The Marketer's Handbook: Reassessing Marketing Techniques for Modern Business

THE BLIND MEN AND AN ELEPHANT

by John Godfrey Saxe

It was six men of Indostan

To learning much inclined,

Who went to see the Elephant

(Though all of them were blind),

That each by observation

Might satisfy his mind

The First approached the Elephant,

And happening to fall

Against his broad and sturdy side,

At once began to bawl:

"God bless me! but the Elephant

Is very like a wall!"

The Second, feeling of the tusk,

Cried, "Ho! what have we here

So very round and smooth and sharp?

To me ’tis mighty clear

This wonder of an Elephant

Is very like a spear!"

The Third approached the animal,

And happening to take

The squirming trunk within his hands,

Thus boldly up and spake:

I see, quoth he, "the Elephant

Is very like a snake!"

The Fourth reached out an eager hand,

And felt about the knee.

"What most this wondrous beast is like

Is mighty plain," quoth he;

"’Tis clear enough the Elephant

Is very like a tree!"

The Fifth, who chanced to touch the ear,

Said: "E’en the blindest man

Can tell what this resembles most;

Deny the fact who can

This marvel of an Elephant

Is very like a fan!"

The Sixth no sooner had begun

About the beast to grope,

Than, seizing on the swinging tail

That fell within his scope,

I see, quoth he, "the Elephant

Is very like a rope!"

And so these men of Indostan

Disputed loud and long,

Each in his own opinion

Exceeding stiff and strong,

Though each was partly in the right,

And all were in the wrong!

Moral:

So oft in theologic wars,

The disputants, I ween,

Rail on in utter ignorance

Of what each other mean,

And prate about an Elephant

WHAT’S IN AND WHAT’S NOT

WHAT’S IN

Account based marketing: see Account management

AAR model

Account management

Advertising

AIDA

Ansoff and his matrix

Audit (The market audit)

B-to-B: see Business-to-business marketing

Behavioural insights for marketing

Bellwether markets: see Diffusion of innovation

Blueprinting

Boston Matrix

Brands

Business-to-business marketing

Brand valuation: see Brand

Buyer behaviour: see Consumer behaviour or Organizational buying behaviour

Buzz: see Viral marketing

Campaign: see Marketing communication

Category management

Celebrity endorsement

Customer experience management: see Service quality

Channels of distribution

Channel strategy: see Channels of distribution

Closing techniques

Cognitive dissonance: see Behavioural aspects of marketing

Collateral; see Packaging

Co-creation of products and services: see Innovation management

Conjoint research: see Research

Communication: see Marketing communication

Competitive strategy

Concept testing: see Research

Conjoint research: see Research

Consumer behaviour

Contact audit

CRM: see Loyalty

CSR, Corporate social responsibility

Customer experience management: see Service quality

Customer journey: see Blueprinting and Service quality

Customer Value: see Value propositions

Cultural variations

Decision-making unit (DMU)

Differentiation

Diffusion of innovations

Digital marketing

Direct marketing

Directional policy matrix

Entertaining customers: see Hospitality

Event marketing: see Sponsorship

Experience curves: see Boston Matrix

Features analysis

Four Ps: see Marketing mix

Gap Model

GE/McKinsey matrix: see Directional policy matrix

Globalization of markets

Growth/share matrix: see Boston Matrix

Hospitality and customer entertainment

IMC: see Marketing communication

Innovation management

Intangibility: see Services marketing

Integrated marketing communication: see Marketing communication

Internal marketing

International Marketing

Latent markets: see Market maturity

Lifetime value: see Relationship marketing, Loyalty, and Service quality

Loyalty

Market audit: see Audit

Market definition

Market maturity

Market myopia: see Market definition

Market share

Marketing communication

Marketing concept

Marketing management

Marketing measurement

Marketing mix

Marketing plans and planning

Marketing strategy

Mass customization: see Relationship marketing

Mavens: see Diffusion of innovations, Viral marketing.

Maslow’s hierarchy of needs: see Behavioural aspects of marketing

Media: see Marketing communication

Micro marketing: see Category management

Molecular modelling

Network marketing: see Relationship marketing, Viral marketing

NPD/NSD (New product design/New service design)

Organizational buying behaviour

Organizational competence in marketing

Packaging

Perceptual maps: see Positioning

PEST: see Market audit

Pestel: see Market audit

Pipeline management

PLC: see Product life cycle

Porter’s competitive forces

Portfolio analysis and managment

Positioning

Post purchase distress

Pricing

Prospects: see Pipeline management

Product life cycle (PLC)

Public Relations (PR)

Relationship marketing (RM)

Repositioning

Research

Sales and selling

Scenario planning

Sector marketing

Segmentation

Service quality

Services marketing

Seven Ps: see Marketing mix and Services marketing

Solutions marketing

Sponsorship

STP: see Positioning

Thought leadership

Value propositions

Viral marketing

WHAT’S NOT

Beak even analysis: a financial method of estimating when a business initiative might return more to the company than its costs.

Belbin’s team roles: (but see Marketing management). A method of identifying the way individuals behave in teams.

Brand valuation techniques: (but see Brand).

Business process re-engineering: (but see Thought leadership). A rather faddish idea which argued for the re-configuration of operational processes.

Business vision: a method of setting the strategic intent of a company.

Core competence: a corporate strategy and operational concept which encourages executives to focus on what their organization excels at.

Corporate strategy: Method of setting direction for the entire firm. Needs to inter-relate with market analysis and marketing strategy.

Customer journey: (but see Service quality). A service quality concept, popular in financial services companies, which focuses attention on customers’ experiences.

Critical success factors: (but see Competitive strategy). A method of identifying important competitive issues that executives should focus on.

Discounted cash flow analysis (DCF): an accounting technique to determine payback on an investment and to decide between alternative uses of capital.

Economies of scale (but see Boston Matrix).

Learning curves (but see Boston Matrix).

Mission statement: A method of setting strategic intent of a company.

Myers Briggs: (but see Marketing management). A respected method of identifying personality traits.

Net promoter: (but see loyalty and service quality). A new approach to the measurement of reputation and service quality, relatively unsubstantiated at the time of writing.

O&M: a rather outdated process design approach (but see blueprinting).

Pareto (but see Account management).

Project management: (but see Marketing management) a well developed method of organizing activities in a one-off management task.

Proprietary tools: there are many good methods and techniques which have been developed by agencies and suppliers and are sold to marketers. This book has omitted the more modern of them because it is difficult to assess how far they are generically applicable.

Return on investment: an accounting term used to understand the returns a business might get from an investment, and used very sloppily by marketers to chat about the value of their activities to their boss.

Shareholder value: a slightly faddish concept pushed by some accountants and economists which is supposed to link the managerial levers of a business to the return to investors. Very suspect because there are so many different variables which affect the value of shares.

Six sigma: (but see Service quality) A newish framework for managing improvements in quality.

Strategic business units (SBUs)

SWOT: a generic, well known management concept to summarize competitive issues.

Total Quality Management (TQM): (but see Service quality). A specific approach to quality management. Some marketing specialists tried to ride the publicity wave associated with this by trying to introduce improvements to marketing management under the term Total Quality Marketing. The latter had some merit but appears a little faddish at the time of writing.

Value-based marketing: a rather dubious attempt to attract the attention of senior executives to marketing by connecting the function with the shareholder value fad; unsubstantiated at the time of writing.

Value chain analysis: (but see Competitive strategy). A corporate strategy technique identifying important and unimportant activities in a firm’s processes.

THE RATINGS

As their career progresses, marketing professionals develop their own judgements on the concepts and techniques that they use. Some they dismiss out of hand. Others become familiar, practical approaches.

The ratings in this book are my own, developed over thirty years of use. They are my opinion based on reading into them and discussing them with others. I do not expect anybody to agree with all, or many, of my opinions. I do urge all professionals, though, to develop their own view.

The criteria for my ratings are:

Practical and powerful: the highest compliment I can pay a marketing concept. Not only is it founded on good, analytical, and experiential evidence, but it works well in practice.

Practical: The evidence for these concepts are, in my opinion, primarily experiential, they need more substantiation but that doesn’t mean that they are not usable.

Merely conceptual: These are normally theoretical with little evidence of their being useful in practice. Some have been substantiated by good academic rigour and ought to be tried.

Toxic: These, if misunderstood or misapplied, can do real damage to your shareholders’ business and your career. That doesn’t mean you should not use them, but understand their limitations and their risks.

A

cmp01uf001 AAR MODEL

Application: Business-To-Business Marketing, Planning Major Account Strategy, Relationship Marketing

The Concept

This little known idea, the actors-activities-resources model (see Figure A.1), divides business relationships into three progressive and inter-related layers:

(i) Activity links are the work, projects, or other activities, involved in the interaction between two businesses. These vary with the depth of relationship. They range from simple sales and technical projects through to two firms meshing or adapting their systems and business processes to become more efficient. The latter has created sizable business opportunities in areas such as outsourcing over the past few decades.

(ii) Actor bonds. These occur when two business people interact through a buying or professional advisory process. The academics behind this research suggest that there are three components necessary for them to develop. The first is reciprocity during the process, ensuring that both sides give something to the interaction, even if one is a customer. The second is commitment and the third is trust. All three increase as healthy business relationships develop.

Figure A.1: The actors-activities-resources model

Source: Håkansson and Snehota, 1995

As people interact they form perceptions of each other about: capability, limitations, commitment, and trust. If the relationship develops these perceptions influence the degree and clarity with which the two communicate; and also the degree to which they involve each other in their own professional network. So, for the supplier, the way in which they conduct their work influences the trust their customer develops in them and the degree to which they will be invited further into the organization, and so the possibility of further work.

(iii) Resource ties are items used by people during business interactions. They might include: software, intellectual capital, skilled staff, knowledge, experience, and expertise. People who have resources, or control over them, have greater power in professional relationships. This power is the basis of the offer (the customer comes to the supplier because they lack one or more of these resources) but clearly the immediacy or importance of need and the scarcity of resource influences pricing and quality perceptions.

This concept suggests that business becomes more secure and profitable as relationships between organizations deepen through the three levels. So, the thinking behind the model will seem intuitively correct to many people in business-to-business marketing. This is its strength, capturing, as it does, the day-to-day experience of many marketers. It allows a firm, when needed, to use a common process and terminology in its approach to customer relationship management. However, it also introduces (perhaps for the first time) a reasonably robust mechanism whereby marketers can analyse and understand in detail what many recognize to be their most important approach to market: relationships with repeat customers.

At its very simplest this model can be used as a basis of discussion with internal colleagues to map the depth of relationships that their company has with its customers. Sales people can be asked to complete formats of their customer relationships using the three levels of the model. Actions arising from discussion of the results (e.g. creating more opportunities for non-task related exchange or making different resources, such as knowledge, available) can be put into account plans.

However, this concept can also be used as the basis of detailed analysis and research. A hypothesis of the professional relationships that exist in a market, and the types of interaction, can be created using the terms of the model. It can then be used as a guide to design a research sample and questionnaire. A two-step, qualitative and quantitative research process based on it is likely to reveal powerful insights into the relationships customers have with the firm and its competitors.

History, Context, Criticism, and Development

This model was developed, during the 1980s and 1990s, by academic researchers interested in both business-to-business and network marketing. It is relatively unknown and relatively modern. Nonetheless, their work contains detailed and painstaking research together with numerous case studies in, largely, European countries. They also examined international business-to-business links; between engineering companies in Australia and their clients in Asia, for example. Yet it appears to be a tool that can also be used for practical purposes within a normal business.

Voices and Further Reading

Axelsson, L. and Easton, G., Industrial Networks: A New View of Reality. Routledge, 1992.

Håkansson, H. and Snehota, I., Developing Relationships in Business Networks. Routledge, 1995.

There is a team effect. Jointly, the two companies can perform activities and utilize resources which none of them could accomplish in isolation. What they can accomplish depends on how the relationship develops. A relationship between two companies does not become automatically a perfect ‘team’ but the potential is always there. The team effects have to be tried out. They develop as the parties involved experiment with the various connections and learn about their effects. The quality of the relationship is the extent to which this function will be exploited. Håkansson and Snehota, ibid.

Purchase, S. and Ward, A., AAR model: cross cultural developments. International Marketing Review 20:2, January 2002.

Ford, D., The Business Marketing Course. John Wiley & Sons Ltd, 2002.

Resource ties can develop gradually and unconsciously as problems are solved within a relationship. These ties can be substantial and important in old relationships, without the companies being aware of them. In contrast, innovation often occurs when the resources are tied together in new ways between companies and this can lead to the development of offerings with wide application. Both of these issues emphasize the importance for the marketer of auditing each important relationship. Ford, ibid.

Woodburn, D. and McDonald. M.H.B., Key Account Management: The Definitive Guide. John Wiley & Sons Ltd, 2011 (3rd edn).

Things You Might Like to Consider

(i) This is a relatively unknown theoretical concept which has been tested reasonably rigorously in academic research projects. However, there is not much evidence of it being used extensively in day-to-day sales and marketing within actual businesses. Even though it looks practical it is relatively untested in real businesses.

(ii) It could be the basis of a consistent way of analysing the relationship status of a number of customer accounts. It could also be used as the basis of a research brief.

(iii) It can be the basis of a viral marketing campaign, examining as it does the complex inter-relationships between business people in different groups.

(iv) It could be integrated into a market audit as a means to understand customer behaviour.

cmp01uf002 RATING: Merely conceptual

cmp01uf001 ACCOUNT MANAGEMENT

Application: Sales to Major Customers

Figure A.2: The typical approach of major account management

The Concept

This concept concentrates specifically on the need to analyse and service important customers. The reality for many firms is that their revenues are dominated by a relatively small number of important, repeat customers. So, for many marketers, their day-to-day job is focused on the needs and opportunities within a small group of significant buyers rather than the mass markets which absorb so much of marketing research and thinking; the so-called Pareto principle. Yet, this perspective is barely covered in marketing courses and tends to be neglected in text books on the generic principles of marketing.

There are several aspects to effective account management:

(i) Prioritizing the Customer Accounts

Two researchers (Woodburn, D. and McDonald, M.H.B., 2011) found, rather alarmingly, that 85% of Western European companies had no idea whether or not they made or lost money from their major customers. So, marketers have to start by identifying their most important customers. This can be as crude as listing them by volume of business and ranking accordingly. Some focus on their top 100 (produced in this way) or some version of it. Others have tiered layers of prioritized accounts, each receiving different levels of attention according to the volume of business they generate. Unfortunately, though, these simple approaches won’t meet all of the firm’s objectives in its market, and it certainly won’t reveal that it may only be receiving a small share of these companies’ spend in its category. Marketers may, for instance, want to identify customers with the highest potential and penetrate those further. Or they may have more generic strategies, such as wanting to penetrate a sector of the market or to take business from a competitor. Or they may set out to penetrate certain types of premium customers in order to be recognized as a high quality supplier. If these target customers have low immediate spend, they may be categorized as a strategic account and receive the same attention as important customers with a larger immediate business volume. So, effective account selection is critically dependant on the setting of good marketing objectives.

With these different issues to resolve and objectives to achieve, it is sensible to step back, and analyse both the existing major customers and the potential buyers before settling on any strategy or approach toward them. If, for example, customer accounts are mapped in terms of the size of their spend and in terms of the company’s share of that spend (as shown in Figure A.3) there will normally be a spread of business. Marketers can use this analysis to determine where best to allocate scarce resources for maximum return. This straightforward analysis suggests four strategies according to where the accounts fall:

Maintain: the intention here is to hold position with relatively little investment. Some, for example, set up telephone-based account management for those that merit less investment.

Defend: these accounts are important and effort must be made to both keep the customer excited by the supplier’s offer and to keep competition out.

Question: if there is one weakness that almost all marketers have it’s the reluctance to cut out unprofitable or low potential customers. Those in this part of the analysis, though, detract from the resources and attention that should be showered on others. They ought to be culled.

Win and grow: this group of customers is high potential and effort should be put into penetrating this customer base further. Resources saved from culled accounts and any incremental investment should be put here. It should be the future business.

Figure A.3: A representation of prioritized customer accounts

The size of the circles represents the size of the customers’ businesses, so this gives an indication of which accounts are likely to be more lucrative and which to allocate resources to.

The directional policy matrix (DPM) can also be used to help prioritize accounts and, at the same time, gain some consensus among the different people involved in account management activities. Involving general managers, account directors, sales, service, and marketing specialists in a project to score and rank accounts brings focus and consistency to account selection. The ability to customize criteria is likely to reveal very powerful insights. A DPM analysis that includes, for instance, the anticipated lifetime value of accounts is likely to make major account selection more relevant and strategically effective.

(ii) Major Customer Sales Strategies

Once the top priority accounts are identified, account managers are assigned to them, taking them beyond the opportunistic approach usually adopted by sales teams that focus on new business. Account managers are dedicated to one large customer in order to develop the account; in other words: to grow the revenue from it. Their role is to get to know that organization in depth and identify or create opportunities. Some have, or develop, deep knowledge of the industrial sector in which the customer’s business concentrates. This enables them to choose relevant products or services for their customer and even to advise executives within it. They need to be capable of understanding and presenting the whole range of products, skills, and services offered by their firm. At a minimum, excellent communications skills will be needed plus a recognized ability to generate revenue. Successful individuals in this role are also creative, able to spot opportunities and harness their own firm’s abilities by forming teams to suggest ideas. They normally deal at middle or senior management level but, on occasion, need to gain access to the heights of their customer’s organization (perhaps to discuss strategy) and the very bottom (perhaps to collect data), as shown in Figure A.2. Yet, they must not only be the voice of their employer to the customer, but also the voice of that customer to their own organization.

(iii) Relationship Stages

The depth of interaction between an organization and its significant customers goes through several stages. These deepen and become more valuable as the relationship between the two organizations develops. These stages have been identified and categorized by various researchers. The AAR model, for instance, identifies three levels of relationship: activity links, actor bonds, and resource ties (see separate entry). The subtlety and depth behind the development of the actor bonds level is fascinating and practical. On the other hand, Professor Malcolm McDonald, who established a ten-year research project into major account marketing at Cranfield University, identified five layers to developing relationships: exploratory, basic, cooperative, interdependent, and integrated" (see Woodburn and McDonald, 2011). They identify the individual needs, the relationship needs, and the benefits at each stage.

These conceptual frameworks can be used to identify the stages in development of the relationship between each account and the supplier. Both generic strategy and practical account plans can be built around them.

(iv) Account Plans

The best account management normally involves an account planning process of some kind, frequently undertaken on a six-monthly basis, which adds discipline to relationship management. It normally involves an internal meeting of employees who have an interest in the account, led by the account manager. At this meeting, the team discusses a number of issues; including:

Objectives for the account. These might be financial, relationship building, or strategic;

Environmental awareness. A review of the customer’s market and challenges, used to understand issues and identify potential opportunities;

Business profile and performance review;

Creation of potential projects and sales;

Sales and marketing programmes specifically for that account;

Proposed annual investment to use within the account.

The team should develop specific sales objectives, such as to win one or more of the opportunities identified. Yet it should also create supporting marketing objectives; such as to reposition the company as a consultancy partner to the account, or to build awareness and preference among important executives for their company. (As important as the objectives themselves is the conversation.) Finally, the account team has to agree how often progress against the objectives will be measured and how it will be reported to senior management.

Sometimes, account leaders will involve members of the customer’s organization in planning sessions to add perspective and depth to the debate. This alone tends to engage others with customers and increase the inter-relationships between the two organizations. The output of the planning process, often in the form of an account plan, is shared with relevant people in the firm. The draft plan should be signed off by interested executives including people like an account director, marketing director, service director, and sales director. Once approved, it should form part of the regular account reviews and account governance procedures.

(v) Serious Investment in Unearthing Insight into Major Accounts

Some marketers have come to the conclusion that, if large business customers are a market in their own right, then analysis should be conducted in a similar way to a full market audit. For instance, to build an understanding of the account’s situation and plans, information can be collected and used in a similar way to which macro-environmental factors are viewed for generic markets; using the PESTEL mnemonic, for instance, (see market audit) as a structure for this thinking.

Some go one step further and analyse how their customer’s market is evolving in much the same way as they analyse their own market. One of the most powerful aspects of his approach is value chain analysis. The aim of this perspective, used routinely in first rate consultancies, is to focus on what the customer provides for its customers. It examines the contribution of all functions within the organization and what exactly the business does for its buyers. It will enable the account planning team to match its offer to the customer’s needs and to be pro-active with proposed projects. In fact, it can unleash powerful, innovative propositions, which revolutionize a customer’s business and approaches to its work.

Data is gathered from multiple sources to understand specific customer needs, how products or services can be used to address those needs, and also how best to communicate the value of those offers to the different buyers and influencers in the organization. Publicly available information sources open to the marketer include: the account’s website (including investor relations information if it is a public company); press coverage (Google alerts can provide daily media coverage of the account for example); social media (blogs, tweets, and LinkedIn profiles of executives); and conference presentations and articles given or written by its employees. Sources of information available for the marketer to buy include: information aggregators (such as Factiva, One Source, or Boardex), investment analyst reports, industry analyst reports and academic case studies of the organization. External advisors can also contribute. They include: industry analysts, procurement advisors, trade or professional body representatives, journalists or editors, and peers in similar roles in other companies. Many of these can be sought out for opinions on proposals, or as sources of potential suppliers.

A profile is needed of each customer, containing information on its strategy, vision, objectives, its important initiatives, performance and associated issues, organizational structure, culture, and buying priorities. In addition, profiles of the key executives within the business are important. What are their roles, their background, their objectives, and their perceptions of suppliers? Their likely buying behaviours can be understood by creating a history of their previous decisions.

Finally, an overview of the competitive landscape within the account is crucial. How much does it spend on the category and what share do the various suppliers have? What are the perceptions of those suppliers? What is their perception of the quality they receive? How much do they earn from the account and with whom do they have relationships? It is important to understand the competitive personnel and their networks in the account. Every day executives in the customer organization see the supplier’s employees and those of competitors. Sometimes they proffer ideas and sales bids on the same issue or needs. What do the executives in the account see and hear? How does it seem to them? What are the strengths and weaknesses of the various sales people offering them advice? A map of the important decision makers and influencers is a useful tool. It should reflect their relationships with each other and indicate the strength of influence of each person on the buying decision for a specific category or opportunity, together with their perception of the supplier. Marketing can really add value here, by identifying and profiling executives; and finding ways to open doors for the account team to meet them.

(vi) Creating Account Specific Value Propositions

One of the most recent trends in business-to–business marketing is the creation of unique and specific "value propositions for individual important customers. Marketers in leading firms set out to specifically create an offer that resonates with and excites their customer. It is a deliberate attempt to move away from vague, meaningless. and commoditized solutions". For each opportunity identified in the account plan, a value proposition is created that demonstrates an understanding of the buyers’ issues, makes the benefits of the offer clear in their language, highlights how the value of the offer outweighs the price, and reinforces the unique selling points or differentiators of the company. Marketers then try to create a snappy elevator pitch for use by the account team when meeting buyers and influencers.

(vii) Designing Bespoke marketing Plans for Specific Accounts

A large number of business-to-business suppliers are beginning to apply dedicated marketing to important, individual customers and not just generic markets or sectors. This is much more than the usual sales or bid processes dressed up in marketing jargon. It’s a tool by which scarce marketing resources are focused on a handful of companies. This approach aims to help companies broaden and strengthen their account relationships, increase awareness and demand for their offer, and ultimately improve their financial results. The approach has been given various titles by the marketers involved (including: client centric, key account, account-based marketing, and one-to-one marketing).

The aim is to create an integrated sales and marketing plan for one customer, in the same way as is done for a generic market or segment. Usually there are two aspects to this: building credibility for the new value proposition inside the account; and getting the account team access to the right buyers and influencers for that proposition. Some of the marketing communication tactics include: customized thought leadership (on issues uncovered in the account analysis and summarized in the value proposition), dedicated portals or extranets, high value direct marketing, private seminars and workshops, content-rich hospitality, and customized testimonials or case studies. The channels most suitable for the messages and the best sequence of activity should be planned in as much detail as that for a more generic market. It is important to develop an integrated approach that incorporates multiple channels that the buyers and influencers use and trust.

(viii) Establishing a Communications Infrastructure

As with any marketing programme, success in marketing to specific organizations relies on good marketing management and programme management. This includes: agreeing the timeline for each campaign to each customer, creating a critical path of activities and milestones with each account team, and agreeing the governance process for the overall programme of activities. It is useful, for instance, to agree escalation procedures, as, often, the bespoke marketing plan relies on significant time and effort from various members of the account team and company executives, who may all be subject to other priorities and might miss the deadlines set for them.

History, Context, Criticism, and Development

The concept of customer account management is based on the fact that certain buyers will give repeat business to a supplier whereas others will not. It developed when product companies found that revenue improved if they took different approaches to existing buyers than those used with new business prospects. They found that the skills of a sales person focused exclusively on getting new customers were different to those of a representative dedicated to managing the orders from existing buyers. The latter is focused on creating longer term relationships and gets involved in many issues other than direct sales (such as complaints, billing, service, or administrative difficulties) which might threaten the business exchanges between the two sides.

Although used in retail, consumer goods, and the car industry, it was when this concept moved into the young computer industry (with its then obsession on its installed base of products) that there was progressive codification of major account management as a discipline. The practices of global market leader IBM, where account managers had been chosen, trained, and fêted for many years, were particularly influential. The concept has since moved into other industries and has been adopted, to a greater or lesser extent, by many different companies.

Even at its best, though, there are limitations to the sales aspects of account management. Much modern practice has been based, for instance, on processes pioneered by IBM in the 1980s. It had client relationship directors and detailed account plans with sophisticated prospecting and sales support. Yet, when (in the early 1990s) the company faced traumas due to dramatic changes in the computer market (like interoperability), it nearly collapsed. This was, in part, due to the fact that its account managers had missed changing customer needs. Similar difficulties occurred at BT. After it was privatized, it invested heavily in account managers but, within five years, its share of its prime market, the city of London, had dropped from 100% to under 20%. Yet, if account management sales theory (which was designed when these markets had semi-monopolistic distortions) was correct, neither should have got into that situation because their account managers would be so close to their customers.

So, account or relationship management as a discipline has its flaws. Account managers might, for instance, hoard information about their customers or miss more general trends because they are so focused on sales deals in one business. In fact, many companies have found that account management needs to be supported by service and marketing strategies to major customers. Leading firms in a range of international industries no longer see this as just a sales strategy or a marketing programme. They are creating products or services, value propositions, marketing strategies and communications programmes for one major customer at a time. This approach seems to have evolved more forcibly in the past decade because company after company has realized that some of their customers have revenues that exceed the GDP of some nation states. Logic suggests that if they were entering a new national market they would resource it with an experienced general manager and a range of operational capabilities. It would be much more than just a sales emphasis and so their most important customers should have more significant resources than just account sales teams. Some companies in business-to-business markets have called this Account based marketing (ABM) but it remains to be seen as to whether this becomes a generally recognized term.

Voices and Further Reading

Client-centric marketing is about managing client perceptions of your services and capabilities … to move client perception in a positive direction over the long term. The perception should be able to endure beyond changes in client personnel and changes in the company. Generalist approaches are no longer enough in today’s competitive market. No more going to big industry shows and trying to get clients to attend. This time, you customise the show, the roundtable and the thought leadership. You still have to do the big shows to create the awareness, but it’s no longer the basis of business to business services marketing – client or account centric marketing will be the model of the future. Dr Charles Doyle, who initiated the original adoption of this technique at Accenture.

Cheverton, P., Key Account Management. Kogan Page, 1999.

Woodburn, D. and McDonald. M.H.B., Key Account Management: The Definitive Guide. John Wiley & Sons Ltd, 2011 (3rd edn).

The management of a relationship is not at all like managing a basic or normal selling relationship. Instead of getting on and doing things … the key account manager needs to consider how to work through other people in the business, how to coordinate what they do, and how to gain an appropriate level of visibility of activity without drowning in communication and tasks. McDonald, ibid.

Bonoma, T.V., Major sales: who really does the buying? Harvard Business Review. July–August 2006.

Shapiro, B. and Posner, R.S., Making the major sale. Harvard Business Review, July–August 2006.

… for repetitive major sales the objective should be to develop long-term account relationships, not just sales. The supplier with an established account relationship has a significant competitive advantage. Because risks are high and an intimate buyer/seller relationship builds over time, buyers are hesitant to try new suppliers and tend to remain with established ones … Shapiro and Posner, ibid.

Things You Might Like to Consider

(i) It is a simple fact that many companies are dominated by relationships with a few repeat customers. It is ridiculous for the marketing function to concentrate on the generic market, the acquisition of new business or generic campaigns if a large percentage of business comes from a few large organizations.

(ii) Just because they are a large customer to your company, it does not mean that you are significant to them. It may be that there is opportunity to penetrate these organizations much further. A marketer dedicated to major accounts should not become immersed in internal perspectives; they need to understand, as objectively as possible, the spend in their category by each of their major customers.

(iii) A surprising number of firms do not know the competitor account managers that deal with their major customers. How can any effective marketing be developed if they are unaware of what others are saying to the customer they value about the same matters they want to communicate?

(iv) Sophisticated marketing communication strategies (such as network marketing, relationship marketing, and viral marketing) should be deployed in marketing to major customers as much as, perhaps more than, to generic markets.

(v) This requires as sophisticated organizational capability as that deployed by leading firms to market to generic mass markets.

Xerox’s Evolution of Global Account Management

At the time of writing, Xerox is the world’s largest technology and services company that specializes in document management. With sales of $17.6 billion and 57,100 employees in 160 countries, the company helps businesses deploy smart document management strategies and find better ways to work. Global account management is not a recent phenomenon for the firm as it first appointed them in 1988. But with increasing globalization, customer requirements have changed and the need for more strategic account management is even stronger.

Aware of the need to take their global account management to a new level, Xerox recently built a global accounts community, which concentrates on making it easier for customers to do business with the company on an international basis. It resulted in a 27% revenue growth in two years. Xerox puts this success down to a stronger, more empowered, group of people.

GLOBAL BUSINESS

As with many large corporations, Xerox was international in scope but not truly global. The company came to realize that although it had, over time, increased its number of global accounts to a hundred, it hadn’t allowed for the considerable infrastructure or capabilities it needed to have in place to really support these accounts. It was also apparent that Xerox’s approach to national and global accounts was cookie cutter, with no real customization around the types of different accounts or geographical reach.

To improve its global account marketing, Xerox experimented with a new global programme that had a refined focus on the very top tier global accounts. Twenty-five accounts were selected as being globally strategic to Xerox, and requiring an integrated and coordinated global approach through dedicated client managing directors and virtual teams across the world.

One of the big catalysts that drove Xerox in this direction was its move to being more services focused. When providing services, the supplier no longer talks to just procurement or strategic sourcing, but also to executives running aspects of the business to get realistic input to their work. It’s a very different dialogue than the cost per print conversation typical in Xerox’s market. With the move from a product to a partnership approach, and the capability to offer global services, Xerox has been able to step above a lot of its competition and create a very different offer.

Although integrated into the broader sales structure, this was about strategic account management, not just sales, and demanded a very different set of skills and capabilities from the account leadership. It was the result of external and internal pressure: to meet both the level of skill required by the customer and Xerox’s ambition. Global business was complicated, with a need to ensure good balance between country and global strategies. The elements Xerox attributed their progress to were: leadership, account selection, coverage, infrastructure, and executive support. Removed from geographic boundaries and managed at the global level, the vision and strategy for these accounts was controlled by a much more empowered group of people than under the old regime of managing up through the organization.

LEADERSHIP

Senior leadership became the critical factor for these global accounts, both at general management and account levels. At the outset, Xerox put the top tier of accounts under the Vice President of global account operations, who reported directly to the Chairman and CEO. Later, it moved to the President of Xerox Global Services. The credibility and leverage of someone who sits at the senior table, sharing progress on a consistent basis, was fundamental to success.

At an account level, the client managing directors (CMDs), who owned the global strategy, had to build and maintain trusted relationships across different cultures, geographies, and economies. This demanded a high level of maturity and experience; articulate professionals who knew the industry and how to engage at executive level. The CMD role has proved to be a very different profile than the typical person Xerox would have hired ten years ago to lead accounts; the company had to recruit both internally and externally to find these capabilities.

ACCOUNT SELECTION

Like most companies, Xerox automatically gravitated towards the largest customers. Yet it was important to identify accounts where the relationship was strategically important for both parties. A primary reason to limit the number of global accounts was to maintain clear customer focus. So, Xerox went from a hundred to twenty-five tier-1 accounts, as it only wanted companies in the programme with a true appetite for global business. Three initial criteria determined whether a company could become a global account:

The company had to be truly global, with operations in more than two regions and a substantial part of its business outside its home market;

The size of the company, both in existing and potential business;

The company needed to be organized in a global way, to have global procurement and willing to collaborate with Xerox in a global manner.

COVERAGE

A clear understanding of the scope of global accounts and determining how to add value delivers considerable return. Xerox had a dedicated person to design global plans for each of the top tier accounts and a clearer strategy for serving the world. It had the ability to take a close look at the client, really study where they are as a business, take advantage of the emerging and growth markets they were pursuing, and set up a coverage scheme that matched the client’s needs more effectively than in the past. As a result, Xerox realized much more of its growth from new business in non-domestic areas than before.

INFRASTRUCTURE

Xerox found that delivering the right infrastructure for global operations underpinned performance. This included:

Global bid support – one of the toughest jobs was trying to negotiate pricing from four operating companies and a 160 countries around the world, particularly without a well coordinated pricing or contracting programme. (The importance of a coordinated bid increases considerably when offering services, where you can build a more complex proposition.) In the new programme all four operating companies had bid proposal teams and Xerox was able to pull together a much more effective and professional global account bid response. Whereas previously Xerox tended to bid for everything, it became routine to, first, decide whether to bid at all, through careful qualification criteria. As everybody participated towards a winning bid, Xerox developed the ability to smooth out inconsistencies that occur on the global stage. Certainly, with this programme, Xerox became more creative and differentiated, adding value rather than competing on price.

Global agility – a core capability that needed to be well resourced; global, regional, selective, and responsive. Until recently, only the Xerox global general manager or CMD had the ability to step outside of their country to help pursue a deal. Yet the pursuit teams’ cross-border capability was essential to go after these big accounts, particularly with real growth coming from the emerging market regions that don’t have the skill-sets required to pursue those opportunities. Xerox became a lot smarter at getting the people and teams who could really own the pursuit of opportunities into a variety of different countries.

Global compensation – Xerox introduced a new compensation plan for the top-tier team to help them drive global revenue. This comprised two key metrics: invoiced revenue and total contract value. Both were multi-year compensation plans to help people think longer term, a fundamental for global accounts. Ultimately, with senior people leading these accounts, a level of P&L responsibility was needed and so they set out to measure bottom line profitability.

As global plans can help to change the company’s culture from a more siloed, local geography starting point, plans that were 100% country based changed radically to think about global revenues as well. For example, Xerox’s Japanese organization had its account reviews at North America headquarters.

Communication – this was important for virtual team networks. A good reporting system with alignment throughout the organization assisted a more customer-centric than geographic focus. Xerox’s own web-based DocuShare has proved a valuable system for internal information sharing, and initiatives such as customized customer portals. From a sales perspective, Salesforce.com has enabled Xerox to manage global accounts more effectively and to provide information back to the countries as and when they needed it.

CORPORATE SPONSORSHIP

This global programme would not have thrived without the full support of senior management. Executive commitment was essential to help meet client expectations and drive the considerable changes needed. But it added most value by its indirect support of the CMDs, which enabled these people to have sufficient power to coordinate activities and influence priorities across traditional geographic and business unit boundaries. Xerox’s focused executive programme was revised to ensure that the top ten executives in the organization were aligned to each of these twenty-five top tier accounts.

IN SUMMARY

Xerox built a strong global account community to meet the business needs of its most strategic global clients. It improved global bid success, a higher penetration of its services portfolio, greater levels of customer satisfaction, and many more C-level conversations in these priority accounts. It also garnered a non-domestic revenue growth of 27%, five times above that achieved in the other global accounts. According to Xerox, becoming a global company never ends, with the need to constantly evolve as your strategic customers change; It’s a race without a finish.

Source: Based on an SAMA conference presentation by Tom Dolan and agreed for publication.

cmp01uf002 RATING: Practical and powerful

cmp01uf001 ADVERTISING

Application: Communication of Propositions, Education, Preparation for Sales

The Concept

Advertising is one of those vast subjects that it is very difficult to do justice to in this format. It is one of the best known aspects of marketing and captures the public imagination. People in large companies, in marketing agencies, and in universities dedicate their whole working life to it.

Advertising is, essentially, the practice of buying space in various public media, often called above the line (a throwback to the past which it is probably not worth going into) in order to communicate a message to a wide market; and, whatever anyone says, it unquestionably influences buyers (whether businesses or consumers). In fact, it has been behind the success of many of the world’s most famous and favourite purchases (like Coca-Cola, Singer, Nike, Apple, Gillette, IBM, and Heinz).

Advertising is attractive because it communicates a message to a large audience very effectively. It is particularly good at communicating messages that require impact, like the launch of a new product or business. It is used extensively by both consumer and business-to-business companies but their commitment to it can be erratic and, as a result, not as effective as it could be. It has been most successful when business leaders have demonstrated a long-term financial commitment to it.

The media used include: broadcast media (television, radio and cinema), print media (newspapers and magazines), online media (websites, online publications, and mobiles), and outdoor media (like posters). Marketers need to plan carefully the use of this method of influencing their intended audience. As a result, advertising campaigns are calculated on the basis of the likelihood of their audience seeing or hearing the message a given number of times over a sustained period.

There are several aspects to good, effective advertising:

(i) A first rate knowledge of the market and detailed analysis.

(ii) Clear, sometimes unique, insights into the human beings at which it is aimed. (See behavioural aspects of marketing).

(iii) A clear communication strategy, often held over many years.

(iv) A distinct, simple message.

(v) A compelling idea. (This is different from a mere message. It is often the most value that advertising agencies add and there has been debate in the industry about charging for it separately.)

(vi) Organizational capability. (Evidence suggests that companies develop, just as in any other area of business, progressive organizational capability in advertising through, inter alia, processes, agency management, and brief clarification. This is at the heart of much success in advertising. There is no doubt that companies are likely to improve advertising effectiveness as they gain experience in more campaigns.)

(vii) Wonderful creative execution. In fact, there is, it seems, a clear link between creative and adverting effectiveness (see Field, P., 2010). This research, commissioned by Thinkbox and the British Institute of Practitioners in Advertising, showed correlation between a campaign’s performance across the creative awards recognized by The Gunn Report, and their business performance in the IPA Effectiveness Awards databank (2000–2008). Amongst other findings, the research showed a direct correlation between strong advertising creativity and business success. Creatively-awarded campaigns were, on average, eleven times more efficient. It also revealed that many highly creative campaigns do not have enough media money invested in them. The client misses the opportunity to capitalize on creative excellence and leverage it to gain significant increases in market share.

(viii) Excellent media choice and management. The choice and purchase of media is a highly specialized and precise skill usually the province of dedicated firms (such as, at the time of writing, MediaCom, ZenithOptimedia, Carat, OMD, UM, MEC, PHD, Vizeum, or Mindshare).

(ix) Some form of success, payback or return measure.

Advertising does, however, have a number of drawbacks. Firstly, it can be expensive, requiring large investment to reach audiences through television or radio networks. Yet, the ability to target messages very finely has improved considerably over recent decades as the proliferation of media has occurred and audiences have migrated away from mass media toward the web, DVDs, cable, satellite, and even computer games. This has caused major advertisers to focus their media choices more precisely and has also reduced costs.

This fundamental change in the nature of media has prompted some advertisers to concentrate on prompting customers to access other channels (such as a web page). A business-to-business campaign might, for example, use social networking sites, blogs, radio, business or news-orientated TV channels, and specialist publications (such as in-flight magazines and trade papers). Called narrow casting, this can sometimes be more effective and less costly than generic broadcast advertising of the past. A buyer listening to a jazz station in the car on the way home or reading a favourite blog online, or viewing a favourite TV channel on a specialized station, may be more influenced by this cheaper media than by a nationwide advert. Now, more than ever, advertising needs to be sophisticated and carefully planned communication run by specialists who manage spend judiciously and target precisely the intended audience. As a result, modern practice tends to emphasize multiple channels, particularly the web, and response management.

Secondly, there is such a deluge of messages aimed at modern buyers that it is hard to make a message stand out. So, advertising campaigns need to be creative and sustained. A well planned and eye-catching campaign running for, say, two years will eventually catch the attention of the intended audience and influence its thinking. The general rule of thumb seems to be that, when a firm’s executives become bored or driven to distraction by their own advertising, the market is just beginning to get it.

Finally, the impact of advertising can be hard to measure. It is difficult to understand the return on advertising expenditure, even if it is well remembered or wins industry awards. Firms tend to create their own measures which help them come to a judgment about the return they get for the cost of advertising. One common practice, for instance, is to have one geography reserved as a quiet area, which does not receive the campaign. Differences in the effect on sales can then be estimated. There have been numerous attempts, going back several centuries, to find a universal, scientific measure of the financial benefits and economic effect of advertising but, at the time of writing, this is still elusive. Most senior executives in major companies establish some mechanism which indicates return to their own satisfaction.

History, Context, Criticism, and Development

The use of good, effective paid advertising is older than many realize. This is not just an esoteric reference to the odd poster or handbill. Companies have indulged in good, systematic advertising that would be recognized by modern practitioners, for at least 300 years. For example, an advertisement in the British Mercurius Politicus of 20 December 1660 was for toothpaste (Dentifice to scour and cleanse the teeth see Turner, E.S., 1968). It emphasized the benefits of the product the way advertising would today (… making them white as Ivory … fastens the teeth, sweetens the breath and preserves the gums …). Business leaders like Josiah Wedgwood (UK 1760s), Henry Heinz (USA 1880s), and Robert Woodruff (Coca-Cola 1920s) used advertising to build lasting brands and companies. One of the first advertising agencies in America, J. Walter Thompson, was created in 1878 and the oldest agency, according to Britain’s History of Advertising Trust, was the Publicke Register for general Commerce, founded in 1611. There were well known advertising consultants in both America (Elmo St Lewis) and the UK (Henry Samson) in the late Victorian period.

There were experienced and insightful advertising campaigns during the eighteenth and nineteenth centuries in at least America and the UK (and probably other developed nations like the Netherlands and Germany). Iconic campaigns have appeared in most cultures and created profit by capturing the imagination and dreams of people. They include: the Guinness animals, Pear’s Bubbles image, Coke’s the real thing, and Esso’s tiger in your tank. Some (like De Beers’ Diamonds are forever) were long running and some were dramatic one-off’s (like Apple’s 1984 launch of the Mac at the Super Bowl). The approach has been successful for both consumer and business-to-business suppliers. It has worked for manufacturers, service suppliers, and retailers. It has also been successfully used for political campaigns and public service messages to educate.

Of course, over time, the volume and the methods have changed. At the start of the industrial revolution in the West and during the Edo period in Japan, for instance, handbills, puffs, and Hikifuda were used. The latter have been described by one source: as overwhelming as TV today (Yamaki, T. and Fukatsu, K., 1995). As literacy and media grew, newspaper, radio, and TV advertising expanded, reaching the mass audiences of today.

So, advertising has an unashamedly successful heritage in creating wealth and profits for business leaders. Yet, not only has advertising launched and built brands, it has influenced society, introducing new language, social norms, and concepts. Cleanliness is next to godliness was, for instance, a 19th century slogan that Pear’s soap used to enter the American market (a phrase that some people still think is in Shakespeare or the Bible). Haddon Sundbloom’s 1931 adverts fixed Santa Claus, to this day, as a jolly plump man with bushy white beard in, of course, Coca-Cola red (before he had been depicted in various forms, like a tall green elf). The advertising of De Beers, which started in the 1930s, crystallized the habit of diamonds being given as a symbol of a marriage proposal and, in some countries, created the practice. Apart from creating cultural habits, advertising has also launched the careers of many fabulous artists (from William Hogarth, Sant x14D_Bembo_11n_000100 Ky x14D_Bembo_11n_000100 den, and Toulouse-Lautrec to Salman Rushdie and Alan Parker). Much art in many societies simply would not have existed if advertising had not funded young artists and helped them to succeed.

Voices and Further Reading

"Whatever is common is despised. Advertisements are now so numerous that they are very