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Cutting-edge companies use integrated marketing communication

Cutting-edge companies use integrated marketing communication

Cliff McGoon

Have you ever responded by phone to a company’s earnest plea on television imploring how it can’t wait to have you as a valued customer, only to be shuffled to a disaffected employee who seems genuinely bored with helping you?

Well, if you’ve had such an experience–and wondered, “Don’t they watch their own TV ads?”–you’re acutely aware of the impetus for Integrated Marketing Communication. It begins with the “one-sight, one-sound” objective of marketing communication, and while that’s only a part of the IMC concept, it’s the part that shows most to consumers and the general public. And it’s the problem that communicators who don’t work directly with marketing frequently have to reconcile in their programs.

If you’re not familiar with the IMC concept, here is an official definition: “…a strategic business process used to plan, develop, execute and evaluate coordinated and measurable persuasive brand communication programs over time with consumers, customers, prospects and other targeted, relevant external and internal audiences.”

The topic of IMC is discussed at length in a best practices report of the same name produced by the American Productivity Quality Center (APQC), Houston, Texas. Report editor is Susan Elliott. Chief subject matter expert is Don Schultz, professor of integrated marketing communication at Northwestern University’s Medill School of Journalism. The report is based on a study of 22 companies that practice varying degrees of IMC. Eight of the companies studied were termed “partners.” Essentially these leading edge representatives are well along the road to IMC; 14 other companies were termed “sponsors,” and also are well on the road to IMC but not as far along as the partners.

IMC development stages

The four degrees (or stages) of IMC development determined by the study are:

1) Tactical coordination of marketing communication. This is where most organizations seeking IMC begin, and focus is on functional areas including advertising, promotion, direct response, public relations and special events. Emphasis is on developing “one-sight, one-sound” policies and programs.

2) Redefining the scope of marketing communication. Here the organization begins to examine communication from the customer’s viewpoint, looking at all contact and entry points of customers with the company. The critical question changes from “How do we reach the customer?” to “How does the customer reach us?” Outside in instead of inside out. Also, the scope of communication activities broadens to include internal marketing to employees, suppliers and other business partners.

3) Application of Information Technology. Here the organization uses data gained through IT to provide a basis to identify value and monitor the impact of integrated internal and external communication programs to key customer segments over time.

4) Financial and strategic integration. At this top level of integration, emphasis shifts from skills and data to driving corporate strategic planning using customer information and insight. Financial measures of marketing are adopted based on return-on-customer investment measures.

The study was built on the concept that corporate enterprises do not simply decide to “become integrated,” but in fact, evolved as integrated organizations over a period of several years.

The study resulted in 12 key findings which are grouped under the four stages of IMC evolution. Following are those key findings with corporate examples to illustrate how the findings actually work in daily corporate reality.

Key Findings, Stage One

1. Integration requires a high degree of interpersonal and cross-functional communication within the organization, across business units, and with outside suppliers. It cannot be driven by formal policies and procedures alone.

For example, at Federal Express, within the marketing department activities are centered around customer segments. Each segment is staffed by a cross-functional team composed of a manager, a marketer, an analyst, an agency account executive, and–if applicable–a representative from the agency-managed fulfillment house. These cross-functional teams meet as frequently as necessary. E-mail has greatly facilitated this integration. All marketing vendors are connected to FedEx and to each other through the FedEx corporate e-mail system.

2. Organizations are taking charge of the integration process themselves rather than looking to ad agencies or other suppliers to provide the coordination.

The majority of companies surveyed believe it is not effective to give responsibility for integration to their lead ad agency.

For example, while CIGNA has an agency of record, divisions may often use smaller, local agencies for specific needs. The divisions have autonomy in creation and execution, however, corporate marcom has significant influence by “integrating” advertising at a high level–by reviewing and ensuring that the messages across the agencies are strategically aligned.

Dow Chemical coordinates its more than 100 outside creative service providers through its global agency management team, composed of five senior marcom employees, four senior public affairs people and a representative from purchasing.

Key Findings, Stage Two

3. Organizations gather extensive information about their customers – using primary and secondary market research sources as well as actual behavioral customer data–and apply that information in planning, developing and evaluating communication activities.

Most companies surveyed have made some effort to examine communication activities from their customers’ points of view. Most have conducted some type of brand contact or communication audit.

As an example, eight years ago Dow Chemical conducted a survey to determine customer information and preferences. It found that customers were primarily interested in their own success rather than Dow’s strengths. This resulted in the “We, We” ad in which Dow listed numerous strengths that could be applied to solve customers’ problems, and it emphasized “We don’t succeed unless you do.” The expression has moved from being just an advertising slogan to one of the guiding principles of Dow’s communication program.

4. Best-practice organizations create a variety of feedback channels to gather information about customers and effectively use customer feedback throughout the company.

Here are some of the reported methods: research work groups, focus groups, awareness and preference tracking for both quantitative and qualitative data, readership studies, tracking of press and industry consultant coverage, e-mail responses.

As an example of the latter, CIGNA’s corporate marcom group uses its web site and some 1,000 customer e-mail messages a month to become the “voice of the customer.” Marcom compiles the info ranging from complaints to compliments and sends it to the pertinent divisions, where a process has been put in place for them to respond within 24 hours.

5. One of the most difficult challenges of integration is aligning internal practices and processes with external communication.

FedEx has a flattop management structure with only five layers, and information flows very quickly. For example, Monday morning the senior VP of marketing meets with his direct reports; Monday afternoon, VPs of marketing meet with their direct reports, the directors who in turn meet with their direct reports. By Tuesday morning, the information from the Monday morning meeting has been completely disseminated. This happens every week.

6. Leading best-practice organizations maintain a greater number of data sources, and their marketing communication personnel have greater access to the data for planning marketing communication programs.

Here’s a very brief look at how IT and marcom work together at four studied companies:

CIGNA: Marketing information systems exist at the corporate level, not in the individual departments, and transforms data captured at the divisional level into valuable company-wide information made available via its database.

Dow Chemical: Information technology plays a key role in Dow’s knowledge management efforts, specifically supporting marcom through Dow’s major investment in communication technology. Employees have access to customer and other information critical to their success through a Dow-developed intranet.

FedEx: Marketing at FedEx has two IT work teams supporting its efforts. The teams are physically located within the marketing building and report to both the IT and marketing organizations.

Hewlett-Packard: HP’s IT provides infrastructure for global communication via e-mail and intranet, facilitating marcom personnel collaboration. HP feels its current efforts to capture consumer data through its web site is an innovation that will significantly improve the amount of data it gains from end users.

7. Among organizations marketing internationally, best-practice organizations are more likely to maintain global, integrated databases than separate, non-integrated databases.

However, of the organizations studied, by far most that market internationally use separate, nonintegrated databases. Exceptions are:

CIGNA, where all information available domestically is available in global markets. Customer information is accessible through this consolidated global database, which is managed centrally by corporate marketing.

Dow Chemical, which has an integrated, consolidated database accessible globally with much about companies, but not much, as yet, on individuals.

And FedEx whose marketing database contains a complete picture of all the company’s customers worldwide, and their FedEx transactions.

8. Information technology must be effectively incorporated into communication planning, development and execution to functionally turn customer data into customer knowledge.

Successful organizations use analytical and statistical tools and models to segment customers and prospects to value customers within their organizations.

CIGNA’s global database will assist in analyzing opportunity profiles and customer valuation.

At Dow, in the past customer attractiveness required much subjective analysis. However, economic valuation based on customer profitability will soon be used enterprisewide.

Fidelity Investments performs lifetime value assessment on customers – working with some proxies for how relationships build over time, what the value of the customer is and how it differs by segment.

9. Relatively few organizations are taking advantage of available technology to create customized communication programs based on individual customer circumstances and characteristics.

Financial services company USAA’s market research department enjoys an 80 percent response rate to its response-generating media, because of the niche market of its members. With this information on lifestyle, interests, etc., it develops customized marketing messages.

Key Findings, Stage Four

Stage Four represents the leading edge of IMC and therefore relatively few companies can report substantial progress at this level. in fact, many organizations operating at earlier stages may not fully realize the important, high-level strategic implications of integration.

10. The role of the marketing communication department is perceived differently at partner companies than at sponsor companies, with partners’ departments more often having bottom-line responsibilities and a more prominent role in strategic planning and new product development.

With CIGNA’s sharpened focus on its brand and image, corporate marcom’s involvement in strategic planning is growing. When CIGNA considers purchasing a company, it must consider whether the reputation, philosophy and brand are aligned with the image CIGNA has built.

At Dow, marcom is considered an integral part of the company’s success. The top two measures Dow applies to demonstrate marcom value are:

* achievement against strategy (measured by metrics set in place business by business for each activity planned)

* achievement against productivity goals: essentially the goal is, from 1995-2000, demonstrate $45 million of new productivity from the effective use of information (more information and better access) and/or the application of new communication technologies, such as digitization, printing technology, Internet, CD and satellite broadcast. The key to achieving this goal is converting work to dollars – the best indicator in evaluating effectiveness of marcom by business management.

11. Most organizations use a variety of tools to measure the effectiveness of marketing communication activities; however, relatively few incorporate financial measurements into the evaluation process.

Marcom suffers from the same measurement difficulties as other functional areas of communication, namely internal communication or public relations. Most marcom practitioners measure such things as coupons returned or telephone calls received. Relating work done to dollars in the door remains a problem since many factors affect a sale.

At CIGNA they try to attribute some of the positive financial impact the company is experiencing to its marketing communication program (i.e., demonstrating the effect the branding initiative has had on customers’ attitudes).

At FedEx, the important strategic financial measure is incremental improvements in aggregate return on marketing investment over time. If what can be seen is a consistent trend of being able to do more with less, then marketing is on track. FedEx measures results from marketing expenditures primarily by revenue and volume by performing complex analyses for every promotion, then comparing results with business plan.

At Fidelity, they have formalized processes to measure costs per inquiry, costs per lead, and costs per conversion. The information is gathered monthly and broken down by publications, spending and different kinds of media vehicles.

12. While organizations may claim to be customer-focused, relatively few have grappled with the strategic and organizational implications of such a focus.

Dow was able to prove cost savings by collecting data at a trade show and immediately reporting key data back to the business. The unit was able to enter the market six months earlier than would have been possible had the more conventional approach of employing a consulting firm been used. This resulted not only in cost savings (the difference between attending a trade show and hiring a consultant), but also in adding value to the business and giving it a time-to-market advantage–a U.S. $300,000 value under Dow’s calculations.

USAA’s market research department reports directly to the company’s strategic planning officer, rims valuable customer data are shared company-wide and directly incorporated into all strategic planning.

Opportunity calls for employee communicators

“One key component of integration is noticeably missing in most participating companies,” says the report, “the integration of external communication efforts with internal marketing communication directed to employees, suppliers and other business partners. While most marketing communication departments report having at least some responsibility for communicating with employees, it appears this responsibility is limited.”

For communicators with the primary responsibility for internal communication, this limitation faced by marketing communication represents an opportunity for strategic alliance. As the study shows, marcom has the attention of senior management and frequently is on board during the strategic planning exercise. Employee communication managers can help marcom communicate with rank and file employees about their roles in meeting customer needs and in supporting organizational and brand promises. When this happens, everyone wins.

Companies Participating in the APQC Study

Partners

Attorney’s Title Insurance Fund CIGNA Dow Chemical Company Federal Express Fidelity Investments Hewlett-Packard Company John Nuveen & Company USAA

Sponsors

Arthur Andersen, LLP Baptist Sunday School Board Bayer AG Ernst & Young GE Capital GTE Kaiser Permanente The Mutual Group Mutual of Omaha Nationwide Insurance Prudential Insurance Public Service Electric & Gas Company Texas Instruments Texas Utilities

Cliff McGoon is a business writer with offices in Palm Springs and San Francisco, Calif.

COPYRIGHT 1998 International Association of Business Communicators

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