Relationship Marketing: strategies for 1993 and 2016

Relationship Marketing: successful strategies for the age of the customer written by Regis Mckenna, was published in 1993. At that time, Mckenna argues that a shift occurred from a company based economy to a customer-driven economy, where advertising that “suckers” customers didn’t work anymore. Further, he argued that there was an evolution from a marketing driven approach to a market driven focus, where customers took control; we entered the “age of the customer.”

Was Mckenna’s book in 1993 a Machiavellian prediction for what was to come, or have we always lived in the “age of the customer?” A Forbes article claimed that 2014 was the beginning of the “Age of the Customer,” and asked the question: are you ready? A more recent Forrester study highlighted digital transformation in the age of the customer in October of 2015, which suggests that “the past five years have marked the beginning of the “Age of the Customer,” in which technology and economic forces have put customers in control of their interactions with businesses.

When did the age of the customer really start? If you ask me, it started in the middle ages with inception of modern trade, but consumerism started around 1760 with the industrial revolution, which eventually led to mass media in the 1900’s. If you’re reading this, you’ve been living in the “age of the customer” your whole life, but the methods of communication have evolved: word of mouth, books, newspapers, radio, t.v., email, and THE internet.

Getting back to Relationship Marketing…

“Starting with the customer will guide a company’s product, market, and corporate positioning decisions – and strategies to implement those decisions.” Mckenna

To further his point, marketing isn’t a function; it’s a way to do business. Put another way, marketing is everyone’s job – creating and sustaining relationships with the customers and industry leaders. When organizations integrate customers into the product development process and provide top-notch service, they are establishing a foundation for success.

In addition to redefining “marketing,” Mckenna argued that the old way of marketing is too slow: idea, research, develop a product, test the market, and finally go to market. That approach didn’t work anymore, because the target is always moving and marketers need to keep adjusting and altering their course…and that was written in 1991. That point is even more true today, IF there can be degrees of truth.

With a new approach to marketing, comes a new objective; the goal of marketing is to own the market, instead of a “market share” mentality. In 2015 M&A activity broke records and part of the reason why this happened is because organizations are making strides to take over markets. We see this in finance, hospitality, technology, healthcare, etc. Organizations aren’t happy with a piece of the market, they want to dominate.

Aside from acquiring customers through acquisitions to own the market, an organizational focus on its customers will pave the road toward customer mindshare, which leads to wallet share. Mckenna pointed out that market driven companies initiate a dialog with the customer and with the market itself. That’s how mindshare is gained. Clever marketing and a barrage of advertising doesn’t work, unless the customer is at the center of everything. Positioning needs to start with the customer: “It’s how customers think about you in relation to your competitors.” Mckenna

Typically when you hear the word “positioning” you think of advertising and the internal strategy to communicate with customers, but advertising should be the last portion of the marketing effort, not the first. It should be used to reinforce a products position. In his book, Mckenna defines three attributes of “dynamic positioning:”

  1. Product positioning – not focused on product specifics
  2. Market positioning – industry influence
  3. Corporate positioning – financial success

To take it further, Mckenna argues that word of mouth testimonials are more believable than any advertising / marketing. This was before Facebook, Twitter, and LinkedIn, so imagine if those powerful social tools existed in 1991; Mckenna might have spent hundreds of pages talking about social sharing impact.

While on the topic of sharing, McKenna had some interesting points about the buyer journey and the role that marketers play. He suggested that marketers need to focus on educating the market about your product, company, and industry. More recently, the great people at CEB reconfirm this point in The Challenger Sale and The Challenger Customer that suppliers need deliver commercial insight; buyers need to be educated, not “sold to.”

Selling and marketing lines have blurred and strategies should be aligned. When developing a market positioning strategy that is customer centric, advice that was relevant in 1991 is still relevant in 2016. Mckenna said that developing a positioning strategy begins with two steps:

  1. Understanding your company
  2. Understanding your market

It is a simple concept, but it forces you to think about how to hold constructive conversations that create positive relationships with customers.

Mckenna concludes Relationship Marketing with advice about deciding on strategy. His message still rings true, that we still suffer from analysis paralysis. Let’s face it, marketing plans sit on a shelf and collect dust. Instead of marketing plans, Mckenna suggests that people meet regularly to plan strategy, make sure it’s implemented, and analyze it’s impact. There are three steps:

  1. Input
  2. Analysis
  3. Synthesis (manipulate ideas)

In closing…

Relationship marketing is a timeless concept that enables organizations to see their customer’s requirements in a more personalized way so that the chances of defection are diminished. It’s different from conventional marketing where the customer and supplier position each other to achieve short-term business goals. Relationship marketing benefits everyone involved in the process. Customers benefit from better products and services and organizations get loyal customers and market domination (not market share).

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