Adding Value To Your Strategic Partnerships


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Presentation to the Cranfield University Key Account Management Forum - June 2004

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  • This is a clip from Minority Report with Tom Cruise.
  • This is a clip from Minority Report with Tom Cruise.
  • The clip comes from the Steven Spielberg film, Minority Report, and shows the main character being recognised by means of his eyes, and ‘carefully targeted’ marketing displayed at him as he passes by. Is this invasive marketing? It probably is, but when it is possible, it may be that it is acceptable, unless you’re driving of course. We need to get to know our customers, and by knowing them, we will be able to interact with them more effectively, and therefore make more profit by increasing ARPU from these satisfied customers – that’s the theory! If you’ve seen the film you will know that to avoid being tracked by means of his eyes, John Anderson (Tom Cruise’s character) has an eye-transplant. Today we have identity theft, with fraudulent credit card applications and people living under two or more aliases. It is not really a modern problem, but with modern technology it has become easier to steal someone’s identity. This is also a problem for corporate and charity websites. Banks, for example, have had their web-pages copied to try and secure confidential information from customers. With more than half of all email traffic now classed as Spam, personal space is already being invaded. Online ‘noise’ has increased and the messages that we try so hard to target and get right are often lost or ignored. So what can marketing do as a profession to get out of this situation? This presentation explores one solution, but in this complex market, there is a complex solution!
  • This is a version of the famous encoding/decoding communications model, and surrounding the message is NOISE! It shows the message emanating from the ‘Source’, being encoded by language or image, before being decoded by the ‘Receiver’ who will then provide some form of feedback. The noise, however, is the factor that can confuse or destroy the message. Online noise takes the form of spam, messages from competitors, too many messages, inappropriate targeting, etc. As marketers we try to eliminate noise, but in the online world we are now coming up against ear-shattering and very distractive noise – so the Minority Report example is certainly a marketing nirvana. It is time marketers fought back against this noise. Legislation can go someway to helping this – well targeted, meaningful dialogue with customers is were we can make most impact.
  • The Marketing Society recently undertook research to check the viability of their e-newsletter. It provides an indication that outbound marketing (I.e. initiated by the seller) is being hindered by the noise in the market. Inbound marketing (initiated by the customer, such as a request for information) is far more successful.
  • As an alternative though – “ I don't trust him. We're friends.” - Brecht, Bertolt (1898 - 1956) from Bloomsbury Thematic Dictionary of Quotations, © Bloomsbury 1997
  • When I was a salesman, my boss told me that people bought products or services from their ‘friends’. I have yet to meet a salesman that I could call a friend – not whilst they were trying to get my money, anyway! Trust is the basis for building loyalty which in turn will increase interaction – it is up to you to turn this interaction into profit. As a personal example – I am an Apple McIntosh user at home, but have to suffer PC’s at work. Think about the customer loyalty Apple has – most Apple users can be identified by two main attributes – they are fiercely loyal to the brand, and they are poor, because the loyalty costs so much! I have used Michael Porter’s value chain model to demonstrate the trust-focused value chain, culminating in ‘trust’ in a brand, product or service. It is no fluke that trust occupies the same space that ‘profit’ does in Porter’s model, indeed I could have extended it with another field to the right called profit. Being trustworthy is profitable.
  • Trust is something that is not, necessarily present at the outset, and many customers are likely to treat a brand new supplier with caution until trustworthiness has been proven. This graph tries to demonstrate this factor. There is, however, another factor. Trust, unlike many other intangible reasons for choosing to do business with a company, is transferable – at O2 we ask customers how they heard about the company. The biggest single source is a ‘recommendation from a friend’. This, therefore, indicates that recommendation infers trustworthiness, and has been used in the valuation of companies – namely Goodwill . This is shown in the second line. Companies like ‘Linked In’ ( take this further, treating this transferred trust almost like a currency.
  • The asymmetric information flow is a newly published model for the financial markets, but demonstrates the principle of the previous slide, in that the initial contact builds your profile in the marketplace. The second step builds your brand image within that marketplace to allow contact to advise customers (remember this is a model for the financial markets). Finally, the after-sales and retention will build your reputation. Reputation is something that is enhanced by trust, and customers who have reached this step will help build this reputation by recommending the brand/company to friends and acquaintances. This slide and the previous one are applicable to both the B2B and B2C marketplaces
  • There is no ‘answer’ to gaining trust, but every company should see it as their goal, because as I pointed out, being trustworthy is profitable. In terms of data gathering and interacting with customers, Senia’s statement about feeling comfortable handing over personal information is key. The same is true in the B2B environment – many organisations are unwilling to discuss their corporate goals, objectives or needs to unknown and untrusted suppliers. As account managers your role is critical in establishing and upholding your organisation’s brand values. Being seen as trustworthy by your accounts might be as simple as keeping your promises – delivering on time, meeting service level agreements, providing accurate data and knowledge, being open and honest, and so on.
  • Trust is under attack in society, and given the wide choice customer now enjoy, it is a competitive advantage to have the goodwill of your customers. Niall Fitzgerald’s quote says it all – “if you don’t command trust, you won’t get anywhere”
  • Nakra identifies a useful approach to developing trust, that can be adapted to the corporate environment. We must maintain an ongoing dialogue – in other words, regular two-way conversations. I can quote my old sales manager here again – you have 2 ears, 1 mouth, use them in that proportion! Listen to what customers are telling you and action their concerns – you will gain credibility and trust from them. Educate your customers – give them something for free, teach them what they should expect (making sure, of course that you can deliver). Create or support industry standards – whatever is relevant to your industry. For example, I’m involved on behalf of O2 in setting the Mobile Marketers standards. Customers will see you leading the way, and respect your efforts and achievements. Lobby for and against regulation - but always from the customer’s position, not just for your own advantage.
  • PAUSE! Here’s a list of consumer brands from the 2003 Readers Digest Trusted Brand survey in the UK. What do you think of the list and the companies against each category – any surprises? What do you have to do to get onto this list, and stay on it? This is all about customer perception and for that you need to have the customer’s hearts and minds. British Airways is on the list, despite their public internal and external problems. What do you think they have done right?
  • A quote from 1984 – I think all marketers would be locked up in these circumstances – talk about an unorthodox profession! But when we deal directly with customers, we have to ensure that we don’t scare them! the quote to the fact that clients watch for signs of irregularity, inconsistency in suppliers – I.e. lack of trust – and that they have to make an effort to stay in the “players” box.
  • Branding has always been an important part of the B2C marketplace. In the B2B market, brands are also important, but it’s often less about the tangible aspects of visuals, packaging and product and more about reliability, innovation, creativity, trust. Remember – business customers are also consumers, and if, like O2, you have a dual audience, securing consistent branding to all your business segments becomes more challenging.
  • It is worth repeating the quote from my sales manager – it is important in generating trust and developing a good relationship. The relationship should also be open, honest and trusting – if you trust your customers, they are more likely to trust you. It could, however, be that the customer doesn’t want a relationship with you – that, unfortunately, is life, you have to encourage the customer to want to interact with you, to opt-in and build a relationship. It will start with trust! LISTEN! Use your two ears and one mouth in proportion. Let the customer tell you what they want instead of you telling them what they should have. Finally, customers should be encouraged to interact. At O 2 , we are looking at incentivising the opt-in process, giving the customers an immediate, tangible benefit from receiving information from us. More of this in a moment. Over time, the benefits will be seeing in terms of the customer receiving more relevant and exciting offers. If you demonstrate trust, the customer is more likely to follow.
  • A useful perspective on the value of trust in B2B relations is shown in this model of procurement behaviour. Trust is an element of value – if you are dealing with strategic purchasing professionals, for example during a contract renewal process, or to secure additional product or service sales, then trust will, or should be, a strong part of your overall value proposition. Your sales claims need to be backed up with credentials, evidence of ability and responsiveness, references and so on. However, trust will work at all levels of procurement behaviour – Rottweiler buyers may trust that you are offering them the best deal, butterfly buyers may trust you to sell them the right service or product for their needs, and order takers will act much as consumers and buy on brand name reliability – if it’s at the right price of course. This is why developing a trusted brand is so valuable – it’s a solution that works across the board.
  • Marketing is regarded as an art – so why not be creative about encouraging your customers to opt-in and to interact with you? Encouragement to opt-in does not mean the same a trusting the brand. The research has shown that customer are quite savvy about data privacy issues and what brand attributes they should and shouldn’t trust. Our research has shown that if we ask for details about mobile phones, customers are happy to respond. If, however, we ask for a full postal address, but are not due to post them anything, they become sceptical. This relates back to the issue of ‘relevancy’! By keeping within the safety of the RFM boundaries, we can infer ‘trustworthiness’. Marketing is constantly challenging rules and trying to get the competitive edge over others in the marketplace. The creative approach we are used to taking can increase opt-in and increase the interaction of the customers – don’t be afraid of using new ideas (but check for the legality of your approach). Trust is a two-way process and we must feel confident that our customers are being trustworthy toward us, giving us correct information and interacting with us honestly. But, ethical marketing will ensure that the company does everything possible to encourage honesty and trustworthiness by exhibiting it, itself. This may take some time, so don’t get despondent.
  • Being trustworthy is profitable, and provides you with a competitive advantage
  • But everyone else is trying the same thing. Are you more trustworthy than your competitor? Do you employ better people? …
  • Start close to home, even if you are a virtual company – local loyalty will form a foundation. Spread out from this.
  • Trust encompasses everything you do, internally and externally. If you display trust in your employees, they are more likely to pass it onto your customers. This, in turn should feed back to being trust in your company, product or brand; both internally and externally.
  • Adding Value To Your Strategic Partnerships

    1. 1. adding value to your strategic partnerships Thom Poole Head of Portal Customer Interaction
    2. 2. adding value to your strategic partnerships ethical account management in a modern age Thom Poole June 2004
    3. 3. agenda <ul><li>what is privacy </li></ul><ul><li>friendship = trust </li></ul><ul><li>trust in marketing </li></ul><ul><li>trust in account management </li></ul><ul><li>the competitive advantage of trust </li></ul>INTRODUCTION
    4. 4. Thom Poole <ul><li>involved in e-marketing & the internet since 1992 </li></ul><ul><li>teaching e-marketing for 7 years </li></ul><ul><ul><li>e-commerce </li></ul></ul><ul><ul><li>web design for marketers </li></ul></ul><ul><ul><li>CRM </li></ul></ul><ul><li>written paper on ‘data privacy & the marketing art of the opt-in’ </li></ul><ul><li>writing a book on ‘ethical e-marketing’ </li></ul><ul><li>working for O 2 as Head of Portal Customer Interaction – customer centricity and ethics </li></ul>INTRODUCTION
    5. 5. commercial environment <ul><li>O 2 strives for ethical e-marketing </li></ul><ul><li>customer centricity is the goal of all projects within the company </li></ul><ul><li>complex mix online and offline issues </li></ul><ul><li>complex mix of b2c and b2b markets </li></ul><ul><li>a leading advocate in the recent code of conduct in text marketing </li></ul><ul><li>a leading voice in the issue of marketing to, and protecting children in the ‘electronic’ environment </li></ul>INTRODUCTION
    6. 6. data privacy <ul><li>what? </li></ul><ul><li>when? </li></ul><ul><li>where? </li></ul><ul><li>who? </li></ul><ul><li>how? </li></ul><ul><li>why? </li></ul>1 © Thom Poole 2004
    7. 10. data privacy <ul><li>how invasive can we or should we get? </li></ul><ul><li>will our customers accept our efforts? </li></ul><ul><li>identity theft – a modern problem? </li></ul><ul><li>invading our personal space </li></ul><ul><li>what can marketing do? </li></ul>DATA PRIVACY
    8. 11. data privacy – noise! Remember this? A linear model of communication (based on Schramm (1995) and Shannon & Weaver (1962) – from Fill (1999)) DATA PRIVACY
    9. 12. data privacy – the spam debate <ul><li>does spam give responsible marketers a bad name? YES 70% NO 30% </li></ul><ul><li>can we control spam without banning it completely? YES 60% NO 40% </li></ul><ul><li>is opting in to receive email marketing a realistic proposition? YES 50% NO 50% </li></ul>Results of an online survey by the Marketing Society, 2003 DATA PRIVACY
    10. 13. friendship = trust <ul><li>friendship = showing or expressing liking, goodwill, or trust </li></ul><ul><li>Collins English Dictionary. Retrieved 10 July 2003, from xreferplus </li></ul>© Thom Poole 2004 2
    11. 14. friendship = trust <ul><li>‘ people buy from their friends’ </li></ul><ul><li>trust builds loyalty </li></ul><ul><li>trust will drive profit </li></ul>Trust-focused value chain (adapted from Porter, 1998) TRUST
    12. 15. trust lifecycle TRUST trust 0 time
    13. 16. asymmetric information flow Spremann, 2001 TRUST
    14. 17. trust in marketing <ul><li>abuse demonstrates untrustworthiness, but to demonstrate trustworthiness is more difficult </li></ul><ul><li>trust = firm reliance on the integrity, ability or character of a person or thing </li></ul>3 © Thom Poole 20034
    15. 18. trust in marketing <ul><li>there is no easy formula to gain trust </li></ul><ul><li>but it is, or should be the goal of every company – trustworthiness is profitable </li></ul><ul><li>“ trust means having the customer comfortable with handing over personal information and engaging in ongoing commercial transactions at a company’s website” (Senia, 2000) </li></ul>TRUST IN MARKETING
    16. 19. trust in marketing, cont… <ul><li>trust is under attack in our society. customers have so much choice these days, which makes it difficult for brands to rise above the incredible number of messages clamouring for the attention of the customer </li></ul><ul><li>“ you can have all the facts and figures, all the supporting evidence, all the endorsement that you want, but if - at the end of the day - you don't command trust, you won't get anywhere&quot; </li></ul>Niall FitzGerald, Chairman of Unilever at the Advertising Association, May 2001
    17. 20. trust in marketing, cont… <ul><li>a proactive approach to dealing with issues of consumer privacy would involve four major issues: </li></ul><ul><ul><li>maintaining an ongoing dialogue with consumers </li></ul></ul><ul><ul><li>educating consumers and promoting privacy efforts </li></ul></ul><ul><ul><li>creating an industry standard for addressing the privacy issue </li></ul></ul><ul><ul><li>continuing to lobby for and against government regulation </li></ul></ul><ul><li>these four issues can all increase apparent ‘trustworthiness’ </li></ul>(Nakra, 2001) TRUST IN MARKETING
    18. 21. trust in marketing – trusted brands <ul><li>automotive Ford </li></ul><ul><li>kitchen appliances Hotpoint </li></ul><ul><li>PC Dell </li></ul><ul><li>mobile phone Nokia </li></ul><ul><li>camera Canon </li></ul><ul><li>holiday company Thomson </li></ul><ul><li>bank/building society Lloyds TSB </li></ul><ul><li>credit card Visa </li></ul><ul><li>insurance company Prudential </li></ul><ul><li>airline BA </li></ul><ul><li>internet company AOL </li></ul><ul><li>petrol retailer Esso </li></ul><ul><li>soft drink Coca-Cola </li></ul><ul><li>vitamins Seven Seas </li></ul><ul><li>pain relief Nurofen </li></ul><ul><li>cold remedy Lemsip </li></ul><ul><li>toothpaste Colgate </li></ul><ul><li>hair care Pantene </li></ul><ul><li>cosmetic Boots </li></ul><ul><li>skin care Oil of Olay </li></ul><ul><li>soap powder Persil </li></ul>TRUST IN MARKETING
    19. 22. trust in account management <ul><li>“ they were always being watched for symptoms of unorthodoxy” </li></ul><ul><li>‘ 1984’, George Orwell </li></ul>4 © Thom Poole 2004
    20. 23. trust in b2b account management <ul><li>for b2b brands to connect with organisational customers, emotional brand values need to be communicated </li></ul><ul><li>brands based on intangible, emotive characteristics such as trust, reassurance, reputation, image and responsiveness are seen as more durable and less likely to suffer from competitive erosion </li></ul><ul><li>brand benefits include: </li></ul><ul><ul><li>ability to charge premium prices </li></ul></ul><ul><ul><li>loyalty through powerful customer/brand relationships </li></ul></ul><ul><ul><li>ability to sustain differentiation in crowded markets </li></ul></ul>Joanne Lynch & Leslie de Chernatony, 2003
    21. 24. ethical account management <ul><li>“ people buy from their friends” </li></ul><ul><li>open, trusting, honest </li></ul><ul><li>“ I don’t want a ‘relationship’ with your company!” </li></ul><ul><li>listen </li></ul><ul><li>encourage & lead by example </li></ul>TRUST IN ACCOUNT MANAGEMENT
    22. 25. procurement behaviour low high high procurement skills business skills butterfly buyers strategic purchasing professionals order takers rottweiler buyers buy on value buy on cost buy on price TRUST IN ACCOUNT MANAGEMENT
    23. 26. the competitive advantage of trust <ul><li>“ the marketing art of the opt-in” </li></ul><ul><li>“ being trustworthy is profitable” </li></ul>5 © Thom Poole 2004
    24. 27. the marketing art of the opt-in <ul><li>the research carried out within O 2 indicates customers could be encouraged to opt-in and therefore interact </li></ul><ul><li>keeping within the ‘RFM’ (recency, frequency, monetary value) boundaries is likely to increase trustworthiness </li></ul><ul><li>creative ideas for encouraging opt-in and increasing interaction will always win </li></ul><ul><li>trust is a two-way process, and we as marketers must feel that our customers are trustworthy too </li></ul>COMPETITIVE ADVANTAGE
    25. 28. getting your nose in front … COMPETITIVE ADVANTAGE
    26. 29. … but so is everyone else! COMPETITIVE ADVANTAGE
    27. 30. local advantage COMPETITIVE ADVANTAGE local customers employees local competitors
    28. 31. work quality COMPETITIVE ADVANTAGE
    29. 32. summary 6 © Thom Poole 2004
    30. 33. summary <ul><li>lead the way with ethical behaviour </li></ul><ul><li>be trustworthy </li></ul><ul><li>keep up-to-date with technology, but don’t be led by it </li></ul><ul><li>stay legal </li></ul><ul><li>manage your competitive advantage </li></ul><ul><li>marketing can be creative – use that creativity! </li></ul><ul><li>treat customers as they expect to be treated </li></ul>SUMMARY
    31. 34. Thom Poole Head of Portal Customer Interaction [email_address] adding value to your strategic partnerships © Thom Poole 2004 All rights reserved thank you