Product has long been one of the four “Ps” of marketing, along with Price, Promotion, and Place (distribution). As digital services have become a pervasive part of modern life, the Chief Product Officer title has similarly grown in popularity. What does it mean that this particular P has been elevated to the executive ranks as a frequent peer to its former 4P host, the Chief Marketing Officer, often taking the “pricing” P with it?
It has to do with the changing nature of relationship economics, a dynamic that is morphing in both B2B and B2C contexts. Ironically, the increased prominence of Chief Product Officers and product-led organizations is a signal of increased customer centricity as opposed to less. The best product organizations are customer centric, and digital channels provide an entirely new standard for how providers interact with their customers. …
Minimum Viable Brand Experience in Customer Centricity
In my last blog post, I pointed out that Low Value Customers are Not a Problem to be Solved. I stated that “Any time your salesperson or customer service rep spends time making a low rCLV [residual customer lifetime value] customer feel great, it is at the cost of additional value from a higher rCLV customer.” In theory, this is true. Spending a dollar on someone that will never return at least that in value is a negative business proposition.
Does that mean businesses should go completely dark on anyone that it determines will be a net negative value customer? Should we keep them away from our stores and hang up if they call us on the phone in order to avoid any possible wasted resource allocation? …
For any number of reasons, there comes a time when many entrepreneurial-minded people decide to take on “real jobs.” These folks have great energy, and I have hired a number of them over the years for exactly that reason. They are driven, passionate, and they can be valuable to an organization. At the same time, the corporate world has a way of really burning these talented individuals out. It can be soul draining.
Having seen a number of others wrestling with the same frustration I once did, here is my advice for those feeling disheartened even in a small “big corporate.” …
Customer centricity can reveal the insights necessary to determine which customers should get the premium treatment, and which should not. Specifically, a business would be best served by reserving its most outstanding service for those with high residual customer lifetime value (rCLV, the aggregate value of a customer’s future transactions discounted appropriately for time-value of money). This makes people uncomfortable (the idea that some customers are more worthy of the “red carpet” than others).
Let’s take the idea even further. Any resource allocation to low rCLV customers is usually wasted. It is even worse than that, because those resources cannot be allocated instead to high rCLV customers in ways that would return more value to the business. Any time your salesperson or customer service rep spends time making a low rCLV customer feel great, it is at the cost of additional value from a higher rCLV customer. …
Traditional marketing is composed of the 4 Ps, which include product, price, place, and promotion.
Briefly, promotion is what most people perceive as marketing, and it involves the communication of a value proposition to potential buyers. Product includes to the the attributes and characteristics of what is being sold. Price encompasses everything a consumer trades in order to acquire and utilize the product (or service). Place relates to distribution or delivery of a product (or service). Promotion involves communication of a value proposition that resonates to potential buyers.
What about customer centricity? …
Marie Forleo talks about Sales Prevention on a recent ilovemarketing.com podcast, and my mind is racing. I’ve advocated this concept for a long time, but I’ve never come close to articulating it as well as she has.
Sales prevention as a powerful growth strategy, because:
If you have a top performing product or service, and you know it, then use this!
This is a loose framework for strategic product thinking that has served me well over the years. It is a tool that can help narrow down the world of what you could do into what you should do. I’ll take you through an example of how I used this process as head of mobile content services for Virgin Mobile USA nearly a decade ago.
Start with two buckets, The Purpose and The Promise.
The Purpose is the reason consumers are interested in the thing you provide. Clay Christensen would call this the “jobs to be done” in his innovation framework. Think more broadly than your current customer base. Consider as many different use cases as you can. …
If you’ve been to business school, this equation should look familiar:
It is the formula for calculating customer lifetime value (LTV or CLV). It fits nicely on the back-of-the-envelope for simple math. It is also wrong. We have proclaimed that LTV is the foundational metric of customer centricity, and for something that important, we marketers must do better than this.
Let’s focus on the three most wrong parts of this formula:
Why is “marketing” so often used interchangeably with “advertising” when advertising is only part of ONE of the FOUR Ps? (Product, Price, Place, and Promotion)
Whether you’re talking about marketing or advertising, marketing guru Mitch Joel is right on when he says that people don’t hate marketing. They hate bad marketing. If you are not a marketer, the piece of marketing you judge most often is advertising, especially bad advertising, and that is why marketing is a dirty word.
The American Marketing Association says: “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” Too complicated. …