Bloghound

Marketing runs on technology today — but what will it take to get the marketing and IT organizations to work together more collaboratively?

A new paper, “The New Marketing - IT Power Partnership,” by David Bond, head of business and IT strategy at Sapient, and Mark Jeffery, associate professor at Northwestern University’s Kellogg School of Management looks at why aligning the two functions is especially critical today, what commonly gets in the way, and ideas on best practices from marketing executives at Hyundai, Celebrity Cruise Line, Nissan, and Vodafone.

I found Steve Wilhite’s comments especially insightful (he’s the new COO of Hyundai America.) He believes that while downstream changes (new channels, consumer generated media, etc) are really changing marketing, “upstream changes may be even more dramatic.” By upstream he means things like product development, time and cost to market,, new ways to hardwire customer insights into the business. Areas , perhaps, that deserve more attention than Web 2.0.

He also cautions marketers not to be seduced by transactional campaign data. “Some of the technology allows for very rapid learning and feedback, but it can take you down a very destructive path. For example, if you see how a campaign can considerably generate a certain kind of lead generation or dealer visits within certain costs, you’re tempted to keep doing that. However, transactional data can lure marketers away from investing in more strategic initiatives like building a foundation for demand creation.”

(Full disclosure: I worked with Dave and Mark in this project.)

Kudos to Australians Kristin Hickey and Derek Leddie of The Leading Edge and David Jenkinson of Fosters Group for their ESOMAR award winning paper, “The Heart Transplant — Customers at the Heart of Your Business.” The authors liken marketing’s obsession with brands to a worn-out, struggling heart and suggest that a customer-centric focus offers the equivalent of a heart transplant.

In an interview with Jesse Blackadder, editor of “Research News,” Kristin said managers see consumer-centricity as a source of sustainable comeptitive advantage for three reasons:

1. It allows an organization to get closer to the customer, increasing the relevance of innovation, communications and other marketing.

2. It provides ane lement of consistent objectivity in the business. There are fewer push-and-pull struggeles between departments based on opinions of differing priorities. The Customer insight and advice provides incontestable direction.

3. Customer-centricity can be a source of bargaining power with trade or retailers.

The paper shows Foster’s journey from being brand centric to customer centric, explores the six barriers to adopting a customer centric vision in an organization, and suggests a five step process for leading a customer-centric revolution.

“Business are already increasing their expenditure on consumer insights, which is creating buoyancy in the research industry,” said Kristin. “However, on closer inspection this buoyancy should be a significant cause for concern. Our industry holds itself up as the expert in the field of consumer insights. Yet to date we have failed to provide strong, compelling leaderhip for businesses searching for consumer-centricity.”

An interesting note: to become customer-centric Fosters took customer insights out of market research and created a new organization which is part of the senior leaderships team, working closely with the CEO and senior business strategists.

There’s no better resource for understanding how to tap into the power of conversations than the World Cafe and the organization’s book, The World Cafe: Shaping Our Futures Through Conversations That Matter.

As marketers look for ways to create authentic dialogue with customers and others important and influential to their success, here are the seven World Cafe principles for hosting conversations that matter. These principles apply to both face-to-face and online conversations. Many thanks to Juanita Brown and David Isaacs of the World Cafe for sharing so much with so many.

1. Set the context: Clarify the purpose and broad parameters within which the dialogue will unfold.

2. Create hospitable space: Ensure the welcoming environment and psychological safety that nurtures personal comfort and mutual respect.

3. Explore questions that matter: Focus collective attention on powerful questions that attract collaborative engagement.

4. Encourage everyone’s contribution: Enliven the relationship between the “me” and the “we” by inviting full participation.

5. Cross-pollinate and connect diverse perspectives: Intentionally increase the diversity and density of connections among perspectives while retaining a common focus on core questions.

6. Listen together for patterns, insights, deeper questions: Focus shared attention in ways that nurture coherence of thought without losing individual contributions.

7. Harvest and share collective discoveries: Make collective knowledge and insight visible and actionable.

How engaged is your company with its customers? Walter Carl, assistant professor at Northeastern University’s Communications Studies Department, has created a six-step model to help companies determine how engaged they are with their customers, particularly as it relates to word-of-mouth. Check out Walter’s post. The six step model, which Walter co-created with his students:

1. Oblivious: don’t realize that people are talking about them.
2. Indifference or neglect: aware that people are talking about company, but don’t care.
3. Monitoring: aware and paying attention to what people are saying; usually only paying attention to what’s being said online, which is short sighted.
4. Listening: listening for insight and understanding.
5. Responding: acting on feedback from customers; reaching out via blogs. Still somewhat reactive.
6. Joining in: actively participating in conversations with customers; proactively creating ways to have thoughtful and helpful dialogues; seeks out feedback, even the negative; earns high Net Promoter scores.

While there’s a lot of talk about “customer engagement,” most companies are still stuck in the first three passive steps. To really engage with people, companies need to be at the last two steps. You can’t develop genuine relationships or trust without talking with customers about what’s of interest to them.

Companies overvalue the appeal of their new products to consumers by a factor of three, and consumers overvalue the benefits of existing products over new products by a factor of three.

So explains Harvard Business School associate professor John Gourville in a fascinating and pragmatic article in this month’s Harvard Business Review, “Eager Sellers and Stony Buyers: Understanding the Psychology of New Product Adoption.”

“There’s a fundamental problem for companies that want customers to embrace innovations,” he writes. “While developers are already sold on their products and see them as essential, consumers are reluctant to part with what they have. This conflict results on a mismatch of nine to one between what innovators believe consumers want and what consumers desire.

“Until businesses understand anticipate, and respond to the psychological biases that both consumers and executives bring to decision making, new products will continue to fail.”

How to address the problem?

Gourville provides a behavioral framework that explains why so many products fail and suggests how to manage consumer resistance, including making behaviorally compatible products, seeking out consumers who aren’t yet users of incumbent products, striving for 10X improvement in innovative products.

I’d suggest that there are marketing fundamentals that we need to pay more attention to as well.

Don’t drink the Kool-Aid, accepting the product managers and executives’ passion and conviction about innovations. Our job is to bring the customers’ perspective into the company, not merely “promote” new products from an insider perspective. Grouville says that executives are unaware of their bias toward new products. “Studies show that when anticipating others’ judgment or choices, people find it impossible to ignore what they themselves already know or believe to be true.”

Focus our communications more on what the customer needs to make sense, or make meaning, about new products. The three essential meaning making ingredients: framing the innovation within the customer’s context; pinpointing the few things that are most relevant to the customer (the features and benefits our product managers and executives find relevant to them); and being cognizant of the customer’s emotions about adopting a new product that requires behavioral change, be it fear, frustration, anxiety or anger.

New Product News says 80 percent of new products fail. If we marketers better understand how the mind works in adopting new products, maybe we can shave at least 10 percentage points off that bleak statistic.

Are online customer communities an undervalued marketing approach?

A new research study released today by Communispace, “What
Companies Gain from Listening: The Effect of Community Membership on
Members’ Attitudes and Behavior in Relation to the Sponsoring Company,” found that:

• 82
  percent of the surveyed community members said they were more likely to
  recommend a company’s products since joining its community.
• 76 percent felt more positively about the company.
• 75 percent felt more respect for the company.
• 63 percent said that membership had increased their trust of the company.
• 52 percent were more inclined to purchase products from the company.

Why do communities affect people so much? One reason may be that it
provides a way for people to talk with a company and feel heard: 91
percent said they felt that their community allowed them to give candid
feedback and suggestions to the company.

Are marketers cannabalizing marketing? Finding and keeping customers is marketing’s purpose. But a new study by the CMO Council shows that marketers are disconnected from customers.

More than half of the marketers surveyed rely on sales for customer conversations. Nearly 75% lack a customer advisory board.

Then
how do marketers connect with customers? They don’t, really.
Approximately one third of the survey respondents rely on CRM systems
as their primary customer information source — and 40 percent said
their CRM systems were weak or very weak. Mmmm…

“Marketers
face the danger of rapidly marginalizing their own operations. They
rely on sales to engage the customer and they rely on customer support
to satisfy the customer,” according to Christopher Kenton, senior vice
president of the CMO Council .

It seems to me that marketing
still has too much of a manufacturing mentality — producing ads, Web
sites, press releases and other stuff. Maybe it’s time to make customer
conversations as important a marketing responsibility as creating
marketing materials.

As my friend Diane Hessan, CEO of Communispace, says, “Marketers need to learn how to shut up and listen.”

One particualry interesting piece of research about what makes
people evangelists and advocates for an organization, comes from the
University of Queensland, and was presented by Sam Friend of Wotif.com
at last week's International Word-of-Mouth Marketing Conference.

The
overriding reason people advocate for an organization or product is
that they identify with the organization or share a sense of community
with other people who support/buy from the organization. (62%)

I was truly surprised to hear that satisfaction and experience accounted for just 21%, and trust for 9% in comparison.

Here are the standardised “path estimates” for the model.

Advocacy à Loyalty (.88)
Identification à Advocacy (.62)
Satisfaction à Advocacy (.21)
Trust à Advocacy (.09)

The business world is starting to swarm around the huge opportunities
for marketing to Baby Boomers, a market segment that has annual
discretionary spending of $750 billion and controls more than 77% if
the U.S. financial assets. Over the next ten years 78 million Baby
Boomers will turn 50 years old. In less than two generations, there
will be 2 billion people over 60 and the elderly will outnumber
children for the first time.

The question among many marketers
is, “what marketing approaches and messages will appeal to Baby
Boomers?” Based on Foghound’s Boomer Market Watch, which daily monitors
30 key Boomer issues, we’re seeing three powerful themes:

1. Usefulness
2. Fear
3. Optimism

Usefulness

As we age, career quests and acquiring new things lose some of their
satisfaction. Instead, people seek to lead useful lives. Benjamin
Franklin once wrote, “I would rather have it said, ‘he lived usefully’
than ‘he died rich.’ Or, as a character in Marilynne Robinson’s new
book Gilead says, “To be useful was the best thing the old men ever
hoped for themselves; to be aimless was their worst fear.”

We
believe this message of usefulness will be extremely relevant to
Boomers. Here are just a few of the things we’ve begun to see that
support the appeal of the usefulness.

• For assisted living
  communities: market how your properties allow residents to continue to
  live useful lives. At a new type of assisted housing called the Green
  House Project, “residents take pride in doing things they hadn’t been
  able to do for years in their former nursing homes,” according to Newsweek International.
  “One resident actually cried when she was able to bake corn bread
  again, recalls project director Hude Rabig. “They really grab onto the
  fabric of life again.”
• For real estate developers: tap into
  the emerging trend of Boomers getting together in small groups to
  create postmodern elder families, eschewing the assisted living concept.
• Travel: market trips and destinations that allow grandparents to share
  new experiences – particularly cultural and educational — with their
  grandchildren. “After the gold watch, what you need to do is get work
  out of your vocabulary and pay attention to your fourth grade
  grandchildren. They have self-esteem without contributing to the GNP,”
  advises George Valiant, a Harvard Medical School psychiatrist who
  studies aging.
• VCs and technology and product designers: think
  cool canes, walkers with computers to identify obstacles, kitchen
  products for those with arthritis, new car designs that are hip yet
  taking into account physical realities. Keep an eye on what’s happening
  at MIT’s Community Innovation Lab.

Fear

The
second motivating message is fear. Here are some of the boomers’
greatest fears – all of which have opportunities for marketers:

• Becoming isolated and lonely. Losing friends. (Attention real estate
  developers, non-profits seeking volunteers, and employers looking for
  part-time workers.)
• Not having enough money and ending up in
  nursing homes. “Residents who leave assisted living usually do so not
  because they die but because they run out of money, and go to nursing
  homes,” according to a recent New York Times article. “There
  the impoverished, including middle-class men and women who have
  outlived their savings, are covered by Medicaid as they are not (except
  for a small percentage) in assisted living.” (Attention financial
  services companies, and long term insurance providers)
• Getting sick and needing extensive (and expensive) rehab and care
  giving services, yet not having adequate health insurance. (Attention
  health care insurers, guardians of Medicare, gyms, food manufacturers,
  physical therapists.)
• Not having adequate health insurance.
  (Attention employers.) Older workers want and need to continue working
  for health insurance and because they need the money. Others want to
  continue working for the intellectual challenges and camaraderie.
  Advice to employers: don’t be scared off by ageism; recent research
  shows that older workers can learn new technologies and are less absent
  than younger employees.

Optimism

And
yet despite these looming fears, Boomers are inherently optimists,
understanding that Americans have the power to change what is and
create new possibilities. The oldest of the boomers, who will begin
turning 65 in 2011, were raised on John F. Kennedy's 1961 call to
action. It’s a generation of activists who know how to organize and
lobby.

A recent study released by the Harvard School of Public
Health says Boomers can become an unprecedented resource if they are
mobilized across the nation as community volunteers.

''There's a
major opportunity on the near horizon to recruit large numbers of older
boomers to help strengthen community life in America,'' says Jay
Winsten of the Harvard School of Public Health. Winsten is director of
the Harvard-MetLife Foundation Initiative on Retirement and Civic
Engagement. But he says non-profit organizations that could use those
volunteers need to create meaningful jobs for them. Boomers, he says,
won't be satisfied stuffing envelopes. ''Boomers have expectations as
to the kind of useful roles they can play in helping organizations.''

If your company is looking at growth market, think Boomers. And think UFO marketing messages.

What can real estate developers do to avoid negative media coverage and protests by community and environmental groups?

First
and foremost understand the opposition’s point-of-view: they believe
that real estate development projects are the community’s projects, not
the developers’ projects. Without understanding this perspective,
developers are highly likely to face delays, protests or have a project
killed altogether.This was one finding from a study, “This Land
Is My Land…But Could Be our Land: Developing Influencer Relationships
to Accelerate Developer Success,” that Northeastern University communications professor Walter Carl and I recently completed for the NAIOP Foundation.
We interviewed 30 commercial real estate developers and representatives
from environmental, community, government and Smart Growth
organizations to learn what it takes for developers to build effective
relationships with influencers.

We also uncovered the seven most
common characteristics of effective relationships between developers
and those influential people who can affect a development project,
positively or negatively. Here are highlights, most of which apply to
all businesses that must build effective working relationships with
external constituencies.

1. Early engagement:
for most influencers the most irritating practice of developers was not
involving the community early enough in the project process.

2. Effective listening:
people want their viewpoints to be acknowledged and respected, even if
those viewpoints can’t be accommodated. They need to feel listened to.

3. Education & understanding:
educating friends and potential foes pays off. The more knowledgeable
people are, the more likely they are to have realistic expectations,
engage in construction discussions, and brainstorm ways to work around
sticky points.

4. Trust and credibility: trust
is based on the principle that each person feels like the other person
truly understands their point of view. To build trust, present the
whole picture, candidly discussing drawbacks as well as benefits. And
always deliver on promises.

5. Accommodation:
Be flexible and willing to give up some control. Adopt the 3Rs: respond
to criticisms, redesign if necessary, and reach accommodations. If you
can’t accommodate all requests, explain why.

6. Adapting:
Adapt your communication style to the other party to foster
understanding. Avoid industry jargon. Adapt the professional skills of
coalition builders and educators.

7. Transparency: Always communicate in an open, direct and honest way.

A
final point to note: building relationships isn’t about asking for
influencers’ approval, but creating understanding. Similarly, it’s not
about getting 100% consensus, but determining whether people can live
with the proposed project.