I just received an interesting comment on my “For Hire” post that asked:

“Are there really any leading authorities – aside from published authors – on integrated marketing and communications? There are a lot of self-promoters who claim expertise in what is usually “the obvious”.

This comment, while obviously an attempt to discredit my experience, made me realized that there are probably many marketing professionals out there that have the same misunderstanding and misperception when it comes to understanding the theory and benefits of true integration.

I want to help fix that.

From the dawn of its time, which would be about 1993, when the “Fathers of Integration” Schultz, Tannenbaum and Lauterborn wrote The New Marketing Paradigm: Integrated Marketing Communications, integration has always been based in customer-centric (putting the customer at the center of the organization) and data-driven marketing. Unfortunately, marketers conveniently ignored the customer-centric, data-driven part of integration. We’ll get to that in a bit…

What Integrated Marketing Is Not

Integrated marketing is not consistent branding and messaging across tactics alone.

Yes, you heard that correctly.

One of the many challenges that The New Marketing Paradigm attempted to address were silos (other challenges included the lack of customer-centricity, planning, and measurement). Messages and branding from marketing, communications, branding, and PR were consistently out of whack with each other—leaving customers and prospects to put the pieces together themselves. Talk about ineffective.

Fast forward. Silos still rear their ugly heads (we see social media putting a spotlight on them), but for the most part organizations have gotten smarter about why it is smart to integrate their branding and messaging.

That said, marketing and communications today still seems to be lead by the basic and simple act of integrating tactics to feed the lead generation beast. That mindset presents new challenges. By thinking that tactics have been integrated across channels it’s a job well done, marketers put themselves at risk of wasting precious resources, time, and budget. Why? Because integrated tactics alone do not deliver on*:

• Relevance
• Receptivity
• Response
• Recognition
• Relationship

Without truly knowing who customers are, when they are open to messages, how they prefer to respond, if they relate to the brand, and how they feel about the organization, it is nearly impossible to be targeted. That is where the data-driven part of integration comes to bear. Without outside-in data, “spray and pray” marketing will continue to be prevalent.

Obviously, I am simplifying this to make a point. It would take a book to dive in deeper!

(*To learn more about the Five R’s and the value they deliver, be sure to pick up a copy of IMC, The Next Generation : Five Steps For Delivering Value and Measuring Financial Returns by Don E. Schultz and Heidi Schultz.)

What Integrated Marketing Is

“GE executives described a stagnant GE when Jack Welch took over as CEO in 1981: “[GE is a company] … with its face to the CEO and its ass to the customer.”

I pulled that gem of a quote from Ranjay Gulati’s most excellent book, Reorganize for Resilience: Putting Customers at the Center of Your Business.

Which direction is your organization facing? Let’s dive in before your backside catches a chill.

IMC: The Next Generation presents eight guiding principles of integration:

1. Become a customer-centric organization
2. Use outside-in planning
3. Focus on the total customer experience
4. Align customer goals with corporate objectives
5. Set customer behavior objectives
6. Treat customers as assets
7. Streamline functional activities
8. Converge marcom activities (this one we get, what about the others?)

The main struggle for product-centric companies when it comes to integrated marketing is the ability to realize customer-centricity and treating customers as assets.

Understanding Customer-Centricity

In Reorganize for Resilience, Gulati observed the following traits of truly customer-centric companies. They:

• Changed the conversation with their customers to one that is more outside-in and focused on how they can help address customer-articulated needs;
• Became problem solvers, not sellers;
• Focused on the set of customer problems they want to solve and are less concerned with the means and more focused on the ends;
• Developed a culture where customer centricity and outside-in behavior is their way of life.

Jay Galbraith describes the same tenets in his book, Designing The Customer-Centric Organization. Customer-centric companies focus on:

• Personalization and customization for the best customer solution
• Strategy supporting the most profitable, loyal customers
• Structure based on customer segments, teams and P&L
• Rewards given to employees who save customer business
• Sales bias on the side of the customer

Integrated Marketing, It’s “The Obvious,” Right?

We hear about the success of the same companies repeatedly. You know who they are: Dell, IBM, Cisco, FedEx, Lafarge, Best Buy, Target, and Southwest. There is a reason for that. The pool of customer-centric companies with truly integrated marketing is more like a puddle.

It has been with purpose for the past year that I have blogged about integration. I truly believe in integration and the value it delivers (how can the evidence be disputed?). As well, I have helped companies with integration in my career and know that it works.

(Note: integration is tough work and it’s not easy to become truly customer-centric, but that isn’t an excuse to move forward with it.)

For those marketers solely guided by revenue generation and shareholder wealth, try this stat on for size:

“…customer-driven companies were significantly more successful than shareholder-driven ones, providing a 36 percent advantage in shareholder returns, compared with their industry median; shareholder-aligned organizations provided only a 17 percent advantage.” – Reorganize for Resilience

Who wouldn’t want those returns?!

Your Job Moving Forward

The next time an agency or consultant is offering integrated marketing be sure to request a plan that is truly integrated (especially the five R’s)  and data-centric and see what you get in response. If it’s  full of tactics that have been “obviously” integrated with lack of regard for much else, you know what to do.

Integrated marketing: it’s the not so “obvious” marketing… after all. (Sort of like the “other white meat.”)

P.S. If you truly want to understand integrated marketing and it’s benefits, pick up the books mentioned in this post along with Kellogg on Integrated Marketing.

[Image Source: hypebeast.com]

“No company will tell you, ‘I don’t want to be customer centric,’ but do you know the difference between taking an inside-out versus an outside-in approach?”

-Ranjay Gulati

Most companies (small to Fortune 500 and everything in between) are not customer-centric—even if they think they might be (market-oriented or customer-focused isn’t the same, but they are a great start!). Driven by revenue generation, product and service development (i.e. profit centers) usually takes the lead and determines the hierarchy, culture and power within the organization. While products and services may be innovative, creative, and useful often the complete inward focus creates a fundamental disconnect between function and actually solving a customer’s challenges—from the customer’s perspective—and therefore companies only gain a temporary brand loyalty foothold. It’s why products and services (whether B2B or B2C) continue to face the challenge of commoditization. Even if customers force fit a product or service that alleviates short-term pain, there is still the hurdle of solving long-term challenges. If they are not focused on or solved, the next company that comes along with a solution and complete focus on achieving loyalty will win. Because companies focus on short-term gains, they lose 50% of their customers every five years or so. Ironically, it is more costly to acquire new customers than it is to make existing customers satisfied.

Breaking the Cycle

There is a reason why companies are not customer-centric. It is an operational practice, which can be  difficult, challenging and downright painful especially considering it requires a hard look at what—and who—is wrong when it comes to focusing on the customer. That doesn’t mean it’s not possible, however. There are examples of B2C and B2B companies that get it like Zappos, Southwest, Target, Best Buy, Carnival Cruise Lines, Cisco, Jones Lang LaSalle, and Lafarge.

So then, how does one break the cycle of being solely hierarchical and product-driven?

First, it is important to understand that customers have gained control of the market place and recognizing that they are not willing to settle for the status quo. It is from that perspective I will share methodologies from the leading experts in customer-centricity.

IMC Value Add – Don Schultz & Heidi Schultz

Don Schultz, the Father of IMC, has been my marketing guide for over 15 years. Everything I know about IMC I have learned from Don’s books (along with implementing, testing, etc.). IMC focuses on becoming customer-centric (putting the customer at the center of the organization) and data-driven. As found in IMC, The Next Generation : Five Steps For Delivering Value and Measuring Financial Returns¹, the “Five R’s” of IMC help companies to focus on reversing the traditional notion of value. That is, the customer determines what is valuable, not the company (not great news for fans of value prop creation).

• Relevance:  Developing products and services that meet customer  wants and needs
• Receptivity:  Reaching customers when they are most receptive, but more importantly in a manner that they want to be communicated with (This requires a company to be open to new ideas, concepts and methods of doing business)
• Response: Can customers response to a company and its offerings in an easy manner at every point of contact (This requires employees to sense, adapt and answer the needs/wants of customers)
• Recognition: Understanding important points of contact (data) that a customer has made within the organization (people, websites, 1-800s, etc.) and connecting the dots of their actions (This requires a company to stand apart from the competition from the start)
• Relationship: Comprehending that customers create the relationship, not the company and specifically not the marketers

NOTE 1: Click on this Google Books link for a graphic and more detail. Or, just buy the book. Bonus: ROI Formula!

NOTE 2: I share the 5 R’s in all of my IMC presentations, so you may have seen them there, too.

The Star Model – Jay Galbraith

I have been a long-time fan of Jay Galbraith, the driver behind organization design and customer-centric organizational strategy and management. Jay’s focus has been on helping companies understand that they: A) no longer have control over the customer;  B) need to understand each customer wants to do business in a different manner;  C) need to interact with customers and D) expand offerings to meet customer needs. Well, that and much more!  Jay is best known for The Star Model, a design framework used to determine new organizational strategies.

The Star Model has five areas:

• Strategy: Determines the new direction and includes goals, objectives, values, etc.
• Structure: Establishes the location of decision making power (including specialization, shape, distribution of power and departmentalization) and is based on the Strategy
• Processes: Channels the flow of information and decision making across the organization as an operational guide
• Reward Systems: Influences the motivation employee actions so that their goals are aligned with the overarching goal of the company
• People: Directs the hiring of employees in order to achieve the strategy and fit the structure of the organization

The Five Levers – Ranjay Gulati

Ranjay Gulati is a professor of business administration at the Harvard Business School and author of Reorganize for Resilience: Putting Customers at the Center of Your Business. Gulati hit the nail on the head when he wrote “enterprises talk the customer talk while failing consistently to walk the customer walk.”¹ To help organizations get to a point where they are customer-centric, flexible and resilient (to economic downturn), Gulati shares five key levers (I talk about them frequently in my IMC presentations):

• Coordination: connect, eradicate, or restructure silos to enable swift responses
• Cooperation: align all employees around the shared goals of customer solutions
• Clout: redistribute power to “bridge builders” and customer champions
• Capability: develop employees’ skills at tackling changing customer needs
• Connection: blend your offerings with partners to provide unique customer solutions

Choosing an Outside-In Focus

What do all of these models/methodologies focus on? Well, they certainly aren’t about giving up strategy, planning, processes (for all of you Six Sigma fans out there) or revenues—if that’s your concern. In fact, customer-centricity is about increasing value and revenues in a reciprocal manner. The first step is for companies to choose to have an outside-in focus, which is akin to admitting there might be a problem. Often an internal audit (hire professional help here) will help to determine next steps and the selection of a methodology that works best to support overall objectives while satisfying customers.

Realistically, however, I don’t see customer-centric becoming the norm. There are too many egotistical, insecure and arrogant people running around corporations for that to happen (am I wrong?). It really takes strong leadership, a willingness to be open-minded and wrong, and a drive to be the best (from a customer perspective) to flip an organization’s focus from inside-out to outside-in.

What do you think? Where is your company’s focus today? Do you think reorganizing around customers realistic?

If you are of the belief that “customers don’t know what they want” and it is a company’s role to determine what the market needs, how would you address being customer-driven?

____________

¹ Don Schultz, Heidi Schultz, IMC, The Next Generation : Five Steps For Delivering Value and Measuring Financial Returns (McGraw-Hill, 2003), 120-122.

² Ranjay Gulati, Reorganize for Resilience: Putting Customers at the Center of Your Business (Harvard Business Press, 2010), 4.

[Image Source: Elizabeth Thomsen]

This past weekend I had the pleasure of being introduced to Ron Shevlin, his blog Marketing Tea Party, and his recent post “The Problem With Customer-Centricity.” (Hat tip: Valeria Maltoni.)

Given that I am a proponent for customer-centricity, I could not help but add my thoughts to Ron’s post since it is at the heart of what I practice and believe as a marketer. As well, I am seeing the trend for customer-centric becoming destined for buzzword bingo and I would hate for it to become meaningless well before its benefits are recognized and experienced.

Ron offers a well thought-out case for what customer-centric is and why it may not in the best interest of an organization (be sure to read all of the comments, too). After thoughtful analysis, Ron arrives at this bottom-line:

“… All this talk of customer-centricity is an utter and complete waste of time. The term means nothing. There’s no common definition, no definitive way to measure it, and therefore, no real proof that a company that claims to be customer-centric is any better (for any of the stakeholders) than any other firm.”

The problem with this premise, however, is that customer-centricity was not been properly defined (the definition from Business in Berkshire is probably the closest definition) nor had the origin of the theory (which is integrated marketing communications circa 1994) been shared.

In order to understand why customer-centric is an operational practice, it is important to understand its history.

A Bit of History

In 1994, Schultz, Tannebaum, and Lauterborn defined what it meant to be integrated and customer-centric with their book “The New Marketing Paradigm.” The paradigm shift they discuss is shift away from mass marketing, removing internal silos and marketing from a customer perspective (including two-way communications).

Since customer-centricity has its roots in IMC, the most correct definition I have seen to date:

“Using outside-in thinking, Integrated Marketing Communications is a data-driven, customer-centric approach that focuses on identifying consumer insights and developing a strategy with the right (online and offline combination) channels to forge a stronger brand-consumer relationship. This involves knowing the right touch points to use to reach consumers and understanding how and where they consume different types of media. Regression analysis and customer lifetime value are key data elements in this approach.”

[The key? Data and relationships.]

From Marketing to Operations

After reading the above definition, you might be wondering how one makes the leap from marketing communications to operations.

Integrated marketing communications is about connecting with, listening to, understanding, and analyzing (communications) customers and delivering (marketing, product development, operations) on their needs and wants, hopefully in a meaningful way that serves both the customer and organizational goals. Perhaps that seems overly simple, but really, it should be that simple.

When I think of an analogy for customer-centricity, I liken it to the customer as the brain and marketing as the heart (and not in an emotional mushy way, but as lifeblood to the organization). I mean, after all, you can’t do much without a brain and heart and the two rely on each other to sustain life.

Marketing from the Outside-In

This is where the Four C’s (Customer, Convenience, Cost, & Communications) come into play. I would posit that they should perhaps not completely replace the marketing mix (Product, Place, Price, Promotions) just yet—who is ready for that?!—but lead them.  Therefore, from an operational perspective, nothing goes to market without it meeting the needs/wants of the customer at a cost, convenience to buy and with communications that are acceptable to the customer.

Planning

As I have said repeatedly, planning is essential for success. With smart and strategic planning comes measurement and ROI. An organization needs to intentionally plan to be customer-centric. It’s hard work and a complete change in mindset, but it’s possible (read Gulati’s book for examples like Best Buy, Cisco, Target and more).

Reality

The reality is that, unfortunately, customer-centric is becoming a buzzword because organizations struggle with focusing on squarely on customers. Short-term gains override long-term value and developing customer loyalty. Is it any wonder that organizations lose 50% of their customers every five years and rely on the ‘marketing machine’ to refill?

Resources

Perhaps you have some time on your hands or you really do care about your customers. If so, here are resources to help you get started:

• IMC: The Next Generation (Schultz & Schultz)
• Reorganize for Resilience: Putting Customers at the Center of Your Business (Gulati)
• Turnaround Strategies for Customer-Centric Operations (Roman)
• Building the Customer-Centric Enterprise (Imhoff, Loftis, Geiger)
• Building Customer-Brand Relationships (Schultz, Barnes, Schultz, Azzaro)
• Strategy from the Outside In: Profiting from Customer Value (Day, Moorman)
• Customer Culture: How FedEx and Other Great Companies Put the Customer First Every Day (Basch)

I am sure for some of you I haven’t made a strong enough case–that would take a book. But, what do you think? Should organizations literally bring customers into their operations? Give them a seat at the table per se? Are organizations ready for this?

[Image: McGill]

Failed icon. Sounds like dismal hook to hang one’s hat on doesn’t it? Especially given that most of us have such an aversion to failure in life and business—or even being associated to failure in any way.

When you think of failure, would you consider someone who:

• has spent a large amount of their career on educating and helping corporations and marketers to become customer-centric;
• is a Professor Emeritus at a well-known university that has a graduate program to educate students in being data-driven to ensure that customers’ needs and wants are met;
• has written over 10 books on subjects like driving and determining brand value and measuring ROI; and
• was named one of the 80 Most Influential People in sales and marketing a failure?

No, I wouldn’t either.

And yet, that’s exactly how Don Schultz, one of the founding fathers of integrated marketing communications referred to himself at Blur (‘The Conference that Erases Lines’), the recent PMA Annual Integrated Marketing Conference.

Schultz stated, “…that after 20 years of integration, IMC, IM and all the other versions and visions that we’re no closer to developing a holistic, customer-focused, marketing and communication system than before.”

20 years have gone by and companies are still no closer to putting the customer first? Seems odd that a company wouldn’t put the people who willing to part with their hard-earned cash to buy their products and services first, doesn’t it? But that is reality for the majority of businesses out there.

Integrated Marketing Communications: It Isn’t What You May Think It Is

When IMC was first introduced, the mission was simple: “One sight and one sound.” Because then the challenge revolved around multiple, siloed departments reaching out to customers in accordance with their revenue generation or communications plans. On the receiving end were the customers, who were left to analyze and pull together all of the assorted messages in order to make sense of what it was the advertiser, marketer, publicist, and sales person wanted them to do. As we know today, that simply doesn’t work (and it most likely didn’t work then either).

According to Schultz all of these years later, “…it only added value to the marketers, not the consumers. It was all “outbound” where we were trying to influence and persuade the customer to buy/try our product/service…”

And yet, most companies that practice integrated marketing communications today are still in this phase of “one sight and one sound.” That’s where, unfortunately, the notion of what IMC is has come to rest in most marketers’ minds.

Barriers Are More Dangerous than Silos to your Business

It’s rare to see a company organized completely around its customers and it will probably be another 15 years before we are even close to that being the norm. As in the past, there are still many silos today. But at least the silos are seemingly working together (branding and marketing communications; marketing and PR; or customer services and sales, for example) to achieve one sight and one sound. It’s not enough, but it’s a good start.

Barriers to becoming customer-centric include:

• Resistance to change
• Organizational structures
• Functional separations and budgets
• Capabilities and control
• Marketing planning systems

Whether as customers or employees, we have all seen these barriers. And they are as smart as putting a concrete barrier in front of your corporate headquarters.

The good news? The world has indeed changed.

Schultz went on to say that “…when he and the rest of the marketing “icons” weren’t looking, the world changed. Today’s information technology has given consumers control.”

If IMC is So Good, Why Isn’t It Being Implemented?

This very question was asked by Loyd Pettegrew, Ph.D. in his 2000 article of the same name. Dr. Pettegrew points out eight conditions that a company must adhered to accurately reflect the practice of IMC:

1. Must speak to all stakeholders with a single, consistent voice
2. Must assume the consumers’/customers’ point of view
3. Strategic communications disciplines must be internally integrated
4. It must have a clear and consistent message that is more effective and efficient than competing messages
5. Messages must cut through the increasingly cluttered commercial landscape
6. Must foster two-way dialogue between consumers and itself
7. Must build bonds that lead to long-term, consumer-to-brand relationships
8. Must not place excellent marketing ahead of corporate reputation

I’d like to add a number nine: Top-down management buy-in for becoming customer-centric.

Sounds familiar doesn’t it? I hope you are making the natural bridge to social media. As Don Schultz has stated, consumers [and customers] now have control. As such, it will be hard for companies to not start adhering to these 9 conditions if they want to be successful socially. If not, we will begin to see a lot of failed icons in the social media space.

Failed Icon or Visionary?

I am going with the latter. Let’s just hope that this time around, we all get it right. Because in the age of social media I don’t think consumers and customers will give us a second chance (as we’ve seen evidence of already).

[Image Source: The Gig Girl]

The hiatus is over! For those who have been loyal readers of this blog, Happy New Year! And I thank you for hanging in there with me while I took the time to consider where to head next.

For a long time I focused on marketing, PR and social media, but rarely the integration of them all. The focus of The Harte of Marketing for 2010 (and perhaps beyond) will be integrated marketing & communications. While integrated marketing communications (IMC) is nothing new, the embracing of social media surely puts IMC back in the spotlight as its principles are similar to long-standing IMC principles.

I have often said that social media isn’t shaking the foundations of marketing or public relations; it’s just driving us home to our roots, which seem to be long forgotten. The same is true of the integration of communications (advertising, branding, PR, direct marketing, etc.) or marketing functions (the 4 Ps)…many people have been integrating since the 90s and for them this will be nothing new, but I hope to add a few twists and turns even they weren’t expecting.

The Eight Guiding Principles of IMC

I am a long-time student of Don Schultz (interview with Don), professor emeritus-in-service of integrated marketing communications, Northwestern University, as well as Larry Percy, Clarke Caywood, Robert Lauterborn, Philip Kotler and all the other folks who worked diligently to put customers at the forefront of our marketing and communications. While times have changed since they first wrote and educated on IMC, the need to prove value to management has not. These are the eight guiding principles from Don Schultz’s book “IMC: The Next Generation. Five Steps for Delivering Value and Measuring Returns Using Marketing Communications.(2003)”

• Principle 1: Become a Customer-Centric Organization
• Principle 2: Use Outside-in Planning
• Principle 3: Focus on the Total Customer Experience
• Principle 4: Align Consumer Goals with Corporate Objectives
• Principle 5: Set Customer Behavior Objectives
• Principle 6: Treat Customers as Assets
• Principle 7: Streamline Functional Activities
• Principle 8: Converge Marcom Activites

These principles don’t seem earth-shattering, do they? Then why is it many organizations today still struggle? Helping organizations make these principles a normal course of their business operations (and more!) will be the focus here and I hope you’ll come along for the ride!