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On Strategic Marketing

If you read nothing else on marketing that delivers competitive advantage, read these 10 articles. We’ve combed through hundreds of articles in the Harvard Business Review archive and selected the most important ones to help you reinvent your marketing by putting it—and your customers—at the center of your business.

Leading experts such as Theodore Levitt and Clayton Christensen provide the insights and advice you need to:

• Figure out what business you’re really in • Create products that perform the jobs people need

to get done • Get a bird’s-eye view of your brand’s strengths and

weaknesses • Tap a market that’s larger than China and India

combined • Deliver superior value to your B2B customers • End the war between sales and marketing

On Strategic Marketing If you read nothing else on marketing that delivers competitive advantage, read these definitive articles from Harvard Business Review.

Stop pushing products—and start cultivating relationships with the right customers.

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Classic ideas, enduring advice, the best thinkers— all in one place

HBR’s 10 Must Reads series is the definitive collection of ideas and best practices for aspiring and experienced leaders alike. these books offer essential reading selected from the pages of Harvard Business Review on topics critical to the success of every manager.

each book is packed with advice and inspiration from leading experts such as Clayton Christensen, Peter Drucker, rosabeth Moss Kanter, John Kotter, Michael Porter, Daniel Goleman, theodore levitt, and rita Gunther McGrath.

Titles in this bestselling series include: • HBr’s 10 Must reads: the essentials • HBr’s 10 Must reads on Change Management • HBr’s 10 Must reads on Communication • HBr’s 10 Must reads on leadership • HBr’s 10 Must reads on Managing People • HBr’s 10 Must reads on Managing Yourself • HBr’s 10 Must reads on Strategy • HBr’s 10 Must reads on teams

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HBR’S 10 MUST READS

On Strategic Marketing

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HBR’s 10 Must Reads series is the definitive collection of ideas and best practices for aspiring and experienced leaders alike. These books offer essential reading selected from the pages of Harvard Business Review on topics critical to the success of every manager.

Titles include:

HBR’s 10 Must Reads on Change Management HBR’s 10 Must Reads on Collaboration HBR’s 10 Must Reads on Communication HBR’s 10 Must Reads on Innovation HBR’s 10 Must Reads on Leadership HBR’s 10 Must Reads on Making Smart Decisions HBR’s 10 Must Reads on Managing People HBR’s 10 Must Reads on Managing Yourself HBR’s 10 Must Reads on Strategic Marketing HBR’s 10 Must Reads on Strategy HBR’s 10 Must Reads on Teams HBR’s 10 Must Reads: The Essentials

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HBR’S 10 MUST READS

On Strategic Marketing

HARVARD BUSINESS REVIEW PRESS Boston, Massachusetts

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Copyright 2013 Harvard Business School Publishing Corporation All rights reserved

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

The web addresses referenced in this book were live and correct at the time of the book’s publication but may be subject to change.

Library of Congress Cataloging-in-Publication Data

HBR’s 10 must reads on strategic marketing. p. cm. — (HBR’s 10 must read series)

Includes index. ISBN 978-1-4221-8988-7 1. Marketing—Management. 2. Strategic planning. I. Harvard business re-

view. II. Title: HBR’s ten must reads on strategic marketing. III. Title: Harvard business review’s 10 must reads on strategic marketing.

HF5415.13.H368 2013 658.8'02—dc23 2012037855

ISBN: 9781422189887 eISBN: 9781422191521

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Rethinking Marketing 1 by Roland T. Rust, Christine Moorman, and Gaurav Bhalla

Branding in the Digital Age 15 by David C. Edelman

Marketing Myopia 29 by Theodore Levitt

Marketing Malpractice 57 by Clayton M. Christensen, Scott Cook, and Taddy Hall

The Brand Report Card 77 by Kevin Lane Keller

The Female Economy 97 by Michael J. Silverstein and Kate Sayre

Customer Value Propositions in Business Markets 113 by James C. Anderson, James A. Narus, and Wouter van Rossum

Getting Brand Communities Right 133 by Susan Fournier and Lara Lee

The One Number You Need to Grow 151 by Frederick F. Reichheld

Ending the War Between Sales and Marketing 171 by Philip Kotler, Neil Rackham, and Suj Krishnaswamy

About the Contributors 195 Index 197

v

Contents

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HBR’S 10 MUST READS

On Strategic Marketing

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I 1

Rethinking Marketing by Roland T. Rust, Christine Moorman, and Gaurav Bhalla

IMAGINE A BRAND MANAGER sitting in his office developing a market- ing strategy for his company’s new sports drink. He identifies which broad market segments to target, sets prices and promotions, and plans mass media communications. The brand’s performance will be measured by aggregate sales and profitability, and his pay and fu- ture prospects will hinge on those numbers.

What’s wrong with this picture? This firm—like too many—is still managed as if it were stuck in the 1960s, an era of mass markets, mass media, and impersonal transactions. Yet never before have compa- nies had such powerful technologies for interacting directly with cus- tomers, collecting and mining information about them, and tailoring their offerings accordingly. And never before have customers ex- pected to interact so deeply with companies, and each other, to shape the products and services they use. To be sure, most compa- nies use customer relationship management and other technologies to get a handle on customers, but no amount of technology can really improve the situation as long as companies are set up to market prod- ucts rather than cultivate customers. To compete in this aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value. That means making products and brands subservient to long-term

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RUST, MOORMAN, AND BHALLA

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customer relationships. And that means changing strategy and struc- ture across the organization—and reinventing the marketing depart- ment altogether.

Cultivating Customers

Not long ago, companies looking to get a message out to a large pop- ulation had only one real option: blanket a huge swath of customers simultaneously, mostly using one-way mass communication. Infor- mation about customers consisted primarily of aggregate sales sta- tistics augmented by marketing research data. There was little, if any, direct communication between individual customers and the firm. Today, companies have a host of options at their disposal, mak- ing such mass marketing far too crude.

The exhibit “Building relationships” shows where many compa- nies are headed, and all must inevitably go if they hope to remain competitive. The key distinction between a traditional and a customer-cultivating company is that one is organized to push prod- ucts and brands whereas the other is designed to serve customers and customer segments. In the latter, communication is two-way and individualized, or at least tightly targeted at thinly sliced seg- ments. This strategy may be more challenging for firms whose distri- bution channels own or control customer information—as is the case for many packaged-goods companies. But more and more firms now have access to the rich data they need to make a customer- cultivating strategy work.

B2B companies, for instance, use key account managers and global account directors to focus on meeting customers’ evolving needs, rather than selling specific products. IBM organizes accord- ing to customer needs, such as energy efficiency or server consolida- tion, and coordinates its marketing efforts across products for a particular customer. IBM’s Insurance Process Acceleration Frame- work is one example of this service-oriented architecture. Customer and industry specialists in IBM’s insurance practice work with lead customers to build fast and flexible processes in areas like claims, new business processing, and underwriting. Instead of focusing on

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RETHINKING MARKETING

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Idea in Brief Companies have never before had such powerful technologies for understanding and interacting with customers. Yet too many firms operate as if they’re stuck in the 1960s, an era of mass market- ing, mass media, and impersonal transactions.

To compete in an aggressively interactive environment, companies must shift their focus from driving transactions to maximizing customer lifetime value. That means products and brands must

be made subservient to customer relationships. And that means transforming the marketing department—traditionally focused on current sales—into a “customer department” by: replacing the CMO with a chief customer officer, cultivating customers rather than pushing products, adopting new performance metrics, and bringing under the marketing umbrella all customer-focused departments, including R&D and customer service.

Customer

Product-Manager Driven Many companies still depend on product managers and one-way mass marketing to push a product to many customers.

Product

Building relationships

Customer-Manager Driven What’s needed is customer managers who engage individual customers or narrow segments in two-way communi- cations, building long-term relationships by promoting whichever of the company’s products the customer would value most at any given time.

Product

Customer

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RUST, MOORMAN, AND BHALLA

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short-term product sales, IBM measures the practice’s performance according to long-term customer metrics.

Large B2B firms are often advanced in their customer orientation, and some B2C companies are making notable progress. Increasingly, they view their customer relationships as evolving over time, and they may hand off customers to different parts of the organization selling different brands as their needs change. For instance, Tesco, a leading UK retailer, has recently made significant investments in analytics that have improved customer retention. Tesco uses its data-collecting loyalty card (the Clubcard) to track which stores cus- tomers visit, what they buy, and how they pay. This information has helped Tesco tailor merchandise to local tastes and customize offer- ings at the individual level across a variety of store formats—from sprawling hypermarts to neighborhood shops. Shoppers who buy di- apers for the first time at a Tesco store, for example, receive coupons by mail not only for baby wipes and toys but also for beer, according to a Wall Street Journal report. Data analysis revealed that new fathers tend to buy more beer because they can’t spend as much time at the pub.

On the services side, American Express actively monitors cus- tomers’ behavior and responds to changes by offering different products. The firm uses consumer data analysis and algorithms to determine customers’ “next best product” according to their chang- ing profiles and to manage risk across cardholders. For example, the first purchase of an upper-class airline ticket on a Gold Card may trigger an invitation to upgrade to a Platinum Card. Or, because of changing circumstances a cardholder may want to give an additional card with a specified spending limit to a child or a contractor. By of- fering this service, American Express extends existing customers’ spending ability to a trusted circle of family members or partners while introducing the brand to potential new customers.

American Express also leverages its strategic position between customers and merchants to create long-term value across both relationships. For instance, the company might use demographic data, customer purchase patterns, and credit information to observe that a cardholder has moved into a new home. AmEx capitalizes on

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RETHINKING MARKETING

5

that life event by offering special Membership Rewards on pur- chases from merchants in its network in the home-furnishings retail category.

One insurance and financial services company we know of also proved adept at tailoring products to customers’ life events. Cus- tomers who lose a spouse, for example, are flagged for special atten- tion from a team that offers them customized products. When a checking account or credit-card customer gets married, she’s a good cross-selling prospect for an auto or home insurance policy and a mortgage. Likewise, the firm targets new empty nesters with home equity loans or investment products and offers renter’s insurance to graduating seniors.

Reinventing Marketing

These shining examples aside, boards and C-suites still mostly pay lip service to customer relationships while focusing intently on selling goods and services. Directors and management need to spearhead the strategy shift from transactions to relationships and create the culture, structure, and incentives necessary to execute the strategy.

What does a customer-cultivating organization look like? Al- though no company has a fully realized customer-focused structure, we can see the features of one in a variety of companies making the transition. The most dramatic change will be the marketing depart- ment’s reinvention as a “customer department.” The first order of business is to replace the traditional CMO with a new type of leader— a chief customer officer.

The CCO Chief customer officers are increasingly common in companies worldwide—there are more than 300 today, up from 30 in 2003. Companies as diverse as Chrysler, Hershey’s, Oracle, Samsung, Sears, United Airlines, Sun Microsystems, and Wachovia now have CCOs. But too often the CCO is merely trying to make a conventional organization more customer-centric. In general, it’s a poorly defined

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role—which may account for CCOs’ dubious distinction as having the shortest tenure of all C-suite executives.

To be effective, the CCO role as we conceive it must be a powerful operational position, reporting to the CEO. This executive is respon- sible for designing and executing the firm’s customer relationship strategy and overseeing all customer-facing functions.

A successful CCO promotes a customer-centric culture and re- moves obstacles to the flow of customer information throughout the organization. This includes getting leaders to regularly engage with customers. At USAA, top managers spend two or three hours a week on the call-center phones with customers. This not only shows employees how serious management is about customer interaction but helps managers understand customers’ concerns. Likewise, Tesco managers spend one week a year working in stores and interacting with customers as part of the Tesco Week in Store (TWIST) program.

As managers shift their focus to customers, and customer information increasingly drives decisions, organizational structures that block information flow must be torn down. The reality is that despite large investments in acquiring customer data, most firms underutilize what they know. Information is tightly held, often because of a lack of trust, competition for promotions or resources, and the silo mentality. The CCO must create incentives that elimi- nate these counterproductive mind-sets.

Ultimately, the CCO is accountable for increasing the profitability of the firm’s customers, as measured by metrics such as customer lifetime value (CLV) and customer equity as well as by intermediate indicators, such as word of mouth (or mouse).

Customer managers In the new customer department, customer and segment managers identify customers’ product needs. Brand managers, under the cus- tomer managers’ direction, then supply the products that fulfill those needs. This requires shifting resources—principally people and budgets—and authority from product managers to customer managers. (See the sidebar “What Makes a Customer Manager?”)

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RETHINKING MARKETING

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What Makes a Customer Manager?

IN A SENSE, THE ROLE of customer manager is the ultimate expression of marketing (find out what the customer wants and fulfill the need) while the product manager is more aligned with the traditional selling mind-set (have product, find customer).

Jim Spohrer, the director of Global University Programs at IBM, hires what UCal Berkeley professor Morten Hansen calls “T-shaped” people, who have broad expertise with depth in some areas. Customer managers will be most effective when they’re T-shaped, combining deep knowledge of particular customers or segments with broad knowledge of the firm and its products. These managers must also be sophisticated data interpreters, able to extract insights from the increasing amount of information about customers’ atti- tudes and activities acquired by mining blogs and other customer forums, monitoring online purchasing behavior, tracking retail sales, and using other types of analytics. While brand managers may be satisfied with examining the media usage statistics associated with their product, brand usage behavior, and brand chat in communities, customer managers will take a broader and more integrative view of the customer. For instance, when P&G managers responsible for the Max Factor and Cover Girl brands spent a week living on the budget of a low-end consumer, they were acting like customer managers. The experience gave these managers important insights into what P&G, not just the specific brands, could do to improve the lives of these customers.

We’d expect the most effective customer managers to have broad training in the social sciences—psychology, anthropology, sociology, and economics— in addition to an understanding of marketing. They’d approach the cus- tomer as behavioral scientists rather than as marketing specialists, observing and collecting information about them, interacting with and learning from them, and synthesizing and disseminating what they learned. For business schools to stay relevant in training customer managers, the curriculum needs to shift its emphasis from marketing products to cultivat- ing customers.

This structure is common in the B2B world. In its B2B activities, Procter & Gamble, for instance, has key account managers for major retailers like Wal-Mart. They are less interested in selling, say, Swiffers than in maximizing the value of the customer relationship over the long term. Some B2C companies use this structure as well, foremost among them retail financial institutions that put managers

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in charge of segments—wealthy customers, college kids, retirees, and so forth—rather than products.

In a customer-cultivating company, a consumer-goods segment manager might offer customers incentives to switch from less- profitable Brand A to more-profitable Brand B. This wouldn’t hap- pen in the conventional system, where brand and product managers call the shots. Brand A’s manager isn’t going to encourage customers to defect—even if that would benefit the company—because he’s rewarded for brand performance, not for improving CLV or some other long-term customer metric. This is no small change: It means that product managers must stop focusing on maximizing their products’ or brands’ profits and become responsible for helping cus- tomer and segment managers maximize theirs.

Customer-facing functions As the nexus of customer-facing activity, the customer department assumes responsibility for some of the customer-focused functions that have left the marketing department in recent years and some that have not traditionally been part of it.

CRM. Customer relationship management has been increasingly taken on by companies’ IT groups because of the technical capability CRM systems require, according to a Harte-Hanks survey of 300 companies in North America: 42% of companies report that CRM is managed by the IT group, 31% by sales, and only 9% by marketing. Yet CRM is, ultimately, a tool for gauging customer needs and behaviors— the new customer department’s central role. It makes little sense for the very data required to execute a customer-cultivation strategy to be collected and analyzed outside the customer department. Of course, bringing CRM into the customer department means bringing IT and analytic skills in as well.

Market research. The emphasis of market research changes in a customer-centric company. First, the internal users of market re- search extend beyond the marketing department to all areas of the organization that touch customers—including finance (the source of

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customer payment options) and distribution (the source of delivery timing and service). Second, the scope of analysis shifts from an aggregate view to an individual view of customer activities and value. Third, market research shifts its attention to acquiring the customer input that will drive improvements in customer-focused metrics such as CLV and customer equity.

RETHINKING MARKETING

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Reimagining the marketing department

The traditional marketing department must be reconfigured as a customer department that puts building customer relationships ahead of pushing spe- cific products.

To this end, product managers and customer-focused departments report to a chief customer officer instead of a CMO, and support the strategies of cus- tomer or segment managers.

Chief customer officer

CEO

Customer relationship management

Research and development

Market research

Customer service

Product managers

Customer segment managers

A CB

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Research and development. When a product is more about clever engineering than customer needs, sales can suffer. For example, en- gineers like to pack lots of features into products, but we know that customers can suffer from feature fatigue, which hurts future sales.

To make sure that product decisions reflect real-world needs, the customer must be brought into the design process. Integrating R&D and marketing is a good way to do that. Few companies have done this better than Nokia in Asia, where its market share exceeds 60%. In an industry where manufacturers must introduce scores of new offerings every year, the group’s ability to translate customer input about features and value into hit product offerings is legendary. Among its customer-focused innovation tools is Nokia Beta Labs, a virtual developer community that brings users and developer teams together to virtually prototype new features and products, inviting even “wacky ideas” that may never make it to the marketplace. (Nokia adopted a different strategy in the United States, using far less customer input, and has seen its market share slide.)

Examples abound of companies that create new value through the collaboration of users and producers: Mozilla’s Firefox in the web browser category, P&G’s Swiffer in the home cleaning category, and International Flavors and Fragrances’ partnership with B2B cus- tomers like Estée Lauder in the perfume market. In a world in which the old R&D-driven models for new product development are giving way to creative collaborations like these, R&D must report to the CCO.

Customer service This function should be handled in-house, under the customer de- partment’s wing—not only to ensure that the quality of service is high but also to help cultivate long-term relationships. Delta Air- lines, for example, recently pulled out of its call centers overseas be- cause cultural differences damaged the airline’s ability to interact with North American customers. Delta concluded that the negative impact on the quality of customer relationships wasn’t worth the cost savings. Now, when customer service gets a call, a representa- tive immediately identifies the caller’s segment and routes her to a customer-service specialist trained to work with that segment.

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RETHINKING MARKETING

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The interaction is captured in the customer information system and used, in turn, by the customer department to divine new customers’ needs and create solutions.

If customer service must be outsourced, the function should re- port in to a high-level internal customer manager, and its IT infra- structure and customer data must be seamlessly integrated with the company’s customer databases.

A New Focus on Customer Metrics

Once companies make the shift from marketing products to cultivat- ing customers, they will need new metrics to gauge the strategy’s effectiveness. First, companies need to focus less on product prof- itability and more on customer profitability. Retailers have applied this concept for some time in their use of loss leaders—products that may be unprofitable but strengthen customer relationships.

Second, companies need to pay less attention to current sales and more to CLV. A company in decline may have good current sales but poor prospects. The customer lifetime value metric evaluates the future profits generated from a customer, properly discounted to reflect the time value of money. Lifetime value focuses the company on long-term health—an emphasis that most shareholders and investors should share. Although too often the markets reward short-term earnings at the expense of future performance, that un- fortunate tendency will change as future-oriented customer metrics become a routine part of financial reporting. An international move- ment is under way to require companies to report intangible assets in financial statements. As leading indicators such as customer- centered metrics increasingly appear on financial statements, stock prices will begin to reflect them. Even now, savvy analysts are push- ing firms to understand customer retention rates and the value of customer and brand assets.

Third, companies need to shift their focus from brand equity (the value of a brand) to customer equity (the sum of the lifetime values of their customers). Increasing brand equity is best seen as a means to an end, one way to build customer equity (see “Customer-Centered

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New metrics for a new model

The shift from marketing products to cultivating customers demands a shift in metrics as well.

Old approach

Product profitability

Current sales

Brand equity

Market share

New approach

Customer profitability

Customer lifetime value

Customer equity

Customer equity share

Brand Management,” HBR September 2004). Customer equity has the added benefit of being a good proxy for the value of the firm, thereby making marketing more relevant to shareholder value.

Fourth, companies need to pay less attention to current market share and more attention to customer equity share (the value of a company’s customer base divided by the total value of the cus- tomers in the market). Market share offers a snapshot of the com- pany’s competitive sales position at the moment, but customer equity share is a measure of the firm’s long-term competitiveness with respect to profitability.

Given the increasing importance of customer-level information, companies must become adept at tracking information at several levels—individual, segment, and aggregate. Different strategic deci- sions require different levels of information, so companies typically need multiple information sources to meet their needs.

At the individual customer level the key metric is customer life- time value; the marketing activities tracked most closely are direct

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marketing activities; and the key sources of data are customer data- bases that the firm compiles. At the segment level the key metric is the lifetime value of the segment (the lifetime value of the average customer times the number of customers in the segment); the mar- keting activities tracked most closely are marketing efforts targeted at specific customer segments, sometimes using niche media; and the key sources of information are customer panels and survey data. At the aggregate market level, the key metric is customer equity; the marketing activities tracked most closely are mass marketing ef- forts, often through mass media; and the key sources of information are aggregate sales data and survey data. We see that firms will typi- cally have a portfolio of information sources.

Clearly, companies need metrics for evaluating progress in collecting and using customer information. How frequently managers contribute to and access customer information archives is a good general measure, although it doesn’t reveal much about the quality of the information. To get at that, some firms create markets for new customer information in which employees rate the value of contributions.

_______________________

Like any other organizational transformation, making a product- focused company fully customer-centric will be difficult. The IT group will want to hang on to CRM; R&D is going to fight hard to keep its relative autonomy; and most important, traditional market- ing executives will battle for their jobs. Because the change requires overcoming entrenched interests, it won’t happen organically. Transformation must be driven from the top down. But however daunting, the shift is inevitable. It will soon be the only competitive way to serve customers.

Originally published in January 2010. Reprint R1001F

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Branding in the Digital Age You’re Spending Your Money in All the Wrong Places. by David C. Edelman

THE INTERNET HAS upended how consumers engage with brands. It is transforming the economics of marketing and making obsolete many of the function’s traditional strategies and structures. For mar- keters, the old way of doing business is unsustainable.

Consider this: Not long ago, a car buyer would methodically pare down the available choices until he arrived at the one that best met his criteria. A dealer would reel him in and make the sale. The buyer’s relationship with both the dealer and the manufacturer would typically dissipate after the purchase. But today, consumers are promiscuous in their brand relationships: They connect with myriad brands—through new media channels beyond the manufac- turer’s and the retailer’s control or even knowledge—and evaluate a shifting array of them, often expanding the pool before narrowing it. After a purchase these consumers may remain aggressively engaged, publicly promoting or assailing the products they’ve bought, collab- orating in the brands’ development, and challenging and shaping their meaning.

Consumers still want a clear brand promise and offerings they value. What has changed is when—at what touch points—they are most open to influence, and how you can interact with them at those points. In the past, marketing strategies that put the lion’s share of

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resources into building brand awareness and then opening wallets at the point of purchase worked pretty well. But touch points have changed in both number and nature, requiring a major adjustment to realign marketers’ strategy and budgets with where consumers are actually spending their time.

Block That Metaphor

Marketers have long used the famous funnel metaphor to think about touch points: Consumers would start at the wide end of the funnel with many brands in mind and narrow them down to a final choice. Companies have traditionally used paid-media push marketing at a few well-defined points along the funnel to build awareness, drive consideration, and ultimately inspire purchase. But the metaphor fails to capture the shifting nature of consumer engagement.

In the June 2009 issue of McKinsey Quarterly, my colleague David Court and three coauthors introduced a more nuanced view of how consumers engage with brands: the “consumer decision journey” (CDJ). They developed their model from a study of the purchase decisions of nearly 20,000 consumers across five industries—automobiles, skin care, insurance, consumer electron- ics, and mobile telecom—and three continents. Their research revealed that far from systematically narrowing their choices, today’s consumers take a much more iterative and less reductive journey of four stages: consider, evaluate, buy, and enjoy, advocate, bond.

Consider The journey begins with the consumer’s top-of-mind consideration set: products or brands assembled from exposure to ads or store dis- plays, an encounter at a friend’s house, or other stimuli. In the fun- nel model, the consider stage contains the largest number of brands; but today’s consumers, assaulted by media and awash in choices, often reduce the number of products they consider at the outset.

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Idea in Brief Consumers today connect with brands in fundamentally new ways, often through media channels that are beyond manufacturers’ and retailers’ control. That means traditional marketing strategies must be redesigned to accord with how brand relationships have changed.

In the famous funnel metaphor, a shopper would start with several brands in mind and systematically narrow them down to a final choice. His relationship with both the manufacturer and the retailer ended there. But now, relying heavily on digital interactions, he evaluates a shifting array of options and often engages with the brand through social media after a purchase. Though marketing strategies that focused on building brand awareness and the point of

purchase worked pretty well in the past, consumer touch points have changed in nature. For example, in many categories today the single most powerful influence to buy is someone else’s advocacy.

The author describes a “consumer decision journey” of four stages: consider a selection of brands; evaluate by seeking input from peers, reviewers, and others; buy; and enjoy, advocate, bond. If the consumer’s bond with the brand becomes strong enough, she’ll enter a buy-enjoy-advocate-buy loop that skips the first two stages entirely.

Smart marketers will study the de- cision journey for their products and use the insights they gain to revise strategy, media spend, and organizational roles.

Evaluate The initial consideration set frequently expands as consumers seek input from peers, reviewers, retailers, and the brand and its com- petitors. Typically, they’ll add new brands to the set and discard some of the originals as they learn more and their selection criteria shift. Their outreach to marketers and other sources of information is much more likely to shape their ensuing choices than marketers’ push to persuade them.

Buy Increasingly, consumers put off a purchase decision until they’re actually in a store—and, as we’ll see, they may be easily dissuaded at

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that point. Thus point of purchase—which exploits placement, pack- aging, availability, pricing, and sales interactions—is an ever more powerful touch point.

Enjoy, advocate, bond After purchase, a deeper connection begins as the consumer inter- acts with the product and with new online touch points. More than 60% of consumers of facial skin care products, my McKinsey col- leagues found, conduct online research about the products after purchase—a touch point entirely missing from the funnel. When consumers are pleased with a purchase, they’ll advocate for it by word of mouth, creating fodder for the evaluations of others and invigorating a brand’s potential. Of course, if a consumer is disap- pointed by the brand, she may sever ties with it—or worse. But if the bond becomes strong enough, she’ll enter an enjoy-advocate- buy loop that skips the consider and evaluate stages entirely.