A Day at Works

Back to brand development…. this afternoon we invite a team from an advertising agency simply to share what they make have done for previous weeks after our briefing. We aim for maintain loyalty of our customers by developing comunity events and since the customer base we have is customer with middle-low income level thus we think we would balance what we can give and what we demand from them. Simply we would make them loyal but also maintaining their expectation slightly higher than competitor only… loyal not because what we give, but loyalty which means they ready to sacrifice for the brand.

And the recommendation is very standard from marketing science perspective although wrap-up with sophisticated and foreign axioms, phrase, picture and so on: ensure we target the right customer by exploring segments might be available and their potencies – jump to what might be their needs – jump again to core value and position we should establish on the mind and heart of those customers.

The problem.. and this is very big and often is that they make a presentation just by introducing brand buzz word, and jumping from one concept to another without data basis. Since they are the creative people they perhaps ignoring the fact that imagination without ratioale is just another day dreaming….

Unfortunately books about brand also make similar approach, lack of scientific background… at least from behavioral science. From left brain dominance perspective, brand development should be justifiable by hard fact, any initiatives should able to answer following (minimum) questions:

1. Brand is a name, so what is a natural thought generally emerge when people see and experience the product? If we have a donout like bread, what’s pop out in the mind of people who see it? a donout, a tart, or what?? When we can understand the natural thought we can determine how far we can differ? Remember that very small difference make the name not even remembered, but to overwhelming such as naming a chinese little dumb face dog with “Mozart” also make an iritation.

2. If we develop the value behind the brand, is it raise expectation unnecessarily? Do we actually doing suicide by setting high expectation without preparing operations just because we want someday our operations be there? If this happen thus the end of brand development is not brand loyalty but just stuck in brand awareness and activation. .. people should remember again the matrix of Kano, or motivational theory from Herzberg.

3. Does the return on investment can satisfy us? Many brand becoming very popular but popular just for the unpotential market. What’s the benefit is a Mercedes popular to youngster of middle low income level? Preparing when they become tycon if the economy boom again? Remember the brand trust concept,… I’m being remembered again by fellow blogger on this case.

4, Is there any measure to navigate the company dealing with brand management? or we just have survey on attitude which probably never proven to be a behavior?

So I am waiting for a local brand or creative agency which not only creative but also rational. A marketing consultant which not only very conceptual but also have a ground breaking creativity….

As the essence of lead generation is an understanding the right person to be targeted, the tactic is also important – just the same as STP is nothing without differentiation and 4P. The tactical level of lead generation, at least consist of:

First, valid and ‘enough’ database. For contact data, you must have at least 3 deep and 3 wide. This means you must have 3 level contacts and 3 peers for each contact, for instance to reach executive corporate Director, you must familiar by GM and his/ her secretary; while to contact a retail end customer, you need to familiar with the spouse and friend. If those deep and wide are not available, then contacting customer is risking money and time. So how to enrich our database? Buy it, or populate it through social networking and social event; both now even available on-line.

Second you need permission and an offer, generally by mail or e-mail. This permission open-up communication and create awareness and need of targeted customer. Common practice is using combination of media to bring customer deeper into relationship, for instance a mail as i) permission, and ii) information or survey to reveal his/ her need then enclosed with iii) a statement of an offering relevant to the need then a statement that the firm will contact customer a week after to follow-up. Without a permission, for instance the firm contact customer by phone directly, customer usually will feel invaded or/ and unprepared thus will result in negativity. Without a ‘bridge’ to reveal need, any offering will useless. Without offering, a contact will loose its essence, what’s in it for me (customer).

As the first is a fertile soil, the second is food for the seed (fertilizer, water, etc), then the third is irrigation; not irritation. At this level the firm need to contact customer with rich media/ channel to develop a positive experience. The media is considered rich if able to deliver and capture verbal and non-verbal message, for instance face-to-face meeting conducted by Sales person. If the firm needs an indirect media, then a phone call is the most appropriate – once again if direct contact is not available. To develop a positive experience, the firm need to communicate at head and heart level; not only communicate the competitive benefit to solve customer need but also to communicate that the firm understand and a partner for customer. The aim of head communication is positioning, the aim of heart communication is acceptance. Positioning says that our product is different and better than competitors, while acceptance grows from feeling that we are in the same side with customer.

Customer loyalty across industry is declining, driving a new paradigm of managing customer. Instead of pushing loyalty to certain product, you needs to realize that customer’s need is growing thus migration must be managed to the way profitable for the firm. In managing customer migration, you need to understand the indication of migration, and redevelop value.

But before you manage migration, you must sure whether customer migrate or defect. Defection is occurred when customer value (what value customer seek for) is remain the same but competitor offering is better. Migration is occurred when customer value is changes because:
1) customer need is changing due to changes in lifecycle and/ or social status, for instance mini sedan buyer migrate to buy medium sedan
2) customer seek variety due to active competitor, for instance apparel buyer who buy from new designer who do promotion. Based on above reason then we understand indications whether customer will migrate or not.

Value redevelopment can be conducted by many ways, from the most essential to the most superficial: 1) product re-design, 2) enhance delivery channel and 3) developing marketing program –after understanding why customer see existing offering is not relevant anymore, and whether customer will come back.
Product redesign commonly happened when the product status is decreasing, for instance Volvo is considered as vehicle chosen for executives, but as Volvo maintaining its value proposition, corporate executive nowadays changes to be younger, and casual thus making BMW more relevant. To gain back his position, then Volvo design is changing to be more casual and feminism.
Delivery channel enhancement can be conducted by enhancing frontline’s service skills, adding augmented value in delivery such as tracking system. Developing marketing program includes developing loyalty rewards, and ways to enable cross loyalty.

Technology by itself does not make anybody more productive. The idea is that technology sometime adds complexity to work environment, and every ounce of complexity dropping productivity. Secondly technology as a tool could not solve problem in people, structure and strategy.

These simple ideas, more often fail to understand by management. For instance installing a new prospecting software replacing the old manual report of daily prospecting activities at Sales Dept. The software will require special time of Salesman to input into the system, more time for Supervisor to monitor individual Salesman’s performance. Other example is how management thinks installing new technology can solve bureaucratic corporate culture; the result is from an hour of time required to write a simple letter to more than a day to do the same thing.

The funny but insightful story is how USA and Russia solve a problem of writing a note in the International Space Station: because there is no gravity thus conventional pen fails to work. Russia provide simple solution, a pencil instead of a pen developed by USA which required more money and time in development.

In Sales Dept, installation of new technology usually to ‘help’ following process: sales lead generation, sales contact, sales tracking, sales record, and sales retention. All of these process can be improved by technology, as long as giving Salesman flexibility in place and time –as well as the nature of the work, and giving Salesman more but practical support. In these 2 requirements, Japanese is more sophisticated by using work tools which is observable and always available, such as simple board using colors, and plate.

Sales in marketing field currently is treated like a step child, and the failure to recognize the importance of selling skills is not just a business, but also an academic failure

According to US Dept of Education, over the past decade, US colleges and universities have awarded approx 1.1 million MBAs. Guess how many of those MBAs were awarded with a concentration in Sales? Answer: ZERO. Guess how many colleges offer even a minor in Sales as part of an undergraduate business degree? Less than 40 – out of several thousand institutions. So no wonder that right now even in Indonesia, Salesman position is undervalued and tend to be fulfilled by high school or diploma background employees.

Why is Sales a pariah when it comes to academia?

While colleges awarded degrees in art (art, literature, etc.), many believe that because Sales is an ‘art’ therefore is not appropriate for colleges to teach and award this subject. Same reason also applied, to the one said that is because Sales is a ‘people skill’ or because too ‘airy-fairy’ and ‘vague’ to be a valid subject compared to counseling, and religion.

So why?

1. Business school are dominated by Marketing Professionals, who have a vested interest in minimizing the importance of Sales. For a Marketing Professionals, the ideal world is one where there is no need for Sales because Marketer know exactly what consumer wants, able to develop differentiated products, and consumers buy directly to manufacturers. They fail to recognize that (Consultative) Sales is the only way for customer to make sense of the complex offerings. In short Marketers believe that their role is to live ‘supply creates its own demand’
2. Academia in general considers commerce unclean.

As academia treat Sales inappropriately, 2 negative outcomes are:

1. Create Sales training industry without quality control, or standard of performance. In Indonesia, a good sales training is the one which is fun, and motivating – without any skills advancement or systematic sales strategy.
2. Lack of real Salesman, make it is impossible to have a Sales Professional. In turn it would make sales career easily insulted, and practiced without ethical standards.

Because everyone sells, it does not mean everyone can sell appropriately… same as everyone can write, does not mean everyman can be a novelist.

Oneday a customer who just bought a luxury car has a phone call. This call is from Ms. Susan, a Relationship Manager of the car dealer he just has visited a week before his recent purchase. In a moment they are in a middle of conversation,… after talk and talk.. Ms. Susan asking whether he has a plan to buy a car, because 3 years ago he bought a nice Camry from the dealer.
Since he has no plan to buy another car, despite the fact that he just have already bought a brand new Mercedes, he calmly said that he might has a plan in the next 3 months, just to ensure the girl still has a nice smile in her face.
Then for about 3 month after, he has cold call again. This time he can easily remember her sweet sound… immediatey after Ms. Susan introduce herself and showing emphaty to his Camry which has its major service after a toll road accident nearly killed him. Different to previous encounter, Ms. Susan surprisingly greet him on his birthday which actually take place one day before.
This situation repeatedly happened: a phone call, and a closing question or offerings. For Ms. Susan she can proudly say that she has a relatioship with customer, she frequently interact with customer.. and often customer also call her back asking for something about car, discount or so on. For this situation Ms. Susan can thanks to massive technology behind, which capture customer’s name, phone humber, b’day, transaction, and other lifestyle information then mining a clue of customer’s future needs.
Although this practice is sweet, but simply has customer’s data such as b’day and greet customer would not necessarily showing the existence of relationship between customer and the firm. Customer would not impressed by a printed greeting card archiving data from central data base maintaining their b’day. As long as customer do not feel the warm emotion in the process, then it is a waste. As long as customer feel we do it just for money, it is a waste.

Think, which is more touching:
1. Mr. Robert buy a car, filling data (including b’day date), Ms. Susan get the date from dB, call him and greet him.
2. Ms. Susan has a conversation with him about his hobby and car, get his b’day date, call him and greet him.

Other example:
1. Mr. Rober go to workshop, the Service Agent record his car problem, Ms. Susan call him whether the car serviced as promised, and next Ms. Susan reminds his next service schedule.
2. Mr. Robert go to workshop, Ms. Susan call him asking whether he need trasport to the office, and next Ms. Susan call him again checking whether the car in good condition to make sure Mr. Robert not necessarily late to the office.

The point is that relationship only can established between human. System to make this relationship easier is important, but the one that guarantee relationship is frontline’s attitudes.
The content of relationship must be no money-oriented, and the context is as customer prefer.

If Ms. Susan has a bunch of data and sophisticated media, but while call customer she show no enthusiasm then it is useless. When Ms. Susan show right attitude backup with data and system, but just to offer customer products, to make a sale then it is useless. When Ms. Susan call customer in the wrong time, wrong place, wrong media, and wrong approach then it is also useless.

So a firm can said they develop CRM when they ensure all employees serve customer from the heart, which only can if the management and leader treat employee with respect.

Menurut Marketing 101, tugas Marketer adalah membuat sales superflous. Hal ini dapat diartikan bila terjadi kesulitan sales maka bisa jadi ada yang salah dengan product, price dan place-nya. Masalahnya dewasa ini Chief Marketing lebih sering dalam posisi ‘aman’ sebab KPI yang diembannya adalah proses atau tidak langsung terhadap penjualan, seperti: efisiensi budget, brand awareness, product holding, dan development time. Akibatnya bila sales jeblok maka yang hampir selalu menjadi sorotan adalah Sales Manager-nya, dengan ‘asumsi’ bahwa 3P lainnya sudah OK. Hal ini diperburuk dengan trend bahwa Marketer biasanya diisi oleh orang-orang yang belum pernah menginjak dunia sales, biasanya jebolan marketing faculty ternama yang dipenuhi teknik analisis pasar yang pada gilirannya men-justifikasi sisi marketing dan bukan salesnya (the product, price, place, and advertising is all good – the problem is on sales promotion and the salesman!!).
Contoh kasusnya adalah Marketing di Ho selalu menetapkan angka cross selling dan target sales, namun berapa sering sih mereka menetapkan angka-angka itu menggunakan Sales Composite Index, berapa sering sih mereka menetapkan angka-angka tsb dengan lebih dahulu mengundang Salesman sebagai narasumber. Jarang bahkan tidak pernah, semuanya diturunkan dari analisis di atas kertas, meski semua orang tahu book smart sangat berbeda dengan street smart.
So pada akhirnya di beberapa industri yang tergolong margin industry, seperti insurance dan automotive, kasta Marketer dianggap lebih tinggi dibanding Salesman. Akibatnya Marketer yang ada di menara gading dengan bersemangatnya menciptakam program-program baru yang implementasinya ada di sales level. Bila target tercapai, akan menjadi achiement Marketing HO namun menjadi sesuatu yang sudah seharusnya bagi operasional sales. Bila TIDAK tercapai maka yang dipermasalahkan adalah operasionalnya, alias Sales-nya; apalagi di atas kertas Marketer selalu membuat semuanya layak.
Pada kondisi demikian selalu ada ‘pertentangan’ antara Sales & Marketing bila:
1. Marketer dan kantor pusat selalu dianggap lebih pintar, sebaliknya Sales di level operasional dianggap hanya sebagai doer.
2. Marketing development selalu di level development tidak sampai pada piloting dan implementasinya.

Hal ini nyata dengan trend terkini di beberapa industri, misalnya perbankan. Pada industri ini competitive point hampir tidak ada sebab produk dan sistem baru yg ditawarkan relatif tidak ada. Pada kondisi ini Marketer HO menggembar-gemborkan bahwa Account Officer harus berupaya mejual many product to single customer. Hal ini benar, namun kenyataan implementasinya menjadi salah karena upaya tersebut sebatas himbauan dan reward system. Account Officer dianggap seharusnya bisa melakukan hal itu, tanpa tools dan system yang memadai seperti informasi best product for customer. Di atas kertas Account Officer hars menjual ini itu dan diarahkan hanya dengan reward system, dan bila tercapai maka Marketer HO dianggap berprestasi…. berprestasi karena melakukan apa? Karena membuat reward system? membuat kontes? membuat produk yang nyata tidak kompetitif?

Bila Marketer menyadari fungsinya, seharusnya yang dilakukan adalah:
1. Mencari tahu mengapa Salesman tertentu berhasil dan yang lain tidak, dengan data yang akurat dengan turun ke lapangan
2. Menciptakan system yang memungkinkan Salesman menjadi Super Sales
3. Menciptakan system pendukung seperti knowledge management, predictive system, reward system, dll.

Kalau Marketer hanya berkutat pada teori, artinya hanya melakukan point ke-3 maka sungguh tidak adil sebab Sales Dept menciptakan Sales, sebaliknya Marketing Dept mengeluarkan cost (bukan investasi, sebab lebih sering sulit dipertanggungjawabkan daripada sebaliknya).

From customer perspective, quality is the ability of the product to fulfill its promise to solve customer’s problem. From company perspective, high quality reduces (potential) cost. Low quality yield for additional cost, high quality input, process and output do not.
When quality product or when delivery met expectation then customer will be satisfied but satisfied customer does not always come back for repurchase and spreading good word-of-mouth. This reality broke the Service Profit Chain concept.
Satisfied customer actually indifferent in his/her attitude toward the product, thus in this stage customer service initiative generally is fruitless, even increasing customer expectation or hygiene factors. Then company should aware that customer service initiative sometimes is a long and hard decision. In macro level this decision is similar to phenomenon that increasing production capacity or go to capital intensive will eventually produce less profit for the whole industry.
CRM concept as a verbose has many definitions, but simply it is an initiative to identify, keep, and develop profitable and loyal customers. CRM is advancement of CS, it ensure that customer service activities directed to the right customer, that is: who can be loyal to company as well as provide profits in the long-term relationship. CRM then make sure company effort will keep desired customer from churning, and develop this customer in term of involvement, trust and commitment (3 basic elements of attitudinal loyalty) and behavior (transaction: referral and repurchase; form of repurchase: buying the same product, other group of product or cross-selling, and buying higher margin product or up-selling).

Thus when company wants to calculate accountability of CS activities such as B’day greetings, executive lounge or simply extra discount then company should move to CRM.

Customer insight is a must for creating value and developing relationship. Without an understanding of what customer want, firm will face difficulty to meet customer expectation that result in problematic selling. More understanding we have about what customer want, greater our chance directed to produce what customer expected.

So how we get customer insight?
We can understand what customer’s want, based on what they buy. This is the most reliable source of information, generated from data mining activities toward internal records (sales records, customer records, inventory records, etc.). If customer buys a pair of Nike, this means our customer is interested in sports, and style. But this does not means if customer is interested in sport and style they will always buy Nike, so transaction is the result but “why” is beyond this information.

The “Why”
To answer this question we must collect information about what customer need, value at, lifestyle and attitude. Customer who value sport and comfort actually can choose Reeboks, Nike, Adidas, or others. But if s/he also value style and professionalism they will more considering Reeboks and Nike rather than others. Next, what is his/ her lifestyle? Reeboks and Nike have different lifestyle. Customer who buys Nike, should be agreed to Nike’s position in lifestyle, that is intuitive and free (remember the tag line ‘Just Do It’). The last is attitude, how customer evaluates product and services. Based on the value within the product and lifestyle s/he has, customer determine positive or negative evaluation attached to products or services. Customer chooses Nike because s/he thinks and feels that Nike is better.

Although customer agreed to benefit offered by Nike, agreed to Nike’s value, agreed Nike’s to lifestyle, and put higher mark on Nike, customer can actually buy other than Nike because externalities such as budget, school policy, stock availability in store, friends influence and so on. So our “Why” does not match to our “What”, our customer need, value, lifestyle and attitude different to what actually customer buy. So transactional data is not the ultimate although it is the reality (customer really spend money on the stuff). Data mining is important to understand “WHAT” but actual picture of customer will be completed by customer survey – the “WHY”, althought externalities will influence the linkage of the two.

Recently I have read “Loyalty Myths”. I think this is a B+ grade book in loyalty marketing. Find it at bookstore…. but before it I’ll share some myths….

Customer Satisfaction brings Customer Loyalty (Myth 45)

Merely satisfied customer not necessarily loyal, only delighted customer tends to loyal because relationship of satisfaction and loyalty is not linear. Besides satisfaction, brand imagery determines loyalty.

Spending on Customer Service increases Customer Loyalty (Myth 41)

Spending on the core of what customer value at will create customer delight then in turn loyalty. The important thing is that many businesses are not driven by services, but product. Think about consumer package goods (Coca Cola for instance), and automotive in which customer is more driven by brand and functional value of the product.Spending on additional and non-core service, such as a Birthday Greeting Card toward automotive customer would not automatically turn them to loyal.

Frequent Contact increases Loyalty (Myth 32)

This is a chicken-and-egg conundrum. Loyal customer tends to purchase frequently, and not otherwise. Delighted customer tend to be loyal customer, loyal customer tends to cognitive, affective and behaviorally committed.

Loyalty Rewards Programs will Solve Customer Attrition Problems (Myth 34)

Loyalty Programs can’t save bad product/ service. If an airline consistently cancelled your flight, would frequent flier miles really matter? The truth is consumer ranked Frequent Flier Programs at the bottom, just a head of airline food.Loyalty Programs which is not providing real value to customer will not contribute to customer delight. The programs otherwise educate customer to delay purchase, at certain periodic promotional events.

Firms should Emphasize Retention rather than Acquisition (Myth 2)

This Myth broke Product Life Cycle and Company Life Cycle Concepts. Retention is a sound strategy when the product/ company stay in maturity or decline stage. On introduction stage, the key is brand awareness, while of growth stage is customer acquisition / market share. Observe Apple which to soon focus on retention strategy before enough share to accumulate. Apple’s growth is steadily small compared to un-sophisticated Microsoft. Retention also rational when firms already satisfied to profitability of current customer portfolio and acquisition of new customer is relatively expensive. On some situation like after product launching, the firm needs to shape profitability of their customer portfolio since majority of customers enjoy special discount facilities. In other case acquisition is cheap, such acquiring walk-in customer to our Restaurant located at high traffic mall.

Customer wants to be Loyal and Interested in having a Monogamous Relationship (Myth 18, 19)

Customers nowadays want simplicity, they refuse unnecessary involvement. So relationship won’t work well in low-risk item or when customers generally buy the product on impulse or triggered by the need of variety. Even in B2B, customers want to reduce cost of purchase: time, risk and relationship. If customers involved in the purchase, they always have a back-up if possible to minimize risk. Customers more safely have a polygamous relationship.

Loyalty can’t be bough; it has to be earned (Myth 31)

Firm can’t bribe customers to earn their TRUE loyalty, but as loyalty reward program flourish customers learn to buy product/ service solely to get financial rewards or exploit the system. The extreme example of loyalty program hacker is David Philips who spent $ 3,140 on pudding cups at Healthy Choice to get $ 1.25 million American Airline frequent flier miles (worth 48 free domestic airline tickets and 12,000 desserts). If they won’t exploit the system, customers have well understood when to make a purchase – the promotional season. That’s why sales increase during promotion and decline after it. As loyalty reward program tend to establish exit barrier, customers focus their transaction to how much they already accumulated, not to awards they can win.