Marketing as a business discipline is in serious trouble. Its effectiveness has decreased to the point where a less than 1% response rate is often seen as respectable in some marketing channels. Its relevance to business has declined as the CMO often finds himself reporting to the Board rather than being on it. And its reputation in society has declined to the point where marketers are often seen as little more than today’s equivalent of snake-oil salesmen.
So what has gone wrong? What has ruined marketing? I believe that a combination of stupidity, short-termism and immorality are big contributors to marketing’s decline in its effectiveness, relevance and reputation.
If you take a step back you will see that the ethos of marketing has changed over the past 50 or so years. It used to be the driver of a three-step process of 1. understanding what customers want, 2. organising to give it to them profitably and 3. telling them all about it.
Today, this has been changed so that marketing is now the driver of a much more intrumental three-step process of 1. create more stuff that we already make or that competitors make, 2. tell customers about it over and over again, and 3. manage away the customer queries, complaints and returns as cheaply as possible. This is a fundamentally flawed approach to marketing. It has resulted in a race to the marketing tragedy of the commons as promises have gone undelivered, requests for help have gone unanswered and a manipulative, Machiavellian approach to marketing has become the norm. There is no wonder that Bain & Co reported a huge ‘Service Delivery Gap’ where, although 80% of executives think their companies deliver a superior experience for customers, only 8% of those customers agree with them.
The grandees of marketing, people like George Day, Philip Kotler and Ted Levitt taught companies how marketing must create value for customers before it can create value for shareholders five decades ago. But these lessons seem to have been forgotten in the rush towards a form of real-time business that is neither realistic nor particularly businesslike. My problem isn’t with real-time marketing per se – I have designed and built real-time marketing systems for pre-paid mobile telcos in the past – but with the low-quality of thinking, the short-termism and the low moral standards that seem to be endemic in marketers today. Is it OK to force yourself into a destructive loop of customer loss through poor quality service followed by a huge push to recruit new customers at better rates than long-standing customers, that many retail bank marketers have been reduced to? I don’t think so. It displays a singular lack of marketing intellect and understanding of how value is co-created with customers. Is it OK to make promises to customers and to simply walk-away from providing them with any support once they find out they were sold a dummy, (because you already have their money), that many utility marketers have stooped to? I don’t think so either. It suggests marketers’ moral compasses are no longer pointing true north.
Many of the problems I see in business today can be traced back, in part, to poor quality thinking about the telos of marketing, to a short-termism that promotes sales now over value over a customer’s lifetime and to an almost complete lack of marketing morality. Day, Kotler & Levitt showed us how to make marketing work. Their teaching has been reinforced by a newer generation of marketing masters like Tom Asacker, Seth Godin and Alan Mitchell. And there are enough marketers out there following their principles to show that they are still as relevant today as they were when they were written half a century ago. So what is wrong with the other marketers; the ones who slavishly copy their peers without thinking about the marketing consequences and the ones who market promises they know they can’t keep without thinking about marketing morality? What is it that drives them to do all the wrong things for all the wrong reasons?
Do you agree that stupidity, short-termism and immorality have ruined marketing?
And more to the point, what should marketers do to dig themselves out of the pit they have dug themselves into?
Graham: Thanks for calling this out. Does stupidity, short-termism, and immorality begin in Marketing, as I think you imply, or does it begin somewhere upstream in the organization?
Bob Lutz’s book Car Guys vs. The Bean Counters makes a compelling case for why businesses decline. While he didn’t choose your exact words, I think you’ve made a worthy summation in your title. But as Lutz describes, flawed strategies start well up the organizational hierarchy. Marketing carries them out.
Thanks for your comment.
I don’t think Lutz makes a compelling case at all. His book is nothing more than a nostaligic, post hoc rewriting of a long and failed career at GM. A career that failed to see the implications of the gas crisis in the 1970s, that failed to spot the rise of the Japanese automobile industry, that failed to halt the rise in power of the labour unions and that ultimately resulted in a humiliating bail-out by the US government.
The real hero of Detroit is Ford, a company that successfully worked with the bean counters during the recession, mortgaged its assets to maintain liquidity and thus avoided a government bailout. It is notable that Alan Mulally, a former Boeing executive who was brought in to run Ford is doing a better job of setting its future direction than any number of prior Detroit veterans did.
Having said that, I agree entirely that poor decisions often start higher up in companies. Marketing will always have its work cut out to make a silk purse out of a pigs ear. Like GM’s most recent failure, the now defunct Hummer… a vehicle that Lutz championed.
Yes, there is short termism and stupidity out there. But i tend to believe that focus on things that are bad inevitably only leads to more bad things…. Just as a focus on things that went well will lead to more cases of intelligent and positive outcomes. This is a line of reasoning that sticks to good old appreciative inquiry and has nothing to do with marketing as such. Point is: i am interested in those cases that are inspirational, that show marketing 2.0, how high value is delivered to customers AND profits are good. Any ideas, suggestions?
…the kind of regressive and repressive marketing you rightly identify as stupid, tactical, and borderline-ethical have seen their customer share, and also often their market share, diminish – sometimes rapidly. The latest public example has been J. C. Penney, where failure to pay attention to customers and what they want in terms of product and experience may take the organization down the same path blazed by Caldor, Ames, Circuit City, and Bradlees. Before that, it was companies like Borders, where lack of nimbleness regarding products and marketing channels sealed their doom.
It’s a further manifestation of the old saying that, while the road to Hell may certainly be paved with good intentions (and a degree of laziness, immorality and complacency), companies that don’t pay sufficient attention to customer wants and needs, and the desire for both emotional and functional value, speed their trip to marketing Hades by not reading either their GPS or the street signs. I chronicled some of this in a recent blog: http://www.customerthink.com/blog/if_you_don_t_know_where_you_re_going_with_customers_any_road_will_get_you_there
On the other hand, for every Yugo, Hummer, and Saturn story, there is a Bolt, Prius, and Beetle story….and maybe a Tesla.
Thanks for your comment.
I am aware of the strengths and weaknesses of post-Lewinian methods like Appreciative Inquiry. The point of my post, written on the back of an excellent post by Wim Rampen on ‘Marketing's New Key Competence: Driving the Consumer's Decision Journey’ (http://bit.ly/147XYkx), was to raise three acknowledged problems – poor quality thinking, instrumental short-termism and low ethical standards – that are endemic in marketing in many large organisations today.
Whilst AI’s emphasis on positive narratives is sociologically admirable, the overwhelming narrative in marketing in many large organisations is unfortunately negative, not positive. It serves no-one’s interests to essentially ignore the problems by turning negative narratives into positive ones, particularly for a method that as Bushe’s 2011 review of ‘Appreciative Inquiry: Theory and Critique’ (http://bit.ly/g1vzNu) points out, is still short of longitudinal studies showing its long-term efficacy.
Do keep us posted with your attempts to implement AI in the Netherlands.
Thanks for our comment.
Like you I have worked in and for many large organisations over the past 25 years. They all operate in complex adaptive systems where there are well entrenched archtypes that guide how companies in the industry usually operate. The UK mobile telco ecosystem is a great example. An analysis I carried out on publically-available data for one telco showed that there was strong seasonality in customer losses and additions across all the telcos. Rather than tackle the obvious underlying problems, all the telcos responded by having large, noisy, expensive marketing campaigns at certain times in the year to top up their leaky customer buckets. As the UK mobile telco market is well beyond saturation levels the telcos were in-effect just swapping customers with each other. One telco spent over GBP 100 million on reacquiring customers to top up its leaky bucket, over 70% of its marketing budget. The dominant archtype in the industry is still one of reacquisition through promotional marketing rather than tackling the retention problem through service failure reduction. Everybody knows about the 900lb retention gorilla in the room, but no-one dares speaks its name in case they have to tackle it.
A lot of my work with my clients these days is building new Smarter Marketing capabilities that allow them to move from the broken reacquisition archetype to a more profitable loyalty, growth and advocacy archetype. Subjects that I know are close to your thinking too.
I agrees with Graham, especially with the telecom case. I have seen myself how a short-term strategy has destroyed the long-term customer value. in doing so, they lost the trust of the customer and it has become increasing hard to acquire new and retain the existing customers.
In addition to what you’re writing, it seems to me that the increasing reliance on data and back-end analytical systems is a contributing factor. It’s been a while since I’ve last seen any kind of marketing make an effort to try to sell something. Salesmanship seems to have been replaced by ever greater efforts to fine-tune segmentation tools, integrating different channels (such as e-mail, social media and so on) and generally the conviction that once the right group is targeted, the product will sell itself.
I’ve recently attended a seminar at which I heard one of O2’s marketing/customer service executives speak, and found it shocking that in all the talk about surrounding the customer and turning what you’ve got into experiential interaction the matter of relevance didn’t come up once. In other words, to many people it all seems to be about building a fancy system to get to the customer pretty much wherever they go – but the question whether or not what they’re throwing at them is relevant too, or of any meaning at all, that’s a thing they don’t seem to want to think about.
Which creates a kind of glass ceiling for any marketing department. What you can tickle out of your system by tweaking your SEO, lists, tracking tools and analytics quickly becomes the manifestation of how far you can take your marketing – before any effort at selling is ever made. Copy is ignored; salesmanship is ignored; approaching the prospects’ needs from their own perspective? Never even heard of. But their systems tell them that they’re “close” to their audience, anywhere from ads they look at on their morning commute down to their Facebook accounts, so that has got to mean something… And with this attitude, they’ll never get past the maximum performance of their tech back-end.
And that’s what’s happening, that’s the reason why they’re happy with absolutely miserable results: Because they think they’ve reached the end of the possible. While in truth they’ve never even tried to sell.
Combine this with a general obsession with brand instead of product/service advertising, and you’ve got a situation where companies spend a lot of money to simply show people that they’re there, and that in case anyone should want to buy anything, hey, by the way, they’ve got stuff available. We’ve moved from selling to announcing products and services, and that’s why nothing is happening anymore.
Thanks Graham – I think you hit the nail on the head. With the rise of technology and real-time marketing (as you say), we are caught up in the tactics of getting an extra lead, increasing the conversion rate of a landing page, or moving a click through rate from 0.55 to 0.7%!
I know many marketers that will oversell on the promise and not follow up on the delivery.
Great article, thank you.
Thanks for your comment.
Your comment is similar to what I see around me in telco, bank and other data-rich marketing departments today. Data, big data, ENORMOUS data is routinely available to marketers in these organisations. But big data is a double-edged sword that cuts both ways. On the one-hand it can and is routinely misused by marketers in a crude attempt to sell 0.01% more stuff. ‘If we gather social sentiment data we can identify the influencers that will help sell our products for us’, seems to be one of the oft-repeated messages. Unfortunately, most of the big data-driven marketing I have seen, whilst statistically sophisticated, is almost totally ignorant of the customer’s contextual needs and thus, the right ‘stuff’ to offer the customer. Often the right stuff is a modicum of customer service, some useful advice, or even, nothing at all! This is marketing driven by big, dumb, data. The result is that although marketers continue to grow in sophistication, they fail to grow in intelligence. And just like good old CRM, there is absolutely NOTHING in it for customers. Expect customers to want less and less to do with marketers in the future.
For every 10 instances of big, dumb, data-driven marketing I also see one driven by big, smart, data. Instead of just mining big data for more ways to sell 0.01% more stuff, it mines the same data for contextual insights that help decide what to do to grow the customer’s value now and in the near future. Customers are not unfeeling automatons as most analytical marketing models assume. At any point in time they are driven by an often conflicting set of needs, feelings and experiences that they must navigate through, largely subconsciously, using the bounded rationality that Daniel Kahneman won the 2002 Nobel Prize for Economics for describing. The same customer with the same basic needs in two different circumstances may require two completely different responses. New contextual micro-models can help the marketer identify what the customer's circumstances are and what the most appropriate response should be. As noted earlier, it might be to offer a particular product that closely matches the customer's contextual needs, but it might be a modicum of customer service, some useful advice, or even, nothing at all!
Big data is here to stay. My hope is that we are just starting to move beyond the faddish phase of big, dumb, data that offers little of value to customers, to big, smart data that has the potential to continue to co-create value one touchpoint at a time for the company and the customer throughout their lifecycle.
The $64,000 question is whether marketers will be big and smart enough to rise to the contextual challenge. Are you a betting man?
Thanks for your comment.
Whilst getting an extra lead, increasing the conversion rate of a landing page, or moving a click through rate from 0.55 to 0.7% are all in their way legitimate marketing tactics they are only a small part of a large picture.
Marketing is all about creating a ‘warm lead’ that can be passed to sales for closure. At the point of sale the company gets paid and the customer takes possession of the company’s product. This is when the fun and games start for the customer. If the product is hard to setup, or there is a problem with the product, or the product simply doesn’t work, there is often little point in contacting the company for help as they already have the customer’s money (and they will do their utmost to keep it at no further cost to themselves). We all know the ‘your call is valuable to us!’ joke. It isn’t funny any more.
The core problem was set out by Lanning & Michaels in an insightful 2000 article in McKinsey Quarterly on ‘A Business is a Value Delivery Ssystem’. L&M pointed out that business is all about delivering value to customers (for which they get paid). To do this consistently, businesses need to think about their products as ‘value propositions’ that deliver the value customers want from the products during their use. L&M set out seven core components of a value proposition that, crucially, includes how the value will be experienced by the customer when they use the product and how they will evaluate the value received.
Marketers rarely if ever use L&M’s value proposition model. Instead, they use Ries & Trout’s much weaker positioning model that is only concerned with how to differentiate products in a busy market and not with how to ensure the products actually deliver what they say on the tin. There should be no surprise that CSAT scores for many companies are so low. And as we know, unhappy customers are all too happy to vote with their feet and these days, with social media as well.
Sadly, none of this is new; Ted Levitt was talking about the same things in the 1960s. Perhaps marketers are just slow learners.
Great insightful article, in fact all your responses are. I have the dilemma of interpreting big data or any data these days into something worthwhile. It seems to me that in the pursuit of profit and more and more consumerism, we’ve forgotten we don’t actually need half the stuff. My dilemma compounds as I see myself more and more as the end user, and deciding whether I should even take on a marketing brief, unless it’s ethical, returns stakeholder value not just to the investors but to the environment and long term future of the next generation. I ask myself more and more, now I’m asking you, where’s the morality in marketing?
Thanks for your email.
Your comment reaches out to fundamental questions about the philosophy of marketing, its morality (or immorality) and the amorality of markets. I need to think carefully about these things and do a little research before I can do justice to your question.
I will get back to you with a substantive answer in a short while.
Thanks for the question. It isn’t often that a marketing question stretches my intellectual faculties like yours does.
No rush, the question has been creeping up on me for some time, (some sort of metta virus) and I think it’s the ground swell of public opinion via social media which is pulling me back from the edge of becoming an automaton of technology, into a thinking, caring person again.
Now I have access to opinion that doesn’t come from mainstream media I’m coming to the conclusion that we need new business models in society (with more morality) and ‘marketing’ should take responsibility for the message.
I have plenty of time for the answer.
“The real hero of Detroit is Ford, a company that successfully worked with the bean counters during the recession, mortgaged its assets to maintain liquidity and thus avoided a government bailout. ”
One point – Ford is controlled by the Ford family; a bankruptcy would have ruined them. They didn’t have the options that GM and Chrysler did.
Short-termism has ruined brands and products that creative marketing had built over a period of time. There are plenty of examples of that in the designer clothing and accessories market segment. When up-scale clothing brands, that sold exclusively from their own showrooms, start selling their brands from retailers like Sears and Costco just to name a couple, they were trying to maximize sales and profitability in the short-term, but ended up hurting the brand in the long term .
I really loved the article and thumbs up for that. It is sad and indeed true that the term marketing has boiled down to ‘sales and publicity’ due to improper usage of the word and a layman might think that is what marketing is and due to that I believe marketers align themselves with that ideology out of the constant need to be recognized by the people (sometimes CEOs, MDs) who do not quite well know about what marketing is.