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Published: January 31, 2006

 
 

Results-Driven Marketing: A Guide to Growth and Profits

If brand attributes have to be relevant to consumers, so, too, do brands themselves. In “The Relevance of Brand Relevance,” David A. Aaker, vice chairman of Prophet Brand Strategy and professor emeritus of marketing strategy at the Haas School of Business at the University of California, Berkeley, explains: “A brand in decline often is in trouble not because of an intrinsic problem, but because the product category or subcategory with which it is associated is fading.”

Professor Aaker cites the example of hardware, paint, and flooring stores, which have struggled to remain relevant as Home Depot and Lowe’s, with their broad selection of products and services, have subsumed existing categories and, in effect, created a new kind of brand. The management of brand relevance requires a hardheaded approach. It also brings us to the next touchstone.

Connecting with Customers
Understanding customers is a good start but is not in itself sufficient to drive growth and profits. Instead, marketers — and the brands they promote — must connect with customers in new and more efficient ways.

In “The Advertising Saturation Point,” Evan Hirsh and Mark Schweizer assert that far from throwing advertising money at the problem, companies should adopt a more scientific approach. Inspired by economic theory, the authors argue that there is an optimal level of advertising spending for any given product. Such “saturation points” may or may not be identifiable for every type of product, but they are clearly evident in the automobile industry. Every car brand, be it Ford, Chevrolet, or Toyota, has its own unique optimal saturation point, argue Messrs. Schweizer and Hirsh. What’s more, “each can be predicted in advance, before a budget is set, and thus can be used in planning advertising spend strategies.” Best of all, these saturation points correlate closely with results.

Elsewhere, the effectiveness of advertising is also being questioned. In the consumer products industry, for example, consumers are increasingly resistant to conventional advertising and marketing, making it ever more important to connect with them at the point of purchase. Where better to start, then, than out in the field with the merchandising sales force? In “Making the Most of ‘Feet on the Street’: A Better Outsourced Sales Force,” Booz Allen’s Edward Landry and Jaya Pandrangi explain that in the rush to outsource merchandising sales forces, companies’ lack of analysis means they are missing important opportunities.

Building Relationships
We next move from connecting with customers to the thorny issue of building results-driven relationships with them. In “The Myth of Customer Satisfaction,” Mark Klein, chief executive of the marketing consulting firm Loyalty Builders, and Arthur Einstein, a cofounder and former principal at the advertising agencies Lord Geller Federico Einstein and Lord Einstein O’Neill, question one of marketing’s sacred cows.

“Why are customers who say they’re satisfied not necessarily repeat customers?” the authors ask. “Because satisfaction is a measure of what people say, whereas loyalty is a measure of what they actually do. Many managers still don’t recognize this fundamental difference, so they use customer satisfaction and customer loyalty interchangeably, as though they were synonyms.”

Building profitable customer relationships is also the theme of the next two chapters in Results-Driven Marketing. In “The Barista Principle: Starbucks and the Rise of Relational Capital,” Ranjay Gulati, the Michael L. Nemmers Distinguished Professor of Strategy and Organizations at Northwestern University’s Kellogg School of Management, Sarah Huffman, a former research fellow at Kellogg, and Gary Neilson, a Booz Allen senior vice president, explain how the success of Starbucks was grounded in its unerring focus on relationships. And “A New Window onto CRM Success,” by David Moloney, formerly of Booz Allen, and Robert Bustos-McNeil, a Booz Allen senior associate, sheds light on how leading companies are using new techniques to analyze lifetime customer profitability and drive results.

 
 
 
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