A quantitative decision matrix for increasing value for both buyers and sellers

A quantitative decision matrix for increasing value for both buyers and sellers


One of the most exciting and challenging opportunities for marketing professionals occurs when a company makes the decision to change its primary strategic focus from product or distribution to a primary strategic focus on the end customer. The client, a Canadian-based financial services company, made such a strategic choice last summer. Evolving from a product or distribution-focused organisation to an end customer-focused organisation requires significant investment in customer marketing skills, tools and processes as well as a significant degree of change in the decision-making process and the allocation of resources within the organisation. In this situation, the authors needed to build end customer marketing skills and processes into the organisation and to invest in truly understanding the end customer. The authors were fortunate enough to receive funding to invest properly in this strategy, despite a flat total budget for the division versus a year ago. Then began the process of restructuring and realigning resources to support the re¬orientation of the company towards a customer-centric philosophy and practice, which is widely accepted as a critical task in today’s intensely competitive financial services industry.

This organisation, like many others in the financial industry, had a powerful bias to action. Sales intuition had traditionally been more highly valued than data analysis and synthesis. In order to build interest and garner commitment to such fundamental change, it was important to deliver recommendations based on research that could be put into action in the marketplace within a short timeframe. Clear recommendations for action were needed in terms of:

— what segments to focus on
— what new products or services offered the greatest potential
— what sales and advice channels were most valued by target end customers
— how target customers preferred to receive information and be serviced.

It was also necessary to be able to measure the impact of the research and subsequent actions on the business in order to demonstrate the return on the marketing investment.

It quickly became clear that the role of the marketing department within the organisation was changing from primarily reactive to primarily proactive. This transition, and the change faced in the marketing area, resulted in some doubt as to whether this could deliver the required business results. A key challenge was to recruit the appropriate skills and resources into the marketing department (ie the ‘right people in the right chairs’), so that implementation of the new strategy could be speeded up.

While all this activity was occurring within the marketing unit, a market orientation had to be built into the organisation. It would not be enough for just the marketing department to understand the end customers’ needs and expectations and how it should perform versus the competition. Market orientation across the organisation had to be nurtured in order to create alignment and integration to implement the strategy as a publicly traded financial organisation in the marketplace.

In addition to the skills and resource implications, the shift to a proactive marketing stance requires the ongoing ability to monitor continual changes in customer behaviour, demographics and attitudes: the market research effort cannot be positioned or perceived as a ‘one-time’ activity. The importance of market research as an ongoing, continuous process becomes extremely critical in a customer- centric organisation, and represents the ‘lifeblood’ of CRM strategy development and implementation.

The appropriate skills are crucial to enable the collection and analysis of data, and to develop data-driven marketing strategies; however, there is also the requirement to create an ‘analytical environment’ to track the results of marketing strategies and make adjustments as the customer or competition changes. Therefore, it was acknowledged early on that a marketing database and the associated analytical tools, would ultimately be required to house customer- level data for analytical purposes. Specifically, the ability to assign existing (and future) customers to actual segments would become key to making the customer segment-based strategy operational. This requirement was imbedded into the vendor assessment matrix: segments had to be ‘actionable’, and each vendor was rated on his or her ability not only to understand this requirement, but also to deliver on it with their segmentation solution.

A critical early task for the marketing area was to identify the market segments that represented the best opportunity for the company and to develop an appropriate strategy to meet the needs of those segments. The authors could not afford to delay this task, as it was mission critical in order to deliver the strategy; and there was a gap in the structure in terms of a market research expert. The authors also faced the challenge of having a very new organisational structure in place — the customer segment marketing team — two of whose three directors were new to the company. Each of the segment directors came to the role with very different skill sets. It was necessary to form a highly cohesive and functional work-team and to propel the segmentation project into action without having the luxury of a lot of time to build relationships.

In order to keep the rest of the organisation interested and to build commitment, it was also essential that other stakeholders were kept adequately informed with enough quality information to whet their appetites without overwhelming them at a time when all areas were confronting significant change.
As they began the project, the authors were very aware of how some other market segmentation projects have failed to result in sustainable action for organisations, but they believed in what they were doing and wanted to ensure that it resulted in a very attractive return on investment for the company.

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