Giving customer-driven marketing new meaning

Research project after research project indicates that an increasingly large proportion of consumers see themselves as “ad avoiders”. How should marketers react to this trend? So far, the mainstream response has been “try harder”: understand consumers better in terms of the media they use and what grabs their attention, in order to “cut through the clutter”.

As one senior creative director says, agencies need to find better ways to “get hold of consumers and take them to a place you want to go”.

But the real challenge is more fundamental. Marketers don’t need to improve the existing communications model, they need to rethink the model itself.

For the duration of this century, this model has been based on stimulus-response marketing: marketers send out stimuli in the form of advertising and promotions to elicit the desired behavioural response from consumers.

We are moving towards what Stephan Haeckel, director of strategic studies at IBM’s Advanced Institute, calls a “sense-and-respond” model, in which advertisers sense what customers are “saying” they want through their behaviour, and respond as quickly and effectively as possible. In other words, they let the customer take the driving seat.

Royal Ahold director Jan Andreae says this “radical idea about consumers” lies at the heart of the Efficient Consumer Response movement. It is the “idea that consumers’ desires should influence our business decisions and direct our operations. That is a frightening concept, because it means giving consumers real control, which would impact on every aspect of our business – from stocking and delivery, to supply and category management.”

What does this mean in practical terms? One good example came last week from Information Resources Inc’s open day for clients. There, McVities’ Steve Hildebrand reported that looking at the biscuit category from a consumer perspective is revolutionising the way manufacturers and retailers manage it. Rather than organising the category according to producer-driven definitions, such as “sweet” and “semi-sweet”, it will be organised by consumer-driven segments, such as “children’s”, “treats” and “everyday”.

This new perspective is changing the items retailers decide to stock and delist, how they merchandise the category, and how manufacturers prioritise new product development projects. Simple as this sounds, it has been a massive task. Yet to be completed, it has involved two years’ research covering 11,000 barcodes, and everyone involved – manufacturers, researchers and retailers – will have to recast their databases.

The new model has – for the first time – compelled rival manufacturers to agree on category definitions and sub-divisions. As Hildebrand says: “It is the first industry standard led by shopper and usage research.” This is an odd boast, considering that the industry is supposed to have been consumer-focused for the past hundred years.

But consumer-driven category definitions are just one tiny example of what it means to be customer-driven in a direct operational, rather than metaphorical, sense.

Wal-Mart uses the Internet to enable suppliers to access data about what the retailer sold the day before by 4am the next day. Using this system, Wal-Mart avoids where possible buying stock from suppliers and then trying to sell it. Instead, it only buys what sells. Its highly flexible logistics systems are making it a sense-response retailer.

The supermarket chain’s worship of every-day-low-pricing versus promotions is not just price-obsessed discounting, but a rejection of the way classic stimulus-response marketing devices create noise, which obscures the real state of consumer demand.

An even more obvious example of a sense-and-response operator is the mass customiser, who makes only on the order and specification of the customer. Dell is the classic example. Not only does this approach help it avoid all sorts of waste – such as stock it cannot sell – but it gives the customer a superior experience: the pleasure of being in control and of getting exactly what they want.

The application to the ad avoider issue is clear. As we are moving towards customer-driven category management, product specification and manufacturing, so the future may lie in customer-driven marketing communications, as specified by the consumer, not the brand manager.

This is more than “permission marketing”. As First Direct’s Peter Simpson says, ideally communication between customer and bank should be consumer-driven. Customers should make contact when it suits them and through the medium they choose. He says putting consumers in control could save a lot of money.

A senior Procter & Gamble executive says: “The emphasis has shifted from manufacturers and retailers choosing what consumers see to consumers being in control.” Marketers will need to “understand what role marketing plays in {different consumer segments’} life cycles” and to improve the relevance of their communications – for customer acquisition and retention. The communication also “has to add some value to the equation”.

Rather than sending a one-way message, marketers need to build systems that “allow their consumers to opt into what has been traditionally viewed as ‘marketing'”.

He adds: “This has implications that could transform our industry.”

Clichés such as “consumer focus” and “customer-driven” are dangerous. They express universal, fundamental truths. But because we all know they are true, we don’t feel the need to scrutinise them.

Next time someone says you have to be “really” consumer focused and customer-driven, ask them what they “really” mean. It may be the start of a stimulating debate.v

Alan Mitchell can be contacted at: asmitchell@aol.com