The 3 Key Critical Success Factors
He almost certainly has the 3 factors critical to success in the new millennium
The commercial world has changed substantially over the last decade and a half and the attitude of consumers has changed in parallel. Many modern business thinkers are rejecting the old analogue, serial, constant state models for analysing and understanding the business world in which we operate. Instead they elect for a more chaotic, constantly changing view.
For example one of the major factors impacting any organisation that hopes to persuade people to buy its products, whether those products service the business to business market or whether they are targeted at consumers, is the fact that the customer is a lot more sophisticated now. All market research companies, when recruiting respondents for quantitative surveys, depth interviews or for focus group work, try to exclude participants who are drawn from the world of marketing. The reasoning goes that people who work in marketing can decipher all of their subtle questioning and probing techniques to understand what the real questions might be. They can then shape their answers to mislead the interviewer, facilitator or group and therefore prejudice the results.
The problem is that excluding marketers does not exclude the problem. In fact most people nowadays understand the subtleties of the marketing strategy and are thus deeply suspicious. As Admap noted recently when quoting a young larger drinker 'What you don't seem to realise is how much we know about what you're doing, and what role you need us to play. You think that what you're doing is clever and remote, but we understand it.' And elsewhere a focus group saw a young housewife ask 'where's the USP in this product?'. These incidents are increasingly common, and most market research specialists, when pressed , can quote similar examples. After all marketing is now a part of every school syllabus that includes a basic understanding of business studies. Those of us who were the hidden persuaders are now the revealed in all our manipulative ugliness.
What this means is that consumers are not just more savvy about what we are up to, they are also more cynical and sceptical too. They know that 'new' and 'improved' too often means 'the same but in a new package'. They discount half of what we say and ignore the rest. As the Henley Centre summarised it some time ago 'In an increasingly complex and commercially-orientated world, consumers are becoming more and more cynical and distrusting of every corporate body and communication with whom they come in to contact.'
Alongside of this consumer cynicism we see increasing commoditisation where price is used as the only differentiator as product unique selling points become eroded ever more quickly or disappear altogether. More cynical and aware consumers see through the branding and demand more competitive prices or else they forsake the brand and buy the lower cost 'me too' alternative. As The Economist put it "what is happening to brands has a significance that goes well beyond the makers of cigarettes, soft drinks and soap powders…The oddity of modern times is that it has become so much harder to make a product that is genuinely different from or better than the competitors." Even Luis Vutton, one of the world's most well recognised high quality brands, is finding it ever harder to exact a brand premium for their product.
So increasingly the relationship between the buyer and the seller is the only differentiator. How hard an organisation works at this will make the real difference between becoming a simple commodity where price rules the decision making process, and having a higher value and longer lasting relationship. The problem is that many organisations think that they have a relationship with their customers but actually they do not. For example in the personal finance sector, research shows that consumers can have relationships with up to sixteen different financial institutions, but very few sell more than one product to one customer. Yet many of these suppliers assume that these very customers select their organisation alone.
Even retailers are not able to confidently claim that their customer loyalty schemes are successful. As research specialists Mintel noted 'while more than 60 per cent of consumers take part in loyalty schemes, they are more loyal to collecting points than to retailers'.
So, in their desperation to market their products and services, marketers spend more and more on marketing communications activities. In an effort to be heard each of us shouts louder and louder. Just look at the statistics. In 1990 there was £8.9 billion of all up advertising expenditure in the UK on above the line major media advertising. By the year 2000 this figure had risen to over £17 billion. That is one hell of a lot of noise against which each of us seeks to be heard.
And, on top of this, there is ever more media. Over a little more than a decade we have seen a huge rise in numbers of television channels. As little as fifteen years ago there were only four channels from which to select and almost any week night if you wanted to reach more than 18 million viewers you could take a spot in the break on News at Ten. Now, according to the IBA, we have more than 500 channels to select from and are lucky if we reach more than 10 million with any of the major terrestrial stations at peak viewing time.
Finally we have the impact of the web. This has changed everything. Now our customers actually control the relationship that we have with them. Increasingly they set the parameters for this relationship giving some of their personal details to those that they trust, and rejecting any relationships with those that they do not. Worse yet, the relationship is no longer simplex (like the old transatlantic telephone conversations where only one person could talk at a time, and if you both talked together it cut out), or duplex (both parties communicating with each other), but triplex (we talk to them, they talk to us and then they talk about us to each other). This means that they can instantly tell others about exactly how badly we have treated them.
But that's not all. The web also sets new standards in relation to individualisation, or rather virtual individualisation. When we visit Amazon and buy a book, they track our purchase history and suggest other publications that might be of interest. Their apparent ability to look on each of us as an individual customer though we are just one of millions, and no matter what our value of spend, raises the bar for everyone else. If the investment management organisation that we have just invested our £7,000 annual ISA with, fails to even be able to provide a current valuation and acknowledge our existence, then what is going to be our attitude towards them in the future?
So what do we do in response to such drivers. Well analysis of such business and environmental trend data a suggests that there are some underpinning forces at work that mean we have to effect a sea change in our approach to our existing and prospective customers.
In fact, this analysis suggests that there are only three factors that are critical ingredients in our success in the first decade of the twenty first century. These are:
1. Integrity
2. Selling Skills
3. Relationship management
Each of them are bound together in a virtuous circle that ensures our survival and prosperity. Let's look at each in turn.
Integrity
In the face of cynicism and scepticism only the honest will survive and prosper. We can no longer fallaciously claim that this our products are 'the best', that the very ordinary price we offer is 'special', or that this old but slightly revamped product we are offering to everyone is 'new and exclusive'.
This does not mean we have to tell our customers or prospective customers that the bottle is half empty, but it does mean that we cannot claim that it is almost full either. We need to treat our customers as adults. To tell them that we will offer them the best possible product or service for a fair price. Make sure that they understand that if they want to buy at the cheapest possible price then we cannot afford to give them any added value. But if they want to pay that bit more, then we can. They are reasonable people. They expect no more than this and will and do understand.
So a large element in delivering on integrity involves being more honest with our customers. Successful organisations have already recognised the importance of this factor. Take a look at the strap line on the Tesco's Clubcard campaign and you'll see that it simply states that 'every little bit helps'.
But true integrity goes way beyond the marketing communication. Integrity it has to be pan organisational and endemic for it to be real. It is also about the way that you treat your staff. Are you honest with them? Do you treat them as adults and deal with them with respect or do you still support command and control functions? It is about the way you behave towards your suppliers. Are you honest with them too? Do you take their needs into account? It is about informing all of your business actions and provides the over-riding principle against which the organisation can be measured.
Selling skills
Selling skills is not just about face to face sales, but refers to all of the marketing communications mix together. It deals with everything to do with the way you sell your products or services.
And of course the foundation on which critically successful selling skills are built is the integrity of the organisation. The greater the degree of integrity the more convincing the selling skills, because the more you can believe the sales pitch.
But good selling skills are also about compelling communications. With so much noise going on in relation to advertising and promotion and with so many media options bombarding the consumer it has to be the best it possibly can be in order to work at all.
It has to attract attention and generate awareness of course, but it must be single mindedly targeted and precisely focused on your specific market place and based on a deep understanding of the customer or prospective customer and their wants and needs. That means having the best creatives who truly understand your business, your sector and your customers and can turn that understanding into marketing communications materials that not only generate awareness, but stimulate interest, desire and action.
It also means that you have to understand your customers well too. You need to be actively researching your market place to gather their views, poll their areas of interest, understand the drivers that shape their lives and their responses to your product propositions, and note how all of these change over time.
Relationship Management
Good relationship management is much more than having a customer database and mailing them with your latest offer on a regular basis. It is about knowing your customers purchase behaviour as well as their purchase history.
It is about understanding their likes and dislikes, and being able to recognise them as segments, but talk to them almost individually. It is about understanding who are the most valuable customers (not necessarily just those that spend the most) and making them more valuable. It is about knowing the customers that are not that valuable, but could be. And it must be about getting them to buy into the idea of you relating to them.
Which, of course, brings us back to integrity. The most critical success factor of all.
But please do not make the mistake of one major blue chip CEO who allegedly said on seeing this model – 'integrity eh? How do we fake that then?'
