Download Just-in-time marketing

Just-in-time marketing
Executive Summary
Traditional marketing methods boost
awareness among many consumers
who will never become customers.
We call this wasted effort “marketing
inventory.” Today, the amount of marketing
inventory companies are producing
is growing–and the costs of creating
and maintaining it are spoiling their
profit margins. To solve their inventory
crisis, marketers should apply the same
Just in Time logic that revolutionized
the factory when excess inventory
threatened to sink manufacturing.
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Most marketing departments
overproduce marketing that
underperforms, even with the myriad
new digital tools they have at their
disposal. That’s because despite
the ubiquity of the internet today,
marketers continue to prioritize
broadcast methods like television,
radio and print that push messages
nearly indiscriminately towards broad
swaths of consumers. And, even when
they do advertise online, marketers
often accept shockingly low clickthrough rates for a meagre return on
their investment.
Clearly, much of today’s marketing
spend–whether digital or not–can
be considered excess. We call these
excess investments marketing
inventory–similar to physical
inventory, the accumulation of unused
parts or unsold goods that result
from a factory’s overproduction.
Marketing campaigns that create
favorable impressions but don’t lead
to purchases are analogous to crates
of unusable or unsellable product that
incur storage and maintenance fees
while gathering dust and becoming
rapidly obsolete. Mounting inventory
is almost always wasteful on its face,
often makes companies inflexible to
shifting demand, and can lead to high
levels of quality defects.
For marketers, this accumulating
inventory is a scourge that continues
to grow. For example, the CMO of a
US auto insurance company recently
announced a 10 to 15 percent increase
in advertising spending in response to
what he called an “arms race”–with all
the waste and diminishing returns that
an arms race implies.
Factories, it turns, out, have been
here before. Starting with Toyota in
post-war Japan, many manufacturing
organizations radically trimmed their
inventory by adopting a Just in Time
approach: produce only what the
customer demands, at the right time,
to the exact specifications and quality
that the customer requires.
To solve their own inventory problem,
Just in Time marketers must take up
a similar mantra:
Produce only the
marketing that’s
required, at the time
that it’s needed, with the
exact message or offer
that will convert a sale.
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Three Lessons from the
Just in Time Factory
Manufacturers became Just in Time organizations through three
related methods, each of which holds a lesson for how marketers
can stem the tide of marketing inventory: Kanban, Kaizen, and
Total Quality Management (see Figure 1).
Figure 1: Three Principles of Just in Time Production
Eliminate wasted
production
Kanban
Kaizen
Just in Time approach
Ensure
cross-functional
quality
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TQM
Continually
improve
processes
Kanban
Kaizen
Kanban refers to a set of procedures
used on Just in Time factory floors,
which ensure that production at
every stage is calibrated to demand
at the next stage, all “pulled” from
customer demand. That way, very
little effort is ever wasted. It’s a sharp
departure from pre-JIT factories which
“pushed” output down the production
line based on forecasts and plans.
Kaizen refers to an organizational
mindset where everyone–from
executives down to line-workers, are
continuously improving processes
and practices to eliminate waste and
enhance quality. While all companies
would say they want to learn from their
past marketing mistakes and improve
their marketing process, only a few
companies today are taking Kaizen
in their marketing departments to an
extreme–improving their customer
interactions every single day, at all
levels of their marketing organization.
Applied to marketing, Kanban asks
executives to concentrate their
efforts on consumers who are
most likely to purchase and use a
product–ideally based on a customer’s
proven interests–rather than pushing
an overabundance of awareness
among many who never will.
Leading companies attract highpotential customers to their marketing
messages by offering them valuable
information and services. Delta
Airlines’ Facebook app, for example,
helps group travelers plan an itinerary
together. Similarly, cosmetics retailer
Sephora maintains “boards” on
Pinterest that showcase its staff’s
favorite beauty products; it turns
out that because Pinterest users
are specifically looking for product
inspiration, the company’s Pinterest
followers spend 15 times more than
Sephora’s Facebook followers. In both
cases, these marketing organizations
are creating targeted pull–producing
marketing that the most interested
customers themselves are seeking out.
Consider how car rental giant Hertz
implemented an analytics platform
that enables the entire front office
to significantly reduce marketing
wastage and improve accuracy in
its targeting. The system continually
analyzes the habits and preferences
of repeat customers and suggests
offers to front-line employees that are
not just profitable for Hertz, but are
also ones which individual customers
are highly likely to take. The benefits
for customers are clear: in 2014, the
company was chosen as the car rental
favorite in a large survey on website
TripAdvisor. It is also Zagat’s top pick
for “Customer Loyalty Program” two
years running, and has also received the
Flyertalk award, bestowed by one of the
top frequent flyer discussion forums.
Total Quality
Management
Finally, Total Quality Management
is a firm-wide commitment to
ensuring that no manufacturing
defects make it through to the next
stage of production–let alone to the
end customer. Applied to marketing,
TQM means that every customer
interaction–whether taking place in the
marketing, sales or service functions–
achieves the best customer outcome.
Take Las Vegas-based Zappos.com, an
online shoe and clothing shop. Based
on the philosophy of its founder Tony
Hsieh (the company is now owned by
Amazon but operates independently),
exceptional customer service is the
company’s primary marketing function,
driving return purchases and viral
word-of-mouth. Zappos maintains
a well-recognized commitment
to achieving what they call “wow
customer experiences”–for example,
they measure widely different metrics
than most companies do at their
call centers, focusing on customer
outcomes rather than call throughput.
Based on their notable service
differentiation, the company built a
trusted reputation that they could
not have achieved through traditional
marketing campaigns alone. In fact,
the company’s cultural commitment
to total quality in their customer
interactions means that the retailer
needs to spend relatively little on
traditional broadcast marketing
methods compared to their competitors.
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Building the Just in Time
Marketing Organization
Based on Accenture’s extensive experiences with clients building
interactive marketing organizations, we’ve found that some
leading-edge companies are starting to break old habits by
reorganizing their marketing either around distinct product and
service categories–or, often better, around distinct customer
segments whose interests and behaviors span various product
categories. Then, to reduce costs and improve effectiveness, each
of these marketing groups are being offered expertise from three
internal talent segments.
1. Creatives and
programmers: Apply
Kanban to Pull
Customers
The first of these talent segments is
made up of creatives and programmers,
tasked with designing messages
and experiences that effectively pull
customers to the brand messaging. Take
Nike’s Digital Sport division, a dedicated
team of engineers, programmers
and marketers whose mission is to
increasingly shift Nike’s advertising
into the digital realm, where it can pull
customers to the brand through ongoing
customer interactions–sometimes over
social media, and sometimes through a
new line of digital sports devices that
log their user’s performance data. As
a result of Digital Sport’s trailblazing
efforts, Nike managed to reduce their
“push” advertising in print and media by
40 percent over three years, even while
the total advertising budget increased.
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2. Data scientists:
Cultivate a mindset
of Kaizen
3. QA specialists: Assure
Total Quality Customer
Interactions
A second talent segment is comprised
of data scientists, who design platforms
for real-time analytics and improved
promotional targeting. Woolworths, the
largest supermarket chain in Australia,
acquired such a team and placed the
analytics group not only at the center of
marketing, but at the center of all the
company’s customer relationship efforts.
According to one analyst, the resulting
improvements to promotions that the
group could now achieve “means better
profits, more long-term relationships
with customers and less wasted
marketing.”
The last group is comprised of
quality assurance specialists who can
ensure the consistency of customer
interactions across marketing, sales and
service functions. A team at the banking
and financial services giant Wells Fargo,
for example, uses technology provided
by innovative startup Sprinklr to achieve
perfect interactions with customers
over social media. The platform enables
the company to move conversations
that begin on Facebook or Twitter into
secure sales or support channels which
retain the context and the continuity
of the discussion. The result: improved
customer loyalty, cost savings from call
deflections, and revenue from new sales.
Why should marketing
departments take this
organizational plunge?
Companies that have been able to dramatically
reduce their marketing inventory are finding
themselves more nimble than their competitors,
able to change their marketing approach quickly
instead of cautiously weighing the costs associated
with ditching a long-term plan. That gives them
the opportunity to focus on their individual
customers–how their preferences are constantly
changing, which channels they now prefer, and
how best to engage them today on those channels.
Making the transition to a Just in Time
organization can be exceedingly difficult, even
with the best digital tools on the market. But,
as manufacturers can tell you, it’s been done
before–and we believe marketers can do it again.
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About the Institute for
High Performance
The Accenture Institute for High
Performance creates strategic
insights into key management issues
and macroeconomic and political
trends through original research and
analysis. Its management researchers
combine world-class reputations with
Accenture’s extensive consulting,
technology and outsourcing
experience to conduct innovative
research and analysis into how
organizations become and remain
high-performance businesses.
Authors
About Accenture
Accenture is a global management
consulting, technology services
and outsourcing company, with
more than 319,000 people serving
clients in more than 120 countries.
Combining unparalleled experience,
comprehensive capabilities across
all industries and business functions,
and extensive research on the world’s
most successful companies, Accenture
collaborates with clients to help
them become high-performance
businesses and governments. The
company generated net revenues
of US$30.0 billion for the fiscal
year ended Aug. 31, 2014. Its home
page is www.accenture.com.
Paul F. Nunes is the Global
Managing Director at the Accenture
Institute for High Performance. He
is the author of Big Bang Disruption:
Strategy in the Age of Devastating
Innovation and Jumping the S-Curve.
His research findings have been
covered by the New York Times,
Wall Street Journal, USA Today, and
Forbes. He is based in Boston, MA.
[email protected]
Joshua Bellin is a research fellow
at the Accenture Institute for
High Performance. His research
focuses on the operating models,
global leadership and marketing
capabilities of multinational
firms. He is based in Boston, MA.
[email protected]
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