7 Laws of Customer Retention Marketing

Change Your Definition of CRM to mean Customer Retention Marketing

I have long struggled with the concept of Customer Relationship Management (CRM), mostly for the simple reason that I fully understand that customers do not want their relationships with an organization “managed.”

This is why the whole notion and philosophy of CRM as customer relationship management is wrong.

In my keynote speech a few years ago at the Services Marketing Conference in Kuala Lumpur, one of my key messages was that marketers and senior management really need to think of CRM as Customer Retention Marketing.

This is what true CRM is all about – retaining customers, or as I like to call it the art of keeping good customers.™

To implement this definition of CRM in your organization, you will need to inculcate the following 7 Laws of Customer Retention Marketing into your culture, processes, and thinking:

  1. The conversion of a prospect to a purchaser is the casting of a potential long-term relationship with a possible customer. A purchaser who buys from you the first time is merely a trial user. A customer is not a true customer until the second time they buy from you. Forget the notions that “the relationship starts with a purchase,” or “you are not closing a sale, you are starting a relationship.” As we have pointed out previously, the relationship starts way back in the information seeking stage of the buying cycle, at least from the customer’s perspective.

The art of keeping good customers means that your entire organization should be geared to ensure that every experience received by a customer (including a first-time purchaser) should result in that customer repeating their future purchases from you whenever you have a product or solution that meets their needs or solves a problem for them.

  1. You do not work for your employer ─ you work for your customers. Sure, someone in the company signs your proverbial paycheck (or authorizes the direct deposit into your account). But those checks and deposits would bounce if it were not for the customers who buy from your organization. When someone asks you “who do you work for?” your reply should be “our customers” or “the customers of (name of organization).”
  2. You do not sell products or services ─you sell solutions that meet the needs, wants, and desires of your customers. As pithy as this sounds, it is something that way too many organizations and workers these days just do not seem to understand.
  3. Customers want relationships with people and organizations they trust, that are committed to them, and with whom they have shared goals. All of us can buy products and services from a vast number of suppliers and outlets. But we choose to have continual relationships, and to repeat our business, with those we trust and with those whom we have shared outcomes.
  4. Employees should be liberated ─ and allowed to be customer champions. Almost all staff want to serve customers well, if only their organizations would let them! Unfortunately many organizations have rules, processes, procedures, and policies that tie the hands of their employees and prevent them from truly serving customers and satisfying their wants, needs, and desires.
  5. Do not have a commitment to customer service ─ have a commitment to customers (and to customer care). We are definitely in the age of the customer. Customers have many choices and options available to them. But they also all share a deficit of sufficient time. Caring about customers means committing to the things customers place high value on ─ flexibility, sufficient knowledge and information, convenience, ability to choose functions relevant to them, customization, and environmental concerns.

And, of course, good service, which in today’s world is now a prerequisite for repeat business as customers will simply not put up with bad service, inconvenience, inflexible policies and procedures, and a lack of options for customization and personalization.

  1. Customer Service staff should be fired ─ and replaced with Customer Satisfaction staff. This is not a matter of semantics. Customer service tends to be either reactive (to a situation) or a follow-up activity (to a complaint).

Customer service, which is problem resolution focused, is usually initiated by the customer, when he or she has a problem. On the other hand, customer satisfaction is proactive and is customer focused.

Customer satisfaction is usually initiated by the organization to improve the quality of the relationship with the customer. The corollary of this rule is that customer service scorecards, measurements, and matrixes should be replaced with indices that measure and monitor customer satisfaction.

In the typical CRM thinking found today, the organization is the center of focus, thinking, and planning. And the measurement tools used are indicators that support managerial bonuses.

In my Customer Retention Marketing model, the customer is the focus and occupies the central platform for all thinking, planning, and strategic focus. The result becomes the optimization of customer-first processes and the continued improvement in the quality of customer interactions.

Your organization will accomplish a great deal more, and be more highly successful, by changing your definition of CRM to Customer Retention Marketing.

 

KEY POINT: change your definition of CRM to mean Customer Retention Marketing.

TAKING ACTION: survey your employees and ask them this open ended question: “what do we sell to customers?” If they give you a long list of products and services it is time to educate them that you are selling solutions, not products and services.

Review the tools and measurements you use to track and monitor customer service. How could these be turned into tools and measurements to track and monitor customer satisfaction?

Prepare an entire issue of your next employee newsletter (or staff memo) on the subject of customer retention marketing, and what the implications are for the organization in terms of customer care, customer satisfaction measurements, liberating of customer contact personnel, changes in policies and procedures, and how you will reward the organization for making the change to customer retention marketing.

 

This article is excerpted from our book The Best of the Monday Morning Marketing Memo, available at Amazon in Kindle and paperback formats.

For more thoughts on customer retention marketing, read our Keeping Good Customers Blog on Tuesdays and Thursdays.

Protecting Your Corporate Brand

Corporate Branding Is More Than Just Logos and PR

Ever since I wrote my first book in 1997, Corporate Image Management: A Marketing Discipline for the 21st Century, I have advocated that “nothing touches the customer more than how he or she perceives your corporate image.”

Corporate image management, or what some writers and researchers refer today as corporate reputation management, remains one of the most important (and yet most overlooked) management and marketing disciples for businesses, organizations, associations, and government entities.

In today’s global market environment, customer trust in organizations, particularly corporations, is at an all-time low as a direct fallout from the never-ending series of widely reported scandals (i.e. WorldCom and CEO Bernie Ebbers, Enron, Martha Stewart, HIH Insurance, OneTel, Tyco, Citicorp’s recent activities in Japan and Europe, Boeing, and Parmalat in Italy).

Corporate image management has always been important, but perhaps never as important as today. As Federal Reserve Chairman Alan Greenspan said in his Commencement Address at Harvard University in 1999, “In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward.”

The corporate image is an extremely important corporate asset, one deserving the same attention and commitment by senior management as any other vital issue. The key to managing this asset is to fully understand that your stakeholders’ perceptions embody your corporate image.

Unfortunately for every organization, these stakeholder perceptions are no longer (and I doubt if they truly ever were) formed solely through experiences with your products and services.

For instance, a multiyear study by Cone Inc., a marketing and communications firm based in Boston, reveals that American customers are now increasingly taking into consideration the reputation and track record of social responsibility of the companies they will keep in their spending circle. Eighty percent reportedly said corporate support of a cause is a key factor in whether or not they trust a particular firm, an increase of 21 percent from the previous year.

According to Carol Cone, CEO of Cone, “This study, a series of research spanning over a decade, shows that in today’s climate, more than ever before, companies must get involved with social issues in order to protect and enhance their reputations.

Supporting a cause can improve a company’s status with customers. Companies that are caught or reported behaving unethically or illegally can also expect to receive some clearly defined customer responses. In such cases, according to the Cone research:

  • 90 percent said they would consider switching to another company’s product or service.
  • 81 percent said they would speak out against the company to family and friends.
  • 80 percent would consider selling any stock holdings in the company.
  • 80 percent would refuse to invest in the company.
  • 75 percent would refuse to work for that company.
  • 73 percent said they would boycott that company’s goods or services.
  • 67 percent said they would be less loyal in their job at that company.

On the other hand, positive corporate activity in social and community issues can have an immediate positive impact on corporate brand images. GMIPoll conducted a survey with 20,000 consumers in 20 countries one week after the South Asian Tsunami, measuring their opinions on American multinational brands, corporate tsunami relief efforts, and U.S. foreign policy. A remarkable 59% of these consumers reported that their impressions of corporate brands improved as a result of the tsunami relief efforts from U.S.-based multinational corporations.

For example, Coca-Cola provided bottled drinking water, basic foodstuffs, and medical supplies to tsunami victims; Starbucks made an initial contribution of $100,000 to international relief organizations CARE and Oxfam UK, plus donated $2 per pound of Sumatra coffee sold during January; and the Bill & Melinda Gates Foundation pledged an initial $3 million to nongovernmental organizations to aid tsunami relief efforts.

The GMIPoll results indicated that as a result of Coke’s contributions, 61% of consumers reported an improved image of Coca-Cola. Starbuck’s tsunami relief pledge resulted in 51% of respondents expressing an improved image of Starbucks. The Bill and Melinda Gates donation resulted in 50% of respondents reporting an improved image of Microsoft.

Furthermore, 46% of all consumers indicated that they will purchase more products from the companies that provided tsunami relief. For example, 39% indicated they would consider purchasing more Coca-Cola products in the future; 32% indicated they would buy more at Starbucks; and 37% indicated a greater willingness to buy Microsoft products.

Positive brand sentiment gained from tsunami relief efforts stands in stark contrast to images heavily influenced by U.S. foreign policy. The GMIPoll found that one in five international consumers consciously avoids purchasing American brands as a way of displaying their discontent over recent American foreign policies and military action (the three countries with the highest percentage of consumers who indicate an intention to boycott iconic American brands are South Korea 45%, Greece 40% and France 25%).

Softening the blow however, 56% of those who indicated that they consider boycotting American brands also reported that their judgment of those corporations that had donated to the tsunami relief effort had improved; similarly, 48% stated that they would consider purchasing products in the future from those brands that had provided tsunami aid. Clearly, there are powerful international cross currents influencing global consumers’ views of American iconic brands.

Corporate branding is more than just positive media coverage, good financial results, and increased market share. And it is certainly more than just donating money, products, or services when natural disasters strike.

Properly managed, your corporate brand should discourage unethical behavior throughout the organization, reduce staff turnover, reduce customer churn and attrition, and minimize negative media coverage. This will happen only when management sees the corporate image as a management discipline, and not just a marketing tool, a graphic design project, or a public relations exercise.

The essential role that corporate image now performs is also a result of major shifts in the field of marketing combined with more knowledgeable and interested customers. The corporate brand image is much more than a name or logo. Your corporate brand reflects your way of doing business, a key component of reputation and identity.

The strongest corporate brands tend to be the ones with the most consistent and clearest messages. These brands create expectations and anticipations in the minds of both consumers who buy, use, or recommend the brands and the employees who deliver upon these inherent promises.

Every organization has a corporate image, whether it wants one or not.

When properly designed and managed, the corporate image will accurately reflect the organization’s commitment to quality, excellence, and its relationships with its various constituents: such as current and potential customers, employees and future staff, competitors, partners, governing bodies, and the general public.

Also, when properly managed and communicated, the corporate image will create an internal culture that is more likely to protect the brand and reputation of the organization.

In a sense, this is complete circle of corporate brand protection. A properly managed corporate image creates a culture that protects the brand and reputation, which therefore reinforces and strengthens the management of the corporate image.

This makes the management of your corporate image one of the most potent marketing and management tools available for your senior executives to use in ensuring the viable execution of your corporate vision, as well as ensuring the protection of this most vital corporate asset.

 

KEY POINT: nothing touches the customer more than how he or she perceives your corporate image.

TAKING ACTION: who is in charge of your corporate image? If the answer is not “everyone in the organization,” then take time to reflect on why not.

When was the last time your senior management team reviewed and discussed your corporate image? How soon can this subject be added to the next senior management meeting agenda?

Survey the top 20% of your customers on their perceptions of your corporate image. Survey 100% of your employees asking the same questions. Compare the results.

This article is excerpted from our book The Best of the Monday Morning Marketing Memo, available in paperback and Kindle formats at Amazon.

Taking Care of Customers

If you don’t take care of your customers, someone else will

I was in Melbourne in 1999 attending a major meeting of the Australian and New Zealand banks that issue MasterCard credit cards and Maestro debit cards.

Mr. Nicholas Utton, Chief Marketing Officer of MasterCard International at that time, had one key message for this audience of senior bankers concerning customers: “if we don’t take care of our customers, someone else will.

That’s worth repeating — and reflecting on: “if we don’t take care of our customers, someone else will.”

And how true that is.

Just think about all the choices and options available to your customers today.

Rare is the organization that finds itself without numerous competitors. Even rarer is the customer without readily available options, choices, or substitute products for the solutions they seek.

To take care of your customers, you need to have a full understanding of their wants, needs, and desires.

I would also suggest that you need to have a corporate-wide attitude that understands a person or an organization is not truly your customer until the second time they buy.

That is right. I recommend you do not consider anyone a customer until the second time they buy from you.

The first time they buy they are merely a trial user. Unless they achieve satisfaction from the purchase and the use of your product or service, they may be unlikely to repeat their business with you.

Hence, taking care of the customer goes beyond the mere sales cycle and includes all post-purchase activities such as use, repair, servicing, customer service, warranties, and trade-in or re-sale.

The best way to take care of your prospects and customers is to tailor or customize your products and service offerings as much as you profitably can.

Treat your customers as individuals ─ with individual needs ─ at all customer touch points and you will be well on your way to developing customer loyalty.

And remember, in the words of MasterCard’s former Chief Marketing Officer, if you don’t take care of your customers, someone else will.

 

KEY POINT: if you don’t take care of your customers, someone else will.

TAKING ACTION: are you fully aware of the experiences customers have with your products? How satisfying are these experiences? Any way to find out?

Where can your product or service offer be customized? How can you create tailored solutions for your very, very important customers?

This article is excerpted from our book The Best of the Monday Morning Marketing Memo, available in paperback and Kindle formats at Amazon.

Think Customers

Customers are people. Treat them as customers and people.

How do you call or refer to the people who buy your goods and services? What descriptive names do you use? What terminology do you use to discuss them?

Your pronoun of choice may include passengers, guests, participants, clients, patients, and a whole host of other words.

However, there is only word that should be used ─ customers.

Here is how the choice of descriptive can alter the way you and your colleagues think about your customers:

Passengers sit in airplane seats eating boring meals and attempting to be entertained by movies on small screens.

Customers are flyers with individual needs, wants, and desires whose travel experiences begin from the time the journey is planned to the time they collect their luggage at their final destination.

Δ Δ Δ Δ Δ

Cargo shippers hand over freight that is then stored and transported in the belly of a plane or the hold of a ship.

Customers are the people shipping or receiving the precious (to them) cargo being carried and transported.

Δ Δ Δ Δ Δ

Hotel guests check in, check out, occasionally dine in house or in room, and might return some day.

Customers are individuals away from home looking for comfort, rest, familiarity, recognition, and a reason to return some day.

Δ Δ Δ Δ Δ

Clients sit in offices and have meetings in conference rooms.

Customers are the people who react to your ideas and appreciate the value you add.

Δ Δ Δ Δ Δ

Patients sit patiently in waiting rooms as they are moved from test to test or room to room.

Customers are people scared about their medical conditions and worried for their futures.

Δ Δ Δ Δ Δ

Participants at a conference have paid for their admission and eagerly wait to hear nuggets of brilliance from the speakers.

Customers are individuals with important personal concerns seeking new insights and experiences to help them achieve personal and professional goals.

 

Customers are PEOPLE — treat them humanely and with respect, as they most certainly deserve.

Customers are not “the man in seat 17F,” or “the woman in room 839,” or “the couple at table 14.” And most assuredly, to them, they are also not “seat 17F,” or “room 839”, or “table 14.” Yet, how many times a day do your staff refer to your customers this way (and hence THINK about them this way)?

Customers are “the customer in seat 17F,” and “the customer in room 839,’ and “the customers at table 14” and they deserve to be spoken about and thought about in this way by your staff and colleagues.

Think of your customers as CUSTOMERS. As PEOPLE.

And treat them as CUSTOMERS and PEOPLE.

Think of them, and treat them, as CUSTOMERS and PEOPLE with real and individual needs, wants, and desires. Not as account numbers, participants, account holders, clients, passengers, guests, or patients.

Do this and you will have more customers.

Do this and you will have happier customers.

Do this and you will have repeat customers.

Do this, and your happy and repeat customers will help to ensure a better and more stable future for your organization.

It all starts with how you think about, call, and refer to the people who buy your goods and services.

KEY POINT:  the choice of descriptive can alter the way you and your colleagues think about your customers.

TAKING ACTION:  for the next week, record every descriptive used internally to describe the people who buy your goods and services. In what context are these words used? How do these words reflect the TRUE feelings of your staff towards your customers? How would their thinking change if the word “customer” had been inserted every time another descriptive was used?

For the next week, review every piece of internal and external communication generated. How often are the people who buy your goods and services described as customers? How often are they described as something else? How do these other words reflect the TRUE feelings of the writers and the readers towards your customers? How would their thinking change if the word “customer” had been used every time another descriptive was used?

Go out to your customer points of interaction. What words are your staff and colleagues using IN FRONT OF CUSTOMERS to describe them? Are your customers being called “room 1027” in front of the customer who is in that room? Are your staff saying “the guy on flight 64 wants to move his seat” in front of the customer making this request?

Start an internal movement now to eliminate ALL descriptive names and words used by your organization other than the word CUSTOMER to refer to the people who buy or use your goods and services.

This article is excerpted from my book The Best of the Monday Morning Marketing Memo, available at Amazon in Kindle and paperback formats.

Service Excellent Attributes

Excellent Customer Service Drives Customer Satisfaction

There are several attributes regularly displayed by staff who consistently perform at high levels of customer service delivery. These attributes are the ones that differentiate Service Excellence winners from other staff.  They are also the attributes that managers will want to search for in future hiring and staff transfer decisions.

These attributes are:

Cares for the customer ─ Service Excellence winners are sensitive to customers’ needs and are frequently described as customer advocates. They display a sincere willingness to listen to customers and to assist wherever and whenever they can.

Displays Consistent Service Ethic ─ Service Excellence winners are committed to doing the best job possible every day. They assume ownership of problems in spite of adverse circumstances or conditions. They work well under pressure and adapt quickly to new assignments.

Exceed Production/Quality Goals ─ Service Excellence winners regularly exceed their volume, timeliness, accuracy, and quality goals.

Solves Problems Creatively ─ Service Excellence winners proactively seek alternative methods to improve procedures, reduce costs, and improve quality. They place customers’ needs above internal concerns.

Works Well With Co-workers ─ Service Excellence winners have excellent working relationships with co-workers. They are always willing to help others and to share knowledge freely.

Helps in Other Areas ─ Service Excellence winners display a desire to learn jobs outside their immediate areas of responsibility. They frequently volunteer to assist on task forces and special assignments, notwithstanding the longer hours required.

Exhibits High Energy and Enthusiasm ─ Service Excellence winners exhibit positive attitudes that impact morale within their units. They have the ability to motivate those around them to work harder and smarter on behalf of customers.

Can you teach the above skills? You can, in the same way that you can teach ethics, good manners, proper social behavior, and fellowship to mankind. For in effect, what really differentiates a service excellence deliverer from anyone else is how they interact with their customers, both external and internal. It is really a personal attribute, sort of like being a good citizen or being a good neighbor.

In addition to teaching the above skills, it would be best to create the right internal corporate culture where these skills and attributes can flourish. As we discussed the Monday Morning Marketing Memo on Creating A Culture of Service Professionalism, none of the tactics employed by service excellent companies to build employee professionalism are necessarily revolutionary. Most important, however, these tactics are energetically and comprehensively inculcated throughout service excellence organizations on an on-going, never-ending basis.

In our book The Best of the Monday Morning Marketing Memo we discuss the Five Dimensions of Service Quality Excellence, the 7 Cs of Customer Retention, crafting a Customer Service Creed, Creating A Culture of Service Professionalism, and other key attributes of service excellence providers.

The path to becoming a Service Excellence Company is figuring out how to integrate these concepts into your own comprehensive, energetic, interactive, on-going, and never-ending program.

For, at the end of the day, excellent customer service drives customer satisfaction; resulting in a strategic advantage for your organization with a direct impact on repeat business, customer recommendations to others, market share, revenue, and profit.

If your business focus is on customer satisfaction, all these other items on your corporate scorecard will fall naturally into place.

KEY POINT:  the attributes regularly displayed by staff who consistently perform at high levels of customer service delivery are different from other staff.

TAKING ACTION:  how do you recognize and reward staff who assume ownership of problems in spite of adverse circumstances or conditions?

How do you reward, recognize and celebrate your customer service success stories?  How can these be ingrained in the culture and practices of your entire organization?

Do your training programs focus only on functional skills, or do they also incorporate activities that help to grow personal attributes, social skills, and interpersonal communications skills?

Is your organization or business unit a high energy one or a demotivating, energy-sapping one?

This article is partially excerpted from the book The Best of the Monday Morning Marketing Memo, available in paperback and Kindle formats at Amazon.

Customer Service Creed

When the customer wins, you also win

The importance of focusing on customer needs, wants, and desires is a key theme in every seminar and keynote speech I give.

I have long advocated that too many businesses are being run in the pursuit of short-term shareholder value (i.e. share price) and not in the pursuit of long-term shareholder value through solving customer problems profitably and from developing long-term customer loyalty.

Now that a significant portion of the global economy is undergoing a slow (or negative) growth phase, the solitary pursuit by senior executives in trying to constantly push the share price higher and higher is coming home to scorch them.

The best way to create long-term shareholder value is to create and keep good customers.

In order to develop strong customer retention strategies, you need to have an organization-wide customer service creed in place.

Here’s a generic Customer Service Creed that you might be able to adapt for your own purposes:

Every employee has customers, either internal or external (or both). Everyone in the organization must walk the talk during every customer point of interaction.

Treat all employees as special, just as you would treat all customers as special. How you treat your staff is mirrored in the way they treat your customers.

Empower employees who are engaged in regular contact with external customers to make decisions. Establish relaxed levels of authority and alternate chain of commands. Not all decisions should, or need to, come to managers. Trust your staff, having given them appropriate guidelines to work within.

Customer service does not end when the customer has paid for the product and taken it home. Customer service must continue after the sale, just as it must come before the sale.

Allow the customer to talk. Look at them. Be interested in them. Summarize what they are saying. Treat each customer as a unique individual with individual needs, wants, and desires and never as someone who is making the same request you have heard before.

To the customer, each individual they interact with is the organization. Eliminate the “we/they” thinking. Success comes when you think of the word “us” when dealing with customers.

It is much easier to create a positive impression than to erase or correct a negative one.

Let the customer win. Then you both win.

Your competition is anyone the customer compares you with.

Reward, recognize, and celebrate your customer service successes. This creates momentum for future success stories.

To win today’s marketing battles, you might want to consider creating and publicizing, both internally and externally, your own Customer Service Creed.

And remember, when the customer wins, you also win!

 

KEY POINT #1:  in order to develop strong customer retention strategies, you need to have an organization-wide customer service creed in place.

KEY POINT #2: when the customer wins, you also win!

TAKING ACTION:  do you treat employees as special? Is how your organization treats its own staff reflected in the ways your staff treat customers?

What impressions of your organization do your customers take away with them after each and EVERY interaction with your organization?

How can you eliminate the “we/they” thinking between your staff and your customers?

This article is partially excerpted from the book The Best of the Monday Morning Marketing Memo, available in paperback and Kindle formats at Amazon.

Corporate Image Management

The corporate image is a dynamic and profound affirmation of the nature, culture and structure of an organization. This applies equally to corporations, businesses, government entities, and non-profit organizations.

Looked at from a marketing perspective, corporate brand management needs to be an on-going, synergistic management tool, not the one-time “corporate image exercise” as practiced by so many organizations and almost all corporate identity consultants.

The corporate brand provides a mechanism for the organization to:

  • Differentiate itself from competition.
  • Create recognized added-value to the products and services marketed or delivered by the organization.
  • Attract and maintain customer relationships in order to prosper in an increasingly competitive and constantly changing global marketplace.

The corporate image also represents the highest level of brand personality and characteristics that can be created and communicated to customers and marketing partners [and hence the linkage to relationship marketing].

In today’s world of deteriorating product brand power, rising perceptions of parity products, reducing employee loyalty, and increasing competition, the corporate brand image has taken on renewed importance.

Previously, a company’s visual identity system was sufficient to project and protect the image of the organization. Today, all aspects of the corporate brand image need to be managed, from the refinement of the mission statement to how well the troops on the front line understand, communicate, and portray this mission.

Corporate image management matches the expectations and understanding of both customers and employees about what the organization stands for, where it is heading, and what its core strengths, traditions, and principles are.

The underlining principle of this discipline is simply thisif it touches the customer, it’s a marketing issue.™

Nothing touches the customer more than how he or she perceives your corporate image. This fundamental perception will be a major factor that determines whether the customer will decide to conduct business with you and, more important, enter into a long-term and mutually rewarding relationship with your organization.

There may be no greater marketing issue than management of the corporate image in today’s increasingly competitive markets.

Without a doubt, corporate image management will be a key marketing discipline well into the future.

The ultimate battleground for winning and maintaining customer relationships now takes place in the minds, hearts, emotions, and perceptions of your customers.

KEY POINT:  the corporate image represents the highest level of brand personality that can be created and communicated to customers and marketing partners.

TAKING ACTION:  where and how can you place greater resources in winning the battle for the minds, hearts, emotions, and perceptions of customers?

Is your corporate brand giving you sufficient differentiation in the market? Why or why not?

How can your corporate brand provide added value to the products and services marketed and delivered by your organization?

What does your organization stand for? Where is it headed? What are its most important core strengths, traditions, and principles? Are these found within your corporate image, as perceived by your key constituents?

This article is partially excerpted from the book The Best of the Monday Morning Marketing Memo, available in Kindle and paperback formats at Amazon.

The Value of a Good Corporate Brand

One of my favorite marketing topics is the subject of corporate image.

While I was conducting research for my first book, Corporate Image Management: A Marketing Discipline For the 21st Century, I began looking for illustrations to prove the value of a strong corporate image.

I knew intuitively that a strong corporate image would provide several levels of value to an organization ─ such as financial value, market place value, human resource value and, of course, customer value.

But how to prove this?

Well, an example from the automotive world probably best illustrates the market value of a powerful corporate brand.

In the late 1980s, Toyota and General Motors created a joint venture company in Freemont, California called New United Motor Manufacturing Inc. (NUMMI).

The NUMMI plant produced two identical cars: the Toyota Corolla and the General Motors Geo Prizm. These two cars were produced on the same manufacturing line, using the same raw materials, the same labor, and the same manufacturing process; basically the same of everything. In the computer world we would call these two car models “pin for pin compatible.”

The only difference between the two models was that some of them carried the Toyota Corolla brand name and some of them had the General Motors GM Prizm marque.

Being identical in all but brand name, they should sell for approximately the same price and depreciate at about the same rate, correct?

Perhaps so, but they didn’t.

The Toyota Corolla sold in 1989 for about 10% more than the GM Geo Prizm.  It then depreciated more slowly than the Geo Prizm, resulting in a second-hand value almost 18% higher than the American-branded model after five years.

Why the differences?

One has to conclude that the relative strength of the Toyota brand and corporate name, over the General Motors name in the late 1980s and early 1990s, played the first significant role. If car buyers perceived a Toyota named car to be superior to a GM car in the same model class, they would be willing to pay a higher sticker price.

But that wasn’t the entire difference, according to a study by the Boston Consulting Group. The BCG study reported that the after-sales service provided by the Toyota dealer network sustained, and even boosted, the perceived edge of the Toyota name.

In other words, the corporate image management process taken by Toyota to ensure that the service departments at its dealer network wouldn’t tarnish or deteriorate the Toyota brand helped to reinforce the positive attributes of the Toyota identity.

These positive attributes had already given it an edge in the marketplace vis-a-vis a direct competitor brand manufactured in the same facility, using the same materials and labor.

This example shows the direct value of a powerful and well-managed corporate brand.

It was stories such as this, as I continued to conduct my research into the value of corporate branding and corporate image, that led me to conclude that corporate image management is one of the most powerful and potent marketing and management tools available to senior executives for the 21st century.

KEY POINT: corporate image management is one of the most powerful marketing and management tools available.

TAKING ACTION: what are your internal processes for managing your corporate brand and corporate image?

What is the weakest link in your corporate image management chain? What steps can be taken immediately to strengthen this weakest link?

What is the strongest aspect of your corporate image? How can this be further leveraged to develop market leadership for your products or services?

 

 

This article is partially excerpted from the book The Best of the Monday Morning Marketing Memo, available in paperback and Kindle formats at Amazon.

Marketing Words of Wisdom

Marketing is not rocket science.

In fact, marketing is more art than science, though there are some scientific and measurable aspects to marketing. But what to measure?

Here are three quotations from our new book Marketing Words of Wisdom containing advice I regularly give to clients on what to measure and how to differentiation advertising from branding:

 

There is a misplaced focus on marketing metrics today.

The number one thing to measure is your customers’ propensity to repeat their business with you.

Secondly, measure how likely are they to bring to you new customers or to refer potential customers, colleagues, and friends to you.

▲▲▲▲▲

A competitive advantage is what you do different from and/or better than your competition.

It is the service, product, brand identification, guarantee, or anything else that motivates the customer to give you his or her money because price is no longer the main issue or the deciding point of differentiation.

▲▲▲▲▲

An advertising campaign should be timely. A branding campaign should be timeless.

 

Now I realize that this is not how many of the big agency firms approach these topics. But my focus is more on helping non-marketers, business owners, and entrepreneurs get a firmer grasp on how to build their businesses and retain good customers.

For more of my thoughts, Marketing Words of Wisdom is available at Amazon for just $5.88 in paperback and $2.99 in Kindle.

The Customer is (STILL) King.

We live in a world of change. As a matter of fact, the rate of change today is faster, and affects a larger portion of the earth’s population, than at any other time in history. And, as some pundits like to repeat, “the only thing constant in our lives is change.”

Tomorrow’s world will require marketing-driven approaches to generate the level of success known as market leadership. My personal market-driven philosophy is “if it touches the customer, it’s a marketing issue.™” 

Anything that touches your customers….that impacts your customers or your prospects….should be considered a marketing issue for your entire organization.

This marketing philosophy has led me to develop five customer-driven marketing strategies. Let me share the first one with you.

I call it the golden rule of marketing: the customer is king.

No, the customer is not always right. But the customer is still the customer, at all times. And as marketers and business leaders, it is imperative that we fully understand and appreciate the needs of each and every one of our customers.

Thus, it is mandatory that everyone in the organization who has contact with customers and prospects be taught how to investigate customer wants and needs. And, they need to be able to fully understand and appreciate these needs.

Then, your company needs to determine how it can best serve the needs of these customers ….. profitably, efficiently, and consistently.

Bear in mind, of course, that it will be our customers who are the judges of how well our organizations satisfy their requirements. Our internal measures don’t really matter, unless we are using the same measurement yardsticks as our customers.

I recall when I first joined a major international retail bank. On the first week on the job I was invited to a party, in celebration of the fact that the bank had just exceeded its own goals on the issuance of ATM cards to new account holders. The bank had achieved a 94% level of issuing these cards within seven days of new account openings for the previous month. It was the first time the team had surpassed the goal of 92%.

“Wonderful,” I thought. “We are willing to set a goal that leaves 8% of our customers less than satisfied.”  However, not wanting to damper the spirits of the team, I kept my initial thoughts to myself.

Later I enquired whether we had ever asked customers if seven days was satisfactory in their minds. Unfortunately, the reply I got was “no.”  Hence, I made sure that in our next regular customer satisfaction survey we included a question on “how many days should it take for you to receive your ATM card after you open up a new account with us?”

As I recall, something like 85% of the respondents selected either three days or four days in response to this question. Hence, not only were we will to live with a statistical service measurement that said it was okay to not satisfy 8% of our new customers….we didn’t have a clue (until the research findings) that in fact we were actually disappointing the large majority of customers by using a measurement criteria that was not in tune with their own thinking.

Please remember, while the customer may not always be right, he or she is still the customer.

And in their hands lie the future fate of your businesses.

Key Point: our customers are the judges of how well our organizations satisfy their requirements. Internal measures don’t really matter, unless we are using the same measurement yardsticks as our customers and have a full understanding of customer expectations on service delivery.

Taking Action: ask your senior managers to brainstorm and develop a list of the things your organization tracks in relationship to customer satisfaction.

When was the last time you checked these measurement yardsticks against the requirements of your customers?  If it’s been awhile, you should make it a high priority to conduct a Customer Satisfaction Survey with your existing clients and ask them how you’re doing in relationship to their needs.

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