Marketing Unmasked

I often tell my MBA students, go to any company and listen to what the people there talk about in their frequent meetings. They talk about the product (or service) and when they finish doing that they talk about the product some more, and when that’s over, yes they talk about the product some more.

What about the customer? Most of the people who work in a firm have zero contact with its customers, and the ones who do, including sales, marketing, customer service, have very little power. The CEO of a large firm rarely has a marketing background or mindset. Exceptions, like Howard Schultz of Starbucks and Steve Jobs of Apple, were people who started their own firms from scratch and managed to ride the corporate bucking bronco long enough to build them into large multi- national powerhouses.

There’s a ton of talk out there about the customer and how important the customer is. You can find a quote from the CEO of almost every major firm about it.

“There is only one boss. The customer. He can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.” Sam Walton, founder and former CEO of Walmart.

This is a famous quote from a man who built one of the most successful firms in the world in the last 50 years. How much power does the average customer have today? If we believe what we read and teach, we should have a lot.  

Just because a customer likes something, doesn’t mean they will buy it.

This is an important fact of marketing, and one which is frequently overlooked. When it comes to cars, I love Ferrari. Would I buy one? Absolutely not. Even if I could afford one, I don’t see a reason to spend a lot of money on any car. For me, the purpose of a car is to get you from one place to another, period. Therefore, for me, almost any car will do. Would I consider renting a Ferrari or another type of sports car? Perhaps for a certain occasion I might, but there’s a big difference between renting and buying. Therefore, if a marketing person were to ask me if I like Ferrari, (or any luxury car) my answer wouldn’t tell them very much. In order to get a meaningful answer, you need to ask the right question. For example:

Question One: Which is your preferred brand of car? (Question offers you a range of responses) I tick “Ferrari”.

Question Two: Would you like to buy a Ferrari? Yes or no. I tick, “yes”.

The question that needs to be asked is:  Are automobiles a category of purchase which carries special importance for you? For me, the answer is, no.

The information that should be important to firms is “which categories of purchases are important to you” what purchases won’t you compromise on and which ones will you? Surprisingly, no company has ever asked me this question.

Everyone is a transaction buyer for some products and a relationship buyer for others

Transaction buyers have little or no loyalty. They don’t see the need in that product category to choose one brand over another and so convenience or price usually heavily influences their purchase.

Relationship buyers will ignore the fact that your competitors product may be just as good, (or cheaper or even better) than yours and will buy from you again and again. It’s not really a relationship that customer is seeking, nor is their loyalty primarily due to inertia. What drives the relationship is that your brand falls into a category which is essential for that consumer and there’s one key thing about your product or service that your competitors don’t offer as well as you do. Therefore that customer becomes your relationship buyer. Relationship buyers are precious because they’ll buy from you again and again with or without discounts. You can, however, lose them through poor customer service. As in all relationships, people will put up with a lot from a partner, but divorces are a fact of life. As a producer, you need to find out, who your relationship buyers are, because they are your core customers. As crazy as it might sound, most B to C firms don’t know.

In relationshipology, (study of relationships), this goes way beyond blind dating. It’s equivalent to repeatedly dating (and/or) sleeping with someone without knowing who they are or anything about them.

Because I lived in Southern Europe for many years, I like to drink wine or beer with meals. I don’t like to go to a pub and just drink beer or alcohol as many people in Northern Europe do. I drink some alcohol almost daily, but only with food. My preference is for wine, but when I’m in South East Asia, as I often am, the local restaurants don’t serve wine, so I have to opt for beer, which they do serve. If a marketing research survey were to ask me about my relationship with beer, however, it could be misleading. Imagine the following:

On average, how often do you drink beer? I tick several times each week. (or chose a number if they provide one). This establishes that I am a frequent user of the product. Which brand of beer do you prefer, (gives me a range) I tick Chang, (Thai beer) Now the survey assumes that I drink a lot of Chang beer, which is not really true. Why? For the category of beer, I am a transaction buyer….I don’t really care which beer I drink, for me, even though I may purchase beer frequently, I have no brand loyalty. Therefore price and convenience heavily influence my purchase. Most firms never know this, because they never ask.

With airlines, I’m a relationship buyer. I always choose certain airlines even though others might offer better prices, schedules or services. I’ve flown almost 1 million miles on United/Continental Airlines, yet they don’t know what it was about their services that made me a steady and loyal customer and also why I never fly them anymore. They’ve never asked why I flew them or why now I no longer fly them.

From a marketing point of view, this is crazy, but from a business point of view it makes sense u

Individual customers mean nothing to most B to C firms

“The preferences of the average American appear to have only a minuscule, near zero impact on public policy” Eric Zuesse, columnist, Huffington Post

What’s true for public policy is also true for business. Let’s take a look at some companies, some very successful companies at that.

The single biggest change we’re making is that we’re now willing to challenge everything we do as it’s seen through the eyes of the customer.” Mike Quinlan, former CEO of McDonalds. He went on to say, this was way back in the 1990s, “today McDonalds is focused entirely on the customer.”

I’ve eaten in McDonalds restaurants in over 20 countries around the world. Does McDonalds know or care? Of course not. Yet they say that they are “customer focused”. McDonalds doesn’t know who any of their customers are. They haven’t a clue. The same is true for virtually almost all restaurants!

This is equivalent to inviting people to your home for dinner and afterward not having a clue as to who these people were

I remember asking a friend and former student, who was working in marketing why she didn’t try for a marketing director position. “I’m not good at the numbers, she replied. You’re good with people,” I countered. “You’re also really good at marketing communications. Companies don’t really care about people, she said matter-of-factly. It’s all about products and numbers.”

McDonalds can give you statistics and numbers about their customers, but not about their individual customers. It’s all impersonal. It’s numbers. It’s the same for United Airlines. It’s the same for almost every B to C firm. I’ve bought a few products, including several I-pads from Apple. I’ve never ever heard from them.

Hotels are usually (at least they tout that they are) good when it comes to knowing who their customers are and tailoring marketing messages to their individual customers, but none of the hotels I have stayed at, (all over the world) have ever asked me why I stayed there, or why I haven’t been back for a while. All they do is send me the same promotional messages that they send to all their guests. The only difference is that they put my name on it. It’s still just numbers.

None of the hundreds of hotels I have stayed at have ever asked me the key questions: Are hotels a category of purchase which is important to you? What are the deciding factors for you, when it comes to choosing a hotel?

The answers here are a bit more complicated because my reasons will vary depending on who I’m traveling with and why I’m traveling. If I’m traveling alone for business I will have a different set of criteria than if I were on vacation with the family. If I were traveling with a lover I would have a still different set of criteria. The hotel never knows why I’m traveling, so how can they possibly tailor a marketing message that makes any sense to me?

"If you work just for money, you'll never make it, but if you love what you're doing and you always put the customer first, success will be yours." Ray Kroc, founder and former CEO of McDonalds

"For us, our most important stakeholder is not our stockholders, it is our customers. We're in business to serve the needs and desires of our core customer base." John Mackey, Whole Foods

This is an interesting observation, “our core customer base”. Those are relationship buyers, not transaction buyers, but Whole Foods, and Apple and McDonalds and almost everyone else cannot identify a transaction buyer from a relationship buyer from a hole in the wall.

What it really says is: “We’re in business to serve the needs and desires of our core customer base, even though we don’t know or want to know who these people are as individuals. For us they only matter as numbers.

The firms that do know who their customers are, (including airlines, hotels, medical facilities, some of the large stores who issue store discount or membership cards), don’t use that knowledge to help themselves or their customers. I consistently get ads from large stores for discounts on products that I never buy. This goes against one of the basic rules of marketing. If I have no interest in a product, I won’t buy it, no matter how cheap it becomes. If, however, a store offers me a discount on a product I do regularly buy, I will probably buy more of it, and go to that store instead of one of their competitors to do so. Stores with discount or membership cards have a record of what, when and how much I buy. That information is not being used for my benefit. It’s also not being used for the store’s benefit. This is marketing today?

There’s a lot of talk our there about the importance of the customer. Unfortunately it’s still mainly talk. The average customer still has minuscule, almost zero importance for most firms. Customers, in significant numbers do have importance, but only in significant numbers.

Therefore, Sam Walton’s quote should be:

“Customers can fire everybody in the company from the chairman on down, if enough of them spend their money somewhere else.”

How about the customer?

It’s still all about products and services and yes, it’s mostly still about numbers, but it sounds great to say you’re putting the customer (me) first