posted 10 Jun 2004 in Volume 7 Issue 9
Your say: KM and marketing
The marketing function is waking up to the impact knowledge-management practices can have on its investments by harnessing and sharing existing customer and market knowledge, accurately targeting prospects, and enhancing innovation opportunities. Sandra Higgison speaks to practitioners, analysts and experts in the field to examine the developments, opportunities and challenges facing organisations looking to tap into this often ignored source of wealth.
Creating a joined-up organisation by linking internal functions is the Holy Grail that many companies strive to find. In March we examined initiatives aimed at co-ordinating knowledge-management work with internal communications and human resources. This month, we turn our attention to the marketing department, another critical function where knowledge-management techniques and methodologies can add incredible value and visible bottom-line returns. As the economy becomes more buoyant, the once flailing customer-relationship management (CRM) industry seems to be experiencing a comeback as organisations pay renewed interest in developing and harnessing these relationships. The application of knowledge-management practices can take these initiatives to the next level by ensuring organisations manage customer knowledge and marketing assets effectively, target products and services accurately, keep in touch with current market trends and intelligence, and truly understand how they can meet customers’ current and future needs.
The strength of the existing relationship between knowledge management and marketing is debatable. Arno Boersma, partner at consulting firm Squarewise, believes that KM and marketing functions should have the same goals. He quotes marketing expert Philip Kotler who said, “Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating genuine customer value.” Although Boersma says that the formal relationship between these two disciplines hardly exists, he recognises that many marketing departments may use knowledge management unwittingly. “If you look at companies like L’Oréal and Nike you will find that marketers apply KM techniques either intuitively or intentionally,” he says. “Their strategies to gather customer information, deliver improved services and co-innovate are similar to KM initiatives.” Tom Knight, a managing consultant at Fujitsu Services, agrees, “I think it is unfair to say that the marketing function hasn’t woken up to the potential of knowledge management. Many marketing activities display KM elements; it’s just that they may not articulate them in these terms. If we define KM as a route to building and leveraging personal and organisational knowledge, then marketing is in the thick of it.”
Leveraging marketing knowledge within an organisation can create incredible value by improving market awareness, sharpening customer segmentation, generating healthy and visible ROI from investments, and harnessing innovation opportunities. Knight sees these benefits in action at Fujitsu Services as the company has focused part of its global knowledge-sharing platform, SolutionsNet, on marketing-related material. “In a services context, the prize is the ability to better anticipate market shifts and changes in customer needs and attitudes while innovating and integrating new service offerings in response to these changes.” Kimberly Collins, CRM research director at analyst firm Gartner, says that value lies on a couple of different levels: “One is having a collaborative workspace where all knowledge is managed, and employees know who to go to for specific issues. On another level, people can see how assets are used for different campaigns and how effective they have been, lessons that are channelled back into the creative process. Often in marketing there is no corporate memory of what has and hasn’t worked. KM allows this knowledge to shape future marketing strategies.”
Effectively managing the knowledge and information held on a firm’s customers may sound like an obvious first step but is one that many organisations have yet to make. Marketing departments can build a 360-degree view of customers based on internal and external information. Sourced from customer details, transactions, interactions, market data, demographics, psychographics and lifestyle trends, this information can be analysed through predictive modelling to examine a customer’s or segment’s propensity to buy. A whole range of solutions exists to support marketing decision makers, such as CRM and marketing-intelligence systems. Leah Guggenheimer, director of marketing and business development at US law firm Darby & Darby, is implementing a centralised contact database in a bid to solve existing marketing challenges. “Like all law firms, we know clients, contacts, referral sources, prospects and service providers, for example,” she says. “However, individual employees are the ones who know these people, not the firm. As the company is decentralised, each person knows who their contacts are but nobody knows who anybody else is in touch with or if they share the same contacts.” Guggenheimer bases her work on the belief that the more you know, the better you can implement strategies to effectively grow the business for the lowest opportunity costs. “You can send targeted mailings, track contacts with clients and prospects, see who else knows a potential prospect and work together to bring in the business,” she says. “The applications and potential of a well thought-out, structured, up-to-date and centralised KM database of marketing information are boundless.”
Applying knowledge management across the marketing function can also create significant cost savings, and ensure that investments are transparent and generate greater returns. When advertising guru David Ogilvy famously said that he knew half his marketing budget was wasted, but just didn’t know which half, he described a challenge faced by most marketing departments. Boersma believes that applying KM to marketing provides better insight into customer knowledge and into this elusive missing half. “KM can lead to a deeper understanding of the customer and help pinpoint the relationship between cause and effect more accurately,” he says. As companies face increasing pressure to justify their budgets, this added transparency is essential. “CFOs are realising that where their marketing dollars are spent is a black hole,” says Collins. “Marketing departments need the corporate memory of what works and what doesn’t to avoid repeating costly mistakes.” Collins introduces the concept of marketing-resource management (MRM) to address these issues. Whereas digital-asset and document-management capabilities allow marketers to collect and manage marketing content to ensure digital and physical assets are not lost or recreated, knowledge management can take MRM a step further and free up marketers’ time to focus on high-value activities.
Recent Gartner research shows that knowledge management forms a critical part of MRM, allowing departments to associate development costs, performance metrics, revenue, usage guidelines, best practices and templates with different marketing programmes, promotions, campaigns, regions, channels, media and digital assets. Sharing information on the correlation between the use of assets for specific marketing programmes and the development costs, templates, processes and performance outcomes ensures more effective and efficient use of marketing assets and processes. This knowledge needs to be shared across the organisation, which is where well practised KM collaboration techniques offer value.
Knight describes Fujitsu’s long history in developing and supporting communities of practice and interest, which include groups for specific accounts. “Most marketers have a site where they can share account plans, contact lists, delivered proposals and informal insights,” he says. “A challenge for us is to develop a more focused approach to market intelligence and service innovation. This will ensure that insights ideas and market knowledge held by individuals and shared within discrete communities is fed up the line to those driving business and marketing strategy.” Such collaborative marketing techniques are also being extended outside the organisation. Boersma highlights work conducted at Philips as an excellent example of an outside-in approach. “Marketers at Philips have realised that to serve their customers in certain categories they should not limit themselves to their own knowledge,” he says. “This has resulted in Nike embedding Philips technology into its sports apparel, coffee machines produced in collaboration with Sara Lee, electric razors incorporating Nivea shaving lotion and, most recently, Philips technology with Unilever laundry-care products.”
Knowledge-management tools are essential for managing customer and market knowledge and leveraging it to best meet and respond to their needs and behaviour. According to Scott MacStravic, an independent consultant, these approaches focus on the brief encounters between customers and the firm, and their impact on the company. Customer-success management (CSM), however, focuses on continuing relationships and their impact on customers as well as the firm. “It seeks to manage, with the active participation of customers, how relationships and transaction experiences affect customers, and how they can be managed to mutual advantage,” he says. “The knowledge here is in understanding and gaining insight into the motivations of customers, what they want from their relationships with the firm and what would cause them to choose another.” As MacStravic says, the problem is that few B2C companies conduct the necessary research and monitoring to collect the knowledge required for CSM. “Despite common use of the term ‘customer-centric’, companies are almost entirely ‘seller-centric’, with goals based exclusively on how they can gain most value from customers for themselves,” he says. “The silence regarding CSM is deafening.” In B2B commerce this situation is different as clients, suppliers and partners take time to get to know each other and learn how they can improve relationships to create shared benefits.
Although the opportunities from knowledge-focused marketing reach further than those described here, it is clear that they offer a source of untapped competitive advantage. The challenges preventing companies from getting such initiatives off the ground are not dissimilar to those facing knowledge-management programmes. Collins describes change management as the biggest hurdle for marketing teams as they do not traditionally think and work in processes. A salesperson, more than anybody else within an organisation, will be reluctant to give up information on contacts and relationships. “Unless there is trust that the information required will not be misused or turned against them personally when setting targets, salespeople will not provide it,” says Knight. Guggenheimer has come across similar problems at Darby & Darby. “Data sharing is a major problem at law firms as partners often consider their contacts proprietary,” she says. “But with the right business culture and strong leadership from senior management this objection can be overcome.” Knight advocates a community approach as an essential counterweight to such objections. “None of this comes free, of course. You need dedicated people to join these things up and community contribution needs to be a sanctioned activity with personal payback on some level for participation.” Boersma also recognises the importance of cultural attitudes and believes that marketing is a state of mind, not a function. “It’s all about attitude and competencies,” he says. “The marketing discipline needs people with a passion for combining knowledge to create new products and requires attitude change to do so.” Finally, Knight describes challenges on a tacit level. “Where CRM provides detailed information on past customer behaviour, the big challenge lies in managing individual relationships, insights and contacts to take the company forward and anticipate the future,” he says.
Despite these obstacles, the future for joined-up working practices looks promising. Boersma sees more companies realising that the marketing department is the lynchpin between the market as a source of customer knowledge and the R&D department as a source of new products. “These departments have a growing interest in business intelligence and the need to share and validate information,” he says. “Their drive to gather and manage customer knowledge is often the force behind KM efforts to set up centres of excellence and communities of practice.” Collins anticipates a change in the role of the chief marketing officer (CMO). “CMOs have traditionally been very creative, but with increasing pressure on companies to be accountable, they have to be more business minded,” she says. “We will start to see more automation within the marketing function to achieve this accountability.” While creativity will remain a staple of the marketing department, the potential value currently lying latent within existing customer, market and product knowledge cannot remain ignored. Marketers may believe that knowledge management simply hangs a new banner over existing practices, but by employing the full spectrum of KM-related techniques, technologies and activities, companies can ensure that they target their products and services accurately and cost effectively to meet increasingly sophisticated and complex customer demands.
- Collins, K., ‘Collect and manage moves from asset to knowledge management’ (Gartner, 2004)
Arno Boersma is partner at Squarewise. He can be contacted at email@example.com
Kimberly Collins is CRM research director at Gartner. She can be contacted at firstname.lastname@example.org
Leah Guggenheimer is director of marketing and business development and Darby & Darby. She can be contacted at email@example.com
Tom Knight is managing consultant at Fujitsu Services. He can be contacted at firstname.lastname@example.org
Scott MacStravic is an independent consultant. He can be contacted at email@example.com