Should You Lease or Buy Your Customer Experience?

“Truly successful decision-making relies on a balance between deliberate and instinctive thinking.” Malcolm Gladwell

TL;DR Summary

• Both in-house and outsourced marketing strategies have distinct benefits and challenges, making it important to carefully weigh factors like control, expertise, cost, and flexibility before deciding.
• Real-life examples from well-known brands showcase the successful implementation of various approaches, offering valuable insights and inspiration for organizations considering their options.
• To make the best choice for your organization, assess your unique needs and objectives, ensuring your marketing and customer experience strategy effectively drives growth and customer engagement.

As we continue to navigate the complexities of 2023, the debate around whether brands should build their own in-house marketing teams or outsource to external agencies has become increasingly urgent. This age-old conundrum has resurfaced time and again, as businesses grapple with striking the right balance between efficiency and effectiveness in their marketing and customer experience strategies.

This latest iteration of the debate brings light to a critical challenge for brands today:?How can they optimize their marketing and CX efforts to maximize both efficiency and effectiveness while navigating the ever-changing business landscape??

In an era of intense competition and rapid technological advancement, brands must carefully weigh the benefits and drawbacks of each approach, seeking the optimal solution that will drive growth and customer engagement.

To make an informed decision, it’s important to understand the intricacies of in-house and outsourced marketing strategies, examining their respective merits and limitations. By exploring the factors that influence the balance between efficiency and effectiveness, we aim to provide brands with valuable insights to help them make the best decision for their unique circumstances and objectives.

The Great Debate: In-House vs. Outsourced CX

The decision to build a marketing and CX strategy in-house or outsource it to an agency is not a new conundrum. Brands have wrestled with this question for decades, and the answer is not always clear-cut. To help guide our exploration, let us first examine the key tenets of each approach.

In-House Marketing and CX: The Art of Ownership

When a brand decides to bring its marketing and CX strategy in-house, it is effectively "buying" the customer experience. By doing so, the brand assumes full responsibility for every aspect of the customer journey, from ideation and execution to analysis and optimization.

1. Control: Owning the customer experience means having complete control over the brand's messaging, creative direction, and strategic initiatives. This level of autonomy can be incredibly empowering, allowing brands to pivot quickly, experiment, and adapt to changes in the market or customer behavior.
2. Integration: In-house teams typically have a deeper understanding of the brand's values, culture, and overall vision. This can lead to a more seamless and cohesive CX, as internal teams can more easily collaborate and communicate across departments.
3. Cost Savings: By consolidating resources and eliminating agency fees, in-house marketing and CX can lead to significant cost savings over time. Additionally, brands can allocate resources as they see fit, ensuring that their investments align with their strategic priorities.

Drawbacks of In-House Marketing and CX

1. Limited Expertise: In-house teams may lack the specialized knowledge and skill sets required to tackle every aspect of marketing and CX. This can lead to gaps in the overall strategy, reducing the effectiveness of the brand's efforts.
2. Resource Constraints: Building an in-house marketing and CX team can be resource-intensive, requiring significant investment in talent, technology, and infrastructure. This may strain the brand's budget and divert resources away from other strategic priorities.
3. Insularity: In-house teams, while deeply knowledgeable about the brand, may become insulated from industry trends and innovations. This can limit the brand's ability to adapt and evolve, potentially stifling growth and customer satisfaction.

A Case Study for In-Housing CX: Red Bull

Red Bull has achieved remarkable success by managing its marketing and CX strategy predominantly in-house. Known for its bold and adventurous brand image, Red Bull has built a strong reputation by connecting with consumers through innovative marketing campaigns and engaging experiences that align with its core values.

Red Bull's in-house marketing and CX teams collaborate closely with the company's product development, sales, and events departments, ensuring that every aspect of the customer journey reflects the brand's unique identity. This integrated approach has enabled Red Bull to create memorable marketing initiatives, such as the "Red Bull Stratos" project, where Austrian skydiver Felix Baumgartner completed a record-breaking freefall jump from the edge of space. This event not only captivated audiences worldwide but also reinforced the brand's association with extreme sports and boundary-pushing achievements.

Additionally, Red Bull has successfully developed its own media production arm, Red Bull Media House, which creates and distributes original content across various channels, including films, documentaries, and digital media. This in-house capability allows Red Bull to maintain full control over its storytelling and messaging, ensuring that the brand's values are consistently conveyed to its audience.

By managing its marketing and CX strategy in-house, Red Bull can maintain control over its brand identity and messaging, allowing the company to create impactful and engaging customer experiences that resonate with its target audience. This approach has not only enabled Red Bull to differentiate itself from competitors but also to build a loyal customer base and expand into new markets and product categories.

Outsourced Marketing and CX: The Power of Leasing

When brands opt to outsource their marketing and CX strategy to an agency, they are essentially "leasing" the customer experience. While they still maintain a degree of control, they are entrusting the execution and management of their CX to external experts.

1. Expertise: Agencies often possess specialized knowledge and skill sets that may be unavailable or impractical to develop in-house. By tapping into this expertise, brands can access cutting-edge strategies and techniques that can give them a competitive edge.
2. Scalability: Outsourcing marketing and CX can provide a level of flexibility that may be difficult to achieve in-house. As a brand's needs change, agencies can scale their services up or down, ensuring that the brand receives the right level of support at the right time.
3. Fresh Perspectives: External agencies can bring a fresh set of eyes and a unique perspective to a brand's marketing and CX efforts. By challenging internal assumptions and offering innovative ideas, agencies can help brands stay ahead of the curve and continually evolve their customer experience.

Drawbacks of Outsourced Marketing and CX

1. Loss of Control: When outsourcing marketing and CX, brands relinquish a degree of control over their strategy, execution, and messaging. This can lead to misalignment with the brand's values and vision, potentially undermining the customer experience.
2. Inconsistency: Working with multiple agencies can lead to inconsistencies in the customer experience, as each agency may have a different approach and understanding of the brand's goals and values. This can result in a fragmented and disjointed CX, which may confuse or alienate customers.
3. Cost: Outsourcing to agencies can be expensive, particularly if a brand requires extensive or ongoing support. These costs can add up over time, and may not always yield the desired return on investment.

A Case Study for Outsourcing CX: Samsung

Samsung has achieved remarkable success by outsourcing key components of its marketing and CX strategy to external agencies. With a diverse product portfolio and a complex, global customer base, Samsung benefits from the specialized expertise and resources that agencies can provide.

One notable example is Samsung's partnership with the advertising agency Leo Burnett. The agency was tasked with creating a global marketing campaign for the Galaxy S8 smartphone, which involved showcasing the device's innovative features and design. Leo Burnett's creative team developed a series of visually stunning ads that highlighted the phone's sleek design and cutting-edge technology, generating significant buzz and driving strong sales.

By outsourcing its marketing and CX strategy, Samsung is able to tap into the specialized knowledge and skill sets of external agencies, ensuring that its campaigns resonate with consumers around the world. This approach allows the brand to stay at the forefront of technology and design, while maintaining a consistent and engaging customer experience.

A Third Choice: The Best of Both Worlds — The Hybrid Model:

The decision to buy or lease the customer experience is not a binary choice. In fact, many successful brands have found that the most effective approach lies in striking a balance between the two. By blending in-house and outsourced strategies, brands can harness the unique strengths of each approach while mitigating their respective weaknesses.

A hybrid model combines the expertise and innovation of external agencies with the control and integration of in-house marketing and CX teams. This approach can create a dynamic synergy that capitalizes on the strengths of each approach while minimizing potential drawbacks.

1. Focused Expertise: A hybrid model allows brands to develop in-house expertise in key areas while leveraging external resources for specialized or highly technical aspects of their marketing and CX strategy.
2. Agility and Adaptability: By maintaining a core in-house team and supplementing it with agency support, brands can quickly adapt to changing market conditions and customer demands.
3. Cost Optimization: A hybrid approach can help brands optimize their marketing and CX budgets, allocating resources strategically based on the unique requirements of their business.

Navigating the Hybrid Landscape: Challenges and Opportunities

While the hybrid approach offers a compelling solution, it also presents its own set of challenges. To ensure success, brands must carefully navigate the complexities of this blended model.

1. Collaboration and Communication: To maximize the benefits of a hybrid model, brands must foster a culture of collaboration and open communication between in-house teams and external agencies. This requires clear guidelines, expectations, and regular check-ins to ensure alignment and avoid potential conflicts.
2. Managing Complexity: Balancing in-house and outsourced resources can be complex, and brands must be vigilant in managing the potential risks associated with this approach. This includes monitoring the performance of both internal teams and external agencies, as well as ensuring that the overall marketing and CX strategy remains cohesive and consistent.
3. Data Security and Ownership: As brands increasingly rely on customer data to inform and enhance their marketing and CX efforts, they must carefully consider the implications of sharing this information with external partners. This requires establishing clear protocols and agreements around data access, usage, and ownership.

A Case Study for Hybrid CX: Nike

Nike has successfully implemented a hybrid approach to its marketing and CX strategy, blending in-house resources with external agency support. This balanced model allows Nike to maintain control over its brand identity and messaging while benefiting from the specialized expertise and resources that external agencies provide.

Nike has a strong in-house marketing and CX team that works closely with the company's product development, sales, and operations departments. This collaboration ensures that Nike's marketing campaigns and customer experiences align with the brand's core values of innovation, inspiration, and empowerment.

However, Nike also recognizes the value of partnering with external agencies for specific marketing campaigns and CX initiatives. For example, the company has had a long-standing relationship with the advertising agency Wieden+Kennedy, which has helped Nike create numerous iconic and memorable campaigns, such as "Just Do It" and the "Dream Crazy" ad featuring former NFL player Colin Kaepernick.

By adopting a hybrid approach, Nike is able to leverage the unique strengths of both in-house and outsourced strategies. The company can maintain control over its brand identity and messaging while also benefiting from the specialized expertise and resources that external agencies offer. This balanced model has allowed Nike to continually refine its marketing and CX strategy, driving growth and solidifying its position as a leader in the athletic wear industry.

Putting It All Together

The customer experience is the cornerstone of modern marketing, and as brands continue to navigate the ever-evolving digital landscape, the decision to buy or lease their CX will become increasingly significant. While there is no one-size-fits-all solution, a thoughtful and balanced approach that combines the strengths of both in-house and outsourced strategies can lead to a more effective and impactful customer experience.

As marketing executives contemplate this question, they must consider not only the immediate implications of their decision but also the long-term impact on their brand's reputation, growth, and success. By embracing a future-focused mindset and continually reevaluating their approach, brands can ensure that they remain at the forefront of the customer experience revolution. And in doing so, they will not only own their customer experience but own their future as well.

Louis Cho is a globally experienced Marketing, Data & Analytics, and Customer Experience Executive with 20+ years of experience in leveraging data, digital and technology to drive customer loyalty, engagement and growth.