Friday, March 19, 2010

Rethinking Marketing - Because companies can now interact directly with customers, they must radically reorganize

and to put cultivating relationships ahead of building brands.

  • Companies have powerful technologies for understanding and interacting with customers, yet most still depend on mass media marketing to drive impersonal transactions.
  • To compete companies must shift from pushing individual products to buying long-term customer relationships.
  • In this aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value.
  • This may mean changing strategy and structure across the organization--and reinventing the marketing department altogether.
  • The marketing department must be reinvented as a ‘customer department’ that replaces the CMO with a chief customer officer, makes product and brand managers subservient to customer managers and oversees customer focused functions including R&D, customer service, market research & CRM.
  • These changes shift the firm’s focus from product profitability to customer profitability as measured by metrics such as customer lifetime value and customer equity
  • It means that product managers must stop focusing on maximizing their products' or brands' profits and become responsible for helping customer and segment managers maximize theirs.
  • Once companies make the shift from marketing products to cultivating customers, they will need new metrics to gauge the strategy's effectiveness
  • The shift from marketing products to cultivating customers demands a shift in metrics as well.
  • This organizational transformation will uproot entrenched interests and so must be driven from the top.

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