Marketing in 5-D

Thinking of Barack Obama as the new chief marketing officer rather than as the nation’s chief executive frames marketers’ current challenge in a different way. His top domestic mandate is to rebuild confidence in the world’s top brand: the U.S. economic engine. To do so, he has promised to fundamentally change our thinking about governance and to bring “a long overdue sense of responsibility and accountability to Washington.”

To that end, President Obama says his economic stimulus plan will be posted online “so the American people will know where their precious tax dollars are going and whether we are hitting our marks.”

Is there a CMO today who is not similarly under enormous pressure to explain the thinking behind every marketing dollar spent and to validate expenditures with certifiable results? President Obama isn’t afraid of this new age of ROI accountability, and CMOs needn’t run from it either, because the tools to implement it never have been more accessible or more important.

New marketing paradigms are in place. A data-driven, behavior-based strategic thinking focus is in the ascendancy. In today’s economic environment, influencing buying behavior rather than just consumer attitudes is crucial.

Traditional marketing’s belief that awareness fostered by advertising builds brand equity never really was true, yet it was accepted and shaped how we think about consumer conversations. But we’ve come to understand that consumers own and define product personality, and that brands are built interactively through relationships, through consumer experiences with products they buy and use. CMOs have gained that understanding largely as a result of mining the wealth of data available on what drives buying behavior.

By all means, seek new customers, but rethink the path. The old approach was to mount a broadly targeted media campaign to build brand awareness. New World marketers in the retail, spirits, automotive, insurance and packaged-goods arena know such tactics need to be augmented[MSOffice1] with behavior-based programs. It’s possible now to amalgamate customer data from all available sources (transactions, Web sites, events, fulfillment, customer care and others) into a centralized marketing database with single-customer views, analyzing it to model brand buying-behavior patterns. From there, programs can be developed that transform brand adorers into brand advocates who drive sustainable buying behavior.

Tesco, for instance, manages its core loyalty program using behavioral data. It mails quarterly statements to all Clubcard members based on their individual behavior and shopping patterns. Each statement contains cash back based on buying activity during the previous quarter, as well as targeted offers and discounts on relevant products. No three customers get the same statement. Additionally, members have the opportunity to join special-interest clubs, such as Wine Club and Green Club. The program comes full circle, collecting valuable behavioral data for future decision-making across the business value chain.

Think long-term-despite every pressure to narrow your focus, and think differently. Use all the tools available to better understand who a brand’s buyers are and how those consumers define a product’s relevance to their lives. That’s not an end; it’s the new starting point.

Customer data is more plentiful, more accessible and more affordable than ever before. You likely have the information you need to influence consumer behavior; the challenge is to identify and aggregate that data. Databases are the building blocks of long-term brand equity, yielding much more accurate articulations of the consumer target than does traditional, aspiration-focused marketing.

The new, consumer-driven marketing paradigm understands that a product’s purchasers/users define its point of difference through their experiences with a product. Discovering the makeup of consumer-controlled differentiation is the key to brand longevity. Customer-purchase and sales-interaction data is the portal to such a discovery.

How do you get there? Try casting it as a “5-D process”:

1. Discover and aggregate all relevant data about your customer behavior from all sources in order to predictively model that behavior.

2 Define the strategies, program constructs and key performance indicators (KPIs).

3. Design consumer-directed, behavior-based marketing programs and electronic customer-relationship management (eCRM) in line with those strategies.

4. Deploy, execute and manage those programs.

5. Diagnose the results, analyze key metrics and learn what should continue and what should be changed.

The ideal end result of that cyclical process is achievement of a sixth “D”: differentiation, the lifeblood of sustainable brand relationships.

Traditional advertising is part of the marketing-solutions mix, of course, but its role is less central than it once was because changing attitudes is less important. CMOs don’t have the luxury of taking the slow, scenic route to producing tangible results. They have to understand their customer behaviors and use this insight to deliver sustainable differentiation for their brands leading to profitable behaviors.

Zain Raj is CEO and global practice leader, retail brands, at Euro RSCG Discovery, North America. He can be reached at zain.raj@eurorscg.com.