Marketing = Building Relationships

Before we leave this section, let me offer one more perspective, perhaps the bird's eye view of brand strategy.

Broken down to its most basic components, marketing is really nothing more than relationship-building. Think about it. If we seek to build a long-term relationship, there are four factors that must be present if the relationship is to be successful over the long-term.

First of all, there must be a sincere desire for a mutually satisfying relationship. You must want to have this relationship even though you know the investment required.

Second, you must possess something of value to offer the other party. You have something that they might want and you are willing to offer this to them.

Third, you have a willingness to trust that the other will also provide value in the exchange. You assume that the other party is going to be fair as they enter into the relationship.

Fourth, you both make a commitment to communicate when the exchange is not mutually satisfying. You promise to let them know if things are not turning out as you planned and to give them a chance to correct the problem.

Does this sound like your marriage? Or your business partnership? Yeah, probably! And it is just this approach that every business must take as the seek to win customers and build their businesses.

Way too much marketing these days is about creating some facade around a product/service instead of accurately communicating how that product/service fits into the customer's life... telling truthfully what that product or service will and will not do for the prospective customer. And at the same time that the organization is having their ad agency create the facade, they are structuring their Customer Service department so that it will be nearly impossible for a customer to tell them when they are unhappy and don't find the relationship mutually satisfying. Then, they are shocked that there is so much churn in their customer base! That is why so many businesses are hurting right now. They did not take care of there customers' needs because they never really thought about marketing being about relationship-building.

Brand marketing (so that we build long-term relationships with our customers) is really simple, just like building any relationship that is important to us. Remember:

Sincere Desire/Offer Value/Trust Other/Communication Commitment

And if you forget any of these, ask your spouse what are the cardinal rules of making your marriage work. They'll tell you.

Thanks for reading. More to come!

The American Business Train Wreck (Chapter 1/7)

So, where is all this leading? This discussion about customer service, brand loyalty and brand communities? You probably don't want to know. But read on, Brave of Heart.

By the most recent numbers I can find (a US State Department report published in April 2008), our US economy's make-up is 67.8% services, 19.8% good producing, and 12.4% local/state/federal government. That means that over two-thirds of our economy is in the service sector and the ratio of service-producing jobs as compared to goods-producing jobs is more than 3 to 1. Thus, if you leave government out of the equation, what service-producers contribute to the US economy is more than three times what goods-producers contribute. If anyone still has any doubt about the importance of services to our overall economy, think about these numbers. I am not saying that the production of goods in not important to our economy but, clearly, services are more than three times as important to our financial health as a nation, as defined by gross domestic product (GDP).

Over two-thirds of our economy is in the service sector.

We have been reading for decades that the US is quickly evolving into a service economy, with the strongest areas in real estate, banking, insurance and investment. Other significant areas of growth are wholesale and retail sales, transportation, health care, legal services, scientific and management services, education, arts, entertainment recreation, hotels and other accommodations, restaurants, bars and other food/beverage services. Not a lot of surprises here, right? I am sure the large majority of us work in one of these industries.

Nothing wrong with that, right? Weeellllll, maybe.

At a time when America becomes more reliant on services to provide income to its citizens, it seems that the quality of those services in the minds of the Americans who buy these services deteriorates dramatically. Remember the research cited earlier in this book about how bad customer service has gotten? Well, if those statistics were not enough, I have more.

Dr. Claes Fornell, a professor at the University of Michigan's business school, has developed the American Customer Service Satisfaction Index (ACSI) and this index is based on regular interviews with 16,000 customers of some 200 companies in 33 industries. Everything Dr. Fornell has found suggests that customer service continues to decline in America at an alarming rate. In fact, the overall "grade" of American business' ability to provide good service is now 70.7 out of 100. That is down from 74.5 in 1994. Some specific industries look even worse. Hospitals have dropped from 74 to 67 in that time period. Airlines are down from 72 to 67 in terms of satisfaction with their services. The local phone companies are a bit higher having dropped from 79 to 75. Not exactly something to write home about. (Source: Daniel Pedersen, "Why the Service is Missing form America's Service Economy")

To make matters a bit worse, in the same article Dr. Fornell makes the point that poor customer service gives a false impression of our economy. Even if prices do not rise significantly, the huge decline in customer services suggests that inflation may be much worse than our economists would have us believe. If we are getting less but paying the same thing for it, we do have a problem with the devaluation of our dollar, don't we?

So, picture this. We are moving quickly toward an economy that relies more and more on American business being able to deliver valued services to its customers. At the same time, our delivery of all those services is in a terrible state of decline. This is not a train wreck in the making: the train wreck has already happened and the bodies are strewn all over America. You can blame some of it on the recession we are facing but, the truth is, many of those businesses were sick and dying before the recession even began. It just took this recession to topple already unstable organizations. Most were crumbling at a slow rate because, as the figures suggest, we have a customer service crisis in American business right now. That customer service problem erodes brand loyalty and that is what brought them down, not the recession.

Anybody afraid? I am. For this country, for businesses small and large, for what my family gets (or doesn't get) for the dollars we spend on all those services.

This is not a train wreck in the making: the train wreck has already happened and the bodies are strewn all over America.

It is a sad state of affairs, really. If your business is in trouble right now, do some research about your level of customer service. I will bet you that if that research is truly legitimate, you will see a problem. And if you have a problem with customer service, how strong can your brand be?

In Chapter 2, we will examine what can be done in the aftermath of this train wreck. Because there is a lot that can be done. But we need to get started. You can build a strong brand community around your brand but it takes work. Your customers can help you.

Thanks for reading! More to come.

What Reputation Does Your Organization Have?

Branding has been abducted by the insincere.

In recent times, branding has come to represent a façade that marketers wrap around a product or service to increase customer sales and loyalty. Branding has become only what they can convince others to think about their business. This is the great lie.

The Marketing Rule is “Find a need and fill it.” But many in business don’t really consider what their customers may need, but rather, what they want their customers to buy. From this point forward, the branding process is usually doomed to either fail or to fall dramatically short of what it could have been.

What should happen is that the client takes his first year’s communications budget and spends it trying to figure out:

1. what unfulfilled needs the market has,
2. how they articulate those needs,
3. how they feel about the currently available options at meeting those needs, and
4. what would qualify as a perfect solution to their needs.

In other words: find out what the customer really wants, what the competition has, and what they can bring to the party.

In his book Building Strong Brands, David Aaker offers a Brand Identity System that moves planning for a brand from its current brand image (as a product, as an organization, as a person, and as a symbol) through development of a value proposition with functional, emotional, and self-expressive benefits. This planning paradigm helps define the future of the brand-customer relationship.

According to Aaker, it is from this definition of the brand-customer relationship that the brand’s positioning can be developed. The positioning statement -- which includes core brand identity elements, the target audience, the competitive advantage, and elements of the value proposition -- directs the communications effort.

Sounds like a lot of work, doesn’t it? I’ll say! Not only is it a lot of work, it is a significant investment of sincerity. The above process can’t be faked. There is no way an organization would go through the complicated process described by Aaker unless they were very, very serious about developing long-lasting relationships with customers.

When I speak to clients about what a brand is, I talk in terms of a “reputation.” I do this because most everyone knows that a reputation is hard to fake. Whatever reputation someone has, it is generally deserved and that is what I want my clients to think about. Act honestly and the world will generally know you have integrity. Do a good job and they will say you are competent. Return their calls quickly and they will say you are committed to their future. Reduce your service to them and they will cut their revenue stream to you.

Branding has become only what they can convince others to think about their business. This is the great lie.

The great marketing guru Ted Levitt of Harvard has said that a business’s purpose was not to increase the wealth of its shareholders, as is generally taught in business schools. Instead, the purpose of any business is to create and keep a customer. Increasing shareholder wealth, says Levitt, is merely a requisite of creating and keeping a customer.

You don’t create and keep customers with a façade. You do that with a reputation that has been developed by listening to your customers and building products, services, and delivery systems that truly meet those needs. If business acted on this mantra, instead of trying to build veneers around products and services that offer little in the way of differentiation from their competition, we practitioners of the branding art would either find our jobs easier or find our services unnecessary.

[Photo used under the Creative Commons License courtesy of Flickr.]