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Fjord’s and Accenture’s “Trends impacting Service Design in 2014”

This is a great report about the changes and developments in the digital arena. Enjoy 🙂

Marketing’s new and re-designed 7P’s

Marketing Mix 4PMarketing used to be about making companies APPEAR to be better, increasing brand appeal etc. Today marketing is about MAKING BETTER COMPANIES

The omni-channel, real-time, everything’s available and traceable environment we are currently living in has changed the marketing fundamentals quite radically. The world is no longer the same place for which The marketer E. Jerome McCarthy proposed the four Ps classification in 1960. This age requires us to re-design them. Actually, in my opinion we should question the old truths and re-define the entire concept, role and meaning of marketing.. go back to the fundamentals and adjust them to this time and age. I hope this article sparks interest and willingness to join in and continue the discussion at Future CMO LinkedIn Group

The new 7P’s

  • Position – in customer’s mind
  • Performance – the user experience, capability to meet expectations
  • Proximity – How close the brand is to it’s customers, Customer intimacy
  • Price  – Price is no longer a fixed figure
  • Presence – instead of Place
  • Perceived product
  • Promotion

POSITION

There is a lot of everything. Customers instinctively make their lives easier by using their mental shortcuts, heuristics, in order to make sense of the surrounding wealth of messages and impulses. The position a brand holds in the customer’s mind connects it to certain attributes, contexts, values, benefits and purposes. Actually, our brain gives an emotional tag to every single piece of information before entering our conscious mind. Branding is about training customers’ brains and winning certain position in their minds. This is why it takes a long time to really gain a meaningful position as a brand. That’s also why brand extensions are not a certain success, as the position the brand has in customer’s mind only consist of certain learned connections.

Because of these reasons I would define Brand as a position in the customers’ minds. During the past decade people have also learned to use brands as their road signs when searching for products, services, solutions, ideas and inspiration. For example in travel and telecommunications markets the number of category searches has dropped, while brand searches have increased. Instead of searching for smartphone or holiday, customers search operators, smartphone manufacturers and travel agencies by brand. To people, brands stand for direct access to information they are looking for. Such behavior makes the top-of-mind position even more important than it has been before. Smartphones or 4G are minimal interests, while Samsung and Apple have strong demand. The data also shows how Android has become a brand on it’s own and has an even stronger demand than Samsung has.

Mobile Google trends

PERFORMANCE

When customers do buy a product or service they have certain expectations for what they bought. Depending on how well the brand meets those expectations, it influences the customer’s personal experience and view on the brand’s performance. Value for money experience is a very important measure for a brand and shared experiences influence the brand’s Net Promoter Score directly. Performance should be measured through the customer’s entire relationship with the brand, across every single experience they share. In my opinion we should include PERSEVERENCE as part of the performance. The customers expect you to stay interested in them and continue to deliver high value. One-shot experience is not enough, no matter how good it is. The real performance must be proved over time also in case of product failure or other unexpected events.

In September 2013 HBR published an article: “The truth about Customer Experience” by Alex Rawson, Ewan Duncan, and Conor Jones. In their experience, most companies measure customer experience by touch points or single engagements. Such an approach will tell you how did that single engagement meet customer’s expectations. It does not say anything about customer’s satisfaction over time. In case this is the only mean to measure performance in a corporate KPIs, it will create an illusion of performing well. In their article, they proved the declining customer satisfaction over the length of customer relationship. When you think in terms of performance, you need to continuously improve your service, in order to keep your customers happy. In my Customer Journey studies I have also learned that, the reasons why customers choose to buy a certain product, or a service, are not necessarily the same ones that will keep the customer happy post purchase on a longer term.

Performance measures are also changing the marketing as a practice, changing management and the ways of managing change. Today, everything can be easily tested in small scale, scaled to global level and measured in real time. The marketing practice has been measured with rather elusive figures like top-of-mind, preference, awareness and attributes until recently. Now marketing has become an actual business unit that should have a business plan, revenue forecasts and profit expectations. This is finally something that other members of the board understand. This is why the marketing as a practice is moving up on the corporate power ladder. Corporate management is already expecting CMO’s to take responsibility for corporate digital transformation. In my opinion the creativity factor associated with marketing function has more potential in this new order than ever before when its performance is measured right. When customer understanding, creativity and performance metrics are connected across corporate strategy and operations, possibilities of developing business, competitive advantage and brand become infinite. We just need to follow the path companies like Tesco, Apple, Google and Amazon have opened for us over the past two decades. In that time the technology and ecosystem developed to its current level of sophistication and accessibility allowing us to join in and follow the paths these giants have already proved effective.

PROXIMITY

Proximity is a synonym for distance. In order to create trust and relationship with customers, brands need to get close and personal with their customers. At best, you can talk about customer intimacy and connecting the brand to people’s self image. We have a chance of having a dialogue and become a part of peoples everyday life via different channels like Facebook, apps, online services, even external bought mediums at personal level. Although the Internet and all it’s applications have a lot to offer, PEOPLE belong in this category too. Person-to-person communications are the primary way of connecting and even getting imprinted to the brand. People and corporate culture represent the brand in human form. The old truth about brand being as good as its salesman is still true. Customers meet people while making their choices, have support needs or they want a reclamation taken care of. People are the very core of trust experience and in many businesses customers imprint on people serving them. In such cases the brand experience and loyalty has it’s foundation on personal relationship: it’s not about B2B or B2C, it’s about Human-to-Human. The current view is, that those companies that best connect their physical experience in an omni-channel world will win the hearts and minds of their customers.

In my opinion the Apple Store concept is one of the best examples of creating a strong human interface and online customer relationship together. The experience at Apple store is that all employees are there for you, concentrating on your concerns and help you with your needs. There are often more employees than there are customers, which just stands for Apple’s priorities. The store is a place for brand experience and it is not measured by sheer efficiency like most other stores are.

Apple store

Picture source: http://zerogeekspeak.net/2014/06/16/av-forward-training-customerprofessional-relationship-dynamics/

PRICE

Price used to be a rather fixed figure. In this age price has become a rather elusive measure. The new approaches to pricing are about yielding models and price variety between customer segments or distribution channels. There is one price for me, and another for you, although the product and the seller are the same. There is a price for me right now and another tomorrow.

Online environment has made it possible to democratize offering and make pricing transparent by using aggregators and comparison services that find prices from different sellers and present them in one single view. This kind of approach has democratized the marketplace, because the aggregators only show certain comparable basic functionalities and push the brand further away from the customer. This approach has increased the meaning of pricing volatility and transparency. People on the other hand love such services, because the offering with large selection, customer reviews and low prices can be found and bought from a single location fast and conveniently. Actually these players like Expedia that is offering Hotels.com, expedia.com, Trivago and those alike them, are creating direct relationships with customers and effectively drive prices lower (and their profit margin higher because they effectively own demand). Smaller players, who have less known brands but can offer services and products at lower cost, can access demand and challenge better known brands due to this logic.

The demand for lower prices is growing and now it’s also connected with certain brands known for their low prices. In January 2014 Amazon reported that its’ more than 2 million marketplace sellers sold more than a billion units globally. In their annual report Amazon also reported higher profit margins, because everything they sell in their marketplace generate pure profit. Amazon, like big brands, have the demand, selling other businesses’ products don’t cost virtually anything for them.

Here’s how demand is developing in case of accommodation business:

Travel Google Trends

PRESENCE

I think that presence has replaced place on this list. In the digital era, presence equals availability and direct access to buying. Presence is a more flexible concept than place that is physical. Social media is a method of expanding presence across customers’ peer groups and generating recommendations, participation and coverage in general. Aggregators also scale presence further. Customers will choose a brand among those present. It is to say that expanding presence is likely to directly impact sales. Out of sight – out of mind, is the name of the game.

When I have been studying Customer Journeys and customer’s decision making, I’ve learned that there exists a market segment of people who are at the state of “pending decision” or “pending action” in many categories, especially in case of consumer packaged goods. Let’s say that you, for example, need to buy a new toothbrush and you decide to do so. The decision is already there, but it could take months before you actually make the purchase. In such cases the sheer presence where customer makes the purchase increases sales even without any kind of promotion. The same logic applies in many other cases too. I have personally become completely loyal for a contact lens seller LensOn. They send me an email once my previous order is likely to be nearly consumed and I only need to click once to renew my order. They know me and their presence takes place at the right time inside my personal space. I consider that great service. Their presence is perfect – out of sight and not bothering me at other times, only serving me proactively when they know I need it. LensOn has effectively increased my contact lens spending, because I have not run out of them since my first purchase, almost four years ago.

PERCEIVED PRODUCT

A PRODUCT is too often defined by companies as how they see and envision it. This is naturally flawed/biased and is where many companies make a mistake in the first steps of selling and marketing their product/service. Especially engineer lead organizations that are very product detail focused. In reality this should be PERCEIVED PRODUCT, making an enormous paradigm shift from companies defining a product, to understanding that the PRODUCT is actually only and exactly what we can get the consumer to perceive it to be. This adds the element of communication responsibility and understandability to the 7P’s equation. Most companies think they have the best product, but still fail, because of an enormous perception gap in the definition of the product in their minds and the potential customers minds. Perceived Products is naturally tightly linked to the second P = PERFORMANCE, which is all about (repeatedly) living up to, and exceeding the product perception and quality expectations of the customer (The definition of Perceived Product came from Jarno Aho, OMD Finland.)

What makes the concept of Perceived product especially important, is the fact that customer experience about a product or service is firmly embedded on expectations. When expectations are really high, it is difficult to meet them. On the other hand low expectations are easy to exceed and translate them to endorsements. Perception has a major influence on brand demand and preference. Branding has everything to do with it.

PROMOTION

Here’s the Wikipedia’s definition: “All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organisation and sales promotion.[1]” Another way to approach promotion can be divided in four major categories:

  • Owned media (own customer interfaces and direct channels for customer communications)
  • Earned media (social media and PR)
  • Partner media (retailers, resellers, bundling and packaging partners, etc.)
  • Paid media (advertising, SEM, etc.)

Important measures for promotion are reach and impact to brand awareness, preference, willingness to pay premium and convert sales. In the Internet age of overwhelming availability of data, own media has increased it’s capacity to impact sales tremendously. Search engine’s page rank can be improved, own customer data can be leveraged very cost efficiently and the relationship with customers can drive further reach with earned social media and dialogue with customers. In the current online centric customer relationships in which marketing and servicing merge as one single messaging, it’s increasingly difficult to define where the product or service ends and marketing/promotion starts. You could say that the core customer service and customer relationship processes have become promotional activities in the age of open online dialogue. Partnering influence reach and presence very effectively too. These new possibilities have diminished the role of paid mediums and increased promotional capacity and scalability at a low cost. Data driven marketing enable paid media’s role as an extension of customer relationship marketing even if the customer has never left his/her contacts.

These were my 7P’s. In case you can agree with them, I’m sure you can also agree with this. Marketing used to be about making companies APPEAR to be better, increasing brand appeal etc. Today marketing is about MAKING COMPANIES BETTER. The difference between these two roles is so great, that it demands us to open our eyes and re-define marketing as a practice for the needs and opportunities of today.

Further reading:

CMO´s were hit by Tornado

Marketing departments in many companies are currently losing their importance and budgets. The world of commerce and marketing is truly in great turbulence right now.. Tornado really. The change is like force of nature and it is so fierce, because several megatrends are colliding simultaneously:

  1. Customer Experience design and metrics mania (NPS)
  2. Corporate Identity as a holistic concept, not just brandbook but experience
  3. Integration of service & marketing = Business Process Design & LEAN process requirement for efficiency
  4. Design thinking breakout for innovation and business model generation
  5. CRM and automation capabilities increase: Increase CIO’s, Sales director’s and business management’s involvement in marketing
  6. Social brand and open dialogue with customers (rating and feedback is ever present issue + the rise of Open Innovation as part of customer relationships)
  7. Revenue Performance Management requirement and Analytics
  8. Decline in traditional marketing & Own media’s tremendous influence increase
  9. Organisational changes – Torn Silo walls makes marketing everyone’s business > “We are all marketeers now” said McKinsey’s article
  10. Requirement to deliver better results with lower budgets

What I’ve heard and observed is, that business management has already got used to thinking in terms of processes due to ERP and CRM technology development and implementation. They are also very familiar with cost/performance analysis and practical implementation to processes. It is easier for them to think about Customer Journey and CX design pragmatically and apply the ideas in practice. Sadly, CMO’s in many companies are strangers to such consideration and thinking. Branding used to be about doing things according to the brand book and design guidelines. Now brand is both an idea about something great that stands for something and something that you can experience with all your senses. The Corporate brand identity is more about such holistic experience than images, jingle’s or tone of voice. They are still important, but the other factors are increasing their influence exponentially.

This community was created because we wanted CMO’s to take advantage of the turbulence that would enable major increase in their influence and improve productivity in organisations. Now it feels like marketing departments influence and capacity to deliver results is dividing in two and this change is escalating as two roadmaps: a) Marketing becomes the driving force for corporate business development (= CMO’s take the driver’s seat leading the change) or b) Marketing becomes second grade support organisation without power (= CMO’s continue their work as they have done before). I wish more companies and CMO’s would choose the roadmap A.

I participated in DMA event in 2004. There Nectar’s (Loyalty Management UK’s) CEO Robert Giergink presented his case about coalition loyalty management program and their results for the first couple of years. His co-speaker was a University Professor whose name I can’t recall anymore, but he said that loyalty programs might represent the future of Marketing in general. I was deeply impressed, enlightened really, about Nectar’s case and find it still very inspiring. In my opinion that professor hit the point exactly. Currently all marketing is about Customer Journey and Experience management, individualized dialogue and event based, triggered and service oriented communications. That is exactly what loyalty programs are supposed to do. However, until recently such approach was ridiculously expensive or impossible. Right now, the technology is very cost efficient and the ROI capacity is absolutely amazing. While this is true with all recognized customers it’s now becoming possible also for customer’s that have left no identification about them.

Naturally the online revolution and social media storm have made everything above even more important and possible and that is why these things have become management imperatives. I’m looking at the CMO’s position in the light of generic Must Win Battles shared by many companies:

TOPLINE GROWTH:

  • Best customer experience (Goals: loyalty, LTV, cross & upsell, high NPS)
  • Continuous and cost-efficient new business (Goals: new customers, demand generation and stronger conversion)

BOTTOM LINE STRENGHT:

  • Lean and effective operations and processes – strong bottom line (Goals: highly productive organisation capable of delivering superb customer experience at comparatively low expences by using new technologies, self service and help, Social customer service, online environments and automation)

ENERGIZING SUSTAINABILITY:

  • Creation of winning corporate culture: Inspirational and very satisfying workplace capable of understanding and driving development and change. Recognition as very prominent employer for hungry and innovative new talent, Topline growth energize the company’s employees and partners focusing their minds on opportunities, innovation and growth

Such MWB considerations should become the heart of marketing strategy development. I’m currently involved in such cases and I’m witnessing the great change and impact such consideration has on the organisations. Creation of new and exploration of unknown are naturally inspiring and when they also deliver financially measurable success it is certainly worthy of your undivided attention.

Word of encouragement: Very few people are truly experienced in this game. Go ahead and learn by doing. I can promise you it is great!

Also check out:

Managing brand – the most profound kpi’s and measures

Marketing has an identity crisis

Author: Toni Keskinen, Change Catalyst & Executive as a Service

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Definition for Customer Experience

Customer Experience is so obvious and yet so complex subject that has multitude of perceptions and views to consider. I try to put it very objectively. What do you think about this definition about:
“Customers approach their experience subjectively and holistically and they form their view of customer experience based on one or multiple engagements with the company’s services, products and interfaces. The company could build great customer experience with multiple engagements and crush the customer’s view with one. The customer has very different approach and expectations for the company along their purchase and customer relationship process and their expectations change along the way. The key to their view on experience is customer’s subjective expectations that the company intentionally or by chance set with advertising, promises, engagements across touch points and via other customer’s shared experiences. This is why same service level deliver’s very different customer experience and Net Promoter Score results from one company to another.”

You can create brand without engagements and the brand is the key to the expectations. The customer experience though is based on personal engagements with the company, it’s products and services.

I recently wrote the article “Beyond HBR’s truth about customer experience” and “Irina” asked what kind of definition I would use for Customer Experience. I wrote that definition before checking other’s opinions. I now listed them below. I often struggle with definitions, because generalizing them to the max reduce other’s capacity to fully understand how many meanings there are behind very few words and suppressed sentence. It’s often true, that we use the same words, but connect very different contexts and views to them. Effectively we could discuss about the same subject and think about completely different issues. This is such a fundamental question, that I’d love to come up with a definition everyone could share from CEO to customer service, marketing, CTO, CFO and well ..The Customer. What is your view on this subject? Have you come across events, in which people have had completely different perception about the issues and events influencing Customer Experience?

Here are some definitions from other thought leaders and players:

Beyond Philosophy: A customer experience is an interaction between an organization and a customer as perceived through a customer’s conscious and subconscious mind. It is a blend of an organization’s rational performance, the senses stimulated and the emotions evoked and intuitively measured against customer expectations across all moments of contact. – See more here

Wikipedia: Customer experience (CX) is the sum of all experiences a customer has with a supplier of goods and/or services, over the duration of their relationship with that supplier. This can include awareness, discovery, attraction, interaction, purchase, use, cultivation and advocacy. It can also be used to mean an individual experience over one transaction; the distinction is usually clear in context. – See more here

Adam Richardson, Frog Design: It is the sum-totality of how customers engage with your company and brand, not just in a snapshot in time, but throughout the entire arc of being a customer. – See Mr. Richardson’s article about the subject in HBR blog network here

SAS: Customer experience is defined as your customers’ perceptions – both conscious and subconscious – of their relationship with your brand resulting from all their interactions with your brand during the customer life cycle. – Article available here

Forrester Research: “How customers perceive their interactions with your company.” In Mr. Harley Manning’s blog post is available here

In Forrester’s article, there was also great picture about how expectations and meeting them influence customer’s subjective experience about the company.

The truth about Customer Experience has a lot to do with our emotional systems. This Infograph by Forbes makes a great point:

I just found a company “Touchpoint Dashboard” Do you have any experiences about using this tool?

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Beyond HBR’s “truth about customer experience”

Harward Business Review just published a great article about Customer Experience and Journey. See here. The main point of the article is, that managing single touchpoint engagements doesn’t provide sufficient customer experience.

HBR - Truth about customer experience

My advice is: Don’t design just touchpoints – Design chain of events, proactive and reactive. Development and measurement is often done engagement by engagement. The service design approach also highlight such emphasis. I’ve done Customer Journey mapping and methodology development since 2004 and agree with the article, only it’s lacking tools and methods how you should approach the challenge. I can help with that.

I’ve written an article series about customer journey management and you can choose and pick, which areas you are interested in or read them as a series of articles:

  1. Customer Journey FLOW
  2. How to map and study Customer Journey
  3. Customer Journey stage 1: Brand as a platform
  4. Customer Journey stage 2: Initiation
  5. Customer Journey stag 3: Choosing and buying – cross-channel influence

In order to really do Service and CX design for the entire customer relationship, you need to understand that there are very different journeys to begin with.

  • Purchase journey (From awareness to consideration and transaction, Acquisition)
  • Service journeys post purchasing (Using the product or service, value-in-use)
  •  Planned (e.g. Address change, regular maintenance etc.)
  •  Unpredictable (e.g. Product failure, reclamation, insurance coverage, etc.)
  • Delivering a service as a customer journey (taking a cruise or flight, restaurant, using media, etc.)
  • Retail customer journeys (e.g. IKEA store experience)

Once you have both Insight and Topsight level understanding about customer journey in full, you need to take a look inside the company. What organisation bodies are involved with customers, what kind of technical environment direct their operation and what kind of data steers their actions. The reality is, that management reporting practices represent management understanding and decisions. The systems and technical infra on the other hand define how the corporate body acts. In case you need to change the way how the corporate body in total behave, you need to define required technical changes, change management and manage change. In my experience, creating Service Blueprints has been quite effective tool for both challenge recognition at current status mapping and Customer Experience planning.

The potential is absolutely amazing. The customer’s expectations are constantly growing harder to fulfill and companies that are agile enough to cure “Corporate Autism” and take the steps required to move from “inconsideration marketing” and mass mailings to service automation, Customer Experience and Journey design at total relationship level, can win marketshare and increase profits considerably. The business-as-usual approach is no longer sufficient, you need to free the full potential an organisation can offer and tear down silos in order to take advantage of synergies available.

In the big picture, your company must act professionally and fulfill minimum requirement perfectly. Failing these requirements cause criticism and decrease your NPS results. Acting human, being considerate, thoughtful and proactive on the other hand increase the number of people willing to recommend you and increase you NPS score. Succeeding in both cumulate earned trust, which is the foundation for long-lasting and profitable customer relationships and strong brand.

creating customer loyalty and trust_improving NPS

In case you do well, the process will enable you to design lean processes and define the best possible value your business processes can possibly deliver. In my opinion this is the Future for CMO’s position inside the company. It’s not the job for CMO’s to define business process management, but it’s the CMO’s responsibility to make certain that everything the company does, delivers maximum customer value and experience across all customer interfaces

Customer interface reach & effectiveness

In case you can capture customer contacts, you can start servicing and inspiring customers individually and simultaneously your capacity to influence increases. The bigger share of the customers buying in a certain category you have in your database, the more effective means you have to influence their behavior and market dynamics. The ultimate goal is to synchronize customer portfolio with product and service portfolio across all touchpoints and marketing interfaces.

customer portfolio_customer touchpoint & marketing portfolio_product and service portfolio

In my experience the only way to do successful customer journey and experience design and create sustainable management model for it is to do the work upside-down. You start from the actual interfaces, motives, contexts and people. From there you continue inside the company culture, practices and technology and design the strategy level after you understand everything else. Like this:

Bottom-up strategy and data analysis

The Holy Grail of customer value is Symbiosis. Check Symbiosis Strategy – creating the ultimate value  -article here.

This is a video by on Sep 12, 2013, It’s All About the Customer Journey

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer, Toinen PHD

http://www.linkedin.com/in/tonikeskinen

Join The Future CMO Movement LinkedIn Group here

Management Tools & Trends 2013 – Bain & Company

The Bain article is very good read indeed.The full article and report as a PDF are available here

The results of the recently revealed 2013 survey show that the world’s top five management tools are:

  • Strategic Planning
  • Customer Relationship Management
  • Employee Engagement Surveys
  • Benchmarking
  • Balanced Scorecard

The differences between market areas are clear, do to their differences in market growth and cultural differences. However, I have to say that I liked the Asian approach more than European or American. The Asian markets emphasize 1) CRM and 2) total quality management. They carve innovation out from customer needs and understanding and emphasize quality or products and services.

However I had to wonder about the ABSENSE of everything related to brand metrics and customer behavior change (eg. online analytics).

Most used Management tools according to Bain study 2013

In all markets the number one corporate goal is to increase revenue. The sales figures are naturally an outcome of brand’s success, brand’s demand and channel conversion capacity. Still, the brand management as part of the management toolkit is totally missing.

In my opinion management systems are too concentrated on the internal reality and manage their operations and strategies inside out. In my work as a marketing architect and customer journey designer I have seen case after case, that the internal and CRM figures have generated blind spots and consequently create corporate autism. The only way to really do actionable strategic development in my opinion is upside down and outside in. You have to analyze customer journey as a whole: Customer Journey rules of engagement  (behavioral dynamics), touch points and channels  and align your own organisation with the customers behavior. Managing operations, partnerships, CRM and everything else should have a clear behavioral and customer experience impact generating rapid sales conversion results and long term brand and demand increase. In my opinion these are clearly CMO’s core responsibilities and the absence of these facts just underlines how desperately the management practices need to pay attention to marketing and CMO’s work.

What’s your opinion?

Author: Toni Keskinen, http://www.linkedin.com/in/tonikeskinen

The CMO Survey 2013 & insights – What CMO’s should do now?

Screen Shot 2013-05-29 at 8.41.47 AM

The Duke University’s CMO Survey 2013 results highlighted again the need for marketing and CMO’s to carry more responsponsibility and integrate better with the corporate management and operations. It seems to me that marketing is facing the same evolution that car engines have gone thru since 1960’s. In the 60’s car engines were large, heavy, powerfull and impressive but their gas consumption was just terrible and their efficiency unacceptable in current evaluation. Currently engines are much smaller but deliver a lot of power with very low gas consumption. The big and impressive modern engines have amazing power with acceptable gas consumption. The engine game is all about efficiency, as it should be.

This is the case that CMO’s are facing now too. The way to get there is very much about understanding the big picture (customers, their needs and drivers, choice criteria, their cross-channel behaviour and corporate capacity to serve and deliver great customer experience across touchpoints), managing analytics and customer interface operations. The multitude of digital and analogical touch points has exploded and require very much consideration in order to come up with the essentials and focus on what matters. Marketing budget, according to CMO survey, is currently 10,6% of corporate overall budget and if we add to that retail, sales, customer service, customer managament related technology and online service investments, the customer interface investment in total is eventually what runs the company. This combination is what matters most and should be considered as an entity that must be analyzed and managed in an integrated way. See article Marketing do-or-die -managing customer interfaces

According to the CMO survey 2013:

  • 6% of marketing budget is allocated to marketing analytics and it is expected to grow to 10% over the next three years. However, only 30% of company’s projects use marketing analytics and leverage insights from it
  • Social media share of budget is currently 8,5% and it is expected to be 11,5% by the end of the year and 21,6% in the next five years. However, for the past several year the level of social media integration to marketing strategy has remained at the level of 3,8 in a scale 1=not integrated to 7=very integrated. The spending is expected to more than double but even in current situation the value social media could deliver is not being effectively harnessed.
  • The CMO’s role is weakening in the areas of CRM, new product development, sales, pricing, innovation
  • The company’s next 12 months expectations though highlight success in customer retention and profit increase and the companies are concentrating on diversification strategy (new products – new customers) and organic growth.

To me these results mean, that CMO’s are actually shying away from the corporate center. The best companies are already using Customer Journey design tools and managing customer interfaces in an integrated way, which really enable CMO’s to fine tune their engines and deliver much higher return on investment. These companies are rare though. The results show that in majority of cases CMO’s and marketing department’s role is weakening. Over time this can only mean declining budgets or declining role of CMO.

We are currently living in very rapidly changing environment from which the marketing has best understanding and the board has least understanding. The boards are now more interested in customers than ever, and they need answers. Sheryl Pattek’s (CMO for Forrester research) article highlights how National Association of Corporate Directors (NACD), a group of board-of-director members from the US’s most prestigious companies is discussing the topic: How to keep corporate boards relevant in the 21st century. This is Sheryl’s view on the discussion:

The discussion that morning focused on the need to respond to and keep pace with the rapid change in customer behavior to stay competitive. It also addressed how current board members could keep up with the evolution of customer touchpoints to understand the new digitally-based strategies that are increasingly being shared with them. What I found striking about the discussion after some reflection was that the realization of the critical importance of customer behavior on the future success of top companies has made it all the way to the boardroom. The age of the customer that Forrester first identified in 2011 has really arrived and goes well beyond marketing. Why now? Corporate boards are starting to realize that to provide the strategic guidance and governance that their role requires, they need to better understand customers and how the relationship between them and the companies they direct are changing. And they need to understand it fast. The market is moving and changing too rapidly to be left behind.” (see the full article here: CMOs, Is Joining A Board of Directors Part of Your Career Plan? If Not . . . It Should Be.)

This is the time when marketing can really, finally become corporate center – driver for management change and change management.  Mr. Steven Cook, the founder of Fortune CMO network has made a great presentation about this subject with some cases. Enjoy.

 

SEE ALSO:

FutureCMO definitions

Lost insights and Corporate Blind Spots

Business Design with customer centricity

How to enable smart company and avoid corporate autism

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here
 
 
 
 

Christine Moorman is the Director of The CMO Survey®
http://youtu.be/gqOGVZE-tMo

The CMO Survey 2013 results in full:

This is how data makes money

This is a presentation that McKinsey consultant, Tim McGuire, made at the recent Direct Marketing Association conference. It is very thought-provoking and inspiring one, because it is about practical value and applications of data. In direct marketing scoring models and regression analytics have been an approach any seriously result oriented marketing responsible has already tested. However, the availability of data and applications in the rich and influential online environment has exploded the value to completely new level.

The CIO’s are currently challenged with new needs that come from marketing department and marketing department can no-longer operate without collaboration with ICT responsible people. Although Big Data sounds like an elephant, you don’t need to eat it with one bite. Majority of Big Data corporate scale initiatives can be done manually in smaller scale or with less expensive technologies. Testing, piloting, learning and calculating business cases from them enable solid foundation for larger investments and management attention.. even urgency. Every change starts from recognition and inspiration. This presentation might just spark that first step towards major transformation. Enjoy and share with your management team!

Business Design.. with customer centricity

Here is my presentation that is about Business Design and how you lay the foundation of business development and value generation on customer journey and diminish the complexity to understandable and measurable insights and practices to marketing, operations and R&D. Recognition and simplification is the way to go and insights come from that. I’ve just landed back to my roots and start Business Development consulting which is really about customer and total marketing driven corporate transformation. That’s why it was relevant to take a look back and make a fusion from past to current.

I came to conclusion that past was already right – but required a lot to learn in order to develop the understanding and methods further.. Even if your theory and concept were perfect – making it a practice and a reality takes a lot of sweat, consideration, trial and error, right context, position and organization. However, enjoy. This material was better than I remembered (I was a founding member at Taivas Business Design and OneExperience planning director before my assignment as marketing architect at Toinen PHD and starated Future CMO transformation consulting and coaching in Jan 2014). 

WHY THIS ONE EXPERIENCE FAILED TO SCALE INTERNATIONALLY?
One Experience was a cross-channel behavior analytics tool and methodology we at Taivas Group started developing already back in 2004. Professor for Masscustomization Jarmo Suominen (MIT/UIAH) contributed to the theory and framework tremendously in the beginning and I led the project turning the ideology in to OneExperience online platform. This tool was extremely advanced back then but also represented a Utopia as practice. It turned out the tool was not viable back then due to siloed ecosystem which made it totally impossible to distribute and scale globally as a SaaS planning platform. Combination of qualitative and quantitative studying methods and total planning approach delivering insights about customer interfaces, brand status, distribution channels and product/service qualities it was impossible to integrate in WPP organisation and scale with Ogilvy Group, JWT, RMG, G2, GroupM, MillwardBrown… Why? We talked to everybody and they all loved it. Well, you would have needed to involve crm, online, advertising, promotion, creatives and media planning from separate organizations and align all their efforts for unified practice and goals. The same applied to client organizations. CMO’s at that point were more brand and advertising directors than true business drivers with full marketing spectrum and integration to operations.
That.. well.. was utopia in 2007 when we launched the tools.  We did good in Finland where we were a single team working for clients in Finnish culture with low organization hierarchy enabling collaboration directly with CMO, board of directors and business managers responsible for operations. We did great results but could not turn OneExperience in to international business as such.
The world has changed over the past five years.. This change is now reaching the tippin’ point. Perhaps we are closer to that Utopia now.. or are we? This change involves every one in the ecosystem and everyone inside corporate management. This is what we are now trying to do at ToinenPHD in Finnish scale. Is the world ready for scaling this kind of Total marketing approach and Customer Journey driven ideology in to practical daily work. Are CMO’s and the ecosystem ready for it now? Is it possible to make Utopia a reality?
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Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Marketing DO or DIE – Managing Customer Interfaces

In case of any company that is selling products and services that people are interested in enough to find more information about, have customer relationships with continuous or repeated purchases, succeed or fail because of their customer interfaces. In the current business environment, where the competition is hard and people have other players available in a ‘click’, you can not afford to fail in converging visitors or people who get interested to buyers. For CMO, these are the new priorities:

  1. Most accountable and rapid growth is available from current customers, their loyalty, re-purchases and cross-selling increasing lifetime value. This game is all aobut customer experience
  2. Strongest growth of customer base is available from own customer interfaces by expanding their reach and increasing conversion rate. The core goal is to recognize these people and start servicing them in order to sell (=selling by servicing and inspiring approach)
  3. Other market – non customers, is most unaccountable and most difficult to really increase ROI from. Content marketing driven SEO success, positive social media, referring traffic and general positive WOM are all free medium generating new visitors to own customer interfaces.

CMO has a rather large liquid capital to invest and in most cases its has been spent on external media channels and advertising. As I am writing this the old spending habits are changing rapidly. Instead of trying to advertise the company’s image, preference and top-of-mind to the new hights, smartest CMO’s and companies are concentrating their efforts on customer experience and customer interfaces. Customer Journey and how to manage it is very much dependent on data and it is now rather easy to capture that data, which is changing the game rapidly (There is nothing wrong with advertising, but I have witnessed way too many times that the advertising has increased demand in general and sold competitors products. So, don’t advertise in case you don’t know that your customer interfaces actually deliver sales to your own brand. Once you do, they will sell also when your competitor is advertising and your own advertising will deliver much higher ROI)

When designing the customer journey and marketing priorities the external touch points are as valuable as their capability to pull people to the company’s own interfaces. Once they are on the company’s interfaces it’s vital to recognize them, which makes it much easier for you to inspire, serve and create feeling of trust or trigger purchases. Own interfaces are as valuable as their capability to convert visitors to buyers or at least recognize who the potential buyers are. In banner advertising this kind of action is called re-targeting, but that secondary compared to marketing automation tools and rich CRM data captured with 1st party cookies. So, here’s a how you can break the picture above in to more detailed contributors along the customer interfaces:

It’s actually not that difficult to pull together data about these interfaces and their contribution to the corporate overall success. Once you have all that data pulled together it is much easier to concentrate on how to make the whole system work more efficiently. These frameworks are tools for Topsight -kind of view. However, they give you a better perspective about what is the role of advertising and what could be possible with your existing customer interfaces, natural traffic, visitors, people considering your product and learning about it, or the role of CRM and existing customer database.

Once you have understanding the next level would be about creating systematic and automated tools and processes for further scale. Here is one more frame for such approach (cycle for success) in the online marketing environment:

This cycle for success starts from customer understanding: Who, what, where and why we should target. The budget allocation for “who” is the foundation for potential to succeed.
The second stage is about performance attribution explaining the active performance of a creative portfolio. Multivariate testing (MVT) with variety of creatives and continuous improvement of best campaigns will deliver you results that are several times better than regular practices deliver.
Clicks however are not money. You must take the time and make sure that the process delivers sales eventually. That is about optimization of landing pages and customer journey. Very little things can deliver much better sales. I don’t think there is any other area in marketing where you can get such amazing ROI that you can get from increased conversion.
Once you do create sales, you also create customer database. Analyze them thoroughly and it becomes an asset you can feed back to the allocation model and create effective marketing automation in order to optimize customer life-time value. Customer understanding is also the best food for creativity.
This is the cycle of success I think will become standard within the next few years.
Everything explained above is already working in practice. Its still very much about continuous learning but already there – not in the distant future.
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