How to Make Personalization Work in a Privacy-Conscious World

In my last post, I wrote that it's time for marketers to rethink their approach to personalization. The value of personalized marketing has been widely recognized for nearly two decades, and most marketing pundits are recommending that marketers expand their use of personalization. They contend that marketers should make personalization more specific and use it more frequently, in more channels, and for more types of communications and experiences.

The problem with this "more personalization" approach is that it fails to account for widespread and growing privacy concerns among both consumers and business buyers. Personalized marketing will not reach its full potential unless marketers use an approach that addresses these privacy concerns. Simply increasing the use of personalization will be ineffective at best, and may do more harm than good.

Personalization has been the subject of numerous research studies over the past few years, and these studies provide a good picture of what is required for personalized marketing to produce maximum results. There are three major components of an effective personalization strategy.

Make Personalization Useful

The first requirement for effective personalized marketing is that it must deliver meaningful and pragmatic value to the recipient. A 2018 study by Gartner/CEB documents the business value of personalization that is perceived by customers and prospects to be helpful. I've previously discussed this research, so I won't repeat that material here. For a more detailed description of the Gartner/CEB study see this post.

Make Personalization "Relationship-Appropriate"

The second component of an effective personalization strategy is to use a level of personalization that is appropriate for each customer or prospect. By appropriate, I mean that the level of personalization should match the real-world status of the relationship. A message or offer sent to a long-time customer can and should be more personalized than a first outreach to a new prospect.

To be effective, personalized marketing must be based on genuine insights about your customers and prospects. When you take personalization beyond such insights, it becomes inauthentic and will tend to be perceived as presumptuous. Corporate Visions recently conducted a field trial involving this principle, and you can read more about that research in this post.

Get Meaningful Permission for Personalization

Much of the concern about data privacy and personalization revolves around the issues of transparency and control. Many consumers and business buyers aren't confident they know what personal data companies are collecting about them or how that data is used. And many feel they don't have any meaningful control over those data practices.

Several recent research studies have shown how important transparency and control are for customers and prospects. For example, in a 2019 survey of 3,000 people in the U.S., Canada, and the U.K., The Harris Poll asked participants about the importance of several data privacy practices. The following table shows the percentage of survey respondents who rated four transparency and control practices as very important or absolutely essential:

These research findings point the way to the third important component of an effective personalization strategy. In a world where privacy concerns are heightened, permission is critical to successful personalized marketing. If all the research about personalization tells us anything, it tells us that most consumers and business buyers will welcome and value personalized content when it is helpful, authentic, and based on permission that is willingly and consciously given.

So, how can marketers gain this kind of permission? There are three key steps.

Use Personalization "Programs" - In most cases, personalization efforts should be organized into discrete programs, each of which is designed to provide a specific type of value to a specific type of customer or prospect. This approach leads marketers to focus on the purpose of personalized marketing from the recipient's perspective.

Invite Participation - Invite your customers and/or prospects to "subscribe" to personalized content on a program-by-program basis, and reassure them that subscribing to one program won't open the floodgates to other marketing communications.

Be Transparent - It's important to be "radically" transparent in your invitation about the details of the personalization program. The main objective of the invitation is to persuade customers or prospects to participate in the program. So it should include:

• Why the program will be useful and valuable for the recipient
• What personal information will be used, and how the information will be used
• How the personalized content will be delivered (format)
• How frequently the personalized content will be delivered
• The duration of the program
• A clear statement that the recipient has the option to "unsubscribe" at any time

It's About How - Not Whether - to Personalize 

The issue for marketers is not whether to personalize marketing content and customer experiences. The evidence is clear that customers and prospects want and appreciate the increased relevance that personalization can provide. The real issue is how to deliver personalization in a way that respects privacy. By making personalization helpful, authentic, and permission-based, marketers will reap the maximum benefits of personalized marketing.

Top image courtesy of Josh Hallett via Flickr CC.

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Four Keys to Strong Customer Relationships

A recent report by Accenture Interactive provides several interesting insights on both the fragility of B2B seller-buyer relationships and what B2B companies need to do to strengthen long-term customer relationships. Service is the new sales was based on interviews with 748 business buyers and 1,499 B2B sellers across 10 countries and 16 industries.

All of the study respondents were directly involved in (or had oversight of) their company's buying or selling strategy or processes. About 75% of the respondents were manager-level or above, and about 25% were C-level. All the companies represented in the research had annual revenues of at least $25 million.

Accenture's report opens with some rather disconcerting statistics. The research found that 44% of B2B buyers had switched sellers in the 12 months preceding the study. The percentage was even higher among buyers who made weekly B2B purchases. Sixty-two percent of those study respondents said they had switched sellers in the previous 12 months. Another 36% of these frequent buyers said they plan to switch sellers in the coming 12 months.

When Accenture asked buyers why they had switched (or plan to switch), the three top reasons - each identified by 25% of the study respondents - were:

• Uncompetitive pricing
• Long lead times for delivery/fulfillment
• Missed delivery dates

This finding indicates that business buyers are a pragmatic group, and it suggests that, before anything else, B2B sellers need to be sure they are getting the basics right.

On a more positive note, half of the buyers interviewed by Accenture said they had increased their average number of items per purchase and grown average purchase values with those sellers who met their needs and helped them succeed.

The Accenture research also sought to identify important attributes and behaviors of B2B "leaders," as compared with "laggards." The report does not provide a precise definition of "leaders" and "laggards," but it does describe how Accenture made the distinction:

"To discern the leaders from the laggards, we weighted responses to 12 questions from the sellers' survey across three key pillars of B2B transformation:  organizational strategy, activities, and infrastructure. To give a robust and accurate picture of the global state of buyer-seller relationships, greatest weighting was given to questions reflecting the objective and measurable elements of B2B sales and service."

With this "definition" in mind, here are some of the major differences between leaders and laggards that the Accenture report highlights.

Personalization - Leaders were twice as likely as laggards to track buyer behavior and more likely to make personalized offers based on "the sum of all behaviors." The Accenture study found that leaders consistently offered greater personalization at all stages of the customer journey.

Digital and Human Interactions - Laggards tended to prioritize digital sales channels over channels with a human touch. Leaders, on the other hand, emphasized interaction channels that provide a dialogue with buyers. This includes digital channels such as chatbots and traditional sales reps and call centers.

Organizational Commitment - Leaders were more likely than laggards to view customer experience as an ongoing work-in-progress rather than as a one-time effort. Seventy percent of leaders said that providing good service and experiences had been a top or high priority in their company for at least three years.

Functional Integration - Forty-eight percent of leaders said they had fully integrated marketing functions across channels, compared to only 19% of laggards. Leaders were also more likely than laggards to have partially or fully integrated their sales and marketing teams.

The Accenture report also highlighted the benefits of being in the leader category. Ninety-seven percent of the leader respondents said they had gained market share, 96% reported higher profitability, and 90% said they had won a greater share of their customers' wallets.

This research also confirmed the importance of blending digital and human-to-human interactions to build and sustain strong customer relationships.

Image Source:  Accenture Interactive

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Where Marketers are Missing the Mark with Customers

The New York chapter of the American Marketing Association has just published a research report that should be required reading for marketers. The Techlash is Here report addresses several aspects of marketing in the world's two largest economies - the United States and China. While the findings about China are interesting, this post will focus on the U.S. results.

The U.S. part of the research consisted of two quantitative surveys and several interviews with marketing leaders. One survey included 502 marketing executives - about 200 from agencies and approximately 300 from brand owners. The second survey polled 508 U.S. consumers. The consumer sample was matched to population data through weighting.

This research revealed two significant disconnects between U.S. consumers and U.S. marketers, one pertaining to social media, and one relating to the appetite for, and concerns about, new marketing technologies and practices.

The Social Media Marketing Bubble

According to Investopedia, a bubble is "created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior." The AMA New York surveys suggest that a different kind of bubble may exist in the social media marketing space.

In the consumer survey, respondents said they expect their use of social media to decline over the next three years. The net change (the proportion of respondents expecting to spend more time on social media minus the proportion who expect to spend less time) was -6%. The survey also found that Facebook use is likely to show no net growth over the next three years, while the use of Twitter, Snapchat, and LinkedIn will decline over that period.

U.S. marketers, on the other hand, plan to substantially increase spending on social media advertising over the next three years. In the marketer survey, social media generated the strongest indication of increased spending (net 68%), followed by web display ads (net 51%) and email (net 47%).

Other research has found a similar exuberance for social media among marketers. In the August 2019 edition of The CMO Survey, respondents said they expect spending on social media to increase from 11.9% of their current marketing budget to 22.5% of the budget in five years.

The Techlash is Here report describes the emerging social media marketing bubble (my term, not theirs) as follows:

"American marketers are overindexing on many social media now and plan to increase spending even as consumer use flatlines or falls off. Currently, the share of ad spend devoted to social media in America . . . is 150% of the proportion of consumer media time they receive."

The Technology Disconnect

The AMA New York surveys also investigated the attitudes of U.S. marketers and consumers about nine specific marketing/advertising technologies and techniques. In this research, between two-fifths and three-fifths of U.S. marketers said they plan to increase their use of every one of those nine innovations, as the following table shows:

A striking disconnect between marketers and consumers becomes apparent when we look at the results of the consumer survey. As the table below shows, none of the nine technologies or techniques is viewed favorably by a majority of U.S. consumers. Four of the nine did receive a favorable plurality by survey respondents, but five of the nine technologies and techniques are viewed unfavorably by a plurality of U.S. consumers.

Once again, the survey report describes the current situation in compelling terms:

"American marketers overrate the perceived positives of marketing innovations:  most expect that U.S. consumers will consistently welcome them . . . On average, nearly four out of five (78%) expect American consumers will agree with each benefit claim we tested. The proportion of marketers who say consumers will agree substantially exceeds that of consumers who do on every one of them - by an average of 27 points."

The Takeaway

The AMA New York research should serve as a wake-up call for marketers. It highlights the risks inherent in getting caught up in the hype that inevitably surrounds new marketing channels, techniques, and technologies. While this research dealt with important disconnects between marketers and consumers, many of the study findings will apply to B2B marketers and business buyers.

Marketers' exuberance for new technologies and techniques is often attributed to the fear-of-missing-out or the shiny object syndrome. This view is overly harsh, but it does contain some truth. FOMO can actually be a positive thing when it motivates us to experiment and test new tactics and tools. But if it isn't tightly controlled, FOMO can also result in bad - or at least ineffective - marketing investments.

The findings of the AMA New York research regarding personalization are particularly noteworthy. As I have previously written, marketers are facing a true conundrum regarding when and how much personalization should be used. In fact, I would argue that the personalization-privacy paradox will be an "elephant-in-the-room" issue for marketers in 2020. I'll have more to say about that in a future post.

Top image courtesy of Artura Pardavila III via Flickr CC.

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What Communication Channels Do Customers Prefer? It Depends!

Last month, the CMO Council in partnership with Pitney Bowes published the results of a study that sought to identify what communication channels consumers prefer to use when interacting with the companies they do business with.

The Critical Channels of Choice report is based on a survey of more than 2,000 consumers with nearly equal representation from five generational cohorts - the Silent Generation, Baby Boomers, Gen Xers, Millennials, and Gen Zers. Eighty-one percent of the survey respondents were from the United States, and the balance were from Canada, the UK, Ireland, and Australia/New Zealand.

This research focused on all forms of communication except advertising. While this study involved the channel preferences of consumers, it is likely that many of the research findings will also apply to business buyers.

The core finding from this study is that today's consumers across all generations want and expect the companies they do business with to provide multiple engagement channels. Eighty-five percent of the survey respondents said they expect companies to offer a blend of physical and digital communication channels. More specifically, when survey participants were asked what communication channels they expected companies to provide, the top five channels identified were:

• Email (86% of respondents)
• Telephone (65%)
• Website (53%)
• Text (52%)
• In person (48%)

Interestingly, when survey participants were asked what communication channel they couldn't live without, the two channels most frequently identified by respondents - telephone (28%) and in person (17%) - were both non-digital.

What this research also shows clearly is that consumers prefer communication channels that provide value, and that the most important elements of value are pragmatic. When survey participants were asked what makes a channel indispensable, the top three attributes identified were convenience (50%), reliability (45%), and speed (41%).

Several other recent research studies have found that consumers place most importance on the utilitarian aspects of customer experience. For example, in an earlier study by the CMO Council and SAP Hybris, survey participants were asked to identify the attributes of an exceptional customer experience. The top three choices were:

1. "Fast response times to my needs and issues" (52% of respondents)
2. "Knowledgeable staff ready to assist wherever and whenever I need it" (47%)
3. "Rewards for my loyalty and recognition of how long I have been a customer" (42%)

It's also revealing to see what these survey respondents put at the bottom of their list of important CX attributes:

• "Always-on automated service" (8% of respondents)
• "Brand-developed social communities to connect with other customers" (9%)
• "Multiple touchpoints that add value to my experience" (10%)

Participants in this study were also clear about what types of customer experiences are valuable. They want experiences that save them money (77% of respondents), save them time (49%), or make their lives easier (47%).

PwC's Future of Customer Experience 2017/18 study produced similar findings. This research consisted of an online survey and in-field interviews of a representative sample of 15,000 global consumers, 4,000 of whom were from the United States. Almost 80% of the U.S. respondents rated speed, convenience, knowledgeable and helpful employees, and friendly service as the most valuable aspects of a great customer experience.

So what does this research tell us about how customers form channel preferences. I contend there are two important points. First, the findings of the new CMO Council study make it clear that customers want the option to communicate with companies via a variety of channels. Second, customers will prefer different channels depending on what they are trying to accomplish and the other circumstances surrounding the interaction, and their preferences and choices will be driven by convenience, speed, and reliability in most circumstances.

Image courtesy of Mike Lawrence (CreditDebitPro.com) via Flickr CC.

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Despite Challenges, Marketers Remain Committed to CX Technologies

In my last post, I discussed some of the findings from a recent study by The Harris Poll and RedPoint Global. Addressing The Gaps In Customer Experience was based on the results of two surveys. One involved 454 senior marketing and customer experience executives, and the second involved 3,002 adult consumers. The participants in both surveys resided in the United States, Canada, or the United Kingdom.

As the title of the research report suggests, the primary objective of this study was to identify where and how the perceptions of marketers and consumers about the quality of customer experiences differ. I discussed some of those findings in my earlier post.

This research also provides several interesting insights about how marketers view the technologies they use to deliver customer experiences. Somewhat surprisingly, the marketers in this study view technology as essential for providing great customer experiences and as a source of major challenges.

The Strategy-Execution Gap

First, it's important to put the findings about technology in the right context. Most of the marketers in this study were satisfied with their customer experience strategy, but not with its execution. More than half (57%) of the surveyed marketers said their company has the right customer experience strategy, but isn't able to execute it effectively. An even higher percentage (63%) said their company doesn't execute its customer experience strategy "very well."

When the survey participants were asked about the challenges associated with closing the strategy-execution gap, the top three challenges identified were:

• The complexity of technology solutions (39% of respondents)
• Lack of cross-functional commitment to strategy (35%)
• The inability to integrate new capabilities with existing processes or technology (33%)

Satisfaction With Technology

On average, the marketers in the study said their company is currently using 10 customer engagement technology systems. About one in five of the survey respondents said their company is using more than 20 customer engagement systems.

The sheer number of technology systems is creating a challenge for marketers. Nearly two-thirds (65%) of the marketers in this study said the number of customer engagement systems they are using makes it harder for them to provide a seamless customer experience.

Only about a third (more or less) of the surveyed marketers were very satisfied with their ability to leverage technology to achieve several key customer experience objectives, as the following table shows:

Despite the challenges associated with CX-related technologies, marketing leaders are committed to a technology-enabled future. More than nine in ten (91%) of the marketers in this study said that investing in marketing and CX technologies is a key initiative for their company.

Twenty-one percent of the surveyed marketers said they expect the number of customer engagement systems used by their company will increase over the next year, and even more (39%) think the number will increase over the next five years.

The Takeaway

These findings make the point that marketers and other CX professionals have more work to do to capture the full benefits of marketing and other customer engagement technologies. But these technologies are evolving rapidly, so it shouldn't be surprising that marketers and other CX professionals are still learning how to maximize their value. In my view, this is to be expected, and it's not a business-threatening problem unless the "proficiency gap" becomes too great.

Top image courtesy of Rabin Pamela via Flickr CC.

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New Research Highlights Personalization, Privacy, and Customer Experience Performance

Senior company leaders in virtually all types of businesses now recognize that providing great customer experiences is a critical source of competitive advantage and a primary driver of business performance. As a result, customer experience (CX) management has become a top strategic priority in many enterprises.

Given this interest, it shouldn't be surprising that CX has been the subject of numerous research studies over the past several years. One of the best studies I've seen recently was published earlier this year by The Harris Poll and RedPoint Global.

Addressing The Gaps In Customer Experience was based on two surveys that were fielded in early 2019. One was a survey of 454 senior marketing executives residing in the United States, Canada, or the United Kingdom. This survey also included technology and customer experience executives, but I'll refer to the participants in this post as "marketers" or "marketing leaders."

All of the surveyed marketers were affiliated with companies having a minimum of $500 million in annual revenue. (Note:  The annual revenue minimum was $200 million for companies that derive more than 50% of their revenue from direct sales to end users.

The second survey involved 3,002 consumers (18+ years of age) residing in the United States, Canada, or the United Kingdom. Figures for age, gender, education, region, and employment status were weighted where necessary to bring them into line with their actual proportion in the population.

This type of study is particularly instructive and useful because it enables us to compare and contrast the perspectives of marketing leaders and consumers, and this is very valuable when the topic is customer experience. As the title of the research report suggests, these surveys found several significant gaps between marketers and consumers regarding customer experience performance.

The Performance Gap

The "headline" finding from this research was that marketers rate the quality of their customer experience capabilities significantly higher than consumers. Ninety-two percent of the marketers said their ability to provide an exceptional customer experience is excellent or good. But when the consumers were asked to think about the companies they interact with on a regular basis, only 80% rated these companies as excellent or good at providing great customer experiences.

The contrast is even greater if we look only at the "excellent" rating. Thirty-four percent of the marketing leaders gave themselves an excellent rating, but only 18% of consumers gave that highest rating.

This research used a "Customer Experience Index Score" to evaluate CX performance across four dimensions - privacy, personalization, customer understanding, and omnichannel/consistency. Not surprisingly, marketers gave themselves higher scores on all four dimensions than consumers.

Personalization and Privacy are Paramount

The findings of this study also provide compelling evidence that both personalization and privacy are of paramount importance when it comes to customer experience. In the consumer survey, 63% of the respondents said that personalization is now part of the standard service they expect, and over half (53%) said they expect a company to know their buying habits and preferences and be able to anticipate their needs.

Customer expectations for personalization have risen to the point that 37% of the consumers said they would stop doing business with a company that doesn't offer a personalized experience. And while 36% of the survey respondents said that companies are presenting them with more personalized offers and messages compared to a year ago, 73% said that companies are still struggling to meet their expectations for personalized experiences.

Consumers in this study also made it abundantly clear that privacy is a primary concern. In fact, they ranked privacy as the most important dimension of customer experience, and 41% of the survey respondents said they would absolutely stop doing business with a company that sells their data to other companies for marketing or advertising purposes without their permission.

The consumer survey also asked participants about the importance of four privacy-related actions that companies can take. The following table shows the percentages of respondents who rated each action as very important or absolutely essential:

The Harris Poll/RedPoint Global research also has several important things to say about the role of technology in providing great customer experiences. I'll discuss those findings in a future post.

Top image courtesy of citylovesyou_ffm via Flickr CC.

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The Growing Personalization Conundrum for Marketers

For more than two decades, the value of personalization has been largely unquestioned in marketing circles. Most marketing leaders now view personalization as essential to marketing success, and providing personalized marketing messages and customer experiences has become a top priority in many companies.

Several recent research studies have confirmed that marketers strongly believe personalization drives improved marketing performance, and that most are committed to making personalization a core component of their marketing efforts. For example:

• In the 2019 Trends in Personalization survey by Researchscape International and Evergage, 70% of surveyed marketers said personalization has a strong or extremely strong impact on advancing customer relationships, and more than half of the respondents said personalization produces increased conversion rates, increased visitor engagement, improved customer experience, and increased lead generation/customer acquisition.
• In the 2018 State of Marketing research by Salesforce, more than eight out of ten surveyed marketers said personalization delivers major or moderate improvements in brand building, lead generation, customer retention, customer acquisition, and customer advocacy.
• In the 2019 Digital Trends research by Econsultancy and Adobe, targeting and personalization was the second most frequently identified priority for 2019 among survey respondents from larger enterprises.

There are also several studies showing that consumers want (and increasingly expect) personalized experiences.

• In a 2018 survey of 8,000 consumers by Accenture Interactive, 91% of respondents said they are more likely to shop with brands that provide them relevant offers and recommendations.
• In a 2018 survey of more than 6,700 consumers and business buyers by Salesforce, 76% of all respondents said they expect companies to understand their needs, and 72% of the business buyers said they expect vendors to personalize engagement based on their needs.

Given these research findings, it shouldn't be surprising that many marketing pundits are now advocating the use of "hyper-personalization," which generally refers to the use of real-time data and artificial intelligence to deliver more relevant content to each recipient.

So the correct strategy for marketers is to personalize everything they can, whenever they can, as much as they can, right? Well, not so fast!

Why More Personalization Isn't Always Better

There is a growing body of evidence indicating that consumers and business buyers are increasingly concerned about privacy and do not always welcome personalized marketing. For example, in a 2018 survey of nearly 6,400 individuals in France, Germany, the U.K., and the U.S. by data security firm RSA, less than half of the respondents (48%) agreed that, "There are ethical ways in which a company can use my personal information."

When survey participants were asked about specific types of personalization, the results were even more stark, as the following table shows:

Note that more than half of the respondents in this survey believe all four of these personalization practices are unethical, not just annoying or ineffective.

Other research has confirmed that people will react strongly when they perceive personalization goes too far. In the 2018 Consumer Personalization Panel research by Gartner/CEB, survey participants were asked how they would react if a company sent them irrelevant or annoying emails. Forty-eight percent of the respondents said they would unsubscribe, and 12% said they would stop doing business with the company.

But when they were asked how they would respond if a company sent them personalized messages that were "creepy," 57% of the respondents said they would unsubscribe, and 38% said they would stop doing business with the company.

When all of the recent research is considered, it's clear that marketers are facing a Catch-22 when it comes to personalization. On one hand, most customers and potential buyers say they want personalized offers, messages, and experiences, and large majorities also say they are willing to provide personal data in order to receive such offers, messages, and experiences.

At the same time, however, most customers and potential buyers are growing more concerned about privacy, and they aren't comfortable with how companies are collecting, accumulating, and using their personal or business information.

So, how can marketers deal with buyers' inconsistent and contradictory attitudes toward personalization? How can marketers balance the benefits produced by effective personalization against the risks of creating personalized messages or experiences that buyers will perceive as intrusive, presumptuous, or otherwise "creepy?" In my next post, I'll provide a few suggestions for dealing with this growing conundrum.

Top image courtesy of Anders Sandberg via Flickr CC.

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Marketing Myopia Revisited

(The following is a post I published more than six years ago. Given the recent focus on marketing's responsibility for managing customer experiences and driving growth, the topic is as relevant and timely today as it was in the fall of 2012.)

The Original Post

In 1960, Theodore Levitt wrote a landmark article for the Harvard Business Review titled "Marketing Myopia." When it was republished in 2004, HBR editors said the article "introduced the most influential marketing idea of the past half century."

Levitt's central argument was that companies will cease to grow if they define their business too narrowly - in terms of specific products or services, rather than in terms of customer needs. In a quintessential passage from the article, Levitt explained the decline of railroads in terms that have become part of the business lexicon:

"The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones), but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business."

The "disease" that Levitt wrote about is still with us, but now, some marketers are also afflicted with another kind of myopia. This new strain of marketing myopia is characterized by an almost exclusive focus on marketing communications and the technologies that support them. As practiced in many companies today, marketing means marketing communications and not much more.

Marketing communications are certainly important, but marketing also has other responsibilities that are essential for business success.

For more than four decades, the term marketing mix has been used to describe the operational aspects of the marketing function. The term became popular in the 1960's after Neil H. Borden published an article in the Journal of Advertising Research titled "The Concept of the Marketing Mix." Borden's marketing mix included product planning, pricing, branding, distribution channels, personal selling, advertising, promotion, packaging, display, servicing, physical handling, and fact finding and analysis. E. Jerome McCarthy later grouped these ingredients into the four categories that we know today as the 4P's of marketing - product, price, place, and promotion.

The point of this brief history lesson is that marketing has long had a mandate that is broader than marketing communications (promotion). Companies can suffer when marketing ignores these broader responsibilities because, of all the major business functions, marketing is (or should be) the best suited to relate a company to its external competitive environment.

So, if you're a marketer, give these ideas some thought:

• Marketing is about communicating your company's value proposition, but it must also be about determining what those value propositions will be.
• Marketing is about communicating the important features and attributes of your company's products or services, but it must also be about determining what features and attributes your products/services need in order to be attractive to buyers.
• Marketing is about communicating your company's price-value equation, but it must also be about determining what your company's pricing strategy will be.

Marketing communications will always be a critical part of the marketing function. But marketers need to keep the other aspects of marketing in mind in order to avoid a bad case of marketing myopia.

A Brief Update

Since my original post was published in 2012, numerous research studies have reported that many marketing leaders believe they are (or soon will be) primarily responsible for managing end-to-end customer experiences. Recent studies have also shown that a growing number of marketing leaders now believe they are primarily responsible for driving business growth, and that other senior executives largely agree with that view.

It seems clear, therefore, that marketing leaders recognize that the scope of marketing's responsibilities needs to expand. It's also clear, however, that this particular transformation in marketing is still a work in progress. For example, in the February 2019 edition of The CMO Survey, only 42.4% of respondents said that marketing is leading customer experience efforts in their organization, and only 43.4% reported that marketing is leading revenue growth efforts.

Earlier this year, I published a series of posts discussing the growth challenge facing marketers, and exploring what marketers need to do to effectively drive growth. You can read more about this vital topic here:

• Have Marketers Fully Embraced the Growth Challenge?
• Both Market and Customer Expertise are Needed to Drive Growth
• Focus on "High-Yield Behaviors" to Drive Revenue Growth

Marketing myopia may be less prevalent today than it was six years ago. The big challenge now is to translate the improved "vision" into tangible actions.

Image courtesy of Rob via Flickr CC.

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What's Required for Effective Demand Generation

CSO Insights (a division of Miller Heiman Group) recently published its 2018-2019 Sales Performance Report. This report describes the findings of the 2018-2019 sales performance survey, which generated responses from nearly 900 global sales leaders.

Sixty-one percent of the respondents were either executive managers or senior sales managers, and respondents represented 23 industries. Half of the respondents (50.8%) were located in North America, and the balance were based in EMEA, APAC, and Latin America.

The CSO Insights study focused specifically on the performance of the sales function, but the survey findings provide valuable insights for everyone involved with B2B demand generation. That's because many of the factors that characterize successful sales performance also apply to the other business functions that play important roles in demand generation.

The Defining Attributes of High Performance

CSO Insights identified three defining attributes of high-performing sales organizations. The study found that respondents from top-performing organizations were more likely than other respondents:

• To say their company has a customer-centric culture
• To report they have a high level of alignment between their sales process and customers' decision-making journey
• To say they are confident in the ability of their sales reps to provide valuable insights and perspectives to potential buyers

These characteristics can be extended and applied to the other business functions involved in demand generation. For example, a marketing organization that excels at demand generation is more likely to:

• Be part of a company with a customer-centric culture
• Align its programs and messaging with the customer buying journey
• Create and use content that provides valuable insights to potential buyers

The authors of the survey report acknowledge this point when they write:  "Looking at all three of these characteristics together shows that . . . [high-performing] organizations are embracing 'customer experience' as a broad concept, of which sales process and salespeople are just one piece."

Lead Generation Needs Significant Improvement

The CSO Insights research highlights several areas where better cross-functional collaboration is needed to improve demand generation performance. One of those areas is lead generation. Survey respondents identified improving lead generation as one of their four primary objectives for the coming 12 months, and they also identified the inability to generate enough qualified leads as the second most significant barrier to achieving demand generation success.

Unfortunately, the CSO Insights report reveals a distressing lack of alignment between sales and marketing when it comes to lead generation. For example, only 29.5% of the survey respondents said their sales and marketing teams have an agreed upon, formal definition of who is a legitimate sales lead. And the level of lead definition alignment between sales and marketing has actually gotten worse since 2014, as the following chart shows.

The low level of sales-marketing alignment also shows up in lead nurturing. Only 33.9% of the survey respondents said their sales and marketing teams have an agreed upon, formal process for nurturing leads. Another 30.8% said they have an informal process - whatever that means.

The CSO Insights research provides more compelling evidence that effective B2B demand generation requires a coordinated effort by both sales and marketing, and that sales-marketing alignment is still very much a work-in-progress.

Top Image Source:  CSO Insights (a Division of Miller Heiman Group).

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Where Customer Experience Stands in 2019

Two recently-published reports paint a decidedly mixed picture of the current state of customer experience (CX) management. Most business leaders now recognize that providing great customer experiences is a critical source of competitive advantage and a primary driver of business performance. So these two reports provide an important snapshot of how far companies have come in their efforts to improve customer experiences.

Forrester's Predictions 2019

In its Predictions 2019 report, Forrester observed that CX performance has been flat for three consecutive years. The report stated that in Forrester's Customer Experience Index research, ". . . few businesses made real gains, most continue to plateau, and some fell back."

Forrester also noted that 89% of surveyed CX professionals do not believe that the ROI of customer experience is well established in their companies. As a result, Forrester predicts that 20% of companies will abandon strategic CX initiatives in 2019 and turn to price reductions to secure short-term gains.

Forrester's report describes the outlook for customer experience management in 2019 in somewhat pessimistic terms:  "There is a strategic and structural mismatch between what CX needs to do and what CX is allowed to do or is capable of doing. 2019 will see that mismatch continue to play out."

The 2019 Global Customer Experience Benchmarking Report

The 2019 Global Customer Experience Benchmarking Report by Dimension Data provides detailed insights about the state of CX around the world. This report was based on a global survey of customer experience professionals that produced 1,114 responses. Respondents were located in 59 countries across the Americas, Asia Pacific, Europe, Australia and New Zealand, and the Middle East and Africa.

I found the overall tone of this report to be fairly pessimistic, but when I reviewed the specific survey findings, I thought they painted a somewhat more optimistic - or at least a more balanced - picture.

For example, there is a broad consensus about the importance of customer experience. Almost nine out of ten of the survey respondents (88.3%) said their organization views customer experience as a competitive differentiator.

The research also found that most companies have a defined customer experience strategy, although only a small minority of companies are measuring the ROI of their CX efforts.

• 36.3% of the respondents said they have a "high level" CX strategy that is aligned to brand positioning
• 30.9% said a CX strategy exists and is recognized as crucial to organizational strategy
• 13.3% said a clear CX strategy exists and its ROI/value is defined and measured
• Only 19.5% of the respondents said they have no formal CX strategy

More than three out of four of the survey respondents (76.7%) indicated they were fairly or very satisfied with their current customer experience capabilities, although only 10.3% said they were very satisfied. Perhaps more important, more than three-fourths of the respondents (77.1%) said their customers would rate their company's CX capabilities as 6 or higher on a 10-point scale (where 0 = poor, and 10 = excellent).

The Dimension Data research also revealed some additional areas of concern. For example, 29.5% of respondents said customer experience is seen as relevant in some business functions only, and that there is no organization-wide ownership of CX. Another 23.9% said CX is owned by individual business functions that are supported by a central CX team.

As I noted earlier, most respondents to this survey said they have some form of a company-wide CX strategy. So it appears that many companies are still leaving the execution of that strategy to individual business functions. This approach can easily produce CX efforts that are not tightly coordinated, and it can also result in customer experiences that are not completely consistent.

Overall, the Dimension Data research indicates that many companies have made substantial progress on CX, but it also shows that more work is needed to deliver consistently great customer experiences.

Image courtesy of frontriver via Flickr CC.

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Salesforce Study Identifies Major Marketing Trends

Salesforce recently published the fifth edition of its State of Marketing report. The new report is based on a survey that was fielded between August 13th and September 23rd of last year, and produced 4,101 responses from marketing leaders (manager or higher). Survey respondents were from North America, Latin America, Asia-Pacific, and Europe.

The authors of the report observed that today's marketers are facing far different challenges from their predecessors. These new challenges are driven by high customer expectations for overall experiences that match their expectations for product quality. This observation isn't particularly surprising, given that the importance of customer experience has been widely discussed for several years.

The Salesforce survey identified four major trends in marketing.

Marketing Becomes the Orchestrator of Customer Experiences
Providing exceptional end-to-end customer experiences is inherently cross-functional, but marketing is well positioned to function as the hub of customer experience efforts. Nearly half (45%) of the survey respondents said that marketing is leading customer experience initiatives across the business at their company.

This finding is nearly identical with the August 2018 edition of The CMO Survey, in which 45.7% of respondents reported that marketing leads customer experience efforts.The Salesforce survey also found that marketers are forging connections with sales, commerce, and service teams in order to deliver better end-to-end customer experiences.

New Realities Elevate the Importance of Data Unification
It's not news that the effective use of data is critical for marketing success. The Salesforce research found that marketers are using more sources of data to gain a deeper understanding of customer needs, preferences, and behaviors.

According to the survey, the median number of data sources used by marketing organizations will increase from 12 in 2018 to 15 this year. However, more work is needed to unify those data sources. Only 47% of survey respondents said they have a completely unified view of customer data sources.

Marketers Remain Committed to Personalization
The Salesforce survey revealed that marketers' belief in the power of personalization remains strong. More than eight out of ten of the survey respondents said that personalization produces major or moderate improvements in brand building, lead generation, customer retention, customer acquisition, and customer advocacy.

The survey also found that the use of artificial intelligence to power personalization is growing. Twenty-nine percent of respondents in the latest survey reported using AI, up from 20% in 2017. Marketers also appear to be focused on trust and privacy issues. Fifty-one percent of respondents said they are more mindful about balancing personalization and privacy than they were two years ago.

Marketers Strive for Real Time Engagement
Lastly, the Salesforce research found that engaging customers in real time has become marketers' top priority and their biggest challenge. Fifty-two percent of survey respondents said they now engage customers in real time across one or more marketing channels. It also appears that marketers are making their engagements more responsive and dynamic. Fifty-two percent of the survey respondents said they adapt marketing strategy and tactics based on customer interactions.

The annual State of Marketing survey by Salesforce provides an important snapshot of the attitudes and practices of global marketers. I suspect that the new Digital Trends Survey by Econsultancy will address some of the same issues, and it will be interesting to compare the findings of these two studies.

Image source:  Salesforce

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Have Marketers Fully Embraced the Growth Challenge?

The role of marketing was a major topic of conversation last year, and there is a widespread belief that marketing's scope of responsibility has expanded. In the August 2018 edition of The CMO Survey, eight out of ten (79.6%) of the survey respondents said that the role of marketing in their organization had broadened over the past five years.

Marketing's responsibility for orchestrating customer experiences has been widely discussed for several years. More recently, industry commentators and practicing marketers have become focused on the role of marketing in driving business growth.

In a recent survey of over 200 CMOs and senior VPs of marketing by the CMO Council and Deloitte, 27% of respondents said that the CMO is primarily responsible for the growth strategies and revenue generation for their organization. The CEO came in second at 22%.

Marketing leaders also believe that other senior business leaders expect them to play a leading role in growth. When participants in the CMO Council/Deloitte survey were asked what level of expectation there is among senior executives and board members for marketing to be a growth driver, 35% of respondents put the expectation level at high, and 33% said senior company leaders think growth is the primary mandate of marketing.

Some will argue, of course, that this is nothing new. After all, it's fair to say that growth has always been the "prime directive" of marketing. What's new is that marketing and other business leaders now believe that marketing needs to expand the tools it uses to drive revenue growth.

So as we begin a new year, it's appropriate to ask two basic questions about the expanded role of marketing. First, to what extent have marketing leaders embraced the growth challenge and adjusted their activities to play a larger role in growth? And second, what should be the role of marketing in driving growth, and what do marketing leaders need to do to fulfill that role?

Where Do We Stand Today?

The recent research indicates that leading business growth is more of an aspirational goal than a current reality for most marketers. Overall, the studies show that most marketing leaders are still relying on conventional marketing communications tools to drive growth, and they remain much less involved in other business activities that have a significant impact on growth.

For example, in the latest edition of The CMO Survey, senior marketing leaders from B2B and B2C companies were asked to identify the activities or functions that marketing is primarily responsible for in their company. The top four activities identified by survey respondents were:

• Brand (91.4% of respondents)
• Digital marketing (82.7%)
• Social media (82.7%)
• Advertising (79.6%)

Other activities identified by more than 50% of survey respondents included promotion (71.6%), positioning (71.6%), public relations (69.1%), and marketing analytics (68.5%)

In contrast, only 40.1% of respondents indicated that marketing is primarily responsible for revenue growth, and even fewer respondents indicated that marketing has primary responsibility for market entry strategy (38.9%), new products (34.0%), and market selection (26.8%).

The CMO Council/Deloitte survey referenced earlier paints a similar picture. That research found that many marketing leaders have identified some steps they need to take in order to drive growth, which include developing strategies and plans to improve revenue and gain market share. The research also found, however, that most marketers are falling back into their "brand comfort zone." The survey report states:

When asked what the role of marketing is specific to growth, only 6 percent of respondents say they are driving routes to revenue across all facets of the business globally, only 4 percent are providing sales intelligence and key account insight support, and only 13 percent are working to retain and grow customer relationships through improved customer experiences. Instead, many marketers are defining and shaping the brand (44 percent) and executing campaigns to attract customers and predispose prospects (42 percent). . . Overall, despite the clear intention to drive revenue, brand and campaign win out in action. . ."

These survey findings suggest that most marketing leaders have not moved significantly beyond "conventional" marketing tools and tactics in their efforts to drive business growth. So what is the "right" role of marketing in business growth, and what steps should marketing leaders take first to fulfill that role? I'll address this question in my next post.

Top image courtesy of ccpixs.com (Creative Commons License).

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The Right (and Wrong) Way to Listen to Customers

"If I had asked my customers what they wanted, they would have said a faster horse."

Henry Ford (Attributed)

"We don't ask consumers what they want. They don't know. Instead we apply our brain power to what they need, and will want, and make sure we're there, ready."

Akio Morita, Co-Founder of Sony

Dozens of books and articles have been written about the importance of listening to customers. Providing great customer experiences has become a top strategic priority for many companies, and listening to the "voice of the customer" is widely seen as an essential ingredient in the recipe for customer experience success.

Marketing often has the primary responsibility for gathering, analyzing, and developing actionable insights from customer inputs. So it's important for marketers to understand that listening to customers in the right way is undeniably valuable, while listening in the wrong ways or for the wrong reasons is a bad idea.

Companies frequently seek customer input in order to design and develop products or services that will be attractive in a given market. However, many companies still struggle to launch new solutions that gain traction with potential buyers. Of course, a new product or service can fail because a company hasn't listened enough to its customers. But failures also occur because companies listen to customers in the wrong ways.

In a common scenario, companies ask their customers what they want and encourage them to describe specific product or service features that would be desirable. The problem is, most customers aren't well suited to perform this task.

Most customers have a limited frame of reference. Like all humans, most of what they know is based on their past experiences. This means that customers can usually do a good job of describing what they want when they're asked about familiar products or services. But when they're asked to imagine or describe new product or service features or capabilities, their input isn't as helpful.

The cause of the problem is a cognitive bias that psychologists call functional fixedness. This bias refers to the natural human tendency to perceive objects only in terms of their typical or normal functions. Functional fixedness can be useful in everyday life, but it can also stifle creative thinking and prevent people from seeing alternative solutions to problems.

Functional fixedness causes people to fixate on the features and attributes that a product usually possesses, and this makes it difficult for them to imagine what new features or capabilities would make a product or service more useful and valuable. In short, most customers have difficulty describing product or service features or capabilities they've never experienced.

As a result, they often describe features or functions that will offer only modest or incremental improvements over whatever already exists. When a company relies solely on this type of input, it can miss opportunities to develop breakthrough innovations that customers would find extremely attractive.

The key to listening to customers the right way is to shift the focus from specific product or service features or functionality to what customers are trying to accomplish - to the "jobs" they are trying to get done. Customers may not be particularly adept at describing specific solutions, but with a little encouragement, they can usually provide a good description of what they are trying to accomplish and what problems or frustrations they are facing.

Focusing customer input on desired outcomes enables you to better understand what customers will really value, and this helps you design solutions that customers will be anxious to buy. So by all means, don't stop listening to your customers. Just be sure you are listening in the right way.

Image courtesy of frontriver via Flickr CC.

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What Abraham Maslow Can Teach Us About Customer Experience

In 1943, the psychiatrist Abraham Maslow introduced a theory of human motivation which proposed that people are motivated to satisfy several needs, and that some of those needs take precedence over others.

Maslow argued that human needs are arranged in a hierarchy, with basic physiological needs (food, water, etc.) at the lowest level, and self-actualization at the highest. The hierarchy of needs is usually depicted as a pyramid like the one shown above. Maslow contended that people must satisfy lower level needs before they will be motivated to satisfy the needs on the next higher level of the hierarchy.

Maslow's hierarchy of needs has been widely used in the social sciences and in business to conceptualize important principles, and a version of the hierarchy can provide an effective framework for describing and organizing the building blocks of B2B customer experience.

The following diagram depicts the six factors that collectively define an exceptional experience for B2B customers. Each element in the diagram is a type of need, or an outcome, or a condition that most B2B customers want to satisfy, achieve, or experience in their relationship with a vendor.

These factors or elements of customer experience are fairly self-explanatory, but here's a brief description of each.

Functional quality/performance - The vendor's products or services provide the expected level of functional benefits and exhibit a high level of reliability.

Economic impact - The vendor's solution was (or can be) purchased at a reasonable price. The solution has an acceptable total cost of ownership and delivers an acceptable return on investment.

Ease of doing business - This element encompasses the functional aspects of the customer-vendor relationship. It includes attributes such as convenience and vendor responsiveness.

Trustworthiness - Information provided by the vendor is accurate and reliable, and the vendor consistently keeps its promises and fulfills its commitments. In addition, the vendor consistently puts the customer's interests ahead of (or on par with) its own.

Strategic insight - The vendor regularly provides insights that help the customer address major strategic challenges, sharpen its competitive differentiation, and/or identify new growth opportunities.

Personal value - Personal value refers to the benefits that are experienced by the individuals who are/were involved in the initial purchase of the vendor's solution and those who will make or influence the decision to continue the relationship with the vendor. Some of the most important personal value benefits are enhanced self-esteem and professional reputation.

As the diagram indicates, these customer experience needs are arranged in a hierarchy, but as with Maslow's model, the hierarchy is not based on the absolute importance of the needs. Instead, the hierarchy describes the sequence in which customers focus on and prioritize each type of need. As a general rule, customers will focus first on the needs at the bottom of the hierarchy. Once those lower level needs have been met, their attention will shift to the need in the next higher level of the hierarchy.

The hierarchy reflects the natural and common-sense way that most customers think about their experiences with a company, product, or service. For example, when customers first encounter a product or service, their attention will be on functional performance and economic impact. Once customers have determined that the product or service is providing an acceptable level of functional and economic performance, they will focus more on whether the vendor is easy to do business with.

It's important for marketing and customer experience leaders to understand that lower level customer experience needs don't disappear once they have been initially satisfied. They must continue to be satisfied, or they will again become customers' primary focus.

If, for example, a competitor significantly improves the functional performance of its product, customers may quickly decide that the performance of your product is no longer satisfactory. Therefore, it's critical to constantly monitor your performance against all of the customer experience needs in the hierarchy.

Top image courtesy of FireflySixtySeven via Wikipedia (CC BY-SA 4.0).

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Decoding the Vital Attributes of Great Customer Experiences

Most senior business leaders understand the strategic importance of customer experience (CX). They recognize that providing great experiences has become a key means of differentiation and a primary driver of competitive advantage.

To provide great customer experiences, marketers and CX leaders must understand what specific aspects of experience their customers value most. The results of a recent study by PwC provide several valuable insights on this critical issue.

PwC's Future of Customer Experience study consisted of an online survey and in-field interviews of a representative sample of 15,000 people. Four thousand of the respondents were from the United States, and the remaining 11,000 were from 11 other countries around the globe.

The results of the PwC study are not particularly surprising. The research revealed that customers highly value speed, convenience, knowledgeable and helpful employees, and friendly service. Almost 80% of the U.S. respondents rated these factors as the most vital aspects of a great customer experience.

What I found most interesting in the PwC study is that customers still place high value on the human aspects of customer experience. Overall, 75% of the study respondents indicated they would want to interact more with a real human being as technology improves. It's not that customers don't use technology to interact with companies. They clearly do. But today's customers expect technology to work, and they don't typically notice CX technology tools unless they malfunction or otherwise disrupt the customer experience.

Providing poor human interactions is also an easy way to lose customers. PwC asked its study participants what would cause them to stop doing business with a company. The top four factors selected by respondents are listed below. Three of these factors are directly related to the quality of human interactions.

1. Bad employee attitudes
2. Unfriendly service
3. Untrusted company
4. Unknowledgeable employees

The PwC study focused on consumers, but research by other firms has shown that B2B customers share many of the same attitudes and preferences.

For example, a 2017 survey of CX leaders and influencers by Walker Information found the personalization, ease, and speed are the three core dimensions of B2B customer experience. Walker's research found that B2B customer experience professionals believe customer expectations have risen across all three of these dimensions and will continue to rise for the foreseeable future.

In this survey, Walker asked participants to rate the level of customer expectations for personalization, ease, and speed at three points in time - in 2013, in 2017, and in 2020. The following table shows the percentage of respondents who said customer expectations were/will be high:

A 2017 study by KPMG Nunwood Consulting (B2B Customer Experience:  Winning in the Moments that Matter) provides more evidence regarding the importance of the human touch in B2B customer experience. This study consisted of a survey of 2,974 members of decision making units in B2B companies.

One objective of this research was to identify what "relationship management model" survey participants preferred. The clear winner was the model in which a relationship manager owns the customer relationship, and serves as the customer's primary, if not exclusive, contact.

The survey report states "[customers] frequently prefer to have one person to deal with and have them acting as their ambassador - the one person in the organisation that champions their interests and ensures that the services are provided to them in the highest standard."

Collectively, these research studies make two important points. First, many of the aspects of experience that customers value most are utilitarian - e.g.speed, ease, and convenience. And second, great B2B customer experiences still require a deft human touch

Illustration courtesy of Jeff Djevdet (speedpropertybuyers.co.uk) via Flickr CC.

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