A Blink is Just a Blink

An interview with Kevin Clancy and Peter Krieg, co-authors "Your Gut Is Still Not Smarter Than Your Head"

A "Blink" Is Just a "Blink"

Why is the tenure of CMOs depressingly low? Instead of popping Alka-Seltzer, Kevin Clancy and co-author Peter Krieg offer an alternative prescription to relieve marketing performance anxiety.

Is marketing really all about the "blink" as Gladwell might have us think? Or can companies truly put into place a successful marketing strategy founded in discipline and a fact-based approach? Is there a way that 2008 will truly be the year that CMOs don’t take flight and companies boost both brand and market performance?

Interview Kevin Clancy and Peter Krieg:

Nettie (NH): While CMOs are popping Alka-Seltzer and trying to increase their now average tenure of less than 22 months, what are the top three things they can do today to get a handle on their marketing efforts?

Clancy: We get this question from folks, a lot—what are those three critical things I can do today to dramatically improve marketing performance tomorrow. I always give the same answer. It’s not exactly a well-kept secret that most executives—marketing and otherwise—have no idea who their most profitable and least profitable customers are. And forget about prospects! It’s a drag on performance to waste time and resources on buyers who offer little in the way of economic value to a company, so the first thing CMOs can do is to filter out the chaff and find a target worth targeting.

Next if you don’t want your brand to be a commodity, don’t treat it like one. CMOs need to find a positioning based, not on what everyone else in the category is doing, but on real buyer problems.

Finally, no matter how dead-on the targeting and positioning, if they get lost in the shuffle during implementation of the strategy—in an ad campaign, for example—there’s no effect. So treat implementation as a priority, not an afterthought.

NH: You say relying on gut instinct to make decisions is dangerous and that it should not be the determinator for marketing programs. In the world of instantaneous "gut-check" marketing and the hub-bub about "Blink," what do you think CMOs should be utilizing instead of gut?

Clancy: In marketing, as in life, the best approach rarely lies in the extremes. Yes, relying on gut instinct and intuition alone to make a marketing decision is foolhardy. But we’d never say all you need are numbers and data to make a decision either. There is plenty of suspect data out there that can lead CMOs in the entirely wrong direction. When it comes to making marketing decisions, nothing beats a balance of personal judgment and seasoned experience with careful analysis of unimpeachable data.

NH: You've said CMOs should "lose their fear of numbers"—what does that mean and why is it important?

Clancy: At most companies today, market researchers and marketing managers are about as close to a productive working relationship as the Democrats and Republicans in Congress. Researchers very often talk in terms of analysis techniques that mean little to marketers and the data they tend to present rarely provides a clear course of action. So like kids and spinach, marketers know they need the research, but they don’t want to eat it—it’s too complex, not really helpful, and who knows if it’s even any good to begin with? In lieu of buyer research, marketers rely on competitive information and their own sense of what customers will or won’t like to make a decision. Given that the average ROI of most marketing programs these days is zero or negative, this approach doesn’t seem to be working very well. CMOs need to take steps to address their current issues with research, otherwise they’ll be left having to explain to the CEO and CFO why he or she has nothing but his or her good name to back up a major marketing decision.

NH: You advocate that marketers should "start buying media by hearts and minds, not numbers." Explain?

Clancy: The only way to buy media these days is by the number of people exposed to commercial message. You can imagine how frustrating this is for marketers who are spending millions and would like to know that target buyers not only see their ad, but also pay attention and respond to it. There’s plenty of talk about coming up with metrics and ratings systems to capture levels of "engagement" in different media such as TV. The theory goes the more "engaged" or involved a viewer in a program, the more likely he or she is to tune into the ads during the show. Our own work at Copernicus in this area has found program involvement accounts for half of the attention paid to an ad and casts a long, positive shadow on persuasion among those aware of the ad. But CMOs need to get serious about tracking ad response by level of engagement to establish exactly what the added investment that will likely be required to secure ad time in a highly engaging program, magazine, radio show, website, billboard, etc., will return to them to move the dream of more impactful media buying closer to reality.

Do Sales and Marketing Really Have to Collaborate?

NH: Why is it important for marketers and sales folks to get along?

Clancy/Krieg: Here’s another flashpoint for marketers—their relationship with the sales team. They just don’t get along and, unfortunately, too many companies just accept this as the natural order of things. Marketers can’t afford to let this continue. I said before that implementation of strategy is just as important—if not more so—than the strategy itself. If you can’t get sales on board with a marketing program, marketing performance suffers.

CMOs would do themselves a big favor if they took the first step toward detente and tried to patch things up. Start with a new mindset—treat sales as a client instead of a competitor. Have your team find key targets for them in available sales databases. Come up with different scripts for different targets. Show them the money—in other words, how the information you are giving them will help make more of it—and they will show you the love.

NH: Why is 100% customer satisfaction unprofitable? And how should that determine where companies should spend their money in marketing?

Clancy/Krieg: Throughout the 1990s, management consultants preached the virtues of 100% customer satisfaction. Many companies—Xerox for one—made this their overarching corporate goal. And even with all that push behind it, the average cross-industry customer satisfaction score still hovers just below 75%. Now, obviously there’s plenty of room for improvement, but the question is how much and where exactly to improve. True, profitability rises as satisfaction increases, but only up to a point. After that, the cost of delighting the customer by delivering ever-increasing satisfaction rises faster than the payoff in profits. The key is to identify critical drivers—the things customers truly want in a category and what they are or aren’t getting from your brand and competitors—and rough out the costs to find the optimal point for improvement. Throughout the 1990s, management consultants preached the virtues of 100% customer satisfaction. Many companies—Xerox for one—made this their overarching corporate goal. And even with all that push behind it, the average cross-industry customer satisfaction score still hovers just below 75%. Now, obviously there’s plenty of room for improvement, but the question is how much and where exactly to improve. True, profitability rises as satisfaction increases, but only up to a point. After that, the cost of delighting the customer by delivering ever-increasing satisfaction rises faster than the payoff in profits. The key is to identify critical drivers—the things customers truly want in a category and what they are or aren’t getting from your brand and competitors—and rough out the costs to find the optimal point for improvement.

NH: What are companies missing out on if they're not pushing a full marketing effort to "those who already love their products"?

Clancy/Krieg: They are missing the opportunity to foster loyalty and grow an existing business relationship. The cost of sales to folks who are already familiar with your brand and already predisposed to buying it are so much lower than the cost of finding and wooing an entirely new customer who may already be loyal to a competitor.

Is Data the New Black?

NH: Data, data, data—why is data so important and how can companies get better at collecting it and using it for marketing decisions?

Clancy/Krieg: Very few marketers complain that they don’t have data—most are overwhelmed by the reams of information they have warehoused in various databases. What they complain about is having data that they can use to make decisions about who to target, how to differentiate their brands, how to reach them with media, what new products will be of interest, and much more. In order to get the kind of information and insights that you need, you need to start by understanding who in the marketing organization will be using the information and how they would like to use it—what decision are they trying to make. Marketers should also understand what some of the limitations of different research exercises are. Ethnography is a "hot" research technique, for instance, but you can’t project findings onto a larger population.

Q: Is there a tip or two that you have for marketers to stave off the recession blues?

Clancy/Krieg: A typical gut reaction in a recession is to cut back marketing budgets dramatically. Tough times, the belt gets tightened. We understand the sentiments. Just consider that all ofyour competitors are also likely cutting back—so why not buck the trend and increase your share of voice in the marketplace? Another typical gut reaction is to assume buyers are much more price-sensitive during a recession, meaning marketers cut prices. During tougher economic times, price becomes a more important consideration, but not necessarily—not even customarily—the most important consideration. In fact, our research suggests that price is the primary consideration for only 15%-35% of buyers in most product and service categories, so even in a recession there are a multitude of other compelling ways to differentiate your brand other than through a low price.

by Nettie Hartsock, Cincom Expert Access