Category — Corporate Social Responsibility

Mutual Marketing started to weave Corporate Social Responsibility into customer value propositions way back in 2004.  We just did not see the point in having a CSR departments producing glossy CSR brochures just to ‘tick the box’: if social responsibility is important,  create value from it.   Attending the Academy of Marketing Conference  on Transformational Marketing yesterday in Coventry (July 2010) ,  it was pleasing to note that we had indeed earmarked an emerging trend.  The key note speech, given by Professor Michael Baker, was about the importance of Social Business in the evolution of global macro economics,  and the triple bottom line measure to micro economics.  In fact it was heartening to see marketing tied firmly back to economics, where it belongs,  as a generator of value and a conserver of scarce resources: this starts to put marketing back into the realm of investment rather than cost.  (And back in the board room,  instead of out on a ‘jolly’.)

Professor Baker, based his view on the importance of social business on what he called three coalescing issues:-

Maslow’s hierarchy of needs – how do we move into ‘self actualisation’ ?

Rostow’s stages of economic growth – what does lie beyond mass consumption?

Organizational value creation – how do we create value from knowledge?

He also said that the role of marketers was to synthesise and integrate emerging ideas from the social and natural sciences, in the interests of consumers and thereby organizations and society – for the greater good.

So, what does this academic research mean in day to day practice?  I will suggest four key capabilities to consider – although there are more.  Firstly, a greater use of techniques such as PEST analysis,  not just as an audit, but as a tool for knowledge, insight and action.  Secondly, an understanding of the value chain process in the organization, and the knowledge needed at each stage.  Thirdly,  a growth in internal business analysts to triangulate information into issue based knowledge solutions.  And fourthly, a greater use of co-creation techniques for building innovation and value.

Much is being made this month of the birth anniversary of the evolutionary biologist Charles Darwin on the 12th February.  So it is appropriate to look at how the new economic and social environment will affect CRM.

The climate of 2009 will see the nature of CRM mutate from ‘what customers give us’ to ‘what we give customers; and get back’. The idea of providing value for money to customer ‘tribes’ will begin to dawn as communities are explored.  A notion quite distinct from the previous view of CRM as individual cross-selling and retention for shareholder profits.

“2009 is a big year for CRM and a big deal. Transformational might actually be more than a political term.” Paul Greenberg

Customers well understand their ‘premium’ status, and those who give their time and money to companies will want more back to solve personal requirements. Companies who helpfully seek to alleviate the emotional and practical issues of recession will build trust. If companies continue to take the profit from customer knowledge, customers will just opt out of relationships.

Reciprocity for mutual benefit - not only between company and customer, but between customer and customer - is a fundamental part of this new thinking. Here, North America, with its strategic use of social software and experiential marketing, definitely leads the way.

Organisations that see themselves as ‘service platforms’ and build facilitative skills will have tuned into the right wave length. Which is why there is a growing emphasis on new business models utilising both technology and partnerships. Stephanie Seakins, principal consultant at OgilvyOne Hong Kong stresses that Asian companies “are now prepared to consider new thinking in order to recover lost reliability and credibility.”

Other signs of the CRM mutation are a change from ‘customer management’ to the more co-creative ‘customer engagement’, and the popularity of sales through service - where service is an entree, rather than an afterthought, that leads to the provision of a personalised solution. If you don’t listen more carefully to your customers your competitors and other consumers will.

According to Paul Greenberg, US author of CRM at the Speed of Light, CRM in 2009 is about understanding, involving and benefiting customers, and I would agree that that is a good summing up - as long as profitability is also added on the end. The secret of corporate sustainability is the constant balancing of benefit between company and customer.

Companies are not fair to us – that’s the view of almost half the UK adult population. In 1980 only 14% thought this way; now 44% do according to nVision from Future Foundation. Nearly two decades after loyalty theories radically changed the business world, average loyalty has declined, whilst consumers have strengthened their recommendation and switching muscles. That’s a dangerous situation for companies to be in.

“Companies that want to improve their service quality should take a cue from manufacturing and focus on their own kind of scrap heap: customers who won’t come back.” So begins the seminal article on customer loyalty, ‘Zero Defections: Quality Comes to Services’ by Fred Reichheld and Earl Sassar in Harvard Business Review 1990

If customers today think that companies are more unfair to them than in the past then companies must accept they are not delivering value for money, that customers to not trust them to be ‘on their side’, and that their brand values need to be inspiring – not internal.

As the original loyalty theory by Reichheld said, feedback is the guiding voice for a systematic approach to building human assets. Loyalty is more relevant today than ever, 80% of customers will continue with a company to whom they feel loyal, especially the over 40’s and more educated, but understanding the ‘best customers’ to invest in is still the key. No one will ever achieve 100% loyalty, and not every customer is capable of it.

Back in the ‘way back when’, there used to be a little mantra about building loyalty, it still applies as a good engagement process, but we now have more tools to achieve it.

• Recognise me (but don’t force me to remember complex passwords!)
• Know me (but don’t be too familiar until I deem it OK)
• Act accordingly (by making life easier and solving my problems)
• Communicate (and listen)
• Respect and involve me (but don’t waste my time, understand my goals)
• Anticipate my needs (because you know things I don’t, that’s your value )
• Show you care (about me, and about society)
• Appreciate me (thank me for my business and involvement)

People often used demographics when describing their customers: some will add a lifestage view (25 - 35 years with children), some may add a value (people who aspire to healthy living), and some may add a lifestyle (sportsmen). But few use all three to describe the context of their customers’ lives. Yet, it is in this context that ‘unique selling propositions’ are to be found. Additionally, as a 2007 report by McKinsey found, not understanding this context is creating a trust gap between consumers and organizations.

Pigeonholing consumers into lifestage as a start, is a pretty reasonable gauge for needs: Shakespeare’s ‘seven ages of man’ still elicits wry smiles, whatever our age. But today’s ‘lover sighing like furnace’ is more likely to check his mistresses views on climate change before texting his ballad. For each generation has life shaping values, and astute companies must monitor these to guide their value propositions.

As the world enters a new economic stage, how are trends in cultural values playing out with different generational lifestages?

How are the ‘freedom protesting’ baby boomers approaching their retirement, will they differ from today’s austerity pensioners? How are generation Y coping with their mobile lives, and are emerging teenagers ‘hoodies’ or ‘greens’?

To start with differentiate between lifestage, values and lifestyle – all of which drive customer behaviour.

1. Lifestage – is based on demographics (age, and family situation). Young families naturally have different needs to young singles, empty nesters from older families.
2. Values – are what people aspire to and spring from two sources, upbringing and culture. Generational values are laid down in formative years and shape our life view, even as cultural values shift. For instance, how does the 60s generation react to the green values of today’s culture, and does this differ to the 80s generation?
3. Lifestyle – the way people actually behave given their environment.

For the report Bridging the Trust Gap which looks at how values are affecting different lifestages resulting in various lifestyles, click here.