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]

[Originally posted on Serengeti's Endless Plain blog on 9/16/10. I have edited some of the contents for this post.]

A post by Dawn Westerberg, “Social Media, Customer-Centric, and #IMCchat,” prompted a long response from me, so I thought I’d share my thoughts here too.

If you read THoM, you might already know that every Wednesday night I co-moderate a chat on Twitter called #IMCchat (that’s the Twitter hashtag, if you want to search Twitter), which stands for integrated marketing communications chat. If you are new to Twitter or if you haven’t been on a Twitter chat yet, I highly recommend checking them out (here’s a list of Twitter chats that Meryl Evans keeps up-to-date). Chats are a wonderful way to ask questions or engage in conversation around a topic that is of interest. It’s also great to learn, get advice and share information.

On the September 15th  #IMCchat we discussed customer-centric organizations, what defines an organization that is customer-centric and examples (Best Buy, FedEx, Fiskars).

Dawn asked two main questions in her post:

• Regarding the music industry… If the notion of customer-centric is that the customer drives the product or service delivered is that always a good thing?

• Regarding social media… Is there a danger of “listening” too closely to social media if those participating are only a tiny percentage of your total customer base?

Here’s my response:

Clarifying Customer-Focused vs. Customer-Centric

As Anna Barcelos (IMC chat co-moderator) mentioned, in a ‘customer-focused’ organization, they provide products and/or services that customers want but do not drive ALL operations around the customer. For example, Apple.  They build products that customers love, but the customers don’t get a say in the functionality of those products.

A customer-centric organization puts the customer at the center of the organization (think of a circle with the customer in the middle, then the next circle surrounding the customer circle is the company. It’s not the top-down management chart we are used to). From that perspective, all operations are focused on the customer. An example here would be Fiskars. Through their community, the Fisk-a-teers, Fiskars taps into the community for new product ideas (Engineers call themselves “Fiskaneers”) and allows key members of the community to test products before they are manufactured or even are considered for the market.

[NOTE: To read an in-depth case study on Fiskars, I highly suggest reading Brains on Fire’s new book, aptly titled, Brains on Fire.]

See the difference?

Being Customer-Centric in the Music Industry

Regarding the music industry, being customer-centric would revolve more around the music producers and less around the musicians. For example, if I were a customer-centric music producer I would make sure (based on data) that I was producing artists my customers wanted to buy (vs. pushing a product), but more importantly, making that music available the way customers want to buy it (convenience vs. distribution) and at a cost (versus price) they are willing to pay.

For example, I love Putumayo (a producer of world music) and I used to buy a ton of their CDs. But all of these years later they still only sell offline at shops and boutiques or via their site. Because neither are convenient for me these days (I buy via iTunes), I am no longer a customer.

Using Social Media to be Customer-Centric

As for listening via social media, it’s correct to assume it’s too limiting. Especially if an organization (B2B or B2C) isn’t engaged. However, we need to consider social media beyond Twitter and Facebook. We can’t forget about communities (private or public), like Fiskars’.

Also, it’s important to understand that social media allows for the collection of data organizations were never privy to in the past. And I don’t mean collecting Twitter handles and putting them into the CRM system. I mean analyzing the collected social data for trends, connections, preferences, etc. (i.e. Audience Research. Something the team at Serengeti specializes in from a social media perspective).

For example, when organizations use that “social” data (whether it’s on Twitter via a blog post or a conversation with customer service) to “hear” the same complaints over and over about how a product or service works, it’s an opportunity to tap into those customers, get their feedback and fix the problem. That’s being customer-centric.

Do you own or work for a customer-centric organization? Do you have any samples of organizations you think are customer-centric? Which type of organization would you rather do business with?

Feel free to join into #IMCchat. It’s every Wednesday night at 8pm ET.

[Image Source: respectalliance.com]

There are a lot of marketers out there that understand that integrated marketing and communications (IMC) is a preferred way to do business because it is an outside-in approach. If an organization isn’t integrated, what are the best approaches to getting management buy-in? Anna Barcelos and I wanted to share nine key ways to provide management with the value of IMC.

Sales-Oriented Vs. Market-Oriented – Which Are You?

It’s often been said that the mindset of “If we build it, they will come” is not viable for long term business. To understand why, let’s look at the difference between a sales-oriented and market-oriented organization.

Sales-oriented organizations have a heavy reliance on promotional tactics to sell whatever products/services the organization has selected to produce. Sales teams, not marketers lead the pack and have the burden of performance (i.e. revenue generation).

In the short-run, markets can be created with aggressive campaigns and sales work; however, the lifetime value of a customer is minimal. The organization mindset is focused on ‘the next big thing,’ hungry and aggressive sales teams, and sales beating up marketing for not dishing up qualified leads or customers ready to spend.

Market-oriented organizations identify what markets need/want first and tailor their operations to deliver products/services that meet those demands as efficiently as possible. Within a market-oriented organization, marketing takes the lead not sales.

Because the market-oriented company has its complete focus on the customer, the end result is often brand loyalty, sales, and strong customer lifetime values.

Getting Management Buy-In

If you are in a sales-oriented organization, how then can you get management to understand the benefits of customer-focused integrated marketing and communications? Here are five areas to focus on:

1. Execute long-term customer acquisition programs across channels instead of short-term lead generation to feed the sales funnel. While the former may take a little longer, the end results produce longer term customers with much higher life-time values. Demonstrate this with metrics and show management. They are always interested in seeing results tied to revenue generation.
2. Emphasize that a customer for life is a much more cost-effective model versus solely focusing on new customer acquisition.
3. Communicate the benefits of how integrated marketing communications delivers a consistent message to both existing and prospective customers.
4. Involve key players from “silos” within the organization in planning process. If you can’t beat them— join them. Realistically, sales-oriented organizations will always have silos due to individual department goals/quotas.  If sales and marketing work together, both are vested in acquiring/retaining customers.
5. Build incentives around existing and new business initiatives to not only motivate sales, but customer service and marketing as well.

You would think that a market-oriented organization would have a leg-up on getting management buy-in, but a lot of times there are still silos and separate budgets in place that affect true IMC. But by demonstrating the value of IMC, chances are you’ll have an easier time convincing management of its inherent benefits. Here are four ways to show value:

1. Do an A/B test of an integrated campaign versus a non-integrated campaign (suggested by Valeria Maltoni, Conversation Agent) Testing is a risk-free, quick way to prove the value of IMC. Large companies shy away from radically changing their current marketing efforts. Testing gets them interested without any disruption in day to day. If tests delivers expected ROI, then scale.
2. Leverage/collect behavioral data and analytics for follow up IMC campaigns with existing customers and build profiles on potential untapped new markets. It’s astonishing how companies have amazing databases that they are not exploiting as much as they could.
3. Survey/talk to customers for the best insight on what works with them and what doesn’t. (“How can we be better?” “ Where do you want to find information?”) Management is always interested in seeing results of these efforts!
4. Maintain communication across all departments. Market-oriented organizations are more customer-centric than sales-oriented organizations. Goals are aligned across the organization from top to bottom. Everyone plays a part in the customer experience. IMC works well within these organizations, but communication is key.

Whether an organization is sales- or market-focused, and the latter may be more beneficial, the reality is that unless upper management encourages a customer-centric culture, self-contained silos and status quo will continue to be the norm.  The benefits of outside-in planning that IMC offers will bring you closer to the customer and social media has really helped put that into perspective.  The voice of the customer is louder than ever, which is forcing traditional organizations to rethink their marketing communications strategies and encouraging customer-centric organizations to develop deeper relationships with their customers.  Both take time, but small efforts across an entire organization will deliver what’s most important—a happy, loyal customer.

Share your expertise with us! Have you encouraged management to implement IMC? Have you broken down or bridged silos in your organization? What worked best? What didn’t work? What would you add here?

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