Friday, September 09, 2005

You Gotta Believe the Customer or Perish

Line 56 reports on two illustrations at the AMR website for how we can almost deliberately refuse to see what the customer wants – even when our business intelligence tells us that our strategy is out of synch with customer demand.

The first illustration shows how clothing retailers can make huge marketing mistakes by misreading the tea leaves. Retailers unanimously agreed that over this past summer denim was going to be a huge hit. So they stocked up on denim. Unfortunately, as it turned out, demand bumped up by only a small percent, and now retailers are scrambling to move product off the shelves and out of store rooms with markdown strategies that cut into their bottom lines.

Fashion trends can hang on little signals from the audience world instead of in the offices of the clothing merchandisers.

Does the average retailer know who the next singer who's going to be the next teenage pop star? Are the retailers even watching MTV?
The point is that there can be catastrophic and unexpected shifts in demand either way. AMR reminds us of a similar event when Clark Gable appeared in a movie without a vest. Sales of vests immediately plummeted.

As marketers, we need to plug into the signals that most influence buying behavior and make sure our products and messages will be relevant.
The second illustration of ignoring the buying signals from the customer is Atkins Nutritionals. Their own data had to be a warning signal that their business model was heading toward a Category 5 Hurricane. Why did Atkins Nutritionals never see and respond to falling revenue in time before hitting the wall?

We have the data analytics engines that can help forecast the trends, but as in the case of Atkins, human nature takes over.

As AMR points out, “the very foundation of the organization was disinformation, that is, an assault on established nutritional and medical science. Atkins was a "true believer," an organization whose own philosophical worldview would prevent it from responding to actual changes in reality. It couldn't reposition itself because of the commitments it had already made to achieve its success; such a repositioning would have been a denial of the company's very identity, and therefore no amount of data could have prevented the change.”

The two illustrations are at opposite ends of over-reaction. Retailers overstocked on denim and Atkins refused to believe the data. Neither was integrally fused to the customer in the way in which contextual marketing requires.

We all know the customer is in charge. But we refuse to believe it.

Now it is time to BELIEVE IT!
We must invest in learning the customer’s interests and serving these interests or we will be overstocked or out of business.


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