Customer relationship management (CRM), once held the hope and promise of good things to come for businesses large and small. Now, many years later, after millions of dollars spent and countless failed projects, we stand in the wreckage attempting to figure out just what went wrong.
Few companies could resist the promise of bottom line results and improved customer relations, practical goals for any business. Why, then, have so few CRM projects lived up to the expectations of those who championed the cause?
Did we set our expectations too high? Perhaps we lost sight of our customers behind databases of information, or did we relax into a false sense of customer relationship security? This issue's dilemma asks: How do you salvage your investment in CRM and realize real improvements in customer relations?
Don't see the point in assessing CRM? Let us know what keeps you up at night. What dilemma do you take with you when you leave the office? Your peers would love to help. Write to us and ask our SWOT Team about your dilemma. Tap into the collective strength, wisdom and experience of this group. It works, and you could win a free copy of our book, A Marketer's Guide to e-Newsletter Publishing.
Revisit our previous dilemma—read below for your peers' best advice on the use visitor data for your Web marketing initiatives.
Unite and make a difference!
- Give advice about this issue's dilemma.
- Read your peers' responses to the previous dilemma (below).
- Submit your own dilemma.
This Issue's Dilemma
SWOT Category: Internal Weakness
After undertaking a three-year CRM project we have little to show for our efforts.
A little over three years ago, I got behind a staff-proposed CRM initiative that held the promise of streamlining our administrative and management load, improving our customer relations, extending our service capabilities and helping us to take a strong competitive position alongside our much larger competitors.
Three years later, the initiative has brought about only the slightest improvements in our service capabilities and seems to have done little to improve our bottom line, our customer relations or our competitive position.
Despite the prevailing disappointment, I'd like to find a way to salvage our investment and use what we've learned to help us better predict the success of future projects.
—Anonymous, Director of Customer Service
Previous Dilemma
SWOT Category: Internal Weakness
Our leadership team disagrees on the best approach to marketing.
Our team is divided on the relevance of the 4 P's of marketing in executing our business model. We describe ourselves as an Internet company, in that our products are sold entirely over the Internet. Our leadership consists of both traditional management thinkers and a small group of modern-day managers, whose experience in marketing is almost entirely Internet based.
I am one of the modern-day managers who feels that for our business model, using the 4 P's approach is like trying to fit a square peg into a round hole.
How can I present a case for moving beyond the 4 P's to a more relevant approach for our business? Can your readers help?
—Anonymous, Internet Marketing Manager
Summary of Advice Received
SWOT Team members, from MBAs to professors, corporate managers and consultants, have taken us directly into the path of the 4 P's, giving us an insightful update into a marketing practice still being taught in business schools, a practice many believe is even more relevant today than when it was written. Anonymously, one SWOT Team member says this:
Online or off, the 4 P's will never be relevant if taken too literally. Rely on it for what it is, a mnemonic device for remembering the variables that a marketer can control. In this context, the 4 P's are even more important in the age of the Internet. The fundamentals of Marketing do not change. I hope those who find them irrelevant are my competitors.
In true SWOT Team form, the advice received runs the gamut. It appears many of your peers have reached this crossroad before and have either altered, enhanced and in some cases completely replaced the 4 P's approach. Looks like we'll traverse this terrain together, emerging on the other side with what is likely to be your own tailor-made solution. Here's what your peers suggested:
1. Recognize the 4 P's as a framework and do some tweaking.
2. Find where the 4 P's and the Internet intersect.
3. Use the new and improved 4 P's plus.
4. Replace the 4 P's with a new approach.
1. Recognize the 4 P's as a framework and do some tweaking
We have a tendency to mistake the map for the territory. SWOT Team members remind us that perspective is important and that the 4 P's are a valuable framework for making sense of an otherwise highly complex subject. “I believe that the basic elements of the 4 P's have changed, but the basis for using them has not,” notes Ric Ruffinelli, Partner of ZestNet, Inc.:
We can be so focused today, whereas in the past we were limited to some very traditional channels. The idea of throwing out the concept of 4 P's seems inadvisable. I would suggest restructuring the definition of each and applying what you need from today's ever-expanding tool belt.
Principal of DaGiau Consulting, Tony DaGiau emphasizes the use of the 4 P's as a guideline:
Frameworks like 4 P's need to be kept in perspective. They're just ways of looking at a problem, methods for deconstructing messy, sprawling disciplines like marketing into tidy categories that help us organize our thoughts and communicate. The 4 P's theory is useful in its simplicity, but its strength is also its weakness. The framework over-simplifies marketing, leaving out customers, target markets, competitive advantage, positioning, operations, infrastructure, processes, etc.
Does the Internet make the 4 P's obsolete? Absolutely not. The Internet changes nothing. I use the 4 P's for simple explanations and discussions. But I've always found it too limiting, too generic when developing things like marketing strategies and plans. The worst mistake is to strip your marketing program of its uniqueness and tailored-to-fit qualities trying to squeeze it into any generic framework—4 P's or otherwise.
Jack Trytten, a partner at Insight Direction, Inc., adds that while “new” thinking has had a significant impact on how we market today, even new techniques are built on the foundation of the 4 P's:
New marketing thinking has made some enormous contributions. Positioning has refined how we consider competitive products in the mind of the consumer. Branding has greatly improved how we consider the long-term aspects of how the consumer considers our products and services. Our understanding of the experiences the consumer has through the purchase, use, customer service and disposal of our products is making major changes in how we market. However, all of these new concepts were built on the foundation of the 4P's. I would be happy to consider an alternative. But right now, these still work for me.
An anonymous SWOT Team member offers this real-world analogy for adjusting the 4 P's to your needs:
I've been teaching the P's at a local college for a few years now. Anonymous, your question is common. When I have to explain the P's to younger students, I use the analogy of a stereo equalizer. I tell them that the P's are like sliders that can be reconfigured all the time to create a new sound (marketing mix). Issues like dynamic pricing mean we have to readjust those sliders more often. I believe the 5 P's (we often include Positioning as the fifth) are still relevant in visualizing a problem. Even if your business is totally online, you can make useful distinctions between product challenges (in comparison to similar online products) and promotion challenges (like where to advertise, banner testing, etc.). Once you identify where the problem lives, you can set out to solve it in your own way. That's where your creativity takes over, and your approach becomes unique. Don't give up on a useful framework if it helps you visualize problems. I doubt that any of your challenges can't be rolled up into one of the P's.
Online marketing specialist Jennifer Molloy reminds us of the importance of additional factors beyond the 4 P's:
Don't forget about the power of quality, customer satisfaction, repeat buys and word of mouth... the Internet has not changed the necessity of these qualities in a company. The 4 P's aren't going anywhere... they may just need a facelift.
Michel Marquis, a consultant with Créativité-communication Inc., warns against clinging to outdated notions, and encourages you to present this as an evolving opportunity:
I offer two quotations of relevance: 1. “We cling to the obsolete definition of marketing as managing the flow of goods and services from manufacturer to consumer.” (Elliott Ettenberg) 2. “Markets are conversations.” (Cluetrain Manifesto). That being said, there will always be a Product, a Price, a Place and a Promotional device … of some sort.
Present your case as an opportunity for evolution and adapting the existing to a changing environment, which may involve expanding previous notions. For instance, the configuration of the Product itself has a lot to do with Client Experience. The Place has to be considered in a new setting, mainly dematerialized. Price has evolved into a dynamic and essentially adjustable notion, often based on immaterial factors. And Promotion has never had so many shapes and vehicles. Think innovative and talk positive!
2. Find where the 4 P's and the Internet intersect
While marketing planning can be a challenge in and of itself, few can deny that keeping your marketing efforts aligned with the ever-changing and emerging opportunities of the Internet really keeps you hopping. Your fellow SWOT Team members went the distance, offering useful views on how to adapt the 4 P's for the Internet.
Don Mennig, CMO of Satient Marketing Communications, believes that in fact, the 4 P's are more relevant than ever, and shows us just how they can be used to guide our online efforts:
If anything, you need to pay more attention to the 4 P's than ever before:
Product: Never before has the ability to receive immediate feedback regarding a product entry been better. Online surveys for new features, support, research, patches, etc., all fall under the Product window and all are facilitated through the Internet.
Price: The Internet has truly commoditized the product market and forever changed how Internet users and purchasing managers shop for products. Therefore, it is extremely important to understand that your customers' perception of price has changed. Because of this change you need to focus on delivering value to customers that warrants your price differentials and then customize your messaging appropriately. When price = product you lose. When price = value you both win.
Place: This is more relevant than ever before, with more possibilities. Your sales channels haven't dried up; they have meandered like an old stream that has found a glacial river in spring. Think of place as a delivery method not a location.
Promotion: The most obvious of the four, the Internet has opened incredible possibilities for the accurate tracking of both traditional and online promotional efforts.
Founder of Savage Ideas, Zach Evans suggests this:
The management team needs to look at current product offerings and think about how the product can be changed and improved by combining it with Internet technologies. Likewise, pricing strategies need to be scrutinized carefully, based on the fact that information once closely guarded (e.g. price lists and/or costs of materials) may now be readily available online. You're able to learn much more about your competition than you were before… while they're learning about you at the same time. Most companies that make the move online no longer have to worry about geographic limitations (Place). In regards to promotions, while I believe that the death of mass media advertising has been grossly over-stated, personalization and one-to-one marketing strategies are the future. The shear amount of data the Internet allows us to aggregate makes these strategies possible—and cost effective.
An anonymous SWOT Team member asks what's driving your marketing strategy:
Is your business model and marketing strategy being driven by the needs of your customers, or by “what you can do on the Internet'? I would say that business success lies with the former. After all, revenues come from customers, not from technology. I have 23 years of experience in Marketing and CRM. I am currently taking my MBA, and the 4 P's are still being taught. The marketing strategies of most companies will evolve to include both traditional and new products, promotion and distribution channels. “Product” should be interpreted broadly to include physical products, intangible services, and the associated product experience (e.g. eBay community). Use of the Internet allows more flexibility in pricing strategies, including CRM generated “dynamic or customer-specific” pricing (versus one price fits all). “Promotion” is no longer just mass advertising, but involves targeted customer communications in the form of direct mail, telemarketing and targeted emails. Of course, privacy will have significant implications on all Marketing strategies, particularly those of online companies. “Place or distribution” goes far beyond traditional channels such as face-to-face sales, retail outlets, outbound telemarketing etc., to include the unique distribution channel of the Web.
My advice—add the elements you think are missing to the 4 P's. Traditional thinkers will adopt “extensions” of existing practices more easily than being told that traditional “terminology and concepts” are irrelevant. And above all else—build your business model on customers, not technology.
3. Use the new and improved 4 P's plus
Looks like even business schools and marketing associations have embraced the need for an upgrade to the original 4 P's framework. Typical of marketers, your fellow SWOT Team members present us with the new and improved 4 P's, adding some P's and C's of their own. Not surprisingly, each variation is slightly different from the other.
Roy Robinson, brand development manager of Kybotech Ltd, gives us the updated version from the Chartered Institute of Marketing, weighing in with a whopping 7 P's:
Use the Chartered Institute of Marketing's 7 P's, adding: People—staff, customer service, adding a personal element to an online world; Processes—get systems in place, all other P's are useless if the process breaks down, leaving the customer's demands unfulfilled. Physical Evidence—giving customers something to remember you and their experience by, something solid to prove they've spent their money on something, rather than in an electronic abyss.
Just Cases, General Manager, Lee Mulberry provides an additional 4 C's that are particularly relevant when doing business over the Web:
If anything, I would add 4 C's to the 4 P's when it comes to Internet business: Credibility, Confidence, Confidentiality and Consistency.
Credibility—A brick and mortar operation has a certain amount of automatic credibility—it physically exists. An Internet company has to work to portray credibility.
Confidence—We must give existing and potential customers confidence that we will be here when they need us (which is often AFTER the sale).
Confidentiality—When you shop in a brick and mortar establishment, you hand them your card, they swipe it, and hand it back. On the Internet, the card data seems to be (or is) out of the customer's control.
Consistency—Can my site be found again easily, will it still look similar? For most businesses, repeat business is the best business; it tends to be less expensive to acquire, takes less care and feeding, and is usually more profitable. For Web-based businesses, it takes consistency to bring customers back.
Bottom Line—Even though I add the 4 C's, I still believe that the 4 P's are the foundation to sound marketing. How they are applied is certainly changing with the Internet, but the underlying principles are still valid.
Henrique Ventura, an undergraduate from Portugal, puts this spin on it:
Use the 4 P's anyway, but... employ personalization (Customization), proximity (I am where you are, my dear customer), pricing (as a key differentiator) and promotion as a metaphor for interactive communication.
4. Replace the 4 P's with a more customer-centric approach
Although not the majority of our responses, these SWOT Team members make a strong case for using a new approach to marketing, one that is more customer-centric.
One anonymous SWOT Team member takes on the myth of the 4 P's, adding with poignancy that marketing is both art and science:
There is a major misconception in Marketing that the 4 P's approach is the “be all and end all” of Marketing and that it has to be used, if you are to be considered a professional marketer. Marketing is an art as much as it is a science. And as such, interpretation will differ from person to person and company to company.
Mark Harrison, a business performance coach with Idea Farm, details his FAR-reaching approach:
4 P's do not adequately describe the approach required. Replace the model with a simpler more dynamic approach. Go FAR instead, which looks at any marketing/sales related issue based on buying decisions and how people make them.
F = Familiarity or “people go to who they know.” Where are you in the heads of your clients, a household name or a nothing? You may also need to change a familiarity perception based on your previous buyers” experiences in totally unrelated industries, markets or sectors.
A = Apathy or “people try what is easy to buy,” so what channels of least resistance do your clients and prospects currently use to access products and services like yours? How can you make it easy for them to choose you?
R = Reward or “people buy what makes ‘em high,” the hardest element to deliver. It's both a need and an emotional thing. It's not just about delighting buyers once, or duplicating the opposition, but making a positive connection emotionally for a lifetime. Just doing a great job is not enough. So how are you going to reward your customers forever “personally”? FAR works because it's based on what drives humans—natural instincts before intelligence.
Our final word of wisdom goes to an anonymous SWOT Team member who thinks the 4 P's have gone the way of three-channel TV viewing, noting that your focus should be fixed squarely on the target audience:
In the marketing community, the 4 P's have been irrelevant since the early nineties. All 4 were set in corporate head quarters by the marketing director, assuming a homogeneous buying public in a time when a company could reach 80% of women by running three commercials on the only three TV networks available. As channels and niches have proliferated, and as we get closer and closer to the one-to-one universe, all prices and products can become customized to the user.
In an Internet company, the place is everywhere, the products are unlimited, the prices change every day and the promotion—well, you have as good of an idea as I do about that. Worry more about who your target audience is (notice that they're not even included in the P's). Find out how you can improve their lives in a meaningful way. Sometimes the only thing you have to offer them is the Internet as a fulfillment channel. Flush the P's.
Practical, Poignant, Powerful and Profitable advice, SWOT Team—thanks again!
We did our best to provide a thorough overview of your responses to this timely topic. All of the advice we received was insightful. Thanks for your participation. We appreciate it!
