Saturday, January 3, 2009

Silos...good for grain, not for marketing

If your business is agriculture, silos are useful, providing a secure place to store your crops.

If your business is brand marketing, silos are downright harmful for the communication barriers they create. Internally, especially in large corporations, vertical thinking sets up walls between departments and complicates decision-making. Externally, vertical thinking sets up walls that distance you from your customer. Both waste precious marketing capital.

Try this little experiment.

Dial up your favorite airline. Best time to call...during a winter storm that puts your departure in jeopardy. Adds nicely to the tension and immediacy. Slides your tootsies right into your customer's increasingly desperate shoes. You know what will happen next. If your flight isn't canceled (disappointing, but merciful), you'll be delayed. If it's really not your day, it'll be delayed again and again.

All you want is an answer to the obvious question, "When do you think we'll be able to fly?"

But the people at customer service can't answer you. It's not their fault. Their department can only communicate what another tells them. So you're told your flight is delayed for 35 minutes. Delayed again for an hour. Perhaps another. You wonder, can't the airline just be honest? Tell you the plane you're supposed to fly out on hasn't even arrived at your airport. (So how in the world was it ever possible that that first delay would be over in only 35 minutes? Eh?)

As I said, silos create barriers.

How will you feel about the airline? Customer service is a key point of brand contact. Bad experience here is like a reverse form of frequent flier points, stealing from your passion for the brand.

Another example. This one, with a happy ending.

You're a large international bank with millions of credit card customers from whom you'd like to generate additional usage--to increase retention, enhance your bank's share of wallet and boost profits. Because your departments are siloed, with their own business objectives, each is mailing to your cardholder database with little regard for other business units.

From the customer's point of view, you're carpet bombing. You're not tying your marketing offers to each customer's need. They begin to wonder about their value to the bank. They begin to get fatigued by the constant offers. Responsiveness falls. As do profits.

What would happen if the bank instead switched to an integrated, customer-centric approach to its marketing?

Coordinating efforts company-wide, the bank undertook a detailed predictive analytical study with a major decision management solutions partner. It clustered customers by their responsiveness to cross-product offers, creating highly-targeted market segments. It then optimized product and offer selection across product lines based on the ability to maximize profits while accounting for multiple business constraints (like revenue and risk, among others).

By breaking down the silos, integrating marketing efforts and gaining a detailed understanding of its customers needs and responsiveness, the marketing team was able to project more than $10 million per year profit increase. (Specific results are proprietary.)

Want to make your marketing efforts more effective? Remember, silos are not for marketing. Break down those walls. Integrate your thinking.

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