In Marketing 101, everyone learns the basic 4 P’s of the classic ‘marketing mix’, as defined by Neil Borden in the 1960’s:
• Product – manufactured item or service
• Place – making the product or service accessible to customers
• Price – charging at a point above break-even to make a profit
• Promotion – communicating to customers, prospects and others about the product or service
Over the past fifty years, these 4 P’s have held up pretty well as an expression of marketing basics. After all, the product has to be right, be functionally sound, be durable, and work well. The price has to be right; and, even in the case of expensive durables or services, it has to be financially sound. The place, reflective of distribution channel, must be in customers’ hands at the right time. And, through promotion, the right target group or groups must receive needed communication about both the existence and availability of the product or service.
As sound as the 4 P’s have been, changes in communication and the move to greater customer focus within the enterprise have found customer behavior, and their loyalty, at growing risk. Companies have to be current with rising consumer expectations and need for personalized value. Digitization has made organizations both transparent and accessible, and has also increased the requirement that they become omnichannel. The traditional emphasis on functional touch points and transactional relationships has given way to a focus on overall customer experience, that goes well beyond price-based commodity to greater innovation and relevance.
Today, we’re dealing with a very different customer experience and value proposition landscape. The contemporary customer is more mobile, content-seeking, impatient, and independent than at any time in history. Even with all of these new decision dynamics, the fundamentals of trust, reputation and image, emotional connectivity, and perceived value have become increasingly powerful drivers of customer loyalty and bonding.
As organizations become more customer-centric, moving from naïve to natural, or from simple customer awareness, through greater sensitivity and focus, finally arriving at customer obsession, they will be well-advised to add four new P’s to their toolbox:
• Permeation – Dedication to providing optimize value must be absorbed into every nook and cranny of the organization. Further, it must core to shared enterprise values/superordinate goals and be an essential element of its DNA.
• Proaction – Organizations can no longer be content to passively, tactically, and functionally react to customer needs and concerns. They must take the initiative in understanding what customers require as value delivery.
• Partnering – James Unruh, former chairman and CEO of Unisys Corporation, said: “…partnering with customers promotes a deeper understanding of customer concerns and of areas for improvement. Partnering relationships can create a seamless interface between an organization and its customers.” Smart and evolved companies create value in partnership with customers, and value is as likely to come from people and information/content as it is from products and services. If companies practice ideas such as ‘creating interdependence’ and ‘building equity’ with their customers, they are strategically differentiating themselves from competitors and making it more difficult for their customers to leave and begin a relationship with a new supplier.
• Paradigm – There are, to be sure, many ways in which an exemplary, world-class organization can be defined. From my perspective, it is an enterprise which creates trust, especially in stakeholder (customer, employee, and supplier) experiences, and in reputation and image. These are critical to optimizing customer value delivery; and inherent in such cultures is the ambassadorial, trust-building behavior of employees (with customers and each other) and customer-forward processes.
The last P, Paradigm, is especially important. It speaks to making customer-centricity a paramount and lasting focus, of both a functional and an emotional relationship that exists between the enterprise and all of its stakeholders. Customer-centricity, after all, is about more than structure, strategy and systems. It’s about the differentiation and engagement that lead to bonding between the organization and its stakeholders. It’s about giving stakeholders a personal investment in the organization and its ongoing success. It’s about the enterprise becoming more transparent and open, connecting with customers through branded, emotional experiences and sustained value delivery, resulting in its operation as a “conscious capitalist”
Finally, Paradigm is about “being human” as an organization, not just as a buzzword to apply to customer experience optimization. As Sisodia, Sheth, and Wolfe wrote in their classic customer-centricity book, Firms of Endearment: “What we call a humanistic company is run in such a way that its stakeholders – customers, employees, suppliers, etc. – develop an emotional connection with it. Humanistic companies seek to maximize their value to society as a whole, not just to their shareholders. They are the ultimate value creators. They create emotional value, experiential value, social value, and, of course, financial value.” Customers have shown strong desire to affiliate, and bond with, companies that are paradigmatic in providing unique, consistent, and value-based experiences as well as building strategic relationships.
There’s actually a fifth new P – Personalization – that says more about the marketing mix as an extension of the customer-centric enterprise. The most valuable customers appreciate and want more personalization, a relationship, and an emotional connection. It’s up to organizations to a) identify the strongest emotional drivers and b) effectively leverage them. Successful organizations have either morphed, or have begun, by placing customers’ interests ahead of the enterprise’s. They build a veritable bank account of trust; and high trust, and the positive reputation and image it breeds, is an enduring strategic advantage, a definite competitive differentiator. And, personalization truly optimizes the customer experience, perhaps its most important benefit.