One example of a company doing business on customer terms is Intuit, which has remained the leader in tax preparation software despite efforts by larger companies to dethrone it. The author recounts how Intuit reacted to a bug in its flagship tax program, TurboTax, that affected less than 1 percent of customers. It offered a new copy to any customer who requested it. No proof of purchase was required, however, and Intuit offered to pay any extra taxes and penalties that resulted from the bug. Contrast Intuit’s response with the way Intel acted when flaws in its new Pentium chip were exposed in 1994 (which also affected only a tiny percentage of users). Intel first tried to ignore the problem, and then downplayed it. The company agreed to replace the defective chips only after months of criticism and ridicule that damaged both its reputation and its stock price.
On measurement, the book takes the reader through charts on how to view profitability by customer, and how to think of marketing investments to attract and retain profitable customers. It provides step-by-step guidelines on collecting data, consolidating data, and tracking customer retention. It even suggests compensation strategies that reflect the importance of retention. This is a book that runs the numbers but also recognizes the difficulty of data capture, and offers tactics to overcome obstacles.
Whether all this works remains to be seen, but Mr. Wreden’s book is a landmark attempt to answer the right question at the right time. ProfitBrand is also well written and well organized, with useful “take-aways” at the end of each chapter.
Like the other three books reviewed here, ProfitBrand recognizes changes in the marketing game. But Mr. Wreden’s view of change is more macro than the others. The author traces several distinct periods in the evolution of consumerism from the “mass economy” (the 1920s to the mid-1990s) to the “customer economy” (the mid-1990s to the present) to the emerging “demand economy,” as he terms it.
“The demand economy will give customers the tools and choices needed to demand immediate, personalized fulfillment,” he writes, “every minute of every hour of every day.” One of his examples is the ongoing development of scanning technology that will allow instant ordering from ads, coupons, and even street posters in the future. The good news for marketers is that new data flows and new technology make measuring returns on marketing investment more achievable than ever.
Although availability and accessibility were the market door openers in the customer economy, the bar for value creation gets higher in the demand economy because of the customer’s need for immediacy: Success in the demand economy requires integrated supply chains delivering tailored solutions to customers whenever and wherever they want, increased accessibility through multiple media channels, and build-to-order personalization.
All four books observe and examine emerging truths that may well endure in our new marketing world. But the ultimate truth is that it always pays to learn from the marketplace. Anyone who has been in business any length of time knows that you learn the most from your failures, not your successes. As Harold Geneen, who built ITT in another era, noted philosophically: “It’s an immutable law of business that words are words, promises are promises, but only performance is reality.”
Kenneth Roman ([email protected]) is a former chairman and CEO of Ogilvy & Mather Worldwide, and has served on a number of boards of directors. He is coauthor of How to Advertise (St. Martin’s Press, 2003) and Writing That Works (HarperCollins/Quill, 2002).