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More and more people in the marketing space are starting to talk about doing marketing with social media, or leveraging social media in their marketing efforts, or better yet, and especially coming from the PR front, monitoring the social media space in addition to the traditional channels.

For some reason that started bothering me. And it should bother you too.

Unlike email, which was a new channel of communication with customers, social media is not a new channel. Social media is what transformed the rules of marketing. By providing a platform of participation to your employees, customers and prospects, social media has changed the fundamental pillars of the marketing game. Not only have the rules of game changed, so have the players, the scope, the tactics and the added values - to use the game theory elements of the game.

So marketing has become a new game because of social media. It is not just a new channel to reach and interact with customers. Not realizing that distinction will result in companies not being able to achieve their business objectives. And those objectives have not changed - and were best described by the late Peter Drucker when he said: “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

So the end goal of marketing has not changed - it still is to create a customer. It is everything in between to get to that goal that has changed! And you will not get there by monitoring the new social media channel. The only way you will get there is if you understand the new rules, the new players and all the other elements of the marketing game.

[6/20 update] I actually expanded on the topic on the Marketing 2.0 blog

I was invited to attend The Conference Board meeting on Marketing Effectiveness yesterday. The main theme focused on how companies keep their marketing departments accountable.

Surprisingly, but as most research shows, a majority of companies are nowhere near being able to hold their marketing departments accountable. Not only are some companies measuring the wrong things, a majority of them have no ability to measure anything at this stage. Columbia Business School Professor and Conference Chair Don Sexton further noted that the lack of progress in marketing effectiveness is also visible in the budget process. Research shows that 54% of companies set their marketing budgets based on historical data – clearly indicating that they have no clue on the effectiveness – and only 20% of marketing executives report being able to forecast the impact of a 10% budget cut.

Now in some cases it’s no wonder than companies cannot measure their marketing effectiveness. A new study by The Conference Board, which will be released later this summer, found that half of the companies which reported no progress with marketing ROI had nobody assigned to the task. Duh…

According to Kevin Clancy, another keynoter at the conference, most marketing programs have an ROI that is zero or negative, which could of course be another explanation for why no progress in measuring marketing effectiveness has been made in the last 40 years - people in charge don’t want that dirty secret to be exposed.

One Fortune 50 company which had a few representatives at the meeting had a very interesting approach to marketing measurement, although one that was running into cultural and political barriers. They recognized that marketing is indeed a large multi-variable complex system that needs to be measured as such. You cannot measure the impact of a campaign without also keeping pricing, packaging, and competitive changes into the mix, just to name a few variables. So they hired a bunch of PhD’s in systems dynamics and operational research to measure marketing as a complex system. Unfortunately, and because they lack marketing expertise, marketers are resisting cooperation with them at this time.

A new study found that if you have a UK Birmingham accent, you are likely to be perceived as less intelligent than if you have a Yorkshire accent - in fact a Birmingham accent will make you sound more stupid than silence.

A friend of mine spent hundreds of thousands of dollars on making his online service a few tenth of a second faster.

What’s the connection? Are people with certain accents really more stupid than others? Do people using online services really care about improvements that range in the tenths of seconds response time?

No - it’s the hidden or unconscious associations that lead to perceptions that make all the difference. In the case of Birmingham, people associate the city with crime, unemployment and other negative things - leading to the perception that people with a Birmingham accent must be less intelligent than others, including silence. In the case of speed of online offerings, people associate that with ease-of-use. If you enter a query and the results come back in a jiffy, you will perceive that service as really easy-to-use.

So do you know what your customers are unconsciously associating with some of your product or company attributes?

It could make or brake your offerings…

We recently launched a new blog on the future of marketing - and called it marketing 2.0 - a term that surely will draw some criticism, but which very well describes the conversation we want to have.

Where is marketing going? Why are the marketing processes that we have grown accustomed to no longer delivering the predictable results that we were used to? What should we change to succeed?

We have assembled a great group of people to lead this conversation - including David Berkowitz, Paul Dunay, Lois Kelly, Valeria Maltoni, David Rogers, and Constantine von Hoffman. You can expect additional contributors to join the group over time.

We hope you will enjoy and join the conversation.

The BRITE conference at Columbia was a great one. Much has been written about it already by David Berkowitz, Tom Guarriello, Max Kalehoff, Lois Kelly, Valeria Maltoni, Amanda Mooney, Christine Whittemore and then also on the BRITE blog.

Here are some of my (heavily biased) takeaways from the conference:

• Many companies are truly in need of help - their traditional marketing programs to attract and retain customers have become much too costly.
  And when a competitor in their space figures out the secret formula, the benefits to that competitor are game-changing, not just level-setting.
  There were some good examples of that at the conference - including Eli Lily (more on them in a future post), Cisco, GE, P&G and Lego.
• Companies have to radically rethink how they do marketing and how they staff it - marketing can no longer be viewed as a collection of programs, but instead as way of behaving in the marketplace.
• Many marketers are complaining that in the new social media world there are not enough opportunities to reallocate their traditional fat advertising budgets - i.e., not enough keywords in search marketing, etc. Forgive my French, but isn’t this looking at marketing in the social media age totally ass-backwards? Maybe you do not need the same traditional fat budgets to achieve the same results - what do you think it cost to produce the coke/mentos video, which resulted in increased sales of 5-10% for Diet Coke and 15% for Mentos? Sure, programs like this may not be replicable, but neither are the results of ad campaigns. Another good example is Amazon – with zero “interrupt” marketing dollars in their budget – which does not mean they don’t do marketing, in fact they are a marketing machine.
• It is clear that agencies are trying hard to redefine themselves, which is a must if they are to survive. Most of them are just using new buzzwords to talk about the same old programs that they’ve been doing for ages. Saying that you will be delivering 3D marketing programs – the right message to the right person at the right time and in the right place does not make it so. Interrupt marketing messages delivered on a computer screen, a cell phone screen, even if powered by GPS, or in an electronic game will work no better than they do on a TV screen or in print. And to say that TV viewing has not gone down as a way to continue to justify non-measurable expensive ad campaigns is totally ignoring what really happens in that marketplace.
• Many marketers have learned that they need to put the customer at the core of their offering, not their company nor their product. It does not matter how a person feels about your product; it matters how they feel about themselves in the context of your product.
• In an attempt to fix the fact that 90% of all new product introductions fail - mostly because they do not address the right market requirements - there may be a bit of an over-correction in the direction of getting your customers involved in designing your products. In certain product categories as with disruptive innovations, getting your customers to help you design your products may in fact not yield the best results. Do you think we could have had the walkman or the iPod through customer co-creation? All that said, an over-correction is still better than the alternative.
• The barriers to marketing innovation are still based on the same fundamentals – which are mostly organizational and cultural in nature. Maybe we need to invent a new marketing department – one in which either nobody reports to the CMO, or one in which most people report to the CMO. And like Eli Lily, maybe we need to change our event horizon and measure it in years instead of in quarters.
• While most companies are confused about what communities really are and how to leverage them, some examples presented at the conference, including the Eli Lily communities, the Lego community, or the P&G innovation communities, clearly demonstrate the power of those communities on achieving game-changing results or results that would just not have been possible without them. You need to be willing to let go of control, go where your most ardent community members hang out, and be supportive but not necessarily provide incentives.

So all in all BRITE was a great conference, with some thought provoking session & presenters, some great insights, and best of all – good discussions and conversations among the audience members. Let’s hope that the blog conversations will extend the life of those great face-to-face conversations.

I’ll be attending the BRITE conference at Columbia this week and I’ll be leading a session with my partner Lois Kelly during the CMO day. The broad topic is: what do you do when traditional marketing is no longer working for you, when customers and prospect don’t want to hear from you, when they don’t care that much about you to give you meaningful feedback, and when all the cool new viral stuff only seems to work for others. If you have ideas or examples that might work well, please post a link in the comments.

We will also be blogging the conference - with 10 of us (David Berkowitz, Don Dodge, Paul Dunay, Tom Guarriello, Max Kalehoff, Lois Kelly, Valeria Maltoni, Amanda Mooney, and Christine Whittemore) participating and reporting on what promises to be very interesting discussions.

There are still a few seats left - so if interested please register. You can get a 10% discount by using the code briteblog08 during the registration process.

We hope to see you there or to receive suggestions for our session through the comments.

A new report jointly produced between Forrester Research and Heidrick & Struggles paints a bleak picture of the (d)evolved CMO (Chief Marketing Officer). You can download the report here, but only after agreeing to become a “lead.”

While two thirds of CMOs want to get a higher involvement with business strategy development and increased P&L responsibility, the reality is that far too many of them are in fact disconnected from where the real action is.

Some of the findings are mind-boggling:

• Only 45% of CMOs have responsibility for product, service or solution development. Only 37.5% are responsible for pricing.
• Only 27.5% are in charge of sales  training.
• Only 25% are responsible for in-store buying experiences.
• Only 12.5% are accountable for the activities associated with customer service and support.

How can you be the Chief Market Listener and not be in charge of what customers say after they buy your product? If you are the Chief Market Officer, how can you not be in charge of deciding what gets sold in the marketplace and how much it will cost the buyer to acquire it? And if you are the Chief Customer Officer, how can you not be in charge for the in-store customer experience? The sales training issue is either a cause or effect for the ongoing rift between most sales and marketing department…

But wait, it gets worse…here is some data about their top objectives:

• Only 27.5% have “increase customer life-cycle value” as one of their top objectives.
• “Innovate” is an objective for only 40% of the survey takers
• Only 27.5% have “increase customer retention” as an objective

And just when you thought you got the extend of the sorry state of CMOs, you find this:

• Only 12% consider “personal knowledge of your customers” as one of their top 5 competencies to their personal success.
• Only 17% consider technology savviness to be one of those top 5 skills

Thankfully (sarcasm intended), more than 65% see people management as one of those top skills. But wait a minute…isn’t it leadership characteristics that get you into the C-suite? Management skills are so Industrial Revolution/last century skills…

Other interesting tidbits from the report include:

• On a scale from 1-3, with 3 being the most important, CMOs found marketing measurement (2.55) to be way more important than customer community development ((1.89) and social computing/web 2.0 tools (1.73).  That goes hand-in-hand with the fact that 92% have advertising as one of their main responsibilities.
• There is room for new industry marketing organizations, conferences and publications. Those three resources come in dead last in a list of 16 resources that CMOs ranked most valuable to their professional career development.

 The recommendations from the authors to improve the situation?

• Spend more time on career development
• Seize the opportunity to lead the organization towards customer-centricity
• Build credibility through the marketing team and leadership contributions.

How about not accepting the CMO job if it does not mean you are really the Chief Market Officer, or the Chief Customer Listener, or the Chief Voice of the Customer Officer, or the Chief Customer Lifecycle Value Owner?

As I was responding to some discussions in the Marketing 2.0 group on Facebook, I started talking about the relevance of the 4 P’s in marketing, which of course is one of the cornerstones in marketing education worldwide.

But are they really relevant anymore?

Let’s look at them one by one:

• Product - I guess this one stays - although are you sure that people are always buying your “product”? Or are they buying an experience associated with your product? Or perhaps a “personal identity” that comes with the use of your product?
• Place - is amazon.com a place? Is a search engine placement a place?
• Promotion - people are not taking your corporate BS anymore…And according to the Strategy and Business article I posted in the Facebook “posted items,” 80% of all insurance policies will be bought based on information not provided by the insurance companies! So does promotion in the insurance industry still matter? Maybe - if you think that the company can participate in the creation of the user generated content that people will base their decisions on without hiring corporate “shills.”
• Price - many new business models have funny pricing schemes - as in “free”

In the late 80’s some academics (I cannot remember who they were) came up with a replacement for the 4P’s - the 4C’s. While not perfect, the 4 C’s may sound a little more modern/appropriate for the times:

• Customer instead of product
• Communication instead of promotion
• Cost instead of price
• Convenience instead of place…

Using the 4P’s as a roadmap for success for new products may not be the best roadmap to use anymore… It is a bit like using north, south, east and west as guides to find your way in deep space.

Thoughts?

[Tags: marketing 4 p's 4 c's marketing death valley marketing 2.0]

McKinsey Quarterly has an interesting article on the evolving role of the CMO (requires subscription). In it they argue that while most CMO’s have their hands full, their role should be further expanded - to represent “the voice of the customer” throughout the organization.

(Yes! finally some common sense on the role of the CMO from an authoritative voice …)

In the face of a rapidly changing customer - ignoring “push” marketing and making buying decisions based on their own research rather than sales recommendations - and with bloggers and other consumer-generated content now determining corporate reputations, companies need to change the way they meet customer needs, the way they innovate, and the way they behave in the marketplace. That will require change efforts across the entire corporation, and who is better positioned to lead those charge than the CMO?

You don’t buy the fact that “push” marketing is dead? Then consider this: in consumer electronics more than half of the buyers buy products based on their own research rather than advice from sales staff. More than 60% of baby boomers use the Internet to supplement their doctor’s advice (so pharma marketers have to rethink the pitch to doctors). And by 2010, it is expected that 80% of all insurance purchases will be based on consumer research rather than information supplied by insurance agents.

You are not worried about consumer generated content? McKinsey Quarterly says” “User-generated media account for almost one-third of all the time individuals spend on the 100 most visited US Web sites, up from roughly 3 percent just two years ago.”

The change in consumer buying habits is broader than some may expect. It is not just that the number of customer touch points with a company has increased dramatically, there is also a more rapid growth of the low and high ends of the the market at the expense of the middle.

So a marketer does not just need to understand the changing customer need as it relates to their product or service, they also need to understand the changing buying needs of those same customers and adapt the whole company to deal with those changes.

[Tags: CMO marketing corporate reputation buying habits customer needs voice of the customer]

Reading Jim’s post and reflecting on two conversations I had this morning - one with a relatively senior person at a major financial institution who told me that the biggest barrier to adoption for enterprise 2.0 tools in his company may be the fear of a flatter organization, another one with a sales rep from one of the two largest enterprise software companies who was trying to convince me that they now cater to companies like ours, with 2 people, a goldfish, and a virtual network of freelancers - got me thinking about the long term prognosis for large companies in general and the fate of large enterprise software companies in the face of an increasingly “atomized” workplace, or as FAST company said in a recent article - a world of a billion single-person enterprises.

I know…as Larry Keeley says, we always overestimate the amount of change in the short term, but we also underestimate the amount of the change in the long term. I wonder how many large enterprise software companies are thinking about this future…or how many large companies in general for that matter.

WARNING - big changes ahead…

[Tags: future of work organization 2.0 enterprise software hierarchy enterprise 2.0]