Two Presentations on Shopper Marketing

Last week I was in Bucharest to present at the Shopper Marketing Conference which was organized by our great friends at Evensys.  For the perusal of the people who participated in this event, or who ever else is interested, I have uploaded PDF’s of the presentations for downloading here.

The Margin Challenge of Being Green

When listening to the case of TNT Post's sustainability efforts at Marktplein 2.0, I could only conclude that no good deed goes unpunished. And as it's a situation which many companies going "green" may be facing soon, it's one to start thinking about today.

At Marktplein, Peter Van Minderhout, Group Director of Corporate Sustainability at TNT, highlighted some of the highly impressive work his organisation does in the area of relief work (and I mean the "real thing" like Darfur, tsunami aid, etc). However, he also indicated a dilemma the company faced for the future.

In short, they had done a reprise of a stakeholder review across a large number of NGO's, customers, etc. to check what these people thought of the companies sustainability efforts (and where they should focus next). And much to their surprise, the message was had evolved from a few years ago. Among their customers, emphasis had shifted from "compliance with regulation", "child labour" and "fair working conditions" in 2004 to "eliminate CO2" today (only preceded by employee working conditions).

Or put more bluntly (my words): "We like what you're doing for the poor and your workers, yet frankly won't buy a penny more for it. Still, if you reduce your CO2 emissions, we would probably increase our orders (and if you don't we'll go elsewhere)."

This shift in itself poses some interesting dilemmas. Still, the real challenge of then responding to this call for CO2-reduction, came when the purchasing departments of these same customers got their hands on the CO2-reduction plans the company was putting in place. Their logic was simple: "as TNT was being more efficient, this should translate itself into lower price. So could we have a discount please?".

This while at the same time some of TNT's highest margin products are exactly the ones that are least efficient in energy (e.g. express freight by airplane). And shifting customers to more efficient means of transportation (e.g. express by train) is much lower margin.

In other words, the company now finds itself in a situation that to comply with the CO2 reduction request from their customers, they need to start cutting heavily into their margin. So in a way - and kudos to TNT for discussing this so openly - they are "damned if they do, damned if they don't".

So I wonder. Will this story repeat itself for EVERYONE who's currently selling to Tesco today, or in 2008 to Casino? Will it be so that customers will first pressure their vendors to "go green" and then send in their purchasing departments to ask discounts for more efficiency? And when this cat gets out of the bag, will these vendors actually resist going green as the business case for doing so erodes?

I don't have an opinion, yet it's definitely a space to watch. Meanwhile I hope the world will show ever more companies like TNT, who first do what is right and then try and figure out a way to also make this profitable for everyone (and even have the conversation in the open). Keep it up Peter!

Uncomfortable Truths (Part Two)

Writing the second part of this post was hard. Not because I didn't know what I wanted to say, but because the need to summarize it into a readable blogpost meant leaving out important nuances...

Still, I've tried to highlight how marketing as a function can help organizations overcome the challenges described last week. And for the impatient ones wanting to impress their CEO still this quarter, I've also added a number of "quick fixes" ;-)

So while you won't find silver bullets, here are a few remedies to the "uncomfortable truths."

Truth #1: Most people in your organization haven't got a clue what you're on about.
Delivering on your brand's promise starts with making sure that the people in your organization understand what it is and how it affects their job.

Still, many marketing departments allocate insufficient time and budget to working with HR on making this happen. As a result, internal communication programs seldom get beyond employee newsletters, intranets and the occasional motivational speech.

Ask yourself this question: would you try and convince the consumer in the street of your strategy with the proverbial powerpoint presentation and an email? Well, as it stands that consumer may actually be working for your company, so maybe there is a lesson to be learned.

To stand a chance in the market, marketers should allocate a significant portion of their time and budget to support HR in putting together a communication and capability development plan that truly affects the organization. Only then, things will start moving.

Quick win: do a survey to check in how far the people in your organization actually understand your strategy and think it's a good idea. Turn it into a KPI and track it. Never point fingers when the figures turn out pretty dim, yet involve everyone who can influence the numbers into a supporter of your cause.

Truth #2: Many leaders in the organization behave against the best interest of the company.
But, as I said before, can you blame them? When facing their boards, most CEOs I ever met are prepared to go for the long run, yet simply don't get decent marketing ammunition to actually pull it off.

Marketing departments need to back up their leaders with 'hard number' based business cases. This means getting serious about customer (life-time) value and measuring the impact of different business initiatives. It means integrating with sales and using decent scenario planning and market prediction methods rather than hazy market research. It means talking the language of money rather than that of "propensity to buy."

Boards are greedy and will support a plan that makes them more money in the long run. Yet to be able to sell such a plan (and its quarterly sequels) leaders need ammunition. The marketing department needs to provide this.

Quick win: start building your credibility by connecting your various marketing initiatives to your sales line. If you're in B2C this will typically allow you to cut your budget by 20% or more without affecting sales. If you're in B2B, it will either increase your closing rate or give your sales people more leads. Win brownie points with this initiative and propose to use the money freed up to do "more of the same" working on a larger scale customer value project.

Truth #3: The people in the organization are often paid to do something else than what the strategy says.
Don't worry, I'm not going to propose that you need to go and challenge the pay grades in your organization (even though someone should). Yet what you can do is translate the promise of your company or brand into desired behavior at the "moments of truth" and then work with HR to devise non-financial reward and recognition systems to support each of them. These can be "employee of the month" programs, a mention in the company newsletter or simply a personal thank you. People respond to recognition and if you reward them for "getting it right" this can be a first step in offsetting salary inconsistencies with the strategy.

Quick win: Rather than trying to take on the whole company, start with identifying for each department in the organization the "one thing" that would definitely need to go right to deliver on the promise to the customers. Partner with HR and then promote the hell out of this one thing + back it up with non-financial incentives which are visibly spread throughout the organization. Once you have established the principle of recognition, the following steps will be more easy.

Truth #4: Quite a few people in your organization are at a loss when it comes to the customer.
While many struggle with the concept of "customer insight," I typically find that whenever you hit upon a real one, it tends to be simple and straightforward. As marketing needs to uncover these insights, it's also its role to spread it to every person the company.

After all, understanding how the organization responds to very specific customer types and needs means that your people are able to come up with the right answers and solutions without the need for extensive processes, manuals or control mechanisms. This accellerates the appropriate service reaction and in turn increases customer satisfaction.

Quick win: Rather than taking on the whole company, pick the group which is currently most remote from the customer (e.g. R&D or engineering). Expose them to the insights you have uncovered and have them work through the implications for their job. Make them understand the customer. Then let them loose on the company again. It will work.

Final Thought
As I said, trying to cover all of this in one blogpost was probably chewing off too much. Still, the main message I wanted to give is that many of the disconnects in organizations can be resolved if marketing and HR work together on communicating and incentivizing people to act according to the strategy (staff and leaders alike).

And while you may say that this is also the job of other departments, marketing needs to take the lead. After all, it's not just marketing's job to "come up" with a value or brand proposition, but also to make sure it gets acted upon. This means addressing the above through communication programs, market insights, decision support systems and strong analysis.

And the good news is that these are all things marketing is good at. Right ? ;-)

In most companies I know the distance between the marketing and HR department is less than 10 minutes. Perhaps it's time for a walk …

Uncomfortable Truths (Part One)

These days, it’s very fashionable to talk about things like Net Promoter Scores, Touchpoint Marketing and Employees that Live the Brand….

After all, we’re — once again — finding out that it’s the employees of the organization that ultimately define the customer’s satisfaction with our products and services.

So after spending a few years of slashing their heads off, the people are once again “our most important asset” (irony intended)….That is why, today, I’d like to explore some uncomfortable truths about these “people.” Yet before you start gloating as you go along, remember there’s a stinger when I upload part two next week. Each of the areas discussed will lead straight back to the marketing department, and what it should be doing to be true to the business.

A big tip of the hat to my friends at MCE, who’s thinking on alignment inspired this post (to avoid confusion, the rants below are my own

Truth #1: Most people in your organization haven’t got a clue what you’re on about.
There is a saying that strategies are typically researched in 6 months, written in 6 weeks (by 6 people?) and communicated in 6 days. This leaves the people in the organization 6 hours to change their behavior before the next quarterly results.

The result – according to über-professors Nolan and Norton – is that only 5% of the people in any organization actually understand its strategy. So even if they have the best of intentions, it is quite probable and plausible they’ll go off and do something completely different than what you had intended when writing that PowerPoint.

Truth #2: Many leaders in the organization behave against the best interest of the company.
And frankly speaking, you can’t even blame them for it. Politics-free exceptions aside, building a corporate careers is 30% achieving results and 70% talking about them in the right places. If you have a kid in school, a mortgage to pay and a social status to uphold, you’re not going to stick your neck out on that daring innovation which may backfire, and you’re definitely going to go along when the long-term strategy gets hit by the quarterly numbers axe. This leadership behavior is, however, also seen by the troops and sends a stronger message than any corporate policy manual on the face of the planet.

Truth #3: The people in the organization are often paid to do something else than what the strategy says.
While some of us work for glory, most people’s behavior is still influenced by the performance bonuses at the end of the month. Yet comparing these against your brand’s objectives often gives interesting results.

This goes beyond the cliché of the sales team that is supposed to “help the customer,” yet is commissioned on volume. How about the researchers who are bonused on # patents, rather than customer insights. Or call-center agents who are on the clock when talking to customers. Or – back to truth#2 – managers who get stock options tied to quarterly results. If “what you say” and “what you pay” disconnect, what are you really saying?

Truth #4: Quite a few people in your organization are at a loss when it comes to the customer.
If you go for a walk to every part of your organization to ask them about your customers and their needs, you’d be amazed at how some of the answers differ from what’s in those expensive insight and market reports you ordered. This may say something about the reportsn, yet if different people go around the organization with different pictures of the customer and his needs, all talk about consistent touchpoint experiences remains just “talk.”

Next week – on this screen.
All the above can be resolved by connecting marketing (“the guys who spend money”) and HR (“the guys who shuffle payslips”) into a strong people management function focused on getting the brand’s employees truly aligned to its strategy.

If you already have some suggestions on how this could be done – don’t hesitate to hit that comments button.

Illegal Downloaders in UK Spend Upto 4.5 Times More on Legal Downloads

In stead of prosecuting illegal downloaders, music companies in fact should be celebrating them as their dearest customers.  That, at least, is the conclusion of a British research by market watcher The Leading Question.

According to their findings, active P2P users spend almost 4.5 times more on buying legal music than their non-P2P counterparts (£5.52 vs. £1.27 per month).  Only 4% of users being interested in "having more than 1000 songs to take a long".  Together with some similar researches in the US, it would appear that the myth of artist-robbing, CD-ripping and malicious P2P pirates is finally crumbling (at last).

There is one snag though.  P2P users do buy their music online (via Napster, iTunes, ...) and don't bother with CD's any more.  This of course, still doesn't fit the record label business model.

Interesting times.

for the article: go to The Register