Marketing Technique: The branded experience - So, how many Ps in marketing?

The staff a company employs and the systems or processes it uses play a key part in forming the impression which shapes or undermines customer loyalty. Gary Ransom of Forum Europe talks to Ken Gofton.

The staff a company employs and the systems or processes it uses

play a key part in forming the impression which shapes or undermines

customer loyalty. Gary Ransom of Forum Europe talks to Ken Gofton.



All marketers are brought up on the four Ps: the right product, in the

right place, at the right price and with the right promotion.



The Chartered Institute of Marketing, I recall, added a fifth and very

important one: ’at a profit’.



Now we have two more: ’the right people’ and ’the right processes’. But

to be fair, a strong case can be made for saying that these latest

additions are the missing ingredients which have been holding some

companies back.



They’ve been tossed into the pot by The Forum Corporation, a

Boston-based consultancy specialising in customer satisfaction, customer

loyalty and training. And they come about not so much from a new theory

of marketing as from refining an existing line of thought, says Gary

Ransom, vice-president of Forum Europe in London.



’We are constantly questioning what drives loyalty,’ he explains. ’You

can look at all the strands: how to measure it; how to identify the

revenue streams in a long-term relationship; and issues such as

life-time values and segmentation of the customer database.



’As we push further, we find we can sum up what we are talking about as

’the truly branded relationship’. It covers everything from the way

customers hear about the organisation, to the expectation they have of

its products and services, to how they are handled when they have a

complaint or need to use the warranty.



’Businesses tend to focus on the four Ps of marketing, but we believe

that if you add ’people’ and ’processes’ then you have a much more

powerful brand.’



How we got here



Consultancy waffle or genuine insight? It is worth taking a step back

and looking at how we reached some of the modern thinking on customer

loyalty.



First, that word brand. In marketing terms, it is about instant

recognition and emotional values as well as product values. It means an

indelible impression. Second, we’ve all absorbed that stuff from Bain &

Co, about how much cheaper it is to retain and nurture existing

customers than it is to replace them with a constant supply of new ones

More recently, there have been attempts to pin down the link between

customer satisfaction and customer loyalty.



But mere satisfaction isn’t enough. Xerox did some research into this in

the US. It found that if customers assessed the company on a scale of

one for total dissatisfaction to five for complete satisfaction, those

who gave it a four rating were six times more likely to defect to a

competitor than those who gave it a perfect score.



Telephone bank First Direct is not a client of Forum, but Ransom is a

customer. The bank claims to get half of its new business from

referrals, and that’s how he was recruited. ’A colleague who banked

there said ’It has changed my life’. How many banks have that impact? In

fact, First Direct is a powerful example. It totally managed its

interaction with the customer. And it is branded in the sense that you

can always expect the right level of service: friendly, knowledgeable

and informed.



’The most common excuses you would get elsewhere, like ’the computer’s

down’, don’t happen. And you know it is due to the organisation, rather

than a few star players. They all have the training to accomplish what

they need to.



’First Direct understands that when I am dealing with my money, I want

the assurance that my instructions have been understood and carried out,

and all in a friendly way. It is not about bricks and mortar, it is

about people.’



Iceland was once a fast-expanding and award-winning operation, but it

has lost some momentum in recent years. The company had already taken on

board the fact that its future could not be restricted to frozen

foods.



Forum was called in because it was felt that the management structure

might be the problem. After researching the situation, it concluded that

Iceland has a powerful customer franchise among people who require value

for money, and also want outlets on the high street. This bond was

stronger than the store itself had realised, but it was in danger of

being lost because the customers were frustrated over issues such as

promotions not running long enough and items being out of stock.



’Iceland has discovered that its future is about the customer,’ says

Ransom. Everyone has spent time - from four hours to two days - learning

a new set of values, about how to look after the customer and how to

recreate the buzz which the group believes it once had. The ideas have

been fed down from the top, so there can be no doubt about management’s

commitment to the idea.



Queuing is one example. All food retailers are keen to cut queues and at

Iceland, extra staff would be moved to the tills if the lines were

building. It was part of the culture, however, that men didn’t work the

tills. Now all staff, including store managers, are primed to volunteer

for the tills if they see that the queues are getting too long.



’We know, and they know, it will take time,’ explains Ransom. ’But

they’re starting to see their managers come alive and excel. Already,

they’re seeing results improve.’



But enough of ’people’, what about ’processes’? Forum quotes one example

of a hotel chain which analysed its customer complaints and found it was

getting a surprising number from people who claimed to have booked rooms

with king-size beds and had failed to get them.



The problem was that visitors from the US were demanding king-size beds

even when they had not booked them. With insufficient information about

guests’ specific requests, hotel staff were changing the rooms allocated

to people who had asked for those beds. Now the system has been changed

to prevent this happening - a much cheaper alternative than putting

king-size beds in every room.



A very different example concerns construction plant manufacturer

Caterpillar.



’I was talking to a guy who runs Caterpillar in Asia/Pacific, where the

competition is particularly fierce,’ says Ransom. ’The way they are

differentiating their offer within the next six months is that every

Caterpillar they sell will be able to communicate its health every day,

via satellite, to a computer in Illinois.



’So now there will be a relationship, instead of just a transaction.



The machine will be sold, but the umbilical cord will not be

severed.



The dealer will be able to ring the contractor way out on some isolated

site and say ’we’ll bring a new hub the next time we visit, because the

left one is showing signs of wear’.’



The right philosophy



Ransom believes that the ’branded customer experience’ philosophy is

relevant across all businesses: consumer and business-to-business,

products as well as services, even the FMCG sector. However, he thinks

the greatest scope for FMCG marketers might come from building

relationships with their trade customers. In the US, the broad pattern

has been that powerful manufacturers have screwed down the margins of a

fragmented retail trade.



Here, the reverse has been true. Either way, Ransom argues for

partnership.



’The best example I came across was Procter & Gamble and Walmart in the

US, and it began with Pampers. Electronic point of sale was just coming

in, giving retailers much more information about product sales.



’They were half a day into a two-day meeting when Stan Walton (the

founder of Walmart) put his feet on the table and said that what he

wanted was everyday low prices - always a good price and always in

stock. He wanted P&G to split the money it allocated to Walmart

promotions with the store, so that both sides benefited, and he wanted

to be able to refill any of his 360 stores at an hour’s notice.



’Over the next two years, a P&G team moved into Walmart’s HQ, and

together they created a system. Trucks would leave the P&G loading bays,

heading for a broad geographical region. They were satellite-linked, and

when Walmart knew which stores were running low on Pampers, the drivers

would get their last-minute instructions.



’The system has since been rolled out to other products. Under US law,

what you offer to one retailer has to be offered to all retailers.

Walmart had no problem with that because it knew it would take the

others a long time to catch up. And it gave P&G a sizeable advantage

over its competitor, Kimberly-Clark. So this is one of the answers for

FMCG: working in partnership.



Arrogance on either side will tend to keep it from being as effective as

it could be.’ k



A shortage of champions



In a recent NOP survey commissioned by Forum Europe, a third of the

population was unable to name a single company which they regarded as

excelling in customer service. A further 42% identified firms which were

not household names. Marks & Spencer came top with a mere 7%, followed

by Tesco (5%) and BT (4%).



’What we wanted was to identify the best and say ’these are the

companies that are setting the pace’,’ says Forum vice-president Gary

Ransom. ’We were initially gobsmacked and depressed to discover that the

highest percentage any organisation got was 7%. We thought ’there is no

story here, we can’t give victors’ laurels to anyone’.



’But I think what it shows is that those which are ahead of the herd

have a huge advantage. As products become commoditised, it is the

quality of the total experience that will differentiate companies.



’This is a much less happy public than we had thought. Their

expectations are rising. The British consumer has seen what real service

means, whether they have encountered it at Disneyland or Pret a

Manger.’



The other interesting point from the survey, says Ransom, is how many

people named their local greengrocer or butcher. Such owners of small

businesses understand the importance of relationships, he claims, and

big companies can do the same. ’For a large chain like Kwik Fit to

recreate the experience that you would get from a caring local supplier

is very impressive,’ he says.



’A few months ago, my nine-year-old son wanted me to describe my

job.



I thought about it and then told him that a lot of what I do is helping

big companies act like small companies.’



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