Wednesday, November 23, 2005

Would You Get in an Airplane with
a 2% Chance of a Safe Landing?

The average response for direct mail campaigns is 2.55% and the rate for eMail campaigns is 1.88%. This is a world where 2% response rates for the past 25 years have been the benchmark of success -- across all forms of measurable marketing media, from direct mail, to in-store coupons, to free-standing inserts, to outbound telemarketing, and broadcast commercials. Factor in the stark reality that the typical sales person closes just one out of eight sales opportunities. We have a long way to go.

Let me lift the issue out of marketing for a moment, and make it really personal.

Would you get on an airplane that had a 98% probability of not arriving safely at its destination? That’s exactly what we are asking our CEOs to do when they support our marketing and sales programs. We give them a two percent chance of survival.

If Ford rolled off its assemblies only two out of 100 cars that started at the beginning of the line, no one would find that acceptable. Fortunately, production systems are much more reliable than are the systems used to sell those cars.

Sakichi Toyoda; his son, Kiichiro Toyoda; and a production engineer by the name of Taiichi Ohno were the innovators of the Toyota Production System that today is the foundation for lean manufacturing. In his system, each process produced only the kinds and quantities of items that the next process in the sequence needed, and only when it needed them.

Production and transport at Toyota took place simultaneously and synchronously throughout the production sequence — inside and between all the processes.

Kiichiro thus laid the groundwork for just-in-time production, and he gets credit for coining the term "just in time."
Manufacturing had found a process to deal with problems inherent in the making of products.

Marketing, however, was still in the swamp with the alligators. Our problems date back at least to the early 1900s.

Marketing is a half-century out of touch with today’s reality

We all know the story of John Wannamaker, the Philadelphia merchant, who at the beginning of the 20th century broke new ground in retailing by advertising fixed prices and money-back guarantees. He became forever famous for his comment, "I know that half of my advertising does not work. I just don't know which half it is." Such ambiguity is the bain of marketing. Even when it does work, we don't know what the successful components were, and when it doesn't work we don't know how to fix them. But mostly, it doesn’t work.

When he addressed the marketers attending the Association of American Advertising Agencies in 2004, Yankelovich President J. Walker Smith identified a number of reasons why marketing productivity is deteriorating, due in large part to consumers drowning in an overabundance of data and information that fails to meet their needs and desires. Marketers can reverse this trend, Smith contends, by doing what consumers prefer. This means moving toward a model in which marketing practice itself is viewed as a source of competitive advantage and away from the current pattern of marketing saturation, clutter and intrusiveness.

Mass marketing is dead but no one seems to have noticed

“Mass advertising does not continue to survive due to its consumer appeal and relevance; it survives because it is difficult to measure on a return-on-investment basis. It is this very lack of measurement that enables mass advertising to continue – often unchallenged – as a viable communications approach.”
The Customer Differential, Melinda Nykamp, AMACOM, 2001. Page 91

Beneath all of these examples is a reality that the customer is in charge. Change is demanded by the customer. “Meet my needs,” we are saying, “or I will move my business to somebody who will meet my needs.” Or, “I don’t want choice … I want what I want!”

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