From Transactions to Relationships

There’s a really great, in-depth article in this month’s Harvard Business Review titled Rethinking Marketing. You can read an excerpt here and below, but you’ll have to pick up an issue at your bookstore or pay online to read the article in full.

This excerpt outlines what most of us already know, yet captures the sentiments really well so I wanted to include it:

“…Never before have companies had such powerful technologies for interacting directly with customers, collecting and mining information about them, and tailoring their offerings accordingly. And never before have customers expected to interact so deeply with companies, and each other, to shape the products and services they use. To be sure, most companies use customer relationship management and other technologies to get a handle on customers, but no amount of technology can really improve the situation as long as companies are set up to market products rather than cultivate customers. To compete in this aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value. That means making products and brands subservient to long-term customer relationships. And that means changing strategy and structure across the organization—and reinventing the marketing department altogether.”

Heard it before? It’s amazing how relevant the Cluetrain Manifesto is still, more than 10 years after it’s publication. The above sentiments also remind me of a number of essays by U of Michigan professor C.K. Prahalad on customer “co-creation.”

But this lengthy article goes beyond describing the changing landscape of marketing. The authors continue in great detail, to lay out their vision for an organization that is restructured to respond to and embrace these changes. To move from a traditional company to a customer cultivating company.

Altimeter Group advises clients to shift their thinking from transactions towards relationships. Similarly, this article discusses the following shifts:

  • Away from Product/Brand Manager-Driven towards Customer Manager-Driven
  • Away from pushing products towards building long-term customer relationships
  • Away from product profitability towards customer profitability
  • Away from brand equity toward customer equity
  • Away from a marketing department towards a “customer department”
  • And most interestingly: Away from a CMO towards a CCO, or Chief Customer Officer. The authors note that there are more 300 CCOs worldwide today.

Get your hands on a copy of this article and read all the details in its entirely. A great read and highly recommended.