The shift from building brands to building customer relationships.
In an era of big data and powerful technologies for connecting with customers, marketers must shift their focus from building brands to building customer relationships.
Nearly two full decades into the 21st century and we have witnessed radical transformation and creative destruction of nearly every aspect of the marketing toolbox. Marketing – as we have practiced it over the past 50 years – is obsolete. Yet many marketers in early stage companies still cling to the notion that mass communication needs to be the foundation or backbone of their brand building efforts.
Never before have marketers had such powerful technologies at their disposal to connect and build lasting customer relationships. And never before have customers / consumers / users been able to interact so deeply with brands, and each other in their communities, to influence the very development of the products and services they engage with.
Yet despite this sea change, most marketing organizations are structured pretty much the same as they have always been. Many have not fully grasped the paradigm shift from building brands to building customer relationships. This may explain the short tenure of most CMOs in companies of all sizes.
To succeed in the interactive digital age of big data technology, business leaders much shift their focus from counting transactions to maximizing the lifetime value of their customers. This means profitability of brands will be less important than the profitability of customers.
Planting Seeds And Harvesting Customer Relationships
What separates an old-school marketing organization from a customer-driven organization is one is organized around activities that sell brands, while the other is designed around activities that serve customers and customer segments. In these transformed marketing organizations, marketing communications is nearly a real-time dialogue, hyper-targeted to thinner slices of customer segmentation.
Enlightened marketers have unimaginable access (from abundant sources) to rich customer data, enabling them to be more deliberate and proactive in their tactics for making a customer driven strategy pay off.
Most marketing organizations are still organized around the principle of selling rather than serving.
Serving customers in highly relevant ways requires you to know them and their behavior essentially on a personal level. Competitive advantage is not about features and functions in ever-cheaper products, rather it will be based in serving customers in ways that are unexpected and highly valued.
Customer driven marketing organizations are structured to engage narrow segments with two-way communications designed to build trusted relationships through products or services that customer’s will value most at any given time. The customer is at the center of the universe with brands organized around them rather than the conventional model of customers organized around the brand.
Keeping Score In A Whole New Ball Game
It’s a cliché to say you can’t fix what you can’t measure. Marketers are obsessed with ROI and their organizations are rewarded or punished based on their ability to deliver the desired financial result. Indeed, metrics are important. However in the shift from marketing products and brands to actively serving customers / consumers / users, there are different metrics that will determine marketing effectiveness.
In customer-driven marketing organizations the focus is on customer profitability rather than product profitability. Current sales are less important than the lifetime value of the customer. The value (equity) of the brand is less important than the value of all the customers served. And finally, market share (which only measures current competitive sales) is less important than customer equity–which is a measure of the enterprise’s long-term competitiveness within the segment and the category.
Dismantling The Silos
Making the shift from a brand-driven organization to a customer driven organization will require the traditional silos of organizations be dismantled. That is difficult to accomplish and it only happens when the shift is driven from the top down. Overcoming the entrenched interests of various parts of the company is the biggest impediment to this level of marketing transformation.
The fix is already in. The train has left the station. The shift is underway and if your marketing organization doesn’t begin to act on it, you will see your competitive advantage blown away in the winds of change.
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