision, and also one that your customers love, pay for and refer others.

Intuit needs some help

My computer crashed today, and after I ran the Recovery CDs I was faced with the chore of reinstalling all my software. I had most of the CDs; the ones I didn't have I downloaded from the companies' web sites using the registration or installation codes. QuickBooks offers no ability to download their software... not only that, but they charged me $20 plus shipping to send me a new CD. What kind of policy is that? Is that my spanking for losing a CD? This is a perfect example of the need to evaluate corporate policies from the customer viewpoint and ask, 'will this policy advance or hinder customer relationships and trust -- Yes or no.'