The Future of Marketing and Customer Engagement – Introducing the Emerging and Rapidly Growing Practice of the Customer Defined Experience

Did you ever consider the following questions related to the future of marketing and customer engagement?:

  • What are the levels of progression of an organization’s customer engagement and marketing capabilities – from the most basic to advanced?

  • What percentage of companies fall into each customer engagement & marketing capability level?

  • What is beyond the current advanced level of customer engagement and marketing capability and the wave of the future?

  • How do you simultaneously and significantly reduce the overall cost of customer engagement and marketing delivery while also significantly increasing your overall customer engagement and marketing effectiveness?

  • What does the future look like in terms of increased customer engagement and marketing ROI?

  • What is the most effective method for creating maximized customer engagement?

If you did, then this blog is for you as it succinctly answers these questions and more.

Future Leading Practice: The Customer Defined Experience
Future Leading Practice: The Customer Defined Experience

The above chart depicts the 3 primary & existing levels of customer engagement sophistication as well as the wave of the future which is The “Customer Defined Experience”. These four (4)  levels of organizational customer engagement capability are as follows:

1) Level 1 – “Shotgun Customer Experience”, very unsophisticated, yet inexpensive. Practiced by approximately 25% of companies.

2) Level 2 – “Segmented Customer Experience”, somewhat sophisticated and moderately expensive. Practiced by a majority of companies, approximately 70%.

3) Level 3 – “1-to-1 Customer Experience”, very sophisticated & expensive, Practiced by <5% of companies.

4) Level 4 – “Customer Defined Experience  which is an emerging leading practice, only practiced by <01% of companies, but the number of companies that are moving toward this capability level is growing fast. I am predicting that this will be, by far, the most effective method in terms of both ROI and cost effectiveness.

The Customer Defined Experience, Marketing Illustration

The Customer Defined Experience Using Marketing as an Example

We will now isolate marketing as a functional example (vs. customer service, sales, etc.) to illustrate how the customer defined experience will be different than traditional marketing practices. The above chart depicts the traditional levels of marketing sophistication and the expected ROI of each level. The newest trend in marketing and customer experience is also revealed in future level called “Customer Defined Experience, Marketing”. Each level consists of the following marketing practices:

  • Level 1: Primary focus on “Shotgun” marketing (approximately 25% of companies). In this approach, companies  send the same offer to as many people as possible with the hope that some of them might take the offer being put forth. With this practice, companies send the same offer to customers and prospects, regardless of their unique interests, needs, wants, history, etc.

  • Level 2: Primary focus on “Segment Marketing” (approximately 70% of companies). This approach models the behavior and history of customers in order to group them into unique ‘tagged’ needs groups. They are then sent offers that appeal to that distinct segment group.

  • Level 3: Primary focus on “1-to-1 marketing” (<5% of companies). This approach combines sophisticated modeling techniques and artificial intelligence to ascertain the unique needs of each customer or micro-segments (depending on the level of marketing technology sophistication, pure 1-to-1 marketing might not be able to be achieved). Companies that use this level of sophistication are few and we can point to major credit card companies, Amazon, Google as models utilizing this type of approach.

  • Level 4: Future Emerging Practice “User Defined Marketing”. (<.01% of companies, but growing fast) Companies like Bank of America, Wells Fargo, Marriott and Southwest Airlines are headed in this direction with the increasing querying of their customers on preferences, needs, wants, likes, etc. The extension of this is to allow customers to define their own experience – how/when they would like to be marketed to, by which channel, which content/tone they prefer, etc. As evidenced by increasing numbers of customer insights groups, this is the trend of the future. Instead of expending all of the effort in modeling/AI/etc. to attain 1-to-1 marketing which attains a 80+% match, why not ask your customers what they want/prefer which will ensure a 100% match to their needs nearly 100% of the time? Research I have conducted has indicated that 72% of customers want a more interactive ‘relationship’ with the companies they do business with, including defining their own customer-company experience – across all of their company touch-points: sales, marketing, customer service, warranty claims, etc. More on this point later in this article.

 

Customer Defined Experience, Marketing Example

Customer Defined Experience, Marketing Example

The above chart is arranged by the levels of marketing sophistication across the top with the following categories arranged on the left for each marketing level:

  • Primary Marketing Focus – What marketing activity do organizations at this level of capability primarily focus their efforts?

  • Marketing Proactivity, Analysis Main Focus: For each level of marketing capability, how proactive is the marketing organization and what is the major focus of their marketing analysis?

  • Primary Marketing Technology Enabler: For each level of marketing capability, what are the primary technology enablers in order for them to achieve their marketing goals?

  • Main Marketing Metric: For each level of marketing capability, what are the most important marketing metrics?

  • Expected Marketing Approach ROI: For each level of marketing capability, what is the expected ROI and return on marketing for following this approach.

Level 1 Capability -Shotgun Marketing

Level 1 Capability – Shotgun Marketing

Shotgun Marketing Practices

Shotgun Marketing Practices

 

Let’s examine the first level of marketing capability, that being Shotgun Marketing. These organizations have the following organizational characteristics:

Primary Marketing Focus: The primary focus for these organizations is to expand their pool of those who will receive their marketing promotions so that there will be likely someone in the mix who will be interested and respond to their canned & generic offer. I heard a comment from a marketing organization I worked for whereby the general manager (overall leader) of the business actually said to me – “just widen the list and I don’t care if Mickey Mouse is on the list, as long as we have 1,000,000’s of folks to send our e-mail to.”

Marketing Proactivity, Analysis Main Focus: The main orientation and focus for organizations at this level is generally a reactive,  whereby the main focus is post campaign execution analysis and ‘seeing how we did in terms of number of responses they had to their offer(s)’.

Primary Marketing Technology Enabler: As you would expect at this level of marketing capability, technology  is generally very basic, rudimentary and inexpensive and would typically include simple and flat file (i.e. Comma Separated Value (.CSV) files) list generation using MS Access or Excel for list generation and very similar and simple spreadsheet type tools for post campaign analysis.

Main Marketing Metric: Since the focus noted above is reactive and post campaign focused, the main metric almost obsessed on by organizations at this marketing capability level is response rates (vs. true sales lead creation rates and actual conversion rates).

Bottom Line with Shotgun marketing organizations: With approach you save $$ by relying on very unsophisticated marketing personnel, processes, technology but this approach rarely produces a high marketing ROI with response rates generally in the 1-2% range due to the inherent high outbound volume. This approach also annoys customers and marketing recipients with mostly irrelevant offerings, products, services, etc., customer risking opt-outs, complaints, ignoring any/all offers by customers/prospects from the same (annoying) company, etc.

Level 2: Segment Marketing
Level 2 Capability: Segment Marketing
Segment Marketing Practices

Segment Marketing Practices

The 2nd level of marketing capability, is Segment Marketing. These organizations have the following organizational characteristics:

Primary Marketing Focus: The primary focus for these organizations is to ensure that the right marketing and sales offers are deployed against the appropriate segment group in order to ensure a marketing lift vs. shotgun marketing practices. An example of this is sending the frugal buyer segment offers for saving $$ by buying quantity of product or by sending offers for products that are discounted (i.e about to be discontinued products) vs. full price products.

Marketing Proactivity, Analysis Main Focus: The main orientation and focus for organizations at this level is generally what I call a ‘retrospective plus’ organization whereby the main focus is post campaign execution analysis and determining the quantitative results (response metrics, plus  perhaps ROI metrics) PLUS the main root cause analysis as to why the campaign yielded in these quantitative results.

Primary Marketing Technology Enabler: At this level of marketing capability, technology in use is fairly sophisticated such as using SAS for building segment models and customer deciles and tools for campaign execution like Salesforce.com and post campaign analysis tools like Adobe and Tableau.

Main Marketing Metric: Since the focus noted above is quasi-reactive and post campaign, the main metric  obsessed on by organizations is overall campaign and segment level response rates as well as ROI if the organization has built a direct response attribution model for campaigns (matching campaign responses to actual customer purchases).

Bottom Line with Segment marketing organizations: By utilizing this approach you spend more $$ by relying on somewhat sophisticated marketing personnel, processes and technology.  This  approach also produces a higher marketing ROI than basic shotgun marketing with response rates generally greater than the 3% range. This approach also ensures segments and marketing recipients within those segments are receiving mostly relevant offerings, products, services, etc. in respect to their needs, wants, preferences, etc.

Level 3 Capability: 1-to-1 Marketing
Level 3 Capability: 1-to-1 Marketing

1-to-1 Marketing Practices

The 3rd level of marketing capability is 1-to-1 Marketing. These organizations have the following organizational characteristics:

Primary Marketing Focus: This strategy strives to ensure that the right marketing and sales offers are deployed against the appropriate individual customer (vs. segment groups)  in order to ensure additional marketing lift vs. segment marketing practices. An example of this is recommending a product that uniquely suits and individual customer’s needs when they are your website for another reason (customer service, billing, warranty claim, etc.).

Marketing Proactivity, Analysis Main Focus: The label is place on organizations at this capability level is generally what I call a ‘proactive predictive’ organization whereby they are recommending items to customers in real-time based on their specific needs profile. The analysis focus of this type of organization is real-time algorithmic learning by analyzing the effect of the real-time offers and then adapting algorithms to further refine the offer (e.g. slightly different product, slightly different price, better warranty coverage, etc.)

Primary Marketing Technology Enabler:  The technology in use for 1-to-1 marketing is very sophisticated and correspondingly expensive.  The goal is to use artificial intelligence for building individual customer profiles based on observed customer behavior.  Automated response engines are then used for real-time customer interactions and offer generation as well as ‘adaptive learning’ algorithms based on offer acceptance/rejection.

Main Marketing Metric: Since the focus noted in 1-to-1 marketing is proactive and real-time, the main metric is customer longitudinal behavior and associated key metrics like lifetime value, loyalty rates, etc.

Bottom Line with 1-to-1 marketing organizations: With this approach you spend a great deal more $$ up-front by relying on very sophisticated artificial intelligence with automated customer analytics and offer engine technology.  This approach does produce a much higher marketing ROI than segment marketing with response rates conservatively greater than the 8-10+% range.  This approach also ensures customers and marketing recipients are receiving extremely relevant offerings, products, services, etc. in respect to their needs, wants, preferences, etc.

Level 4 Capability: Customer Defined Marketing

Level 4 Capability: Customer Defined Marketing

Customer Defined Marketing Practices

Customer Defined Marketing Practices

The 4th level of marketing capability is The Customer Defined Marketing (& Experience). These organizations have the following organizational characteristics:

Primary Marketing Focus: The primary focus here is to ensure, for those customers who are willing to co-define their own experience with your company and brands, that there is an opt-in conduit whereby customers can self-define what type of marketing and customer experience they will have across all touch-points. Examples of this is allowing customers to define, through their own personalized ‘preference portals’, customer experience parameters such as the following:

1) Their tolerable periodicity of how often they want to be marketed to;

2) Selecting the channels they prefer for marketing, customer service, product recalls, etc. ;

3) Preferred time of day, week that they would like to receive marketing, communications;

4) When it is warranted to override their current opt-out settings (i.e. critical product defects notifications).

5) The specific types of content customers are interested in subscribing to;

6) The types of offers customers would like to receive – closeouts, higher end products, types of products/services, etc.;

7) …Many more customer defined parameters.

By enabling these customer-defined preferences above, you are approaching 100% in terms of ensuring the customer receives the right offer, by the right channel, at the right time, etc.

Marketing Proactivity, Analysis Main Focus: The main orientation and focus for organizations at this level of (future) capability is generally what I call a ‘proactive, holistic, continuous’ organization whereby the company is continuously seeking to deliver the desired customer experience with the goal from each customer is rating the company as being rated as extremely open, engaging, encouraging proactive listening, is a good and reliable brand partner, drives high levels of customer satisfaction, etc.

Primary Marketing Technology Enablers: With this level of marketing capability, the technology is not as sophisticated (or expensive) as in 1-to-1 marketing, but requires a paradigm shift back to aligning with the basic premise that the customer is always right and enabling customers to self-define their preferred marketing and overall customer experience through preference portals (enabling the self-defined experience) and through business process rule workflow engines like Pega Systems to deliver the customer defined experience.

Main Marketing Metric: Since the organizational orientation as noted above is proactive and continuous, the main metric almost obsessed on by organizations at this marketing capability level will be ongoing levels of customer engagement, satisfaction and loyalty.

Bottom Line with Customer Defined Marketing (& Experience) organizations: With this approach you spend less $$ by relying on sophisticated marketing personnel, processes, and technology.  The strategy  is expected to produce a much higher marketing ROI than all other marketing capability levels by enabling the customer defined experience and inherently having 100% accuracy rate (customer defined needs/preference = delivered customer marketing/experience).  This approach also ensures customers and marketing recipients are receiving TOTALLY (self-defined)  relevant and preferred offerings, products, services, and communications.

In implementing this solution, companies will have to take into account the following considerations:

1) Not all customers will want to opt into defining their own experience. By using lucrative opt-in incentives companies have been able to achieve nearly 70% participation rates by customers. The remaining customers can be managed by simultaneously utilizing any of the two previous capability levels of segment marketing and/or 1-to-1 side-by-side with customer defined marketing.

2) Delivering a unique customer experience, once defined, will be difficult. By utilizing automated work-flow and business rules engines in conjunction with marketing automation and service automation tools, pathways (e.g. customer use cases) can be set up to automatically deliver the desired customer experience for sets of customers with the same defined preferences.

3) The customer really doesn’t know what they want. I constantly hear  from business leaders and CxOs that the customer doesn’t really know what they want/need so why waste the time and expense to ask them. These are the same executives who are shocked when I provide customer insights or focus group feedback that consistently and totally contradicts their own perception of how the customer perceives their company and brand(s). I applaud the business leader brave enough to ask for these insights since the majority of business leader tout their great pulse on their customer base to internal stakeholders without ever validating these claims with actual customers. In addition, customers today are extremely savvy, sophisticated and aware and want to be in control of their own company/brand experience.

4) Customer won’t really spend the time to tell us what they need/want. A customer insights group I helped developed has 5,000 current members who are required to volunteer several hours a week providing a Tier 1 US bank with feedback on different pre-market launch products, services and approaches. There are another several thousand on a waiting list waiting to join this insights group to volunteer several hours a week to provide company/brand insights. Additionally, the loyalty level of this insights group toward the bank is 57% higher than non-members with members providing verbatim feedback on their participation in the insights group as follows:

1) “Finally a bank that listens to its customers”

2) “We consider bank {xyz} to be a great brand partner”

3) “{xyz} bank totally breaks the paradigm of most ivory tower banks just throwing products at you to buy, they actually care about our opinions and listen to us”

4) “They actually give us feedback on how our suggestions are shaping their future products and services – WOW!”

Therefore, the bottom line is that customers today are very eager to become a brand-partner provided you ask them, allow their direct company-brand participation.

Expected Marketing ROI Per Capability Level
Expected Marketing ROI Per Capability Level

The above graphic points to the fact that, with every increase in marketing sophistication and accuracy in providing your customers and prospects what they need/prefer, the increase in ROI also rises dramatically. The holy grail of this is the practice of Customer Defined Marketing and the abandonment of the expense and exercise of hypothesis building and refinement (iteratively guessing at what your customers want/need) and simply providing a conduit in order that your customers tell you precisely what they want/need/prefer. My research has shown that over 70% of a typical sophisticated customer base is more than willing to tell you what they want/need from your company.

Join the ranks of market leader like Wells Fargo, Marriott, Southwest Airlines, Ritz-Carlton, Bank of America and many more joining the customer defined experience future who query their customers on their wants, needs, preferences, likes/dislikes, etc.

Therefore, instead of your company spending a great deal of $$ on ever more sophisticated hypothesis building (intelligent guessing) what your customers want and prefer, just simply ask them and join the ranks of these market leaders that are participating in the emerging practice of the future – the customer defined experience.

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The Marketing ROI Calculator – The Simple & Proven Formula for Calculating True Marketing Cost, Value and ROI

Put Your Marketing Team & Your Marketers on Notice! Your company will start using this proven formula to measure true marketing ROI !!

Introducing…The Marketing ROI Calculator – The Simple & Proven Formula for Calculating True Marketing Cost, Value and ROI !!

  1. Having trouble figuring out the value of your marketing efforts?

  2. Need a proven formula to calculate true marketing ROI?

  3. Want to continue marketing efforts that work and provide net income and abandon those efforts that are a net loss?

  4. Seeking to implement an improved world-class and six sigma marketing process to increase your marketing effectiveness while decreasing your marketing costs?

If you answered “yes” to any one of these questions, read the rest of this blog that delivers the true marketing ROI formula to help develop measured ROI driven marketing!

{Note: this is just one of many formulas variants I have developed for calculating marketing ROI and the actual one to implement will depend on the type of marketing you are performing}. 
The Marketing ROI Dilemma

The Marketing ROI Dilemma

Before we get into the main marketing ROI formula, I want to point out a relevant quote and sentiment from John Wanamaker who was an American merchant, civic and political figure, considered by some to be a pioneer in advertising and marketing. To that end and related to this topic, John Wanamaker once had a famous quote to illustrate his frustration with the inability to determine if his marketing and advertising spend was truly effective and if it was producing the expected ROI. This famous quote is as follows:

John Wanamaker &amp; His Famous Marketing &amp; Advertising Quote

John Wanamaker & His Famous Marketing & Advertising Quote

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The following blog content is focused on introducing the proven formula, in use by some advanced marketing companies across the US, for calculating marketing and campaign ROI designed to drive sales orders. The marketing ROI formula will be broken down in sections and then by individual fields. We will cover how the formula is used, what internal six-sigma marketing processes need to be put in place to support the population of this formula and how each field is calculated or derived.

Introducing the Tried and True Full Marketing ROI Formula:

Complete Marketing ROI Formula

Complete Marketing ROI Formula

This formula consists of a pre-launch campaign section illustrated in yellow above and a post-launch campaign section for the entry/update of actual campaign post-launch effectiveness and ROI.

Let’s now review each section in detail as follows: Pre-Launch ROI formula section:

Campaign Pre-Launch Marketing ROI Formula

Campaign Pre-Launch Marketing ROI Formula

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The first column of the pre-launch marketing ROI formula (“Campaign Number”) should be a uniquely identifiable campaign number or code being updated from your marketing automation system and the 2nd column (“Campaign Description”) should be the main goal of the marketing campaign (Customer: acquisition, retention, up-sell, cross-sell, branding or awareness, urgent business alert of crisis communication, etc.).

The 3rd column of the pre-launch marketing ROI formula (“Campaign Quantity”) is the campaign quantity being delivered to your customer audience (i.e. number of e-mails being delivered, mail, texts, etc.)

Campaign Quantity

Marketing Campaign Quantity

The 4th column of the pre-launch marketing ROI formula (“Materials and Labor Cost”) is critical to the ROI formula and will likely require a few marketing process changes, as well as IT system changes. A true six-sigma structured process marketing environment will require your company to track all labor hours and materials cost associated with the planning, development and launching of any and all campaigns. This requires that you create a work breakdown structure (WBS) to appropriately track hours and materials associated with each campaign you conduct. By doing this you will finally have the fully loaded cost for each campaign such as creative hours spent, strategy planning time, cost of materials (for direct mail, outsourced text or e-mail, etc.). The cost shown is the per-unit cost to send the campaign or 34 cents for each delivered campaign item.

Marketing Materials & Labor Cost

Marketing Materials & Labor Cost

The 5th column of the pre-launch marketing ROI formula (“Total Mktg. Cost”) is merely the unit cost expanded out to the total cost of the campaign (10,000 x. 34). If your delivered item is a single unit campaign quantity like web landing page, your campaign cost simply becomes the total labor hours used to develop this page and you can skip both columns 3 & 5.

Total Marketing Cost

Total Marketing Cost

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The 6th and last column of the pre-launch marketing ROI formula (“Plan Campaign Dates”) is the expected campaign execution dates that the orders (shown in the post campaign section) will be tracked against this particular campaign.

Planned Campaign Dates

Planned Campaign Dates (that orders will be tracked against)

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Let’s now review the last section of the marketing ROI formula in detail as follows: Post-Launch ROI formula section:

Campaign Post-Launch Formula

Campaign Post-Launch Formula

The first column is the actual campaign dates that the campaign executed in order to compare it to the planned campaign dates

To obtain the 2nd column of the post-launch marketing ROI formula (“# of Orders”) will require your company to develop the process of direct campaign attribution so that when customers order an item based on a campaign, those customers are incented to provide the campaign code (e.g. in exchange for a small discount) they viewed that drove them to order the item. By making this marketing process change, you have a direct way to track which campaigns drove which orders, by how much, etc. Car rental companies are excellent at this since every coupon is tracked with an encoded code such that they know exactly where the coupon was obtained, what campaign it was associated with, etc.

Number of Orders Associated with Campaign

# of Orders

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The 3rd column of the post launch marketing ROI formula (“Actual RR %”) is the redemption rate (RR) or simply the number of orders driven by the campaign, divided by the campaign quantity launched (column 3 of the pre-launch form).

Rate of Return for Campaign

Rate of Return

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The 4th column of the post launch marketing ROI formula (“Avg. Order Sold”) is the average order sold which is populated by your order system and is simply the total value of all orders divided by the number of orders. In this case the total of all orders is equal $2,175 (this becomes the 4th column, “Bookings”) divided by 15 orders = $145 average per order.

Average Order Sold (AOS) $$

Average Order Sold $$

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The 5th column of the post launch marketing ROI formula (“Bookings $$”) is simply the number of orders multiplied by the average $ per order or, in this case, 15 orders x $145 per average order = $2,175.

Bookings $ from Orders

Bookings $ from Orders

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The 6th column of the post launch marketing ROI formula is the Average Cost of Goods Sold (“COGS %”). In this case, the company has calculated that, historically, the cost of an average order is approximately 30% of an orders value. Another way to state this is that average margins are 70% and 30% is the cost to produce an order.

Cost of Goods Sold (Avg.) %

Cost of Goods Sold (Avg.) %

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The 7th column of the post launch marketing ROI formula (“COGS $”) is simply the COGS sold percentage (30%) multiplied by the total bookings $$ value ($2,175 x 30%) = $652.50

Cost of Goods $$

Cost of Goods $$

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The 8th column of the post launch marketing ROI formula (“Contribution $$”) is where we finally calculate the total ROI of the campaign via this simple 2 step process:

  1. Add the cost of the labor to produce the campaign as calculated in column 5 of the pre-launch formula to the cost to produce the orders that the campaign specifically drove.

  2. Subtract the total value of orders from #1 above.

Using the example shown in the full marketing ROI formula above, we first add the pre-launch materials and labor cost of $3,400 to a Cost Of Goods Sold (COGS) cost of $652.50 = ($3,400 + 652.50) = $4,052.50 We then subtract this total campaign cost from total bookings value of $2,175 = -$1,877.50.

Contribution $$

Contribution $$

The 9th and final column of the post launch marketing ROI formula (“Cost Per Order”) is simply the total number of orders divided by column 7 (“Contribution”) to determine how much each order is benefitting or costing the company when produced. In this case it is a contribution of -$1,877.50 divided by 15 = -$125.17.

Cost Per Order

Cost Per Order

Per the last section, it is important to note that, the greater the number of orders, the more likely the cost will go from a negative contribution to a positive. This occurs because you have generated enough bookings $$ to exceed the cost of the overhead associated with the labor cost to develop and launch the campaign.

Break even for this campaign would be to sell at least 34 orders where the contribution finally turns positive of $51 and the cost per order becomes +$1.50. Selling beyond 34 orders becomes pure profit for the campaign and adds to the bottom line contribution.

This sample below shows the equation using break even orders (“# of Orders”) of 34:

Campaign Break Even Example

Campaign Break Even Example

I have helped numerous companies across the US implement, not only the marketing ROI formula/equation, but an entire world class & six-sigma marketing process that accompanies the ROI formula.   Implementing this six-sigma marketing process includes implementing a marketing and campaign work breakdown structure (WBS), campaign tracking codes, a set of governing marketing performance metrics and benchmarks and much more.

Once this six sigma process architecture is in place, companies are able to implement a full closed loop marketing process and enable full marketing ROI and effectiveness tracking for any/all marketing initiatives and programs as well as the associated marketing campaigns. In addition to those benefits, companies experience an increase their marketing process repeat-ability and predictability as well as automation of numerous manual marketing tasks, leading to decreased marketing costs and decreased marketing cycle time.

The Basic S4 (S**4) Building Blocks to Creating and Implementing an Effective Customer Strategy

4S - Customer Strategy Building Blocks

4S – Customer Strategy Building Blocks

 

The following blog article will succinctly and effectively answer the following questions as related to developing and deploying an effective customer strategy:

  • What are the basic building blocks of an effective customer strategy ecosystem?

  • What is the function of each process in this customer delivery ecosystem?

  • What are the critical questions that must be answered by each function in this ecosystem?

  • How can you develop an effective customer strategy that delivers maximized customer satisfaction simultaneous to maximized profitability?

  • What is the checklist to ensuring your customer strategy and delivery is effective?

The Building Blocks of the Customer Strategy Life Cycle

The Building Blocks of the Customer Strategy Life Cycle

 

Above are the basic building blocks to delivering an effective customer experience.  Each process is designed to work in an ongoing continuous ecosystem (loop) in order to deliver a personalized customer experience that matches the customer’s current and future needs, preferences, etc.

Let’s examine each process and how it supports the overall infrastructure model.

  • Segment – the analogy for the segment process is that the more and differentiated customer knowledge you have, the better you will be able separate customers into unique needs groups in order to deliver a unique experience that they truly value.

  • Separate – Once you have effectively segmented your customers and prospects into unique needs groups, you can then start to separate them in order to deliver differentiated and 1-on-1 treatments that are uniquely valuable to each of those customer segment groups.

  • Satisfy – The next step in the process is to deliver content and programs that deliver value, not only to the needs of the overall segment group, but also delivers value to every customer sub-segment within the overall segment group via program sub-segment delivery structures. This is accomplished by delivering customized 1-to-1 customer programs that effectively leverage the unique customer insights gathered (history, needs, preferences, likes, dislikes, previous pain points, etc.).

  • Stratify – The last step in this foundational process is to develop program that migrate customers from low value segments to ever increasing higher value segments. The goal of this process to increase customer’s overall spend, overall share of wallet with the company and overall loyalty and brand ‘stickiness’ such that migrating to a competitor and defecting becomes increasingly difficult. In addition, the migration of customer to higher value segments should also increase the customer’s brand advocacy ranking such that there is a correlation between higher value customer segments and their likelihood to be more likely brand super-advocates {see blog on this topic titled “Achieving Market Leadership by Effectively Managing Customer Loyalty and Advocacy ” : Achieving Market Leadership by Effectively Managing Customer Loyalty and Advocacy  }

The 4S Customer Capabilities

The 4S Customer Capabilities

 

Critical Questions Answered by Each Process in the Above Customer Delivery Ecosystem:

  • Segment – What specific data elements and insights can we leverage or collect to increase our ability to develop unique customer treatment groups.

  • Separate – Which customer groups does it make sense to develop and deliver differentiated treatment strategies based on profitability models?

  • Satisfy – What are the optimal customer treatment strategies that can simultaneously optimize customer profitability, loyalty, brand advocacy and customer growth objectives?

  • Stratify – How do we deliver a progressive and tiered customer program to differentiate ourselves vs. our competitors and grow our market share?

Summary: You might read many complex articles on what a good customer strategy should be based on, but the above basic foundational building blocks are a simple way to start thinking about your customer ecosystem and what corporate capabilities need to be put in place to deliver effective customer and market success.

Aligning Market Insights & Trends to Customer Strategies & Priorities

Does Your Company Ever Grapple with how to answer the Following Questions related to the market you operate in and your customers?:

  1. What is the size of the potential pool of new customers and which are the best customers to acquire?

  2. Which customers are your most profitable and how do you get other customers to grow and become part of your top ( and most profitable) customer segment group?

  3. What is your current customer share of wallet (SOW) as compared to your competitors and what does driving small incremental increases in your customer SOW do to your overall revenue?

  4. What are the shifting attitudinal and behavior patterns of your customer market and how do you develop a strategy that ‘gets in front of’ these trends?

  5. What are the shifting customer demographics of your marketplace as well as the underlying shift in spending habits

  6. What are the changes in customer preferred marketing channels as well as trends that might impact customer loyalty strategy

Market Insights and Trends Drive Customer Strategy, Programs

Market Insights and Trends Drive Customer Strategy, Programs

 

The above charts illustrate why it is critically important to have clear and accurate insights into your new customer market potential/pool as well as the current customer base and their share of wallet.

The chart above (left side) details the trends for new customers by segment as compared to current customers.

The chart above (right side) illustrates which customers drive the current percentage of revenue in order to understand how customer priorities and strategy should be defined.

Critical Insights: Top Customer, Top Profitable Customers and Customer Share of Wallet vs. Competitors

Critical Insights: Top Customer, Top Profitable Customers and Customer Share of Wallet vs. Competitors

Market Spend Insights Can Be Transformational in term of goal setting

The above graphic illustrates how share of wallet changes drive bottom line revenue as well as converting customers into more loyal top customers.

Customer Attitudinal Trends Insights Are Critical to Customer Strategy

Customer Attitudinal Trends Insights Are Critical to Customer Strategy

Understanding your market & customer behavior insights is crucial to your company’s survival

The above graphic demonstrates a deep understanding in the shifting attitudinal and behavior patterns of the customer market

Customer Market Buying Power Insights are Crucial For Developing a Coherent Customer Strategy

Customer Market Buying Power Insights are Crucial For Developing a Coherent Customer Strategy

The above chart illustrates a company capability to understand shifting demographics as well as the underlining shift in spending habits per demographic group

Understanding Key Customer Behavior & Preferences is a Customer Strategy Imperrative

Understanding Key Customer Behavior & Preferences is a Customer Strategy Imperrative

The above chart illustrates a company capability to understand the changes in marketing channels as well as trends that might impact customer loyalty strategy

Customer Strategy: An Alignment of All Customer & Market Insights to Maximize Market Dominance & Profitability

Customer Strategy: An Alignment of All Customer & Market Insights to Maximize Market Dominance & Profitability

Once Customer and Market Insights are fully embraced, an Effective Customer Strategy can be developed that includes optimizing market channel selection, as well as contact and loyalty strategy program components

Blog Summary: In order to achieve the above insights, your company must develop and deploy the following strategic capabilities and delivery programs:

  1. Market sizing & trend insights

  2. Customer revenue and profitability insights analysis

  3. Customer share of wallet and competitor spend insights delivery capability

  4. Market trend & consumer attitudinal and behavior change longitudinal analysis

  5. 360° customer needs and preference cultivation that enables a personalized customer experience strategy and delivery (i.e. preference portal customer selection of preferred channels, content types, offer types, frequency of content delivery by content type.)

Below is a list of companies where I have helped develop these programs and are considered world-class in these practices:

  • Johnson & Johnson

  • Capital One

  • Amazon

  • American Express

  • Kelloggs

Win a Customer for Life by Employing the 5 R’s of Customer Loyalty

 

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The 5 “R’s” of Customer Loyalty

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Ensure Your Company is 5 “R” Customer Compliant

Following the 5 R’s of Customer Loyalty Will Enable Your Company to Attract and Keep Customers for Life

 

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Ensure Your Company is Customer R-Reliable

 

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Top Steps to Ensuring Your Company is R-Reliable

The First “R” of Customer Loyalty Is Setting High Quality Customer Standards (External) and Goals (Internal) and then Delivering on that Customer Promise for Each and Every Customer Interaction as well as the overall & long-term customer relationship

 

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Example of How a Company Demonstrates Customer R-Reliability

 

 

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Example of How a Company Demonstrates Customer R-Reliability (continued)

 

 

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Ensure Your Company is Customer R-Responsive

 

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Top Steps for Your Company to Become Customer R-Responsive

 

The 2nd “R” of Customer Loyalty Is Ensuring That Customer’s Expectations Are Met: Needs, Concerns, Quality, Cycle Time Expectations, etc.

 

Example of How a Company Demonstrates Customer R-Responsiveness

Example of How a Company Demonstrates Customer R-Responsiveness

 

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Example of How a Company Demonstrates Customer R-Responsiveness (continued)

 

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Ensure Your Company is Customer R-Recognizable

 

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Top Steps for Your Company to Become Customer R-Recognizable

The 3rd “R” of Customer Loyalty Is Ensuring That Your Brand and Company has Distinctive and Positive Characteristics such that it drives positive emotions (driving repeat business, customer referrals, word-of-mouth adverting, etc. 

 

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Example of How a Company Becomes Customer R-Recognizable

 

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Example of How a Company Becomes Customer R-Recognizable (continued)

 

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Ensure Your Company is R-Relationship Oriented

 

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Top Steps for Your Company to Become Customer R-Relationship Oriented

The 4th “R” of Customer Loyalty Is Ensuring That Your Brand and Company develops a high quality and mutually beneficial relationship with your customers based on mutual respect, customer insights, an ongoing and open dialogue and a model that encourages a partnership between your brand & company and your customers 

 

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Example of How a Company Demonstrates That It Is Customer R-Relationship Oriented

 

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Example of How a Company Demonstrates That It Is Customer R-Relationship Oriented (continued)

 

 

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Ensure Your Company is Customer R-Rewarding

 

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Top Steps for Your Company to Become Customer R-Rewarding

The 5th “R” of Customer Loyalty Is Ensuring That Your Brand and Company rewards mutually beneficial customer behavior (greater share of wallet, spend, brand partnership activities, etc.) such that it drives further and longer-term customer loyalty.

 

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Example of How a Company Demonstrates Customer R-Rewarding

 

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Example of How a Company Demonstrates Customer R-Rewarding (continued)

 

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Is Your Company Ready to Take the 5 “R” Pledge?

SUMMARY: If you take the pledge above to adhere to the 5 R’s of customer loyalty, you will enhance your ability to attract and retain customers for life. Key to this is developing the capabilities to be best in class for each “R” and ensuring that you are (cost effectively) maintaining a major qualitative advantage in each customer R vs. your competitors.

The Top 3 Myths (vs. Reality) Associated with Customer Loyalty and Customer Loyalty Programs

Customer Loyalty Myths vs. Reality

                                 Customer Loyalty Myths vs. Reality

The Top 3 Myths Related to Customer Loyalty & Customer Loyalty Programs

The Harsh Reality About Customer Loyalty

                          The Harsh Reality About Customer Loyalty

Achieving High Degrees of Customer Loyalty is Even More Elusive Than Ever

The Harsh Reality About Customer Loyalty - Continued

                          The Harsh Reality About Customer Loyalty – Continued

 

Customer Loyalty is Declining Across the Board for Many Industries

Revealed: Root Causes for Customer Defection

                             Revealed: Root Causes for Customer Defection

 

Why Customers are Defecting to Other, Competitor Companies

Customers Feedback on the Major Factors that Drive Their Continued Loyalty

           Customers Feedback on the Major Factors that Drive Their Continued Loyalty

What Factors Drive Customer Loyalty The Most

 

Myth #1: Understanding Customer Satisfaction is Enough to Predict Loyalty

 

Customer Satisfaction is Only One Insight in Determining both Short-Term and Long-Term Customer Loyalty

Customer Satisfaction is Only One Insight in Determining both Short-Term and Long-Term Customer Loyalty

Holistic Insights You Must Have to Drive Effective Customer Loyalty Programs – Part 1

Customer Satisfaction is Only One Insight in Determining both Short-Term and Long-Term Customer Loyalty - continued

Customer Satisfaction is Only One Insight in Determining both Short-Term and Long-Term Customer Loyalty – continued

Holistic Insights You Must Have to Drive Effective Customer Loyalty Programs – Part 2

 

360° Loyalty Insights Enable High Degrees of Loyalty

                           360° Loyalty Insights Enable High Degrees of Loyalty

Effective Customer Loyalty Programs Are Highly Tailored Based on Multi-Dimensional Customer Loyalty Insights Shown Above

 

Customer Loyalty Management is Multi-Dimensional

Customer Loyalty Management is Multi-Dimensional

Effective Customer Loyalty Programs are Multi-Dimensional in Their Approach and Focus on Many Program Objectives

Customer Loyalty Management is Multi-Dimensional

 

Customer Loyalty is Established & Maintained by Nearly Every Department within the Company

Customer Loyalty is Established & Maintained by Nearly Every Department within the Company

Customer Loyalty is Everyone’s Responsibility within the Company

The end

 

Marketing Master Calendar Development Best Practices

How to Supercharge your Marketing Operational Effectiveness

Integrated Marketing Planning Calendar

Integrated Marketing Planning Calendar

Having developed numerous marketing master calendars for Fortune clients world-wide, here are top 10 lessons learned & best practices for developing a marketing planning master calendar:

1) All involved marketing & supporting departments must have input into the development of, and be fully represented on the master marketing calendar.

2) All the departments represented on the calendar in must understand their responsibilities, deliverables, due dates, inter-dependencies with other departments as well as the metrics that they are being held accountable for in each step in the process.

3) Process Service Level Agreements (SLA’s) shall be in place for each process handoff such that the overall calendar timeline retains tactical delivery integrity.

4) The calendar must be chronologically intuitive (flow left to right for each sequential major marketing event).

5) Process details must be developed for each major milestone represented on the marketing calendar.

6) A process step owner must be identified for each process step with clear articulation of their responsibilities.

7) Calendar post-event reviews must capture marketing event & campaign lessons learned, planned vs. actual metrics, customer feedback, etc.

8) An actively managed marketing best practices knowledge base must be maintained to capture & propagate captured calendar relevant & other best practices & lessons learned to all stakeholders.

9) Marketing executive sponsors & steering committee members must play a role in the development & execution of the master marketing calendar.

10) Periodic calendar process reviews must be conducted to ensure the calendar & critical processes on the calendar are as efficient & effective as possible.

The following are Master marketing calendar and planning best practices examples that I developed for several Fortune 500 clients as represented by this one (of several examples):

 Integrated Marketing Planning Calendar

Integrated Marketing Planning Calendar

A Best Practice Master Marketing Calendar Represents All Major Events, The Critical Timeline and Major Calendar Development Participants and Stakeholders

 

Assessment of Current Marketing Capabilities

             Assessment of Current Marketing Capabilities

A Very Honest Assessment of the Current State Marketing Capability along with Gaps and Development Needs is Critical for Future Process Improvements

Integrated Marketing Planning Solution

               Integrated Marketing Planning Solution

A Future-State Solution Vision Must Be Established in Order to Achieve Future State Capabilities

Marketing Business Outcomes Meeting Summary

        Marketing Business Outcomes Meeting Summary

For Each Meeting on The Marketing Master Calendar, Critical Outcomes must be determined for each Calendar Development Meeting Along with Identification of the Meeting Key Owner

Marketing Master Calendar Development Stakeholder Responsibilities

Every Stakeholder and Responsible Leader Must Be Represented on Marketing Master Calendar Development Meeting Master List

Marketing Planning Event Cadence Map

                  Marketing Planning Event Cadence Map

Clearly Defined Responsibilities and Outputs Must Be Defined for Each Marketing Calendar Channel

Marketing Roles & Accountability

                       Marketing Roles & Accountability

Clearly Defined Accountability Must Be Defined for Marketing Calendar Development

Marketing Roles & Accountability for Each Functional Area

Marketing Roles & Accountability for Each Functional Area

Clearly Defined Accountability Must Be Defined for Marketing Calendar Development

Clearly Defined Accountability Must Be Defined for Each Functional Area

Clearly Defined Accountability Must Be Defined for Each Functional Area

Clearly Defined Accountability Must Be Defined for Each Functional Area (left Blue Boxes) in the Marketing Calendar Development Process

Marketing Critical Success Factors

                Marketing Critical Success Factors

Critical Success Factors Must Be Identified in the Master Marketing Calendar Development Process

Marketing Meeting Summary & Next Steps

         Marketing Meeting Summary & Next Steps

Summary Actions & Next Steps Must Be Identified in the Master Marketing Calendar Development Process

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