(this is a guest post by Taylor Mitchell of our sister program for Sales executives, the Sales Executive Council. It originally appeared on their blog.)

A fundamental shift in customer buying behavior has created a rift where Sales and Marketing have traditionally engaged customers. This void in the purchase process where customers are free from supplier engagement, a “no-man’s land” so to speak, has several implications on what successful selling looks like in today’s environment, but one of the more immediate concerns is that most suppliers haven’t fully recognized the shift has even occurred

This lack of awareness could partly be blamed on the fact that there is significant internal confusion in supplier organizations over the ownership of certain commercial responsibilities. Data from the MLC’s Commercial Integration Diagnostic illustrates that companies don’t have a good sense of which function, Sales or Marketing, owns some of the most important commercial activities—almost 70% of the member companies surveyed were unsure of who owned the insight generation responsibility, for instance.

As such, many sales organizations lack the scalable organizational support reps need to successfully sell in today’s environment, and are therefore leaving individual reps to do much of the heavy lifting themselves.

What makes matters even more difficult for sellers, and sales organizations alike, is the fact that buyers are not contacting suppliers until they are, on average, 57% of the way through their purchase process —meaning they have already determined their needs, completed due diligence, and have even begun to do some comparison shopping.

Given that this emerging commercial rift or “no-man’s land” is essentially enabling customers to make purchase decisions without supplier influence, it is all the more important that suppliers alter their strategies to drive customer engagement at the earliest, most formative stages of a sale and shape customer demand.

The SEC is focusing on just this in our forthcoming 2012 research. Initial findings suggest that the best companies are developing an organizational capability spanning both marketing and sales to generate unique insight, develop scalable commercial messaging based of that insight, and to generate leads/select opportunities based on customer receptiveness to that insight. By doing so, these companies are able to successfully support their sellers in engaging customers early and shaping their demand.

What is your organization doing to tackle no-man’s land and increasing buyer sophistication? Does developing an organizational capability to generate unique insight and support sellers sound like the right approach to you?

Usually, when the customer has an issue, customer service is there to help. But in this case, the reps are often as confused as the customer. As a rep at a national retailer recently told me when I called, the personalized ad “is not on our site so it’s Pandora’s ad not ours”. With personalization being a relatively new and under-regulated phenomenon, the chance to be exactly right is often counter balanced by the chance to be completely wrong. Sophisticated algorithms running in the background don’t guarantee success – any financial firm can tell you that.

As marketers rightly understand it, personalization is on their turf. While they are positioned to take the lead in delivering greater relevance to consumers, marketers can’t hope to ace it on their own. Here’s why:

• Personalization calls for inter-departmental coordination. Your interactive marketing vendor isn’t the only party you’ve got to work with. Not letting your left hand know what the right is doing when it comes to targeting customers is inviting trouble. At the very least, sales and customer service need to know what personalization is and be able to give a informed explanation when customers call with questions/comments ranging from “Why am I seeing this?” to “Stop spamming me!” To consumers, anything with your logo on it is your ad and hence your responsibility to explain / fix / make disappear. Having a short, scripted FAQ beforehand on how personalized ads work and how settings can be adjusted could save reps from coming up with their own explanations. For sales, integrating the detailed customer data your use for personalization into the CRM system could help them gain valuable context before each conversation and more willing to track additional consumers metrics for you next time around. The simple fact is, if you don’t talk to other departments beforehand about what’s going on, they’ll come back to you later about what’s going wrong.

• Personalization calls for coordination within marketing itself. In the same vein, marketers involved in personalization shouldn’t be allowed to sit in their own niche while keeping the rest of the department in the dark. Digital and social marketers can tell you who is poking around on brand’s Facebook and campaign pages; product managers can help you zoom in on purchase motivation in a particular segment; and market research analysts have primary research and tracked metrics that would add another layer of do’s and don’ts.

Hippocrates said, “First, do no harm.” Embarrassed or annoyed consumers aren’t likely to be loyal – they said as much in our recently concluded consumer survey on personalization and privacy. The bottom line: consumer data can be bought but consumer trust cannot. We’ll talk more about how you can get personalization done right in your segment so stay tuned for more insight.

So we’re currently trying to tease out, exactly, what people are using analytics for, and what ultimate goals those actions feed into. When we’re on the phone with members, overwhelmingly we’re hearing that data brings enterprises closer to the consumer, leading to all sorts of better outcomes: more resonant marcomms, higher margins through more effective price discrimination, and, for some companies, better products that arise through access to protected, proprietary data assets (like Nike+).

I could imagine two ways that data might feed into customer centricity (whether it’s helping or hurting). Story number one more or less goes: we as a company had very little idea who our customers were, what they liked, how they socialized and what kind of products they bought from others that they could be buying from us. When we integrated advanced marketing analytics and unstructured data, the numbers told us more about our customers than we already knew, and we became more customer-centric.

The other story goes: we as a company had very little idea who our customers were, and therefore we integrated big data and advanced analytics. But we couldn’t choose which data to use, and our analysts and marketers got caught up in a never-ending cycle of analysis paralysis. Moreover, thinking about the consumer as an abstract concept in data led to people forgetting the importance of experience and observation. In the process, we lost sight of the softer, qualitative ways that we learned about customers, and ended up becoming less customer-centric.

Which of these is more plausible? I’m not sure, but my gut says it’s the second story. I can count the number of companies with great, consumer-apparent uses of data on my fingers and toes, and analytics vendors have bigger appetites than that; there are surely hundreds of companies out there with data on their hands of varying effectiveness.

So, we thought we’d bring the question to you. Answer the poll below to let us know how you feel about data and analytics’ role in customer-centricity. Want to add some details? Let us know in the comments section.

These factors are creating the “no-man’s land” facing Marketing and Sales, one that we told you about last summer in our annual B2B research project. But they’re also making Sales’ job harder by making the process more complex: when buyers have ideas in their head that they get from internet research, or when a committee makes a purchase, rather than an individual, complex contingencies quickly develop, ones that can be hard to manage for individual reps.

Johnson Controls, an industrial controls and facilities management company, sells complex products and solutions. Its reps ran into the problem described above, and had trouble making complex sales. The company’s solution was to embrace game elements to help reps unearth critical, unarticulated customer needs that aren’t being met effectively – and, in turn, reconcile competing priorities among multiple stakeholders.

Johnson Controls first gets all the stakeholders into a room and asks them to fill out two kinds of cards: “needs cards” represent key priorities for each participant in the buying process, and “practice cards” represent the organizational actions needed to meet the needs.

Cards are then mapped onto a special gameboard developed by Johnson Controls, that graphically represents where the customer thinks critical needs are going unmet. Armed with data and benchmarks from across the customer’s segment, reps can challenge customers in the moment by comparing them to competitors.

For more, including how Johnson Controls reps balance multiple priorities among stakeholders, check out the full case, or listen to this webinar replay to see how this and other companies have revamped their needs assessment process.

But many brands struggle with the risk involved when using consumers to market the brand.  After all, giving consumers the license to share their thoughts on your brand allows them to share the bad along with the good.  In addition, it can be hard to select the right people to represent the brand.

Ford tackled these challenges to launch the U.S. model of the Ford Fiesta by using consumer advisors, or “agents.”  To ensure that both consumers and the brand could trust the agents, Ford implemented a rigorous selection process to ensure good brand fit and social media reach.  Ford selected a very diverse group of agents, so most consumers in the Fiesta’s target demographic can find agents like them.

A larger struggle for most brands, though, is giving up control over what the consumer advisors say.  Ford knew it needed to balance the need for some brand control with the need to generate authenticity by giving agents uncensored speech, so they assigned monthly missions to give some structure to the agents’ experiences. Ford then allowed the agents to use their own blogs, tweets, and YouTube channels to tell their stories in their own words, pictures, and videos.

In addition to providing structure for the agents, Ford further leveraged these missions by selecting some that highlighted the car’s features.  For example, one mission had one agent drive until his car ran out of gas, showcasing the car’s high gas mileage; other missions included turning the car into an ice-cream truck (showing off a large amount of trunk and storage space) and taking a road trip (to demonstrate its comfort over long distances).

Using the agents to tell the brand’s story had really positive results: Ford generated the same name awareness for the Fiesta as the Ford Edge and Flex had after two years of traditional advertising at just 10% the cost of a traditional media campaign.

After seeing such great success in the United States, Ford adopted the campaign for India.  MLC members, click here to read about how Ford used the agents to generate brand interest in an emerging market.

Payless, an American shoe retailer, faced this problem a few years back. Facing competitive threats from big-box discounters, a deteriorating customer experience, and a management team far-removed from the average customer, the company’s CMO tried to drive improvements in the customer experience but predictably failed due to lack of senior management buy-in.

Realizing that the company needed to make the lack of customer focus “real” to senior executives, Marketing arranges a series of executive-immersion sessions. They listen in on focus groups to learn the characteristics of core segments, then “act out” those segments in a series of visits to Payless and competitor stores – a constraint that forces them to remove their functional hats and view stores from the perspective of a consumer, rather than an operations or a finance executive.

A key part of the visits to Payless stores is that they are unannounced and incognito. Executives, assuming their roles as a particular customer persona, shop in the store as any other customer would, avoiding the problem of stores “preparing” for pre-announced visits.

The end result? Executives quickly figured out where the customer experience was lacking and identified a few key elements to fix, leading to higher same-store sales and increased foot traffic and customer satisfaction.

MLC members, check out the full case, or listen to this webinar replay on how companies – including Payless – have pioneered consistent, differenteated, and delightful customer experience.

Part of this has to do with greater information availability – customers are educating themselves about products and solutions before they ever see a rep, and, as such, are in a better place to make more thorough and deliberate decisions about what they buy. Time pressures have led business leaders to spend less time with reps, as well, reducing the amount of messaging purchasers absorb prior to the buying decision.

But one important element of buyer scrutiny is fear: fear that the solution will fail or not work as advertised, and that their key metrics – or, even worse, their careers – will take the hit. And who can blame them? In today’s networked world, the cost of failure is a lot higher than it once was.

Autodesk, a 3D design, engineering, and entertainment software company, solved the problem using a purpose-built online community that connects credible customers to qualified leads, enabling customers to assuage the risk-oriented fears of the prospects. Using a variety of incentives for existing customers, the online forum enables conversations across customer groups. The best conversations are converted to product messaging – helping bring “social proof” into the company’s marcomm efforts.

MLC members, for more on this solution, check out the full case.

This list was eerily reminiscent of the results from MLC’s Marketer Quick Poll from a couple of months ago.  Only in our case, we had asked marketers about their top challenges on the data management frontier.  If these challenges are so similar between such different subjects, then perhaps it’s time to reposition and take a step back to look at the broader marketing environment.

The easiest big-picture framework that came to me was the traditional supply-and-demand curves.  For simplicity’s sake, we can consider the consumer market for baby food.

Assume we hold the supply curve constant.  To increase the amount of consumer surplus under the demand curve, we can do one of two things:

1. Try to make our captured demand hug the full consumer demand closer.  (Gerber battles Baby’s Best!)
2. Attempt to shift both demand curves further out along the supply curve.  (Expand the economic pie – for instance: Gerber using analytics to discover that older adults without teeth were an underserved market)

Most marketers would agree that achieving both would be ideal, and if they had to pick, they’d aim for the latter.  But if we look at actual practices, most marketing departments are focusing their social media and analytics efforts in the first one.

Their thought process might go something like this:

Sure I’d like to just burst through the innovation bubble and find a whole new untouched consumer population…

But we don’t have the innovative power, and it certainly won’t be easy justifying riskier, creative ventures to the rest of the organization.

Besides, the consumer landscape is changing so fast, I’m having a hard-enough time just keeping up with my competitors!

So let’s just work on speeding up current activities and getting as much consumer information as possible.  Who knows, maybe we’ll get lucky and come across something that will push innovation forward!

However, while aiming for “real-time” relevance has its merits, it may not be the smartest way to secure customer value and loyalty.  Consider the following: are marginal increases in market share sustainable?  Are consumer preferences really changing so quickly, or does it just seem that way with recent technological/analytical advances?

We’ve recently been thinking that focusing on speed may lead to smaller marketing improvements with fleeting market advantage.   Keep an eye out for our survey in February, when we’ll be gauging Marketing Agility (speed, flexibility, and all the factors that represent entrepreneurial readiness).  Participating companies will get a benchmarking report.  Email me if you’re interested in taking the survey or learning more: yzhang@executiveboard.com

But bridging the gap from data to action almost always requires an intermediate step – testing. And with big, real-time data, the B2C space just might be entering a golden age of testing and learning, as the test-to-results cycle speeds up and decisions can be made faster.

It’s important, though, to keep the possibilities here realistic – tweaking products, experiences, or messages will almost certainly produce marginal results, ones that might be eaten up by the macro factors at play in any business success – technological trends, the economy, that sort of thing. Case in point is Sears/KMart – a company that’s come on some hard times in the last few years, and one that recently announced that it would close between 100 and 120 stores in the coming year.

Of course, a lot of this has to do with economic and technological shifts facing all big-box retailers: the improving quality of mobile and e-commerce, easy price comparisons, an overall dip in consumer spending. But Sears hasn’t sat idly back, waiting for the waves of change to render it irrelevant – they’ve been extraordinarily active in testing different sales-floor formats, trying to figure out which resonates with consumers the best.

As Jesse Eisinger wrote in Portfolio a few years back:

Retailers experiment all the time. But Sears Holdings celebrates its test-and-learn culture as a matter of corporate pride. [Sears CEO Eddie] Lampert’s idea is that he can, using data and good business sense, eventually figure out what’s wrong and fix it. “One of the great advantages of having approximately 2,300 large-format stores…is that we can test concepts in a few stores before undertaking the risk and capital associated with rolling out the concept to a larger number of stores or to the entire chain,” he wrote in a letter to shareholders.

Lampert’s tests are peppered throughout the country. In Zephyrhills, Florida, the company put a Sears within a Kmart. In Houston, it’s trying out a huge home-appliance showroom. In Rockford, Illinois, Sunderland and his team are testing a new Kmart design that has an outdoor-marketplace feel. Duluth, Georgia, has a retro-themed store. Maureen McGuire, Sears Holdings’ chief of marketing, says that testing is now so embedded in the culture that the company put two different covers on its famous Christmas staple, the Sears Wish Book catalog, which it reintroduced this year after a 14-year hiatus. The blue one with stars tested better than the red one with pictures of Christmas cookies in the shapes of power drills and high-heeled shoes, she says.

The lesson? Sears designed smart tests and has learned a lot about what its customers like and do not like, but these tweaks to the experience did not – and probably could not – overcome the immense challenges all big-box retailers face in the next few years. That runs counter to a lot of our conversations with marketers, some of whom seem to believe that marginally-better customer understanding will lead to big step changes in revenue.

We’re still in the early stages of our work, but I think we’re going to find that one of the biggest challenges with data and analytics won’t be solving problems with data, but rather figuring out what problems to solve.

If there’s one thing the past few years have been notable for, for marketers, it’s instability and uncertainty. Core assumptions of the craft are being called into question by technological shifts, a growing impetus on globalization is running into geography-specific challenges, and it’s unclear whether consumers and business buyers will re-learn pre-recession habits.

A lot of these are longer-term issues, ones that we might not get clarity on for a few years. But some might be decided in 2012. Here are some things to look out for:

B2B social/digital media.In the B2B space, we think this might be the year that marketers gain a bit more visibility into how best to use social media in the business buying environment. A number of variables are falling into place: for instance, marketing automation technologies are helping marketers use social data and platforms more effectively and a greater percentage of buyers are becoming more comfortable with social media.

I’m not suggesting that we’ll learn “the answer” to all B2B social media related questions, but I think we’ll get quite a bit closer.

Geograhpic uncertainties.A number of the major markets big firms have invested in across the last 10 years are showing signs that idiosyncratic issues might affect consumer and business outcomes in the next year. In the United States, the November presidential election is very important for – among others – the finance and healthcare industries, as legislation passed under President Obama may be rolled back in the event a Republican unseats him. In Europe, the ongoing sovereign debt crisis still threatens big consequences for the Eurozone, and if the situation isn’t resolved well (and soon), consumers could feel the pain even worse than they do now.

In India, the government has begun to show signs of wariness towards Western business, such as shelving a plan to allow foreign retailers to open stores in the country. And in China, there are some signs that phenomenal economic growth may be slowing.

In general, firms have done a great job of hedging their bets geographically, but significant challenges in each of those geographies remain – challenges that may shake out between now and December 31.

Erosion of sticky recession habits. We’ve talked about it here before, but there’s significant evidence that it takes consumers and businesses quite some time to retreat from frugal habits learned in recessionary times – even if those habits aren’t strictly necessary anymore.

Those habits have created some pretty tough times for marketers, as margins have decreased, price comparison and individual research blunt the impact of messaging, and budget contractions have shrunken the spending pie.

We know that habits shift through some combination of changing economic circumstances and time. Will 2012 be the year your customers loosen the strings a bit?

Mobile and e-commerce. Pretty much everyone buys some things online these days, but in recent years, we’ve seen a vanguard of early adopters shift to doing most or all of their shopping online or with their phones (you can count me as one; I hate malls). With Amazon Prime and a subscription to a grocery delivery service like Peapod or FreshDirect, one can just about get away with never stepping into a retail store again.

Now, clearly, there are benefits to the retail environment that, for some, make up for the hassle of having to actually enter the store. I think this may be the year where brands and retailers figure out exactly what those things are, and find a limit on consumers’ willingness to shift their shopping online.

What have we missed? Let us know in the comments.

Give more than we take. Marketing’s job, at its most basic, is about a) gaining customer attention and b) converting that attention to dollars. The strategies for doing that vary, obviously – some firms opt for longer-term relationship and brand-building, deferring the attention to dollar conversion to a later date, while others choose shorter-term strategies.

Regardless, it’s worth remembering that that attention is as limited a resource as the money it leads to, and the best firms will do everything they can to extract the most value out of every minute of consumer brain time. For most, that will mean something that might be a bit revolutionary – positioning marketing efforts to add value to the life of the customer.

How to do it? Last year’s major research projects (B2B, B2C) suggested some examples of how big companies have made the buying decision easier and more valuable for customers.

Get empirical (well, as empirical as possible). “Data-driven marketing” is repeated so much by vendors and consultants that it’s nearly at the cliche level, but our initial impression of how large-enterprise marketing organizations use customer data is that there’s a lot of room to improve. In a number of organizations, we’re seeing that data is used mostly to give an empirical veneer to already-formed conclusions; that’s not what empiricism is about, to say the least.

Our best-practices research into this topic is ongoing, obviously, and subject to change. But one key area we think marketing organizations can pretty easily key in on is reducing the cost of being wrong. Why? Well, making fact-based decisions requires people willing to be proven wrong by data – the market is a complex place, and our assumptions about customer behavior, marcomm effectiveness, and any number of critical knowledge areas will sometimes – perhaps often – be wrong. If the stakes of being wrong aren’t quite as high, decision-makers will have more incentive to bring an open mind to customer data.

Forge better cross-functional connections. Critical to progressing on adding customer value and making the most out of data is an old Marketing bugaboo: forging effective relationships with other functions. For instance, making the best use of data requires an effective partnership with IT, at the very minimum, and incorporating added customer value into marketing activities likely requires us to play nice with customer service and R&D.

This is an old standby topic for MLC; for more, check out our cross-functional alignment topic center.

Get serious about establishing a truly global marketing organization. Most large enterprises have marketers around the world, but, judging from the best of the best, that’s not quite enough to call your marketing department “global” anymore. What’s needed, rather, is a focus on building out local marketing staffs and incorporating local practices and knowledge, to the extent possible and necessary.

Last year, we did a project on global marketing that lays out how some of the best companies are structuring their Marketing organizations to take advantage of all that a global footprint has to offer.

Do you have any marketing-related resolutions for the upcoming year? Let us know in comments.

From all of our conversations with marketers over the years, I think it’s safe to say that most marketers behave as if it’s 90% nurture and 10% nature.  In other words, most marketers believe that, if only their marketing were good enough, they could get most consumers to engage with the brand and be loyal.

I believe there’s a case to be made that genetics accounts for far more of consumer behavior than marketers appreciate.  I’d guess it’s more like 50/50 nature vs. nurture.  And if that is true, it ought to dramatically change who we market to and how we market to them.

So let me share some of what I’m seeing by way of evidence, and I’d love to get your reaction via comments below.  The evidence is by no means conclusive, but it is certainly provocative.

I’ll start with some fascinating empirical work that David Lykken and Auke Tellegen conducted back in the 1990s.  The study is called Happiness is a Stochastic Phenomenon (catchy, eh?).  The authors looked at pairs of identical twins (who by definition share the same genetic makeup) to understand how much of happiness is driven by nature vs. nurture.

If you’re like me, you would have guessed that the majority of happiness is driven by life experiences—in other words, nurture.  But Lykken and Tellegen found that about 50% of variability in happiness is explained by genetic factors.  Some of us humans are naturally predisposed to being happier people, and others of us are predisposed to being less happy.  That’s just the way it is.

So what’s the connection to marketing?  Bear with me here—I wanted to start with this research because it opens up the possibility that our assumptions about nature vs. nurture and what drives human emotions may be off.  We marketers care a lot about sparking and building emotional connections with consumers, after all.

Now consider this additional work, which addresses more directly a marketing outcome that we all shoot for: loyalty.

John Keaveney at Wunderman has been doing some interesting quantitative work looking at what drives humans to be loyal.  I’ll quote from Mobile Mania, a Wunderman e-book where I spotted this work e (p. 91):

Put simply, there are loyal people.

And there are disloyal people.

He [Keaveney] compared the attitudes of loyal and disloyal people to see why they differed.

He found that disloyal people wanted to pursue “a life of novelty and challenge” and enjoyed “taking risks.”

Whereas loyal people were the opposite.

Keaveney then examined personal relationships of these naturally loyal and disloyal people.  He found that loyals were more likely to value long term personal relationships.  Disloyals were much more likely to be single.  That carried through to sexual habits, as well, in terms of number of partners.  And it seems Keaveney controlled for age (for those of you thinking this is all a function of aging from our young, wild carefree selves to more settled-down mature adults).

Keaveney concludes that loyalty is less about some humans being true to some brands, and other humans being true to other brands.  Rather, loyalty is an “intimate facet” of who we are by nature.  Some consumers are loyal by nature, and will be loyal to brands and significant others.  Other consumers are not loyal by nature, and won’t be no matter how good the marketing is.

That brings us back to MLC’s work on relationships and loyalty.  In my last blog post (Consumers: They’re Just Not That Into You), I raised the possibility that some consumers are hardwired for certain kinds of engagement, while others are not.

If we marketers knew this to be the case—that nature accounts for far more than we think in consumer engagement and loyalty behaviors—we’d want to identify who is predisposed to be more loyal or enter into a brand “relationship”, and who isn’t.

If it’s something like half of the human population that is hardwired NOT to be loyal, imagine how much marketing cost and effort you could save by identifying those folks, implementing lower cost marketing approaches for them, and plowing the savings into higher ROI areas (such as improving the product or service experience itself).

The passage above from the Wunderman work even gives us hints about the kinds of questions you could use to identify and segment customers in this way.

“How important is it that you pursue a life of novelty and challenge?” (1-10 scale)

“How important is it that you take risks in your life?” (1-10 scale)

(FYI, I wouldn’t recommend asking about number of sexual partners as your segmenting question.  Big danger of self-reporting bias there…)

Do you find the evidence persuasive?  How would you pursue marketing differently if loyalty and engagement behaviors were more nature and less nurture?

MLC members, for more findings on engagement and relationships, see MLC’s work on decision simplicity and loyalty.

While segmentation can be approached in many ways, some of MLC’s members have evolved best-in-class winning segmentation strategies that have propelled them to success. Presented below are a couple of strategies our members have used to segment their customers and consumers. The key take-away, as you read through these examples is that these are simple to enforce, yet innovatively different ways to segments your customers and consumers.

B2C Consumer Segmentation Examples:

LG Mobile’s Adaptive Customer Personas: Going over and above the conventional psychographic consumer segmentation, LG developed real life consumer personas at the work place. Employees could interact with the personas personally. Listen to LG’s M. Ehtisham Rabbani on how LG got it’s segmentation to stick with it’s employees.

La-Z-Boy’s In-store Diagnostic Protocol: Furniture retailer – La-Z-Boy developed distinct segments based on purchase motives of consumers, while in a retail store. It then equipped sales reps with a short two question diagnostic, which helped them map the customer, in-the-moment, into different purchase segments. The diagnostic also provides next-step recommendations to reps, to facilitate in-store interaction, leading to purchase.

B2B Customer Segmentation Examples:

Dow Chemicals’ Need-based Segmentation: Dow chemicals embarked on industry focused exercise to determine company-neutral loyalty drivers. However, instead of fitting drivers of loyalty within customer segments, Dow built its segments around them. This needs based segmentation enabled Dow to meet customers’ stated, and latent needs. By addressing previously unmet customer needs, and increased customer loyalty by 15%.

Square D’s Segment Selection Methodology: Square D (A Schneider Electric Division) defined valuable customer segments on two-criteria – opportunity” (long-term revenue potential) and “fit” (a comprehensive measure of a customer’s alignment with Square D’s strategy). The company allocated more marketing resources toward these key customers, who scored high on both the criteria. By carefully defining their customer segments, Square D was able to grow its key accounts by 54%, as opposed to 12% growth in other accounts.

MLC Members: You can find our extensive topical coverage on our Segmentation Topic Center. We have also assembled a Segmentation Pre-launch toolkit, which will help you to put in place the pre-requisites before launching a segmentation exercise.

India’s retail boom is driven by a plethora of reasons–from increasing disposable incomes and changing lifestyles, to growing demand in rural areas and smaller towns, and the rise of the global consumer. Indeed, global retail giants are trying to tap into this vibrant market but their core business model seems to be failing their aspirations.

The reason behind this change—the unique purchase drivers of the Indian consumer. Think–Value for money (through deals and bargain-hunting), convenience (e.g., deep rooted system of home delivery of purchases) and relationship based customer service (legacy of “kirana” or corner stores).

So, to survive and grow in such a market what are retailers doing? Tweaking their business models and making their stores locally relevant. Take a look at how global and local companies are adapting and innovating for the Indian consumer in the organized market.

1. Flexing Store Formats—With over 150 stores across India, Big Bazaar (an Indian hyper-market) is created on the principle of a “bazaar” (the Indian market place); Big Bazaar offers a local market feel but in large store format set-up. Wal-Mart (Easy Day in India) too is moving away from its typical big-box strategy and is diversifying its store format strategy in India e.g., opening small format stores, creating stores in the middle of towns and residential areas to make it easily accessible.
2. Meeting local expectations—Distinct regional preferences of the Indian consumers are mirrored in store efforts to localize merchandize across stores. This helps in making stores relatable, merchandize appealing and consumers comfortable while shopping. For example, Marks & Spencer’s has been working to shed its exclusive and over-priced image. Based on Indian preferences, Marks & Spencer’s for the first time introduced shirts with pockets and longer shirts for women. In addition, it has made itself less niche by making its products affordable and expanding in big and small towns through a varied store format.
3. Embracing Customer Service—Along with the traditional conveniences of local stores (e.g., home deliveries), courteous staff and loyalty programs are basic expectations. For most successful retailers, technology aided services (like e-commerce, online stores and store operating systems) differentiate them from the rest. For instance, Shopper’s Stop, a department store chain and multi-brand apparel retailer provides high quality customer and store experience by combining traditional services like in-house tailors with strong technology solutions in online, point-of-sale and inventory. This has helped it carve a reputation for itself as a convenient and reasonable store to shop from.

Do you have any experiences or stories on what companies are doing differently to be accepted in the Asian market? What do you think is working for them?

Below are six of the bigger and edgier hypotheses we’re testing.  If you have any other suggestions/thoughts, please email me soon and we’ll try to add them to the survey.

Consumers value personalized products and service more than personalized product recommendations and discounts. We’re pretty confident that consumers value personalization in some areas of the 4Ps more than others, but we’re not really sure which.  I won’t be surprised if the survey shows the opposite of the hypothesis above, but will be interested either way!  (We’re also comparing the impact of personalization in other areas, e.g., category-related advice and brand values).

Implication if true: Focus on measuring and optimizing parts of the experience that customers want to be more personalized.

Boosting loyalty and willingness to pay requires a step change in relevance, not just small increases. Take messaging as an example. Most brands’ currently personalize messages based on at least a few criteria (e.g., gender and region) and reach a reasonable level of relevance for a good portion of customers. As a result, increased investment in personalization (e.g., adding age and neighborhood to gender and region) may not result in noticeably more relevant messages for a good portion of customers, despite adding complexity internally.  As another example, we’ll compare the impact of product recommendations from a) any consumer, b) a consumer of your age/gender, c) a consumer with similar taste to you, d) a friend whose opinions/taste you trust.

Implication if true: Focus personalization efforts on elements of the experience in which small increases in relevance count most.

Consumers value decreased irrelevance (i.e., less irritation) more than increased relevance. We’re hoping to compare the impact of email frequency and email relevance. Instead of using data to send more relevant messages, the best first step may be to reduce low-relevance messages.

Implication if true: Stop trying to make your email subject line more eye-catching and start cutting the number of emails you send altogether.

Demographics are the least effective means of personalizing; aspirations are the most effective. We hypothesize that the easiest data to capture (demographics) is also the least valuable for personalization.  We also hypothesize that the hardest data to capture – aspirations – is the most effective.  We’d guess that contextual data (place, time of day/week) is in between in terms of both ease of capture and impact.

Implication if true: Beware of over-valuing data just because you have it and consider using unstructured social media data to understand aspirations.

Most consumers don’t realize how much data brands have on them, but those who know are more protective of their data. We’re going to test consumers’ “personal information IQ” and also ask about any steps they’ve taken to restrict brands’ access to their data. We expect that most consumers aren’t aware of how they’re data’s used (although it may turn out that many know when prompted, but forget).  We also expect a weak correlation between privacy understanding and privacy protection, but not a strong one (given what we know about ourselves from Facebook).

Implication if true: As privacy concerns get more press, more people will take steps to protect their information.  This could stymie brands’ personalization efforts.

Shoppers who like variety, but don’t have much time to shop will value personalization more than others and privacy less. We’ll be testing a range of demographic, behavioral, and psychographic factors to see what (if anything) correlates with lower concerns about privacy and higher demand for personalization.

Implication if true: Target data collection and personalization at certain segments that value it most.

Watch this space to find out which of these hypotheses prove true (results early next year!).

Three of this year’s best hit those buttons, we think. As for the other two: a little levity never hurt anyone. Here are our thoughts – let us know what you think in comments!

1) Volkswagen – “The Force”

Here’s what we said about this one in this year’s Super Bowl Roundup:

As someone who dreamed of Force-like powers as a child (and who didn’t?) this commercial was my favorite of the night. The kid in the comically oversized Darth Vader helmet will be, I think, this year’s E-Trade baby – the iconic, lasting image of what was, overall, a pretty good crop of ads. The commercial works, I think, because of the juxtaposition of the car and magical, supernatural abilities; the Passat shown in the commercial is a luxury model. The dramatic camerawork doesn’t hurt, either. Great job, VW!

Yep, all that still holds true. Best ad of the year, by far.

2) Google Chrome – “Dear Sophie”

I’m about as skeptical as they come when it comes to companies pulling at peoples’ heartstrings in ads, but this one is stunningly well done. The pace of the ad – which picks up as Sophie gets older – reminds of parents’ lament that childhood slips away quickly, and the memories the father shares – a combination of the mundane, absurd, and poignant – mimic real life. The best thing this ad does, that I’ve never seen any other technology company do as well, is cut through the hype and show customers exactly how technology can help them lead better lives. I’d kill to have a GMail account full of stories from my early life, and I bet a lot of others would, too.

3) Chipotle – “Back to the Start”

Shared values? Check. Visual homages to Pink Floyd’s “The Wall”? Check. One of the best Coldplay songs? Check. Covered by Willie Nelson? Check. This ad is a great, poignant reminder to customers that Chipotle isn’t just a purveyor of delicious burritos and rice bowls; they’re a bringer of wholesomeness into the community.

4) Nissan Leaf – “Gas Powered Everything”

Chalk another one up to the “shared values” category. This ad for Nissan’s all-electric Leaf, which creatively imagines a world in which all our electronic gadgets were powered by gasoline, tugs at our inner environmentalist while taking a not-so-subtle jab at a competitor, the Chevy Volt.

I’m a longtime fan of the steampunk genre, which, in a similar way, asks readers to imagine an alternate future in which steam – not electricity – became the dominant power source for most things in our lives. It’s pretty clear that the directors of this spot took some inspiration from that world – which speaks to the geeks in all of us, as well.

5) DirecTV – “I Am Epic Win”

This one’s a personal favorite. It checks so many boxes for me, it’s almost as if the directors read my mind. Nerd humor (“epic win”) in the title character’s name? Miniature giraffes? Lampooning Russian oligarchs? Love it all.

The best part about this campaign, though, is the web component, most notably the Petite Lap Giraffe website, which fooled a number of friends and family this year. Thanks, DirecTV, for that.

Facing a mismatch between internal processes and the things they had learned from their customers, health care products company Cardinal Health had to do just that. Looking at sales data, the company’s marketers realized that customers – seeking to dampen costs and not seeing the value in Cardinal Health’s complete offering – often purchased one element of what was intended to be an integrative solutions deal. Not good!

The company realized that the problem wasn’t with the customers, it was with them – while they had some insight into their customers, they weren’t baking it into key internal processes, like new product development. The result was that their solutions offers didn’t resonate with their intended targets.

To fix it, Marketing developed a cross-silo innovation framework, designed to do a few things:

1. Get consumer insights from around functional silos on one page. Marketing divided internal stakeholders into three teams, and asked them to get in the heads of their customers and think about deep-seated marketplace beliefs, Cardinal Health’s key areas of competency, and their customers’ desired outcomes.
2. Identify the best opportunities. The teams then meet together, and develop links between the beliefs, desired outcomes, and areas that Cardinal Health can help.
3. Define the business concept. The ideas from stage 3 are then advanced through successive levels of scrutiny.

Want to learn more about Cardinal Health’s process? MLC members can read the case here, or listen to a webinar where we talk through this solution, as well as another from IBM.

Readers familiar with the outer reaches of the social media space may have heard of a concept called “the quantified self“, an ethos and accompanying suite of technologies designed to give average people data and insights into one of the most mysterious things in the world – the workings of their own bodies. Nike+, which we wrote about a few months ago, is a “quantified self” technology, as are more comprehensive solutions like the Jawbone Up, which – in addition to physical activity – can track daily calories burned and sleep quality.

Part of the value of quantified self technologies is ease of comparison – you can easily figure out if something that’s going on with your body is normal or cause for concern. But in order to get enough data for comparison, you have to have a critical mass of users – and quantified self stuff is probably not mainstream enough for statistically-significant sample sizes for any given question.

Well, what if there were organizations with hundreds of thousands of health consumers – enough to provide adequate sample sizes for just about any “is this normal” question, with a vested interest in those consumers taking preventative health measures? Oh, wait, there is!

Snark aside, I know that there are serious regulations around patient data, although I won’t pretend to know the finer points about what can be shared, and what can’t, as well as how patient consent changes that calculus. If HIPAA won’t allow reporting of aggregate data with patient opt-in, then HIPAA should be changed to allow it given the clear health benefits it would make available to customers.

But it kills me that this general idea – take data from the giant mass of health consumers under insurance plans, and give patients better insight into what good looks like for people of their rough demographic – is being pioneered by startups, established tech companies, and athletic shoe manufacturers, not health companies. We know, for instance, that providing insight into what others have done reduces consumer stress appreciably. It’s not a giant leap to think that consumers would appreciate the same from their health insurers.

As a health insurance consumer myself, the feeling I most want to have upon thinking about my insurance company is “they’re on my side”. Sometimes that means a trusted adviser, working one-on-one to solve a problem, but other times it means the strength of a corporate behemoth, knocking down walls to improve my health. Health marketers have little problem doing the first; I’d like to see a lot more of the second.

As we speak with marketers moving into emerging markets, many cite considerations such as how to organize staff to support these markets or how to manage the trade-offs of having staff in disparate locations. In simple economics terms: how should they manage the “supply- side” factors”?

While examining the supply-side is important, an equally productive, but often under-usedtactic, involves analyzing “demand-side” factors—namely, what will drive customers in an emerging market to buy your product(s). Regular readers of our blogs will know that our latest research reveals that the drivers of customers’ purchase decisions are changing significantly in both B2B and B2C sectors (for those unfamiliar with this work, our B2B analysis can be found here, and our B2C analysis here).

But, what do these findings mean for emerging markets?

I’ve just returned from my second trip this year to meet with marketing leaders in South Africa from roughly a dozen companies. There has been great debate on the similarities and differences between customer purchase decisions in developed versus emerging markets as well as on how brands should respond. Below are a few of the highlights from these discussions related to B2C markets (I will reserve B2B observations for a future post).

The Consumer Purchase Decision – Different or the Same?

Emerging Markets Are Different!: In developed markets the purchase decision is more schizophrenic due to factors such as recent declines in spending power that create greater willingness to try new brands, or new technologies that facilitate switching at the point-of-sale (e.g., mobile coupons). Meanwhile, in emerging markets the proliferation of brand choice is a more recent phenomenon and is altering the purchase calculus for consumers in these markets.

Emerging Markets Are the Same!: While the starting point might be different, the complexity of purchase decisions is increasing everywhere. Moreover, as in developed markets, emerging market consumers are increasingly armed with up-to-date information on everything from reviews of product features to the location of lower-cost substitutes.

Takeaway for Brands: The marketing tactics that worked five years ago are likely less powerful today. Winning global brands will be rewarded for revising their understanding of what drives brand commitment during purchase and re-calibrating their marketing efforts accordingly.

Responding to Purchase Complexity – Different or the Same?

Emerging Markets Are Different!: In developed markets, our research shows that brand affinity accounts for a third of brand commitment, while the in-the-moment purchase path accounts for the remaining two-thirds. This is due to a consumer population that is overloaded by decisions and prone to shifting brands at the point-of-sale.

Emerging Markets Are the Same!: The jury is still out on how overloaded consumers are in emerging markets. Anecdotal feedback from marketers suggests that brand choice does not appear to be overloading consumers to the point that consumers are in developed markets. At the same time, the purchase decision at the point-of-sale isn’t the foregone conclusion it often was in the past.

Takeaway for Brands: Brands would be wise to continue long-term investments in brand affinity efforts (principally through differentiated emotional connections), while keeping an eye out for signs that consumers are becoming overloaded and, therefore, require simplified purchase decisions.

Please let us know in the comments where you stand on the similarities and differences between marketing in developed versus emerging markets.

It seems clear that, for a variety of reasons, energy and resource constraints will continue to be key concerns for small business owners for the foreseeable future. Those constraints take a few forms – sometimes they’re around environmental concerns, other times they’re around cost. But what language should you speak to business owners concerned about energy costs?

We know that green marketing can be effective in the B2C world, but how influential are environmental sustainability and corporate social responsibility on small businesses’ purchase behavior? This year, the Enterprise Council on Small Business tested the impact of a myriad of factors on small business owners. As it turns out, value alignment – such as on green – has only moderate influence on owners.

Source: ECSB Research, July 2011, n=1099 N.A.

So, if green marketing isn’t an effective way to reach small businesses, what is? ECSB recommends positioning how members’ products and services can alleviate business owners’ pain points. In a recent study, ECSB asked owners what their biggest pain points are in all areas of managing their businesses. In the area of building and office administration, the cost of utilities ranked highest – despite the majority of owners not anticipating price increases for 2012.

At the end of the day, messaging how your products and services can positively impact the bottom line is likely to be more effective than green marketing per se in targeting small businesses. So, rather than focusing on going green, show business owners how your company can help them save some green.