June 2008
Getting Emotional About Product Innovation

"Emotional Functionality" Should Be On Your Innovation Radar

By Mary Beth Lake and Brian S. Lunde

Every year, The Conference Board publishes the results of their survey identifying the top concerns of hundreds of CEOs around the world. Once again, the 2007 report puts "stimulating innovation/creativity/enabling entrepreneurship" among CEO's top ten concerns. Even more interesting in the 2007 results is that when asked about challenges to their company's innovation performance, chief executives cite "improving customer relationships" as the second most significant challenge, right behind acquiring and developing the right talent. These results reveal a crucial insight: innovation doesn't create lasting business value unless it improves customer experience and, thereby, the strength of customer relationships.

February 2008
Storm Proof

Build a strong foundation for long-term customer management success

Dr. Lawrence A. Crosby and John Carroll III

Every organization engages in some sort of customer experience, relationship and loyalty management. Reams of paper chronicle the importance of actively managing customers. There are conferences galore for those who seek to discuss and learn about the principles of customer management. So, we all do "it" (customer management). We all read about it. And, we all talk about it. Yet, many senior executives and people directly engaged in customer management would admit that despite significant time, energy and investment, customer management programs regularly falter.

December 2007
Shift Work

It is time to make the move from marketing to the evolving concept of customer strategy.

Dr. Lawrence A. Crosby and Brian Lunde

Peter Drucker famously said, "The purpose of business is to create and keep a customer." What he did not say was: the purpose of business is to create and keep a market. Drucker offered a profound insight and most 21st century corporations have missed this important distinction.

October 2007
Passion Comes Alive

In the heat of creating marketing results, it can be useful to take pause and ask how we as marketing leaders can take our leadership to the next level.

Wayne Marks

One definition of leadership might be "to find a parade and get out in front of it." One can question, of course, the viability of that strategy. A preferable definition might be that of John Kotter, the distinguished professor of leadership at Harvard Business School who focused thinking about leadership on dealing with and advancing change.

August 2007
Managing the Brand Beyond Communications

Managing the brand is all about leaders having the "courage of conviction" to adopt and commit to a new course.

Dr. Lawrence A. Crosby and Wayne Marks

Any good rancher knows that to find the herd, one must first apply a very hot chunk of iron to the bovine body with a mark that identifies the four legged product as "my cow." Indeed, the etymology of "brand" can be traced to the old English word for burning.

June 2007
Loyalty Linkage-Essential Measure in ROMI

Marketers are overlooking an essential measure in their ROMI arsenal.

Dr. Lawrence A. Crosby and Brian S. Lunde

For the past few years customer loyalty and retention have been on the list of the top-10 issues CEOs say are of greatest concern to them and their companies. At the same time every marketer knows that marketing metrics and return on marketing investment (ROMI) are hot issues among corporate marketing leaders (and their chief financial officers).

Innovation Critical to Customer Experiences

Innovation is critical to delivering a customer experience that builds loyalty.

Dr. Lawrence A. Crosby, Wayne A. Marks, and Sheree L. Johnson

Investors weren't kind to Home Depot through the third quarter of 2006, driving down the stock by 14% at that time. Although sales increased by nearly 17% in the second quarter of 2006 vs. 2005, and operating profit increased by nearly 5%, the company suggested to analysts that the remainder of the year would be challenging.

Endless Measurement Debate

If the field of customer measurement is complex, it is because the interactions between customers and companies are complex.

Dr. Lawrence A. Crosby and Sheree L. Johnson

It seems that the value of measurement is regularly rediscovered by executives. We know that measurement is good. The ultimate aim of implementing a measurement system is to improve the performance of your organization. And organizations that manage performance through measurement do better than those that don't.

Get Ready for Monumental Change

Get your brands and organizations ready for the monumental change in age demographics.

Dr. Lawrence A. Crosby, Sheree L. Johnson, and John Carroll III

Will you still need me, will you still feed me, when I'm 64?" Sir Paul McCartney crooned this 39 years ago, as he pondered his future and what is oft called one's golden years. He turned 64 years old this year, and ironically, his career appears to have only accelerated as he's aged. Sir Paul's continued activity—during what many still consider retirement age—isn't a unique phenomenon. In fact, it's said that today's baby boomers define old age as starting at 80 years old. That is three years after the average person is dead!

Corporate Citizenship: It's the Brand

As brand architect and steward, marketing should play a key leadership role in corporate citizenship.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Most executives acknowledge the importance of social and environmental responsibility. According to recent surveys, they see the significance to the bottom line, their companies' reputations, and their customers. But when it comes to translating citizenship into meaningful programs and embedding it in the business, companies range from leaders to laggards—with the majority somewhere in between.

Make It Memorable

Creating a good memory is perhaps the most important ingredient in building customer loyalty.

Dr. Lawrence A. Crosby and Sheree L. Johnson

The business case for an organizational focus on customer loyalty continues to strengthen, according to recent statistics from a variety of sources:

Cause-Effect Loyalty Perf Measures

Performance measurement models provide clear lines of sight, from employee actions to customer loyalty.

Dr. Lawrence A. Crosby and Sheree L. Johnson

The business requirement to meet the needs and expectations of customers and other stakeholders is the primary impetus behind strategy. Financial results are the ultimate measures of strategic effectiveness, but not the drivers of business success. Consequently, there is a need to link day-to-day, relationship-affecting activities to financial results. Defining what drives a company's overall business success—from the activity and process level to increased customer loyalty and financial/marketplace success—should be one of management's highest priorities.

Customer-Centric Innovation

Marketing is positioned to take a central role in the innovation process.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Drucker made this statement almost 30 years ago. And like most things Drucker, managers nod their heads in agreement with his statements. But most of the managers also struggle to implement such wisdom. A recent survey of senior executives found that increasing top-line revenues through innovation has become an essential key to success. However, the same survey showed that more than half of the executives were dissatisfied with the financial returns on their investments in innovation. Also, of the 30,000 new consumer products launched each year, more than 90% of them fail.

Exceptional Experiences

Market tactics that are quickly copied may erode customer loyalty.

Dr. Lawrence A. Crosby and Sheree L. Johnson

I own a Honda CRV. In fact, it's my second CRV. My Honda dealer recently called me to let me know that their rates are really good now and that I might be able to lower my monthly payment on my leased vehicle, if I exchanged for a newer model now. How do you think I felt about that proactive telephone call to me? I was thrilled that I might save some money. Plus, I was very impressed that my Honda dealer was looking after my best interests. It increased my trust in him. Now I own my third CRV ... and continue to be a Honda advocate.

CMO as Change Agent

Everyone will have an opinion. It's up to the CMO to be true to the voice of the customer and lead the charge.

Dr. Lawrence A. Crosby and Sheree L. Johnson

In the 1980s, firms internally focused their efforts to improve processes through total quality management, Six Sigma, business process change, lean manufacturing, and so on. This was a significant paradigm shift, which re-oriented corporate management responsibilities to recognize the importance of processes and quality. At companies such as General Electric (GE) and Motorola, this change came to redefine their cultures.

Moving Customer Loyalty to the Center of Your Business Strategy

To be truly effective, customer loyalty must be at the heart of your overall business strategy, not just your marketing strategy.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Customer Loyalty has become a catchall term for many marketing programs where customer data is used. The words "customer loyalty" typically bring to mind the tools and programs that organizations try to use to influence customer purchase behaviors. These tools include loyalty cards and programs, customer relationship management software, and customer satisfaction surveys. With the best intentions, these tools attempt to transform customers from transaction interactions to lifetime relationships. While these tools may be part of a marketing strategy, in many cases they are not part of an organization-wide customer loyalty strategy. This greatly increases the risk of these programs losing momentum (if they are able to get any tread to begin with).

Loyalty Leadership

Leadership is critical to creating a customer-centric organization focused on achieving business results through customer loyalty.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Customer orientation is at the very center of modern marketing management and strategy. It is now a widely accepted and proven fact that for an organization to achieve consistently above-normal market performance, it must create loyal customers. Although it doesn't show up on a balance sheet, customer loyalty is the greatest asset any company can have. It is an asset that boosts sales, and with a profitable operations model, results in increased shareholder value.

ROI = Return on Insights

Using customer loyalty insights for resource allocation puts you on the path to seeing returns on your investments.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Resources—dollars and people—are the fuel for your journey on the road to your firm's vision. How valuable resources are allocated in an organization sends the message of your commitment to your vision and predetermines your success in achieving your vision.

GROWING UP

Are you ready to take on the growth challenge through a Customer Loyalty strategy?

Dr. Lawrence A. Crosby and Sheree L. Johnson

With a better U.S. and global economic picture ahead, CEOs are ready to turn their focus to growth: "Sustained and steady top-line growth" ranked as the No.1 issue of greatest concern in The Conference Board's recent Top 10 CEO Challenges survey. And CEOs are looking to their customer base for that growth: No.2 in the U.S. on the list was "customer loyalty retention."

The Buzz about Customer Experience Management

Emotional bonds are a powerful competitive weapon.

Dr. Lawrence A. Crosby and Sheree L. Johnson

The merging of two powerful fields. In the July-August 2002 issue of Marketing Management, we wrote that we were seeing a merging of the fields of customer loyalty management and brand management. These two fields have different origins—customer loyalty measurement and management with its history tracing primarily through product quality, process improvement, customer satisfaction, etc. (more or less the "hard" side); and brand management coming up predominantly through the market-ing and advertising creatives (the "soft" side). However, as we noted in 2002, "The two fields now have great overlap and appear to be converging because they both have the same destination—building long-term, profitable customer relationships."

Is Everyone Lined Up?

To align an organization, first integrate performance measurement.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Over the past three years, executives in many industries have been focused on contraction in order to survive. Boardroom conversations have resounded with cost control language—outsourcing, downsizing, consolidation, discretionary spending, hiring freeze, and the like. Today, policy makers, blue chip panels, and world leaders are forecasting a strong global economy. The April 2004 World Economic Outlook report from the International Monetary Fund stated, "The outlook for the world economy is among the rosiest we have seen for a decade."

What If?

Link non-financial and financial measures through simulation modeling to assess ROI.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Since marketing plays a key role in strategic planning and business operations, it is a fundamental determinant of business success. Consequently, over the past few years, the concept of marketing effectiveness has attracted increased attention among academic researchers and business practitioners. In multiple studies, experts have found that marketing effectiveness differentiates superior organizations from their competitors.

The 3 M's of Customer Loyalty

Understanding customers involves measuring, modeling, and managing.

Dr. Lawrence A. Crosby and Sheree L. Johnson

These days firms are attempting to differentiate themselves based on the simplicity of their measurements. In the area of customer loyalty (CL) measurement, some are now advocating surveys composed of only one or a few questions to assess the strength of customer relationships and provide direction on how they might be improved. Granted, this approach is simple and inexpensive, but is it effective? It's like trying to diagnose the reasons behind a fever simply by taking the patient's temperature. Intuitively, a single measure can't tell the full story on a topic as complex as CL. From the standpoint of having a scorecard, CL is known to manifest itself in numerous ways, all of which have economic consequences for the company (repurchase, recommend, sole source, and so on). We also know from years of measurement progress in the social sciences that multi-item indices tend to outperform single question indicators in terms of reliability and validity.

Brand Loyalty–Making the Intangible ... Tangible

A customer base loyal to your brand is a strategic asset that can be leveraged–in good times and bad.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Intangible assets have become more and more important in today's economy. The evolution/revolution from an industrial to an information age has shifted the weight of strategic asset management from a dominant focus on capital, plant, and equipment to a more balanced eye on a new organizational wealth housed in more intangible assets.

Redefine Your Customer Base

Loyalty-based segmentation provides new insights for serving target markets.

Dr. Lawrence A. Crosby and Sheree L. Johnson

If you do a web search on "what is innovation?" you'll find a variety of definitions. Here's the one we like: "Innovation is the conversion of knowledge and ideas into a benefit, which may be for commercial use or for the public good." This definition allows us to be innovative about innovation! For example, what constitutes innovation in marketing?

Manufacturing Experiences

Tapping emotions can create value for your consumers.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Business marketing articles and books today seem to be dominated by a few cult brands whose stories we hear again and again—Apple Computer, Starbucks, Nike, Harley-Davidson, and Volkswagen Beetle. And these brands deserve their reputations.

Watch What I Do

Leadership behavior sends the strongest message.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Much has been written over the past 20 years about the notion of "internal marketing." In practice, however, most organizations struggle to see the results of this practice—perhaps because they're unclear about the results they seek.

Do your metrics reflect your market strategy?

When developing performance measures, don't lose sight of your objective.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Most organizations focus on profitability and efficiency control when they evaluate and control their market activities. While these are certainly critical performance measures, keeping an eye on the effectiveness of your market strategy should be your overarching objective in defining your metrics.

Chasing the Elusive Customer

Customers and their purchase habits are an ongoing source of mystery.

Dr. Lawrence A. Crosby and Sheree L. Johnson

In the movie Minority Report starring Tom Cruise, set in the year 2054, the police department is able to predict murders before they happen. Advertisers using retinal scanners are able to serve up personalized messages to consumers. A Guinness ad, for example, speaks to Tom Cruise's character as he walks by, saying, "Hey, John, you look like you could use a Guinness!" When Cruise's character walks into a Gap store, an automated virtual greeter welcomes him back and asks if he enjoyed the shirts he bought previously.

Beyond Brand Awareness to Brand-Customer Relationships

Just getting the word out about your product isn't enough.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Brand management is generally believed to have emerged in 1931 when the president of Procter & Gamble decided that "each P&G brand should have its own brand assistants and managers dedicated to the advertising and other marketing activities for the brand."

Innovation—Not for the Faint-Hearted

With mass layoffs and cuts in R&D the norm, sticking to an innovation strategy requires courage and discipline.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Four years ago, economic growth was happening faster than most organizations could handle. Back then, the right strategy was to throw resources at ideas and hope one of those ideas would turn into the next big moneymaker. But now that the explosive growth phase has slowed to a simmer, many organizations have responded by delaying or canceling new product and service development, focusing instead on short-term measures to improve profitability quickly, such as mass layoffs and tightened R&D budgets. Breakthrough innovations will be rare in this type of environment.

Have You Hugged Your Dishwasher Today?

Relationships built on trust help combat commoditization.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Today's actively engaged customer has helped create a complex environment for customer marketing and management. Companies are strategically shepherding prospects and customers through the customer life cycle of acquisition, retention, and loyalty and are attempting to sell their products directly to the end user. Escalating customer needs, falling entry barriers leading to globalization, and deep-pocketed aggressive competitors have helped create a state of hyper-competition. In addition, accelerated technological change and CRM technology have helped enterprises automate and manage the marketing, sales, and customer service processes in an organized way.

Managing the Future

Success depends on measuring the right things right.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Much of the value companies are creating for shareholders today can't be found on a balance sheet or income statement. In fact, less and less of a company's stock performance can be explained by financial results. Corporate investments in intangibles such as brand, training, and research and development now equal investments in tangible assets such as property, plant, and equipment.

Who Moved My Value?

Customers, not companies, create value.

Dr. Lawrence A. Crosby, Christian Grõnroos, and Sheree L. Johnson

Strategic marketing based on identifying, delivering and communicating segmented value propositions is familiar language in business today. As described over the years, the first step is to "choose the value," which involves analyzing and selecting a clear position in the market by defining the target customers and the benefits that can be profitably delivered to those customers. After making this selection, the firm should install the people, processes, partnerships, technology, and management systems that will enable it to "deliver the value." The final stage is to "communicate the value" to the external market and, just as critical, to the internal organization.

Going My Way

Loyalty and brand gurus find common ground.

Dr. Lawrence A. Crosby and Sheree L. Johnson

We recently conducted a search of recent books on both customer loyalty and brand management. Here are some of the headline excerpts we found: "Getting the right customers often depends more on the magnetism of the value proposition and the referrals it generates than on brilliant salesmanship."

Measuring Customer Relationships

Effective metrics can help put your CR strategy to work.

Bruce A. Corner

Building and managing relationships with prospects and customers is a difficult job. It requires a comprehensive strategy encompassing the entire customer life cycle, from attracting the "right" segments of prospects, to delivering on the brand promise, to managing churn. Every stage in the life cycle (i.e., attraction, sales effectiveness, loyalty management, and churn management) requires sound metrics to guide managers in their most critical responsibility—allocating resources in a way that maximizes shareholder value.

The Globalization of Relationship Marketing

Global customer relationships depend on the right strategic mix.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Is it possible to have a successful global relationship marketing strategy? We know both anecdotally and scientifically that culture-induced differences affect customer perceptions. In Europe, for example, there is relatively little cultural homogenization despite the success of EU-wide economic policies. How then can we hope to understand and build satisfaction, trust, and relationship commitment on a global basis?

Building Loyalty Strategies

Successful customer relationships require an integrated business strategy.

Dr. Lawrence A. Crosby and Sheree L. Johnson

A customer relationship marketing and management (CRMM) strategy aims to achieve growth by building and nurturing high-value relationships with carefully selected groups of customers. Through these relationships, both the company and its customers can enjoy lifelong benefits.

Technology—Friend or Foe to Customer Relationships?

When it comes to customer loyalty, technology can be a double-edged sword.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Fast moving information and communication technologies have helped drive the growing popularity of relationship marketing. To keep up and to help build closer customer relationships, companies are investing heavily in CRM technologies.

High Performance Marketing in the CRM Era

Today's CRM tools can help guide and improve your marketing investment.

Dr. Lawrence A. Crosby and Sheree L. Johnson

More companies today are realizing that marketing is a critical factor in determining an organization's success or failure. Equity analysts believe that strong brands, supported by consistent marketing investment, allow companies to perform better. Consequently, they want more detailed information on marketing and advertising expenditures, trade discounts, marketing performance measures, and brand values. More and more organizations are also using brand valuation in mergers, acquisitions planning, and lending decisions.

The Democratization of Data

While "fingertip access" to customer information helps maintain relationships, some potential land mines remain underfoot.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Organizations are quickly learning that building effective CRM strategies requires information and understanding about their customers. There is a movement in these organizations today to give employees "fingertip access" to customer information. The premise behind this "democratization of data" is that many employees have a role to play in creating and maintaining customer relationships, and that the provision of detailed customer information will make them more effective. This applies to aggregated information about markets and segments, as well as specific information about individual customers. It includes data relating to customer profiles, transactions, product/service usage, and just about anything in the data warehouse. More recently, it also includes marketing research results.

Branding and Your CR Strategy

A main driver of customer loyalty is brand commitment.

Dr. Lawrence A. Crosby and Sheree L. Johnson

Today, brands exert a strong influence on both customer attraction and customer retention. In fact, the main driver of customer loyalty is often brand commitment. Managing the brand as an asset is a critical component of any effective customer relationship management (CRM) strategy. But how and what do we measure and manage? Let's first look at a brief history of branding to understand why it started and how it has evolved.

Uncovering Customer Value

Is technology the new Holy Grail for customer loyalty?

Dr. Lawrence A. Crosby and Sheree L. Johnson

Total Quality Management, Customer Satisfaction Measurement, Business Process Re-engineering... Customer Relationship Management (CRM). Are business managers just driven by the latest fad? Well, yes and no.