Research

Podcast: A company's road to success, building trust, 'fessing up' and listening to customers

Creating a great product or service is just the first step on a company's road to success. It's also necessary for your potential customers to know about that great product or service. So how does a company go about developing a successful customer focus strategy? According to Nancy Stephens, an associate professor of marketing at the W. P. Carey School, it's a matter of creating a trustworthy brand, choosing the right type of marketing media and — most importantly — listening to your customers.

2007-09-26

Creating a great product or service is just the first step on a company's road to success. It's also necessary for your potential customers to know about that great product or service. So how does a company go about developing a successful customer focus strategy? According to Nancy Stephens, an associate professor of marketing at the W. P. Carey School, it's a matter of creating a trustworthy brand, choosing the right type of marketing media and — most importantly — listening to your customers.

Transcript:

Knowledge: Creating a great product or service is just the first step on a company's road to success. Unless the public knows about that great product or service, a company is going to have a difficult time standing out from the competition. That's where marketing comes in. Nancy Stephens is an associate professor of marketing at the W. P. Carey School of Business.

In January she'll be teaching a course on the essentials of marketing for the Center for Executive and Professional Development. Here, Stephens gives a tutorial on the fundamentals of marketing. Customer focus, it's so important, but why do some companies not do it, or don't keep up with it?

Nancy Stephens: I believe the reason some companies don't engage in customer focus type activities is because they fall into a rut where they may have done research at one time or they may have done surveys, and they may have a pretty good sense of what customers want. And they don't pay attention to the fact that that changes. Customers change all the time. Their needs and their requirements for products and services change. So what the business has to do is keep listening, and sometimes businesses sort of forget to do that.

Especially if sales are going well and market shares are going well, they just kind of, I guess you might say fall back into a very comfortable zone and they forget to listen until something happens that shocks them out of it, and then they might start listening again. I think the main problem then is that companies don't work at consistently listening to customers. And there are lots of ways to listen.

For example, a very creative company doing this is the big financial giant UBS. They're a Swiss company and they have a market researcher who is actually an American. He stood around Switzerland at ATM machines watching people use the machines. Now even though he was watching, that's a good form of listening — to just watch how your customers interact with the product or the service.

He noticed that young mothers with little kids with them would come up to use the ATM and they would often have a bag of groceries with them. The puzzle to him was that they would never set the bag of groceries down on the ground, which made it very difficult to hold the groceries, keep track of the child, and also operate the ATM. So he approached some of these young mothers and said, "Why don't you set your bag of groceries down?"

They said, "Well, it's raining here. It's usually raining here. If I set this bag of groceries down, it's going to get wet and when I pick it up the bottom's going to fall out of the bag and it'll be a mess. I'll never be able to leave here." So very simply, the result of that listening to customers was to put up a grill kind of shelf at every ATM so that people with bags of groceries could set their groceries down without worrying that they would get wet and the bottom would fall out of the bag.

So I would say that is a very simple example of how you could listen to your customers to get very close to what they want. A lot of times customers can't tell you what they want. For example, I don't know that if you had done a mail survey with a questionnaire — of young mothers — if you would have found out about this problem at the ATM.

So sometimes customer focus is a matter of being very creative in how you listen to your customers. But basically the problem of customer focus is not listening enough, not listening carefully. One big problem of not listening is thinking, "Well, gosh, we sent out our annual survey. That's done."

Well that annual survey is probably not enough anymore. You just have to be constantly approaching your customers, asking them how things are going, asking them, "Are you having any problems? How could we do this better?" Listening to customer is the number one most important activity for achieving customer focus, and companies simply forget to do it.

Knowledge: And also it depends too on whether they know who the decision makers are.

Stephens: Well, that's an excellent point too. Sometimes we listen to the wrong person. And that's another reason it's a problem to just send out a survey, because you don't know who's answering it. In fact, that's a big problem in marketing, to figure out who is the right person you should be talking to. But there are methods of figuring that out, and it can be done.

Knowledge: Now, companies talk a lot about branding. You hear marketers talk about branding. "We need to brand this product." But is there a real understanding, not just with the big corporations, but with the smaller and medium-sized ones on what branding really means and how important it is?

Stephens: I think maybe "branding" is a term that is thrown around a lot without a deep understanding of what it is. A deep understanding would tell us that branding is a very simple concept: it's trust. That's really all it is. It's trust. And so if a small company wants to develop a great brand, what it's really saying is: "I want to develop a group of customers who know me and who trust me. Who know that I will do the right thing by them."

So I think that's really the essence of branding. There are various levels of branding and brand trust that you can develop, from a very low level to "Geez, I've heard of that dry cleaner but I don't know if I would really go there," to "That's my regular dry cleaner and if they're closed, I'll save my clothes instead of taking them to another dry cleaner."

And various levels in between. So branding is trust, and it's important for any business of any size to understand that that's what branding is. It has something to do with the logo and the look of the brand, but that part of it is a minor part and functions as a reminder of the trust you have in the company or the store to do the right thing by you.

Knowledge: You talk about customer focus, so they can differentiate your product, which may be similar to your competitor's, but they've created that bond with you.

Stephens: Yes. In fact, I think a strong brand can be a competitive advantage in a highly competitive market where all products or all services are essentially the same. They have the same features, they cost about the same. Great branding and trust can distinguish those.

I think one good example might be Tylenol. And I think it might stem from the big scare they had years and years ago. Someone — I believe it was in Washington State — tampered with their product, some third party. And Johnson & Johnson immediately pulled all Tylenol off the shelves.

They ran full-page ads throughout the country saying, "If you have Tylenol that you're even halfway worried about, bring it back and we'll refund it." That built so much trust for the Tylenol brand and the Johnson & Johnson company, that Johnson & Johnson is the textbook example of how to do it right.

Knowledge: And now we're seeing something similar with Mattel.

Stephens: Mattel, yeah. Actually, Mattel is a very interesting example. We need to stay tuned on Mattel. I admire the company tremendously. Because to come out proactively and say, "We found these problems and because we found these problems we're going to go back and test even more of these products to find out if there are more problems." And then announce, "Yes, guess what? We found more problems."

It's probably going to kill them at Christmas. I hope that customers realize that this is the toy company that is 'fessing up proactively and we want to come back to them and buy their toys. Because think of all the other toy companies that we didn't hear from. What are they doing? Are they even testing their toys from China? What are we going to find on the shelves from them at Christmas?

So I think Mattel has done the right thing, and I hope they don't suffer for it, for being the only one to step up and assume responsibility. I think the same thing with Jet Blue. What a great company. We used Jet Blue as an example of how to do things right. And then last winter they had all these problems in New York, but they were the ones who stepped up and put their CEO right out there on the line on newscasts and said, "Look, we screwed up, we know it, and we're going to try to do better."

I don't ever recall seeing any other airline executives from any other airline going on television and saying, "We're going to try and do better. We know we made a mistake." So I really hope that the marketplace rewards those companies for being honest, because that's what they're doing and that should be something that we do trust as customers. We should appreciate and trust those companies for being honest with us.

Knowledge: Now let's say a company has gotten down its customer focus. It's listening, it's listening to the right people, it's branded itself, it's building trust or at least is trying to build that trust, but they're trying to decide "What type of media should we go to?" It's not like the days of the "Big Three" networks, or you had magazines like "Life Magazine" that appealed to everybody. What do they do now?

Stephens: Reaching today's customer is a big problem, because the media world ... Imagine a glass ball dropped from the third story shatters into 3, 000 pieces. That is essentially what is happened to media in America. Thirty years ago we could have bought a national schedule pretty easily. We'd make maybe half a dozen phone calls to buy ads and we'd cover the whole country pretty easily.

That cannot happen any more. In television, we all know about that because we all have cable channels. And how many cable channels do we have? Maybe 50 or at least 100 channels? So we don't have that big audience watching the broadcast television channels any more. We don't have people reading magazines and newspapers any more. You know, years ago in this country, most big cities had two newspapers, and they had a morning paper and an afternoon paper.

It's difficult to name more than five cities that have two newspapers any more, and I don't know of a city that has an afternoon paper any more. So you've identified a very serious problem. And the answer to that is to figure out more precisely who our customers are and figure out where they are. And that takes, again, listening and asking and doing media research.

For a small business, I don't think it's a mistake to ask your customers either orally or by a survey, "What television station do you watch? Do you read magazines? Do you go on the Internet?" Just simply ask them where they can be found. But even doing that is not sufficient. What we see now in modern marketing is a move away from traditional media schedules and toward what we call "buzz" marketing. Or sometimes people know this as public relations.

And the idea is to get attention. Maybe you're not buying an ad, maybe you're trying to get your product placed in a television program, or maybe you're trying to get it placed in a movie. Or maybe you're going to do a crazy billboard that has a funny message on it that makes people wonder, "Wow, I wonder what this is about." Maybe you're going to have people go into bars and talk up a new alcoholic beverage, and the people they're talking to don't know that they're paid by the company.

Now that also raises additional ethical considerations that companies should consider. But my point is that we see more one-to-one type promotion, and more "look at me" publicity types of attempts. And there's a way to do that strategically. It's a mistake for a company to say, "OK, I just need to get publicity. I need to be crazy." And that would be a mistake just to go out and be crazy. You can do this by design.

There's a very careful procedure you can follow by saying, "OK, what kind of product or service do I have? Who are my customers? Who do I want to be my customers? How do they make this purchase decision? How long does it take them to make the decision?" For example, we know in hi-tech products that the decision cycle is very, very short. But at the same time that it's short, it's very broad.

People who buy technology, especially for businesses, are looking very broadly all over the world, at as many places as they can look, but they don't look for very long. Contrast that with the purchase process of someone who's going to take a summer vacation with the family, and they're thinking of going to Alaska. They're going to think about that six to eight months ahead of when they leave.

So it's very important to understand that purchase process, how the customer thinks about it, where the customer is going to be — not necessarily the customer, but the prospective customer. How does that person drive to work? What streets? Maybe there's a billboard. You just have to get inside your customer's shoes. You know, Peter Drucker, the marketing genius that we all know and respect, has said, "You should know the customer so well that by the time you get to the customer with your offering it's a yes."

We should know as much about our customers practically as we know about ourselves. So the key goes right back to customer focus: knowing, watching, listening, knowing everything about that customer. You know, another way to think about this is: imagine that I asked you to make a persuasive appeal to your wife or your husband or your boyfriend or your girlfriend. My guess is that you know every hot button that that person has. You know exactly what to say to persuade that person around to your way of thinking.

To go on vacation where you want to go, to eat at the restaurant where you want to eat. You know how to persuade. That's how well you need to know your commercial customer. You know exactly what that person is interested in, how that person makes a decision, what information that person wants, how much information, and when. You just know everything. You know that person practically better than that person knows himself.

Marketing Faculty