Customer Level Marketing – Investing in the Bottom UpApril 27th, 2007
Earlier this week, I was engaged in a discussion with a colleague on the way corporations tend to invest their capital. The amount of wasted dollars thrown toward executive pet projects, productivity initiatives, cubical redeployments, senseless non-strategic advertising, and other non-sales generating expenditures is simply mind-boggling. It truly makes me wonder how many companies have ever taken the time to consider what the results would be if they were to redirect a portion of their SG&A expenditure to improving customer relations.
Okay, you’re probably asking “what the heck does Erik mean by customer relations?” To be honest, I’ve never worked with or for a company that has ever concentrated their resources at the customer-level of the organization; every company I know concentrates most of their salaries, bonuses, amenities, perks, and other resources at the corporate executive level. Think about it, how many large organizations pay their frontline employees, namely those who interact and serve the customer, more than keyboard jockey managers back at the office?
I remember the first time I was introduced to this concept during my undergraduate studies over in Finland. My marketing professor asked us to read a phenomenal book by Jan Carlzon titled Moments of Truth. Through the book, Carlzon focuses on his stint as CEO of Scandinavian Airlines (SAS), where he is widely renowned for resurrecting what should have been a dead dog company. The SAS Carlzon took over was destined for insolvency, yet his progressive approach to turning the organization upside down literally saved the company and made it a world force in airline transportation. His strategy was simple: slash resources and expenses at the top and invest heavily in the bottom. Within a matter of months, SAS drastically reduced corporate headcount, frivolous spending (such as corporate-level perks), and useless overhead all the while investing in customer service training, customer-focused sales strategies (in regards to ticketing, seating arrangements, and travel packages), employee bonuses based on customer satisfaction, and salary increases for frontline personnel.
Along with the reallocation of resources, SAS initiated a policy wherein all corporate-level employees were required to work at the frontline level for a designated period of time so as to gain an intimate appreciation for the ticket counter representatives and stewards/stewardesses and the customers they served. Furthermore, SAS adapted a progressive policy of promoting high-performing frontline personnel to strategic positions within the organization so as to help consult other service-oriented personnel with customer-relations. Despite the temporary moral downswing at the corporate level, the frontline employee moral shot through the roof as opportunities opened up for incentive pay and promotions. Guess who reaped the benefits of motivated frontline personnel … yep, the customer.
So as to not give too much away, I do encourage you to read Carlzon’s book and contemplate his advice on marketing to your customers through your frontline employees. In addition to the frontline, bottom-up approach, Carlzon provides great strategic insight to managing a successful firm. Here’s a link to purchase Moments of Truth through Amazon:
Moments of Truth
To conclude, it would be well worth your time to consider how your organization could reallocate its resources to building a stronger relationship with your customers. It might be time to consider how to incentivize those who deal with your customers the most.