The Stanford Ignite programme in Bengaluru on innovation, the first such course offered outside of Stanford University, is currently in its fourth year.
The Stanford Ignite programme in Bengaluru on innovation, the first such course offered outside of Stanford University, is currently in its fourth year. James M Lattin, faculty director, Ignite programme and Robert A Magowan professor of marketing, Stanford Graduate School of Business, talks to BrandWagon’s Ankita Rai on entrepreneurship and how the practice of marketing has changed over the years. Excerpts:
Has the entrepreneurship programme changed since the launch of the first Stanford Ignite in Bengaluru in 2013? A lot of people are naive about what entrepreneurship entails. They think it involves coming up with a great idea — an invention of some kind. That is just the tip of an iceberg. At Stanford Ignite, we are trying to make entrepreneurs aware of the whole process they need to go through, right from the idea stage to launching a viable commercial venture. Most ideas fail because nobody figures out pricing, distribution, where to find the customer and how much it costs to acquire those customers. So entrepreneurship is about trying and failing with all sorts of different business model ideas to sustain this exchange of value between your target customer and the venture you create.
You have been working on customer relationship management (CRM) and loyalty programmes. How has the role of CRM evolved? Is it dead? I don’t believe CRM is dead at all. It is just that technology now allows us to do things which were impossible before. For example, CRM systems can generate all the information required throughout the stages of acquiring, developing and retaining a customer. It is used by sales people to manage their pipeline for prospective customers. From a marketing perspective, CRM systems make it possible to target users according to the stage of the customer lifecycle they are in. CRM systems now enable marketers to send relevant messages.Consider permission marketing. A good CRM system helps you to infer when it is okay to approach the consumer. Nobody likes an irrelevant message. But sometimes, a message can be so finely targeted it can make a customer apprehensive about her privacy. Research shows that if customers are given a personalised deal, they think it will not give them the best value. Marketers are trying to balance this need to be relevant but at the same time operate within the boundary of an acceptable relationship with customers so the latter trust them with their personal information. CRM is not dead but we haven’t solved it either.
What should be the customer acquisition and marketing strategy for early-stage companies/new ventures? There is a different solution for everyone. First, figure out who your customers are, the different ways of reaching them and the conversion rate of each process used. This will help in estimating how cost effective the method is. Find the product-market fit. This means find consumers who are excited about the product. Investors invest only if you show them consumers who are interested in your product and if you can find them cost effectively. For each industry, consumer behaviour is different. First, find where your target customers hang out and create content that matters to them. For instance, if they spend a lot of time reading blogs or on Facebook, accordingly target them.
Have the rules of marketing changed? Has technology changed the role of marketing? The way in which marketing is practiced has changed but the principles are the same. One rule that marketers need to understand is segmentation. Consumers are different in terms of their preferences, behaviour and attitudes. Marketers still need to identify which segment of consumers they need to target. Similarly, the positioning strategy still remains the same. What has changed is how you reach the target consumers and manage the relationship with them. CMOs are some of the shortest tenured C-level officers, the reason being that the world is moving faster and so the window of opportunity for CMOs is greater. Two, organisations are demanding justification for each marketing dollar spent. Ironically, while we have better tools to determine RoI of each channel investment, in marketing it is challenging to do that. The expectations of organisations have moved faster than our ability to measure RoIs.
Brian Fetherstonhaugh of OgilvyOne has spoken on how marketing is no longer about the 4Ps. Do you agree? Increasingly experts are saying that marketers need to shift from crafting clever brand messages to creating experiences, after all…. I was never a big believer of the 4Ps. Few people are relying on it now as a teaching framework. In small companies, start-ups and tech firms they don’t follow it anymore. Maybe for consumer packaged goods firms it still works, such as segmenting responsibilities like who is going to work on promotion etc. Each of the 4Ps is a tactic that is connected to a task. So, if one has to communicate value about a product, he will use a set of tactics such as promotion and selling. But today, it is a lot of other things such as social media and so on.
Experience and engagement are different things. Engagement is important for customer lifetime value. You want them engaged so they continue to derive value from your product. Netflix is a good example of a company that continues to engage with its subscribers. It creates its own content and analyses viewing patterns of customers to find the things they will spend hours watching.
Experience is about communication, sharing and nostalgia. For example, Facebook reminds me of things that make me feel good. Consumers value experience more. They understand that consumption of an experience stays with them for a long time and it can be revisited. Experience should be part of a company’s positioning too. It is a viable strategy.