JULY 16, 2003

By Christopher Kenton

Doing a Number on Consumer Metrics

Marketers tend to come in two main flavors: Inept or annoying. Here's a growing third variety: Those who treat consumers with respect

I've been following with some interest the growing public backlash against the practice of marketing. In the past few months, there has been an increasingly organized outcry against annoying tactics like telemarketing and spam, along with a growing list of state and federal regulations to control them. As a marketer, what makes this particularly interesting to me is that it shadows an antimarketing backlash that has been going on in the boardroom since the economy started to fall apart. Nearly two-thirds of my clients flushed their marketing departments 18 months ago and hired entry-level coordinators to hold down the fort. A recent study of small businesses confirms that while budgets have taken a beating in all departments, marketing is rapidly losing ground relative to investments in sales and technology initiatives.

Marketing's stock is getting hammered -- and I, for one, am ecstatic, because marketing needs a life-threatening challenge. The vast majority of companies have no idea what marketing really is or what it can offer, and the marketers who serve those companies have proven astoundingly weak at demonstrating their worth (see BW Online, 7/11/03, "The 'Useless Marketing' Trap").

JUDGMENT DAY. They represent what I call the Mousy Marketeers. They are content to collect a paycheck and let their employers go on thinking that marketing is just promotion-and-sales support. On the other end of the spectrum, among the small percentage of businesses that understand and invest in real marketing, the majority use their skills to turn marketing on its head -- striving not to serve the customer, but to enslave him. They're what I call the Mercenary Marketeers.

These two groups are the marketers we know from experience. As consumers, we're always in the sights of the Mercenary Marketeers, who give us spam, computer-driven telemarketing calls, and brilliantly manufactured needs and desires. As small-business executives, we're frustrated by the Mousy Marketers who give us nothing but an endless stream of mushy PowerPoints about differentiation and brand awareness -- oh, and don't forget the obligatory "mission statement."

I think it's high time we start rooting out boththese varieties of marketers and purge them from the system. Maybe then we'll discover the next phase of marketing evolution, which I believe is in the hands of a very small and dispersed group of people. Many aren't even trained in traditional marketing, but they understand how to cultivate the true value of the relationship between businesses and customers while measurably improving the bottom line.

Contrary to what many believe, marketing is not intrinsically evil. Without marketing, businesses wouldn't know what products consumers want, and consumers wouldn't have any idea where to go to find what they need. In the simplest terms, marketing is the matchmaker between businesses and consumers, playing no small role in keeping the economy going.

COLDLY CALCULATED STRATEGY. The problem, of course, is that matchmaking is not a simple business. There are many suitors vying to be chosen above all the others, so these contenders for the consumer dollar come up with ever new ways to set themselves apart. Sometimes the consumers come running, but more often, they don't pay attention to even the sweetest advances -- and businesses have to work that much harder, not only to be noticed but also to impress. In this environment, many companies with great products lose out to rivals with lesser wares, but which play the game better. This has given rise to a kind of marketing Darwinism, the survival advantage that effective marketing conveys making the game decidedly more predatory.

The marketing business has always used aggressive language to describe its activities. We describe marketing tools as "weapons" and consumers as "targets." But at some point -- unless you're a Mousy Marketeer -- those targets and campaigns turn into numerical entries in a ledger. Of a thousand targets in a campaign, you can expect to score a hit with maybe 1%, which means 10 new customers.

It sounds simple, but this concept of marketing measurement, known as a "conversion rate," begins the transformation of marketing from an unquantifiable art into a discipline that is subject to accountability. Businesses need this kind of accountability to improve effectiveness and increase margins, and the few that have grasped this principle are quickly moving far beyond simple conversion-rate calculations to more powerful performance metrics. But the application of this power can be troubling. As a marketing agency, my company emphasizes marketing return on investment (ROI). If you spend $1 to market your business, you better know how to get $1.50 in return. We've developed a lot of tools and models to improve marketing effectiveness, but there's an underlying philosophy in our approach that keeps the power in check. Any time we develop a marketing campaign or customer-research program, we go to great lengths to treat every prospective customer -- especially those that turn us away -- as if they were our next customer. More simply said, we strive to treat our market with respect.

FOOL'S GOLD. Growing numbers of businesses are treating their market more like a strip mine: They see little nuggets buried in a lot of dirt, so they develop more efficient methods to discard the dirt as fast as possible. As long as they get that 1% conversion rate, no one cares what happens to the other 99%. The only time they stop and think about the approach is when they don't make their numbers, and then the discussion focuses on finding more efficient tactics. This kind of thinking leads to ever cheaper campaign weapons -- like computer-generated calls and SPAM. Annoying people cheaply is a net win for Mercenary Marketeers.

But is it?

I believe in the same accounting methods these marketers use to support their approach, but where they see only the 1% conversion, I see another 99% to be accounted for. What portion of that 99% is annoyed enough to tune-out your next campaign, effectively shrinking the target market? What portion is frustrated enough to tell their friends and turn them off as well? Mercenary Marketeers try to avoid such collateral damage by hiding their brand name from the vast majority of the consumers they annoy -- the folks who hang up immediately or press "delete" in the first few seconds, not staying connected long enough to register a negative association with the brand in question. Meanwhile, the damage simply filters up to the market at large until it becomes a general cry for regulations and penalties, or a general tuning out of all marketing messages. It's tragically comic how many marketing agencies position themselves on their ability to "be heard above the noise" -- the very same noise they're generating in the market!

NEW DIRECTION. Somewhere between these extremes of marketers -- the ones who would sell their mother's e-mail address and phone number for a dollar, and those who couldn't defend a dollar in their budgets -- is an emerging breed of marketer that I truly believe will put a fire under businesses in the next few years. They are marketers who understand technology, marketers who understand the balance sheet, marketers who understand that every brand touchpoint is more than "a promise of quality to the customer." The new wave I'm talking about realizes that marketing is a proxy for the living relationship between a business and its potential customers. They know that not only must customers be treated with respect -- which is challenging enough for most businesses -- but that everyone they touch must be treated with respect as well.

I'm not talking about touchy-feely, at-least-I-can-sleep-at-night marketing. I'm talking about sustainable marketing. I am talking about a marketing philosophy that is able to account for long-term viability in the context of an increasingly regulatory landscape and a frustrated market, while still reflecting the concept of what we marketers call "customer lifetime value" in the bottom line.

If I sound passionate about this it's because, as a marketer, I believe the time has come for the profession to begin changing course. I know people are out there who have embraced this trend, because I talk to them every day. And while the rest of the industry is waiting for the economy to return so we can all get back to the good old days, these people are working on new marketing tools and models that will shine a light on the weaknesses of a traditional methodology that still hasn't grasped the relevance of technology and accounting, much less the importance of the customer.