The Customer Learning Curve: Creating Profits from Marketing Chaos

Citation

McMellon, C. (2005), "The Customer Learning Curve: Creating Profits from Marketing Chaos", Journal of Product & Brand Management, Vol. 14 No. 5, pp. 348-350. https://doi.org/10.1108/10610420510616395

In a new twist on the B2B integrated marketing theme, author's Hellman and Burst take the customer's learning perspective. Grounded in solid research, The Customer Learning Curve (CLC) offers understanding and practical advice on each step a marketer must take to create brand loyal customers and the eventual profits it produces. Although based on a weak premise – that many firms are facing some kind of marketing crisis – all marketing professionals, in crisis or not, can learn from the CLC model.

Chapter 1, “Marketing chaos and what to do about it,” sets the groundwork for the rest of the book by showing us how the CLC model can help marketers develop a marketing perspective, cope with change, deal effectively with disruptions, make midcourse corrections, assess the progress of a new product or service, update knowledge bases, and help management make good choices.

This chapter opens with a description of the CLC model showing how to develop customer insights. There is also a financial model that focuses on increased revenue by choosing the most effective market programs. This may be good for the short term, but it ignores long‐term goals, which may not be in the best interests of the firm. Based on the hierarchy of effects, the CLC model breaks down the B2B marketing process into eight steps: need, aware, access, motivate, purchase, know‐how, experience/value, and retain. Many of the advantages and disadvantages of this type of approach are discussed. The process is easy to understand and measure, although it does not include all possible purchase decision situations. Nevertheless, this is an easy to understand process that when combined with a cost/benefit financial analysis offers the B2B marketer insights into increased profits. Each of the following chapters details a step in the model.

Chapter 2 “Who needs what your company sells” is the first step in the CLC model, focusing on how to refine the firm's target market to be more effective. This chapter is packed tight with insights. For example: “The more narrowly defined the target market is, the sooner it will be mined out, saturated with competitors, and unable to produce the revenue growth demanded by corporate planners and ultimately Wall Street. Sustained growth requires expansive, creative thinking. Powerful marketing strategies and efficient execution require focus. You must simultaneously expand and focus your creative market definition to reach your highest potential sales and profits” (p. 25).

The authors take an interesting position on targeting, suggesting firms need to both focus and expand at the same time. How the authors solve this paradox, using a Yin and Yang approach, is well worth reading. Such innovative and diverse techniques as identifying who not to target and involving customers in the process are intelligent and interesting techniques.

The Yin of expansion is examined through a variety of techniques, some of which are well‐known while others are a bit more obscure. Techniques such as developing internal ideation sessions, observing and involving customers, hiring young people, digging deeper into you customer's thinking, using restructured focus groups, and exploring intent to buy all offer methods a marketer can use to expand a target. For example, hiring young people suggests that younger marketers might offer new and interesting takes on old problems.

The Yang or focused approach wisely cautions against using size, industry, and geography as the only determinants for identifying a target. First, identify who not to target. Second, be more product specific when assessing size and geography. One of the more interesting tactics is what the authors call “situational segmentation.” This challenges the notion that segments are mutually exclusive. That is, some customers will have more than one need and may fall into two or more segments based on the situation of product use.

Chapter 3, “Who is aware of your offering and its benefits?” tells the reader awareness of your firm's name alone is practically useless, but awareness of your name and competitive advantage is not useless. Here all the communication functions play a role. The authors discuss how to use advertising, public relations, direct mail, telemarketing, personal selling, and electronic communications to build effective awareness.

Chapter 4, “Who can access your product or service?” focuses on the steps the B2B marketer must take to assure access to buying your product or service. The authors believe “any access problem is serious and must be addressed” (p. 68). They cover traditional channel, capital development, knowledge, competitor and internet barrier problems, and most importantly, solutions such as targeting innovators and early adopters first.

Chapter 5, “Are your customers motivated?” focuses on the who and how of motivation. As the authors state, “Motivation is all about overcoming inertia, breaking old habits, and getting the prospect to devote an unusual level of attention and energy to your product and service” (p. 87). Their solutions are standard with nothing out of the ordinary. They suggest sampling, promotions, trade shows, premiums, and incentives.

Chapter 6, “What influences purchase? Pricing and selling your product or service,” focuses on how to integrate the “left‐brain reasoning used in price development and the right‐brain relationship‐building skill necessary for sales” (p. 108). Sales issues covered include who to visit, what to say, and sales force compensation. Price sensitivity is also examined with a discussion of conjoint analysis – don't try this at home alone – which statistically compares various combinations of price and benefits seeking the best solution.

Chapter 7, “Who learns how to use your product or service,” stresses the importance of post‐purchase education on how to use your product or service effectively. Every marketer strives for a level of customer satisfaction that will develop loyalty to your offering. This chapter suggests that customer education happens not only right after the sale, but through the complete life‐cycle from the basics of how to use the product to extending a product's life through new applications.

Chapter 8, “Do your customers experience value,” begins with a “how‐to” measurement primer for the two components of value, customer satisfaction and assessment of benefits for the price paid. Data analysis is also highlighted, which includes the notion of segmenting satisfaction by various benefits. The second half of the chapter discusses how employees and electronic communication can contribute to customer satisfaction.

Chapter 9 asks the key question, “Are you creating loyal users?” We all know customer loyalty is important and can lead to higher profits, but how do we measure it? The authors demonstrate that satisfaction and loyalty are not the same. Loyalty may include repurchase, frequency of purchase, expansion of purchase to other offerings, or the quality of the relationship. In addition, this chapter deals with how to build loyalty through differentiation, segmentation, word‐of‐mouth, employee training, and relationship building.

Chapter 10, “How to create profits from marketing chaos,” finalizes the main theme of The Customer Learning Curve. It summarizes each step of the process laid out in chapter 1, discussing how to integrate the eight steps of the CLC with the various mathematical models to maximize return. This all sounds complex, but it's not.

In summary, this book should be read by all interested in marketing strategy. It is not a magic bullet for success, but it is a step‐by‐step process that helps a B2B marketer make wiser decisions. The authors offer both the tried‐and‐true plus some new ideas. It is a must read book for B2B marketers, but also consumer products marketers. The chapter on the yin and yang of target marketing is worth the price of the book. It makes you think about segmenting and targeting in a way you might not have thought before.