Let’s take a walk down memory lane to better understand why the answers to our problems—recession and slow sales—have changed, and how integrated multichannel selling has become the must-have instead of nice-to-have strategy for a business. Let me be candid here: I am not old enough to have experienced the whole progression. I have to rely on the experience of the marketing giants on whose shoulders I stand today, so here I present a quote from the book Innovation in Marketing by Peter Doyle and Susan Bridgewater.
“Until the late 1950s, the world was characterized by excess demand. People had to queue or wait to buy new cars, telephones and products of all kinds. Quality and service standards were often appallingly low. In normal periods, companies with modern manufacturing facilities had little trouble selling their products. But during the 1960’s this began to change; countries had recovered from the ravages of World War II and the South East Asian manufacturing miracle began to take up speed. Gradually manufacturing capacity began to exceed normal demand. Excess capacity began to characterize more and more industries—cars, steel, wine, electronics and many others.
In the new era, marketing rather than manufacturing become the basis for competitive advantage. The issue becomes how to create consumer preference rather than having the ability to produce products and services. Finding manufacturing capacity was much easier than creating unique brands.
As the discipline of marketing evolved, its meaning changed. During the early period, the 1950s and ‘60s, marketing was synonymous with selling. The task of marketing was seen as getting customers to buy what the company produced. The key techniques were viewed as advertising and sales promotion. In the late 1960s and early ‘70s, however, there was a fundamental change. Marketing was transformed from a concept based on selling to one based on understanding the needs of customers. The new idea of marketing was employing market research to understand customer wants and expectations and then designing and delivering products and services that matched these wants. Rather than selling what the company produced, a more effective way to compete was seen as having the company offer what the customer wanted. In an era of growing competing for customer preference, this was a very rational change.
During the 1990s the concept of marketing changed for a third time. Implicitly or explicitly, both the two earlier ideas of marketing focused on winning new customers. But today’s concept of marketing emphasizes keeping existing customers. Various studies by researchers and consultants showed convincingly that, for most firms, profit and growth depend upon the company’s ability to create long-term loyalty among its customers. If it could keep its existing customers loyal, then it would be easier to grow, and it would have a lower cost base. In general, the longer a customer stays with a company, the more the customer spends, the less price-sensitive he becomes and the easier he is to service. By contrast, new customers are costly to recruit and spend less than established customers. The new emphasis in marketing becomes measuring customer satisfaction, developing loyalty programs and forging close links with customers to service them better.”
The mid- to late '90s is the time when I started my career, so I lived through the next phases of innovation and can continue the story myself. Mr. Doyle and Ms. Bridgewater, thanks for such a crisp description of the history of marketing. So what happened next? The Internet.
The Internet was the game-changing disruptive technology. For the first time ever in the history of mankind, there was a technology that made it possible to reach markets across the world at a fraction of the cost. Businesses jumped on this opportunity instantly. IT became the new competitive advantage. There were, however, no sales channels available to do business over the Internet. Marketing had to work hip-to-hip with sales teams to develop Internet sales channels. This was the first instance after the 1960s when marketing came face-to-face with sales. Instead of feuding over numbers with the sales team, marketing become responsible and empowered for meeting sales goals.
Over the next five years, from 2000 to 2005, Internet technology matured and the information age began. The world first shrank, then become flat. With the flat world, the competitive advantage went to low-cost producers. Once-powerful brands toppled. Outsourcing, extended supply chains, and globalization returned some of the competitive edge to sales and marketing. However, things were different this time. With quick and fast access to information about products and services, the customer became king and customer-centric marketing became the focal point. With the plethora of marketing channels, changing customer buying behaviors, and extended pressure to meet sales numbers, marketing gradually inched towards selling.
In last few years, however, things have reached their tipping point. First, the customers who were buying based on their preferences are now demanding personalized solutions. They want to co-innovate the products/services that they buy. Take, for example, iGoogle. Google provides the platform and users decide if they want to use it for fun or for knowledge. Second, the information age created so much clutter that customers became immune to old brand-building techniques, such as interruptive advertisements. Instead, they started relying on the advice of the crowd i.e., social networking, influencer marketing, word of mouth, etc. Third, the baby boomers retired, and the X and Y generations became the main markets. That is why the marketing is shifting again. This time it is the quest for owning the customer experience.
Owning the customer experience is key for building a brand because customers co-create the brand. It is key for customer loyalty because customers enjoy the offering, it is key for repeat sales because customers value your services, and it is key for influencer and word-of-mouth marketing through social networks because customers love to share what they co-create, enjoy, and value. It is the key to the next generation of competitive advantage because customers own it!
If customer experience is a viable strategy in good times, it is doubly so today in recession. And this is exactly what our world-class organizations are doing. They are delivering an unbeatable customer experience and leap-frogging the competition in today’s recessionary times.
So what is customer experience?