Table of Contents
| Praface | ix |
| Acknowledgmants | xvii |
| New Millennium! New Networked Economy! New Marketing Imperatives! | 1 |
| Imperative 1 | Use What You Know to Drive What You Do | 17 |
| Imparative 2 | Erase the Line Between Product and Sarvice | 41 |
| Imparative 3 | Make Each Relationship as Different as Each Customer | 69 |
| Imparative 4 | Do as Little as Possible Yourself | 93 |
| Imparative 5 | Make Your Interactive Process Become the Product | 123 |
| Imparative 6 | Factor Future Value into Evary Move You Make | 153 |
| Imparative 7 | Make Business Responsible for Marketing and Marketing Responsible for Business | 187 |
| Where Do You Go From Here? | 227 |
| URL Listing | 235 |
| Glossary | 243 |
| Index | 245 |
Read an Excerpt
New Millennium! New Networked Economy! New Marketing Imperatives!
Decisions. Decisions. Decisions. More products to choose from. New ways to shop. Not enough time. Bombarded by commercial messages. Disappointed by customer service. The plight of the consumer of the new millennium.
New pressures to the bottom line. Internet buzz attacking the brand. The networking of everything. Shorter product life cycles. New expectations from savvy consumers. The plight of the businessperson of the new millennium.
As companies and their competition struggle to figure out how to adapt, survive, and prosper in an interconnected business world, one thing is clear. The interaction between an e-business and its e-customers will be radically different from anything ever seen before.
This new dynamic requires a new kind of link between a company and its customers, between the company and its stakeholders, between the brand perception and the brand experience-even between the company and its competitors. Forging these new connections will not be easy. The profound impact of the Internet on how modern-day society functions is destined to change marketing just as profoundly.
The wastefulness built into the mass marketing of the past is giving way to a newly affordable ability to communicate directly with the best prospects and customers. Fifty years of marketing orthodoxy has been turned on its head.
We've moved from mass marketing, to segmented marketing, to niche marketing, to truly fulfilling the promise of individualized marketing. What was formerly seen as a totally crazy idea-selling to a segment of oneis rapidly becoming the new marketing model.
The new marketing does notbegin and end with mastering the bewildering array of automated tools driving today's Customer Relationship Management (CRM). Most companies don't get one-to-one marketing right because they remain primarily focused on the latest software technology rather than on the strategies and creative communications that create future value in interactive customer relationships.
Marching to this different drummer is dependent on playing a different tune-a new willingness to truly care about the customer in daring new ways. This "caring and daring" mind-set must be drilled down to the very core of the enterprise.
Who will be the first in each business category to create a corporate culture dedicated to exceeding what customers expect and winning their trust? These "marketing machines" of the future will become the new standard of excellence as buyers flock to their banner and keep coming back for more.
Whatever business you are in-whether selling to the consumer or to other businesses, whether an e-company entrepreneurial venture or an old-economy behemoth, whether selling a product or a service or an ingenious combination of both-putting the new marketing imperatives to work in your business can pay off big in the months and years ahead.
How far have we come in this exhilarating and perplexing journey into doing business in a Digital Age? The answer lies in how the personalized MaxiMarketing concepts of the 1980s have evolved into a new paradigmthe Max-e-Marketing of the Net Future.
Max-e-Marketing is the high road to maximizing profits with breakthrough info-tech applications that drive appropriate and effective interactive communication with targeted prospects and customers at all touch points online and offline.
Max-e-Marketing is about the creative strategies, communications, and interactions that add value for the customer while adding value to a company's bottom line. It's all about:
1. Relationships: How a business and all its employees interact with a prospect or a customer when it comes in contact with that person online or in any other communication channel. The common thread is to obtain a measurable response that updates the corporate knowledge base and leads to more responsive and productive future interactions.
2. Experiences: How each experience that a customer has with a company's products and services impacts the relationship. Delivering a pleasing experience involves the entire enterprise-end-to-end-as marketing becomes as much about process and operations as it is about creating a memorable advertising campaign or effective direct mail offer.
3. Future value: How you measure the value of the overall relationship with the company's customers and identify the drivers that impact the future value of that relationship. Measuring the return on investment (ROO of an individual marketing campaign now takes second place to measuring the ROR (return on relationship), the return on the investment in building an enduring relationship with the company's customers, business partners, and stakeholders. The right relationships determine the future value of the business.
Marketing in this environment will be like nothing experienced in the last century. Creating a smiling customer now becomes the business of everyone from the call center representative, to the process engineers developing a new delivery system, to the truck driver delivering the product, to the newly crowned customer relationship manager and the CEO. Everyone who even remotely "touches" the customer will have to become a marketer in the true sense of the word-whether that person operates in virtual cyberspace or the bricks-and-mortar world.
In tracking the experiences of dozens of companies, the authors found some companies making the transition to the new personalized marketing with immediately gratifying results. But they also found many companies who only give lip service to this new way of thinking and resist allocating the budget dollars needed to implement it well. And there are far too many companies standing aside, running the risk of being left behind as they ponder which way to turn in the suddenly unfamiliar business landscape of the Net economy.
There is much to be learned from the innovative Internet entrepreneurs upsetting the practices of whole industries, from the old-economy companies making a U-turn in their strategic outlook, from the Michael Dells of the world who got it right more than a decade ago with the "be direct" business model.
Max-e-Marketing in the Net Future looks at where we are and spells out the new imperatives for coming out on top today. Taken together, these signposts can be a company's guide to what is needed to think differently and be a leader in the next wave of marketing innovation...
Read a Sample Chapter
Chapter 1: Use What You Know to Drive What You Do
Make Everything You Do Add to What You Know
The chief information officer of a large financial institution once told us his bank had stored enough data on its customers that a printout would reach from the earth to the moon and back. What is being done with all that data? The bank hasn't yet decided.
A lot of companies are in the same position. Even though customer data is the currency of the Net Future, in many cases marketing managers simply have not yet come to terms with what to do with all the information that's being collected and stored.
Some are struggling with technology problems. Some have underestimated the amount of change required in their business processes to take advantage of the data. Some may use the data for ill-conceived promotions that focus only on short-term sales goals at the expense of building long-term customer relationships.
Other businesses are still just trying to capture the basic information needed to compete in the Net economy.
The Internet, with its interactive capabilities, ubiquitous access, and low cost of communication, has become an explosive new source of vital customer information gathered in real time. And, what we learn online can be tied to the legacy of offline knowledge stored in the company's computers. In the Net Future there will be an abundance of software that reads, understands, and makes sense of this mountain of information so that you can:
- Communicate with customers, based on their known preferences and needs.
- Offer relevant products and services based on known data, using the most cost-effective channels.
- Reap the rewards of direct contact with consumers to influence their buying behavior, based on their individual criteria.
In this new world of interactive communication, the goal is to make every marketing decision and action accountable in building and sustaining the most profitable customer relationships.
In short, it's about Max-e-Marketing.
Max-e-Marketers maximize sales and profits by means of appropriate and effective interaction with known prospects and customers across all touch points online and offline.
Taking advantage of the ease and low cost of interaction on the Internet means learning new ways to constantly get more information to improve the customer experience. Companies that act now to collect, analyze, and use this knowledge will be able to profit in ways that were unimaginable only a few years ago.
When you make everything you do add to what you know, you can take full advantage of the possibilities for establishing truly responsive relationships with each customer-relationships that are driven by what is known about that individual's preferences, interests, and past behavior.
TAKING STOCK OF YOUR INFORMATION ASSETS
In many cases, valuable information already exists within the company, but because that information isn't organized in a meaningful way, it cannot be used effectively.
The first step to becoming a relationship-driven marketer is to assess your current customer information assets.
WHAT IS THE RIGHT DATA?
Before you start using what you know to drive what you do, you want to know what you need to know. Sounds obvious. But it is the first place a would-be Max-e-Marketer is likely to do less than what is indicated. It requires undertaking a strategic planning process that managers often may bypass because it is difficult. It requires cooperation across multiple departments that may be accustomed to full autonomy and don't see the broader relationship opportunities. But this process is a crucial starting point, because it lays the foundation for everyone in the company to recognize the enterprise value of customer data.
A key consideration in this evaluation is to determine the kinds of information that can help you create and retain the most profitable and long-lasting relationships possible. Many companies have rushed to market with surveys, promotions, or registration forms intended to gather lots of customer data, only to find later that they had forgotten to ask for key data elements.
For example, one dot-com company realized too late that its promotional contests, designed to acquire new customers, were attracting a high proportion of minors who would be unable to afford its products.
HOW MUCH OF THIS USEFUL DATA DO YOU ALREADY HAVE?
Exactly how much do you know about your customers today? Beyond name, address, and perhaps phone number, how many actual data points do you have on each customer? How many fit the criteria you established as being needed to drive profitable business relationships? A company may find that it already has a good deal of the data it needs, but it isn't easily accessible. Now, in the Net economy, resources are available to sort through huge data banks to assess the value and significance of information. You can prioritize what you know with an effectiveness never before possible. You can create systems to link old and new information, as well as to add new data with every customer and prospect contact.
WHAT DATA IS MISSING?
Many in-house customer databases have been growing for years, sometimes taking on lives of their own. The bad news: the data they contain may not match your needs in the Net Future. Your audit must identify what types of data are missing and create a plan for obtaining the information.
Missing data can often be obtained by changing data-collection practices. What exists may also be enhanced with data that is available from public sources, commercial databases, or data-sharing agreements with marketing partners.
For example, a company that realizes it is failing to identify how many of its online shoppers are repeat visitors can easily change its own data collection and monitoring practices. A company that wants to reach new prospects or offer new value to existing customers may partner with another company to create a custom publication or outsource its loyalty program. If a company wants to create a predictive model to target its next promotion toward prospects most likely to respond and buy, it may need to overlay its file with additional demographic elements such as age, income, or home ownership. In many countries, new processing technologies are making it easier to enhance data files-for a fee-from numerous sources.
HOW ACCESSIBLE IS THE DATA?
The larger the company, the greater the chance that valuable information is locked up in multiple databases that were built over time by different divisions to support very different purposes. Extracting and linking up the data to get a cross-enterprise view of the customer base can be a costly and technically difficult project.
What's more, each profit center in the company usually wants to "own" the data, to better serve its specific customer sets. Cross-company linkage often requires a strong, high-level champion to get cooperation from the current "owners" of the data. But without making all the data accessible to everyone in the company who can use it, it will not be possible to maximize sales and profits.
WHO DOES WHAT WITH THE DATA NOW?
Finding out who within an organization is collecting and using customer data is a crucial process that can yield surprising insights about how many relationships a customer already has with a company. A publishing operation, for example, may collect basic mailing information about subscribers in the Circulation Department. But the Advertising Department is likely to augment it for use in creating personalized advertising campaigns for ad clients. And any new interactive publishing efforts would be collecting valuable online user data from online subscribers.
Other industries likewise may have predictable patterns for where data is collected and used within an organization.
- Manufacturers may have numerous product divisions collecting information about customers without realizing that the same customer does business across product lines or in both his or her professional and personal lives.
- Financial institutions have been pacesetters in focusing on cross-product consumer behaviors and assessing how to act like one company with customers who have money invested across multiple distribution channels.
- The professional divisions of pharmaceutical companies maintain massive databases about doctors and health care institutions, and are increasingly building databases of consumers who respond to mass market campaigns by requesting literature about products or illnesses.
Within every industry and company, identifiable patterns of data usage can help determine how customer and market information can be managed and used effectively.
WHAT PUBLICLY AVAILABLE DATA SOURCES CAN BE USED?
Depending on geography, you may be able to supplement your own databases by buying or renting those of others. However, there are enormous differences in what is available in various parts of the world. The ability to use other sources may be affected by privacy legislation and how advanced data collection is in a given area.
In the European community, a regional directive imposes strict limitations on the use of data about customer shopping behaviors. It generally requires that a marketer, who must obtain permission for that use, tell consumers explicitly about intended use of their information. In South America, reliable, legal sources of data are very hard to find. In the Far East and much of the South Pacific, data markets are still very immature, and regulators there are looking to Europe for direction.
However, as the Internet takes a more central role in shaping the e-business of the Net Future on every continent, markets around the world will likely move closer to the North American model.
The United States currently has the most open data markets in the world, and a wide array of compiled databases and response files can be rented for various uses. If a company needs to augment existing data elements, overlays can be purchased in the United States from sources such as Acxiom, Experion, and others.
Acxiom now offers an advanced Net Future capability to link all known occurrences of an individual customer across a company's many systems. Whether Rose Dugas shows up in a monthly billing system or an up-to-the-moment e-commerce transaction, Acxiom's new linking technology, AbiliTec, can help a company identify her as the same individual. This can shortcut many months of programming and development work to get a holistic view of customer relationships across the enterprise.
AbiliTec, combined with new application integration technologies, enables the marketer to instantly recognize a customer at any touch point. This improves the speed and quality of the interaction, ensuring its relevance to the customer. If the customer just went online 10 minutes ago, and is now calling the customer care center, his or her latest actions at the Web site are known and available to the representative handling that call.
HOW IS THE DATA ORGANIZED?
Creating the infrastructure for extracting data from existing systems, assembling it, and augmenting it with new transaction data from online and other sources will be a continuing challenge. It's one reason why customer data-integration technologies are such a priority for most IT managers.
Establishing reliable operations that can accommodate data from disparate systems, mine the data, and manage marketing campaigns and customer relationships has never been more important. It is essential that marketing and IT professionals work together to ensure that the infrastructure supports the organization's strategic goals.
THE DATABASE IS THE MARKETPLACE AT MEREDITH
As publisher of books, special-interest publications, and magazines such as
Ladies' Home Journal and
Better Homes and Gardens, Meredith Corporation is perhaps best known as a U.S. media giant. But in the last decade, its use of data-driven marketing has made its rich databases as important to its overall business success as its publications. Its use of the Internet is enabling the company to create added value for its advertisers and for the readers of its publications.
The Des Moines-based company, founded in 1902, employs almost 3000 people. It has 20-plus magazine properties, 12 television stations that reach almost 10 percent of all U.S. TV households, and has published 300 books and more than 100 special-interest publications on subjects such as cooking and building.
What is not commonly known about Meredith is that it has evolved into a database marketing company that prides itself on its use of consumer data and leverages each nugget of information it collects to help its customers (the advertisers in its publications) better serve their customers (consumers).
When the company transformation started more than 10 years ago, established industry practice was to maintain separate circulation and advertising databanks for each publication. Advertisers had little more than broad-based information about the readers of those publications beyond syndicated research about the general population.
Meredith decided to invest in integrating these individual market-oriented databases. The company now has information on about 7 out of every 10 home-owning households in the United States. On each consumer, it maintains about 300 individual data points.
"We wanted to put the databases together to provide consumer information to our advertising customers. That was the biggest thing we did 10 years ago," says Steve Lacy, President of Meredith's Integrated and Interactive Media Group. "We wanted to target direct marketing activities across all the properties. This was our plan to support our direct mail activities. Also, companies such as Procter & Gamble and Kraft wanted to better target through our magazines. The information we have about the consumer helps them create the right products."
SERVING A CUSTOMER'S CUSTOMER
Every marketing effort, whether for its own circulation base or for an advertiser's direct-response marketing campaign, is carefully tracked and added to the company's integrated knowledge base.
"The knowledge is a tremendous asset," says Lacy. "We figured out in an opportunistic way how to service our direct mail. As it evolved, and we established integrated marketing, we found we could help our customers communicate better and more directly with their customers."
For example, Meredith found that there was a correlation between gardening and minivan owners. "We worked with Chrysler and found this out by overlaying lists of consumers." Meredith then worked with the automotive industry to provide gardening books and publications as incentives for consumers to visit specific minivan dealers, helping its customers reach the right prospects in the right way. "We're pretty sure we have the most well-defined consumer database of any of our competitors."
The Internet has provided Meredith with a rocket-booster for its data-collection engine. It has not only allowed the company to leverage what it knows about subscribers but also has provided a cost-effective way to continue to add to that data source.
"We're trying very hard to make the database evolve because with the interactive environment we can get a whole lot more information," says Lacy.
Over time, Meredith has developed three methods to accumulate and fine-tune useful information:
1. The drip technique: This is the direct, consumer-contact model. Whenever a consumer contacts Meredith, whether by telephone, mail, or through any of its Web sites, the company gently probes for a bit more information about that person. "We add to the information we have in small chunks. We ask just a little more each time we talk to you," says Lacy. All that information is funneled into consolidated central databases.
2. Mapping: The Net gives Meredith the ability to see where its visitors go. "We keep track of the activity whether you're in the 'home improvement' or the 'recipe' database. We can track back to the user ID. We also do a lot of focus groups and a lot of testing."
3. Overlays: These provide more descriptive information about types of users and their preferences. Meredith is a big believer in lists: customer lists, lists from the government, lists from competitors, or any list that helps the company determine how certain types of people behave in certain ways. Each list adds to the storehouse of information that increases its targeting capability.
"Why does a supermarket stack Tide to the ceiling and leave it that way for every customer? How is the consumer who shops on Thursday different from the one who shops on Sunday morning, and how are those consumer needs different from each other? Companies are too focused on products and not enough on customers," says Lacy. He goes on to say, "The best way to get a customer is to serve them a product they're interested in. What we know about the consumer lets us drive our business. Some other companies are still run as silos, as individual businesses . . . The more you communicate with us, the more data points we have."
For most companies, Lacy recommends a four-step process to become customer data-centric:
- Buy as many lists as you can to add relevant overlay data.
- Do a lot of data-driven direct mail testing.
- Capture as much information as you can on the Web.
- Buy "the right technology " and use it to integrate what you learn from diverse sources.
The technology is needed to de-duplicate information and mine the data to find correlations among various profiles and behaviors. Lacy comments:
"There are all sorts of companies that operate as silos when they communicate with a consumer. They need to have a consolidated view of the consumer.
"The traditional mode is to sell products. What you want to do is see how you solve a consumer's problem and deal with it from that direction. The more levels between the manufacturer and the consumer, the more difficult it is. Most retailers don't know a great deal about their customers."
Meredith keeps all its data in one data center, where it focuses a large amount of its effort in keeping that information up to date. While one group of people is responsible for accumulating and updating the data, another group functions as internal and external consultants to the business units. "They help the customers figure out the best way to mine the data out of the database," says Lacy.
Meredith figured out over time that just building a database does not a business make. It takes building, fine-tuning, updating, centralizing, cleaning, and continual refreshing. Every customer contact adds value to Meredith's database, and the company is often approached by other companies to take over their database operations.
At this pacesetting Max-e-Marketer, there is a fierce concentration on using what is known about the consumer to drive what they do for the advertiser, and everything Meredith does adds to what they know about end users.
"We basically gather and retain information about what a consumer does, which gives us knowledge of how to speak to the consumer. This is now part of our culture."
TURNING THE FIREHOSE OF INFORMATION ON YOURSELF AT NABISCO FOOD SERVICE
Nabisco generally brings to mind images of cookies. After all, who hasn't spent at least part of his or her childhood either munching on Fig Newtons or twisting off the chocolate ends of an Oreo to lick off the cream filling on the inside?
But there is another side to Nabisco. It also has a business-to-business division called Nabisco Food Service. Every time you sit down in a restaurant or eat at a fast-food facility, you're likely to use a Nabisco product. Besides Oreos and Fig Newtons, Nabisco boasts such brands as A1 Steak Sauce, Grey Poupon mustard, Ritz crackers, Life Savers, and Planters peanuts.
Nabisco Food Service sells about $400 million worth of those products to restaurants each year, going through major distributors, such as Sysco. What is different at Nabisco as it adjusts to the Net economy is that the seller-to-buyer information flow is being reversed.
Knowing how to collect and use that information is a key strategic competitive weapon, says Steven Rudnitsky, President of Nabisco Food Service:
"In food service, the industry is evolving as we speak," says Rudnitsky. Manufacturers and distributors all have various designs in terms of how they market to the 500,000 restaurants around the country. "Historically, a salesperson would go in and see each individual customer and sell all the products they had in their book. Now all the information is available electronically so the distributor has a fully automated book. And the value of the distributor changes."
It is this change in who has the information and when that turns many business propositions on their heads. In the past, the producer had all the power. It not only controlled the products but it also decided what products were created, how they were marketed, and the actual information flow to the buyer.
In the Net economy, the buyer has most of the power, as Nabisco Food Service realizes. "If chefs want to make something, they can now go into a distributor's database and see the menu and all the options,"says Rudnitsky. "They can see what they need and order it. It's not only the recipe management and value of the product available online that's giving any chef the opportunity to create something new. It's the experience of doing that that is so different from in the past."
In this and many similar situations and in companies in many different categories, the change in information flow changes the actual business.
"The chef is the buyer, but the distributor is not the same seller of yesteryear," says Rudnitsky.
"It's like Amazon's ability to create new options that is vastly different than the way things were in the past. The buyer is doing the buying and the seller isn't doing the selling. The information takes on a whole new value.
"When a buyer is buying, the information available today gives them exponential opportunity. As a result, the seller needs to respond to that opportunity."
Nabisco realized that to succeed in this environment, it had to rethink its product mix and how it interacted with its customers. Rudnitsky says:"It's the information itself that creates a new model. It becomes crucial to create value-added products, via services, for the buyer. The cycle then is complete, because as the buyer is ordering, real-time information is being fed back to the distributor."
With this recognition of change in information flow, Nabisco changed how it operates with its own internal information flow and created a real-time feedback process for its sales staff.
When presenting their marketing materials and sales pitch to a restaurant, rather than simply taking the order (or not), the salesperson now captures feedback from the customer placing the order.
That feedback is instantly transmitted via pre-created formats on each salesperson's laptop computer, enabling the marketing department to instantly monitor a campaign's degree of success. In addition, the sales staff rates various features of the campaign, such as ease of execution and quality of materials.
Nabisco uses its sales staff to make everything it does add to Nabisco's marketing knowledge bank. What is added to what Nabisco already knows, in true Max-e-Marketing fashion, is translated into real-time feedback that can impact the bottom line.
"The role of the seller in the past has been to ensure that the products they marketed are available when needed," says Rudnitsky. "In the future, the seller could become the tracker of the buyer's information needs, as the information flow totally changes from the company, to the seller, to the buyer."
That information flow, in turn, will determine which products Nabisco Food Service needs to manufacture and in what quantities.
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