This article originally appeared on Sandhill.com. Read it there.

Those familiar with incentive-based loyalty programs know that scaling back or — gasp — discontinuing a popular program amounts to a betrayal in the eyes of your “loyal” customers. Many executives are savvy enough to understand they are buying loyalty, but few realize until it is too late that their transaction was merely a rental. When the perks stop, the supposed loyalty dries up just as quickly.

Dictionary.com defines loyalty as: “faithful adherence to a sovereign, government, leader, cause, etc.” Faithful means “steady in allegiance or affection,” so a loyal customer is one with a steady allegiance or affection for your company or product. You create loyalty by aligning your firm’s actions with your customers’ goals.

Genuinely loyal customers are the opposite of bought-off customers, forgiving the occasional misstep and providing a valuable source of ideas and insight for building better businesses. They form an emotional bond binding them to your company and increasing switching costs, but in a non-transactional way.

Loyalty programs vs. rewards programs

Most loyalty programs are really rewards programs. A rewards program influences buying behavior through the use of pre- and post-purchase incentives. Airline frequent flyer programs and supermarket “club cards” provide good examples of rewards programs that are often misunderstood as loyalty programs.

In both examples the objective is to raise consumer switching costs rather than align goals. Airlines don’t really care if the flying experience is convenient or enjoyable as long as you don’t defect to another carrier. Likewise, supermarket club cards exist solely to gather data on your shopping habits; discounts induce signup so the program can facilitate personalized offers to increase or change your purchases. Your interest doesn’t really figure into the picture.

By contrast, Southwest Airlines believes it is in the customer service business — it just happens to fly airplanes. Attitude is a primary hiring consideration and employees are infused with a service ethos that reaches all the way to the top. While air travel in general is commoditizing, Southwest’s Net Promoter Score is 45 points above the industry average. In an industry marked by bankruptcies, Southwest has remained profitable every year since 1973.

Genuine loyalty is completely different

In exchange for their faithful allegiance, customers expect a two-way, mutually beneficial relationship looking out over a similar time horizon. Dictators from tribal societies such as Libya’s Moammar Gadhafi and Africa’s Mobutu Sese Seko provide useful examples of loyalty. They each engendered genuine loyalty from their own tribe due to aligned interests but merely transactional loyalty from other groups that were bought off with spoils or through fear.

Genuine loyalty is not always easy to spot and even harder to quantify. Often there is no visible “program” at all. Benefits are often intrinsic or hard to quantify because actions seem to serve collective goals. Without an affirmative effort to identify loyal customers, many organizations remain ignorant of this powerful resource.

Creating genuine customer loyalty

While loyalty creates strong emotional bonds, it is rationally based. To understand the drivers of loyalty, it’s helpful to consider how fostering loyalty serves the self-interest of your company and its customers.

To your company, true loyalty yields:

• Lower selling costs. Sales and marketing shouldn’t ignore loyal customers; these are customers who want to buy from your company, don’t make unreasonable demands and are receptive to cross-selling and up-selling.
• Improved offerings. Listen to your customers and they’ll tell you how to create more competitive offerings that deliver stronger value. Consequently, companies pursuing genuine loyalty actively seek out constructive feedback.
• Business resiliency. Loyal customers believe in your company, so they are less likely to flee at the first sign of trouble. They realize that smart companies may misstep, but those that align with customer interests quickly regain their footing.

True loyalty also serves the self-interest of your customers:

• Greater value and functionality. Providing feedback results in better products for your loyal customers to use. Moreover, resulting enhancements reflect their specific needs.
• Less risk. Stable vendors expose customers to less risk, often eliminating the need to diversify vendor relationships to ensure continuity of supply.
• Vendor stability. Stable relationships provide room to invest in forging deeper integration.
• Lower buying costs. Stability creates economies in purchasing.

Loyalty offers its own version of the magic of compound interest. Customer benefits grow stronger with the success of the vendor. Thus, loyal customers benefit every time you make a sale, not just when they purchase. A more profitable vendor is a more stable vendor and generally means more resources for R&D, infrastructure scale-outs and other actions benefitting the long-term interests of committed customers.

Loyal customers therefore have a rational and compelling reason to help your company realize greater success. An easy way for loyal customers to contribute is by providing customer references. Loyal customers will provide references at a frequency that creates burnout in other customers. Often the only incentives they require are acknowledgement and your interest in hearing about what they’d like to see different at your company.

Finding ways to solicit rather than merely accept input up-levels the benefits of loyalty even more. This type of co-creative relationship is detailed in our Lifetime Opportunity Value Equation model and can transform your entire business.

A professional investor friend of mine provides an example. He employs some innovative strategies and is willing to provide feedback regarding the various analytical products he uses. Seeing his suggestions incorporated into the products he uses — sometimes within a couple of weeks — both affirms his value intrinsically and creates better tools for his own investment activities. His perceived value and affinity for these investor tools increases each time. The tool providers get prized product suggestions from an innovative user and free de-bugging assistance.

With proper care, true loyalty creates increasing returns to scale, benefiting from more rather than fewer interactions. While loyalty generates results you can “take to the bank,” loyalty itself is not bankable. It becomes a wasting asset if not continuously tapped. It is far more likely your most loyal customers are wondering where you are than upset by over-attention.

Loyalty reflects deeply on the culture and values of an organization. Even with the right values, conventional wisdom often sabotages us by imposing short-term thinking that fails to appreciate the enormous benefits a loyal customer base brings.

Content: Market the vision, not the product

Junior marketing and sales people are taught to message benefits rather than features. The open-ended SaaS subscription model encourages a more future-oriented conversation where a robust vision can reduce risk for the SaaS buyer. The relevant benefits are no longer limited to your existing offering but can expand to include even non-specific future intentions.

To capitalize on this shift, SaaS marketing should set forth your company’s vision rather than focusing on your product. If customers adopt your vision, the field tilts to your advantage.

Premise-based competitors are at a further disadvantage. For them, too much talk about future functionality can lead customers to defer purchases. If they talk about futures, they risk the vaporware label. Vaporware is anathema to traditional software buyers because it represents future capabilities they are lured into paying for, but will not get.

Focus: Reduce churn by focusing on existing customers

Churn is like kryptonite, robbing SaaS of its on-going stream of future payments. With it typically taking two to three years for SaaS customers to turn profitable, churn becomes an important metric–even in the presence of net customer growth.

Because churn is so expensive, ignoring customers from the day after installation until a few months before the next release is not an option. In a reversal of priorities, existing customers become the focal point. This may seem like a distraction from the sales and marketing job of attracting new customers, but it’s not.

The lack of a long-term commitment in SaaS agreements creates strong incentives to quickly resolve customer issues. With smooth running operations, marketing has a stable environment for planning and execution, leading to greater resource efficiency, especially regarding people.

Cost and Timing: Faster, better cheaper

Subscription models take longer to recover acquisition costs, and more frequent releases mean less ready-made fodder for big announcements. The SaaS marketer must operate in a faster, better, cheaper environment rather than one dominated by a few spikes.

Faster, better, cheaper creates two major implications for SaaS marketer:

• Opportunities for entrepreneurial self-starters will increase, even within larger companies, as fewer big releases drive marketing to take on smaller but more targeted activities.
• Limited funding will encourage new and innovative practices—and consolidation. Customer acquisition costs are recouped over a much longer period, so the availability of funding will drive thinking. While there are no cheap ways to build a brand and acquire customers, I’ve seen a lot of marketing budget spent ill-advisedly over the years. Deep pockets relieve some of this pressure, and have become a major factor in the current market consolidation. Staying independent requires marketers to do more with less.

Cloud services reward a healthy regimen of attentive behavior. In the cloud, customers are always nearing renewal time and there are fewer opportunities to cluster announcements into traditional marketing splashes. The shift toward marketing your company’s vision and the need to manage financial resources over a longer time horizon feel less natural to many and increase the slope smaller SaaS contenders must scale to achieve success. While financial benefits of deeper pockets will continue to spur consolidation, the need to shift the content, focus and timing of SaaS marketing will meet resistance within some acquiring firms, limiting the success of their cloud acquisitions.

The task of leadership is first and foremost to hold out a vision for the future and, second, to lead towards it. Even with clarity of vision, the path ahead is continually interrupted by a rapidly changing environment, often transforming well thought-out plans into liabilities. In this article, I focus on the second part, navigating a path towards the vision.

Success or failure depends on your ability to make complex decisions while leading your organization through a remarkably fluid business environment. Savvy executives increase their odds of building a better business that thrives in this climate by creating more autonomy, using data to establish a richer context, and not thinking about customers in transactional terms.

Create a more autonomous organization

The traditional top-down management structure is being reshaped by a pair of meta-trends.

First, society, education and business are all moving towards relationship networks. Relationship networks, when combined with communications technology such as social media, change not only behavior but also customer expectations about how they interact with you. These customers spend less time seeking information because they have growing expectations that the right information will find them. Broadcast messaging is ineffective in influencing relationship networks.

Second, the pace of innovation and information flows doesn’t provide time for traditional decision making where information flows up and decisions flow down the organizational hierarchy. Decision making needs to occur closer to the front lines.

Together these trends mean leaders must teach their organizations to be self-directing and to respond autonomously while remaining in strategic alignment. A strong and credible vision is essential for aligning your organization.

Focus data on building a richer context

IDC forecasts that the amount of information managed just by enterprise data centers will expand by a factor of 50 during the next decade. Growth is occurring along three axes – more data, more sources and more complexity – while the decision window is shrinking. You have to deal with more data in less time.

It’s tempting to place data at the center of your decision making. However, your organization generates data faster than you can process it, so more data doesn’t automatically translate into better decisions. Even mountains of data paint an incomplete picture, especially at smaller volumes, leaving you open to confirmation bias. I recommend a different approach for my B2B clients.

I urge my clients to use the vast stores of data available to establish the context into which they make strategic decisions. This represents a reversal for many people who view experience as context, but look to data to drive decisions.

This approach acknowledges – and embraces – that most decisions are more qualitative than quantitative. Think about it. Even in choosing a vendor, quantitative criteria like price and delivery often take a back seat to qualitative factors such as business model fit, ease of doing business and trust. This doesn’t eliminate the confirmation bias; but by forcing you to acknowledge that you are making the decision, not the data, it creates a more transparent process.

Don’t read this as minimizing the impact or value of data. Unlike your BI dashboard, the human brain is a decision engine, and leaders need to lead.

Quantitative and qualitative information sources must work in unison. Analytics and business intelligence are excellent at illuminating trends and quantifying the speed of change, but they tend to create a black-and-white perspective lacking the context needed to make business-critical decisions. Under-appreciating context is dangerous in complex situations.

Stop thinking about customers as transactions

In addition to pushing down the tools and authority to make on-the-spot decisions (you better hire well) and using data appropriately, savvy leaders need to guide their organizations to a new understanding of the customer-company relationship. You acquire rich insights from your customers when you stop thinking about them as transactions to be completed and start viewing them as ongoing interactions to be tended and nurtured.

Interactive customer relationships are more resilient than transactional ones and generate far more than just revenue for your company. This is the Golden Rule in action: if you treat them as partners, they’ll respond in kind. They’ll tell you what you are doing right, what you are doing wrong, why their buddy dropped your company after many years and how you can win him back.

Regular bi-directional interactions between customers, partners and employees encourage the kind of questions that reveal blind spots in your current thinking. Done right, you will be treated to an occasional peek into the future. The peek is often unstructured, so a solid context based on data is essential for discerning how to act.

The more you truly understand the forces shaping change in your markets, the better equipped you are to not merely survive but to actually benefit from rapid change.

A final note and bonus tip. Baseball’s annual spring training provides a helpful reminder that even the best teams can be undone by poor fundamentals. That is why extraordinarily talented, gazillionaire athletes spend weeks in the desert practicing bunting, covering first base and hitting the cut-off man. Rock-solid positioning, a focus on value and a strategic marketing plan based on realistic priorities and resources are keys to excellent execution. As with baseball, the real value is in the execution, not the plan.

To date, social media has been largely about fans; in the future it will increasingly focus on advocates. If there were a button, advocates would “Love” your brand, but we all know true love requires more than mere words.

I’m already seeing less emphasis on hard to monetize measures like Facebook “Likes” and more discussion around pursuing bankable objectives like brand love. New attention on brand love is a return to fundamentals, but not a retreat to the past as social media adds so many new capabilities. While far more valuable than “Likes,” brand “Loves” lack an easy metric.

This shift is true for B2C, and even more so for B2B where the sales proposition is more complex.

I can see the new outlook taking hold as my B2B clients ask much more focused questions regarding social media. The concern about getting more “Likes” or even “should we have a social media plan?” are giving way to pointed inquiries about how social media can integrate with and support specific marketing, business development and/or sales initiatives.

What’s wrong with “Likes?”

The fundamental shortcoming is they tell you very little. It’s a lot like trying to predict election results by observing yard signs. What you want is the story–ideally the passion–behind the sign. There’s no passion in a “Like.” Love is driven by passion and communicated by stories.

Because they are so good at communicating passion, stories are among the most versatile tools for building customer relationships. Social media is valuable because it offers opportunities for storytelling. Good stories paint mental pictures, and as we all know, “a picture is worth a thousand words.” In the same vein, a good story must be worth at least a thousand “Likes.”

Building Brand Love

The evolution discussed here leads us down a path away from the transactional mindset driving the traditional sales funnel. Expansion in buyer-accessible information creates to more buyer control of the sales process. Brands need to focus on building interactions rather than merely transactions, but they need a model for where those interactions take them and why. Interactions are no more valuable a goal than “Likes.” These interactions form the process infrastructure for building brand love. I’ve created such a model in the Lifetime Opportunity Value Equation (LOVE) model which you can read about here and here. A take for Product Managers is here. A social media specific take is here.

Especially in the B2B world, customer interactions and conversations should aim to create value in both directions. Brand love creates a customer that more than buys your product, more than recommends it, but one that feels they have a stake in your company’s success.

How do you build brand love?

The Advantage: Why Organizational Trumps Everything Else in Business by Pat Lencioni and Great from the Start by John Montgomery navigate new paths to competitive advantage that make worthwhile contributions to the existing sea of business books. They each depart from conventional wisdom, but in different ways.

Competitive Advantage via Healthier Organizations

Lencioni asserts that healthier organizations gain The Advantage by not letting politics and confusion bleed them of morale and productivity. Organizational health attracts and retains the best people, leaving these organizations able to tap the intelligence of the organization and find ways to make it smarter. Lencioni charts a new approach not in his diagnosis, but in his prescription.

According to Lencioni, organizations suffer poor health when leaders focus on quantitative, objective and impersonal topics like strategy, marketing, finance and technology–the stuff leaders are taught matters–rather than integrative, holistic and relatively subjective ones like minimizing politics and confusion. To be fair, he doesn’t say strategy, marketing, finance and technology are unimportant, merely that ubiquitous information leaves them commodities available to even small firms. The Advantage offers a four-pronged approach to making organizations healthier: Build a cohesive leadership team; create clarity; over communicate clarity; and reinforce clarity. You may detect a theme.

Seeds of Competitive Advantage Form Early

Coming from a very different perspective is Silicon Valley attorney and entrepreneur John Montgomery’s Great from the Start. Based on 25 years of work with startups. Montgomery argues that baking in good organizational structure is the best way to build an organization able to scale rapidly while operating as a responsible corporate citizen. The genesis of Montgomery’s book was a quest to reverse engineer Gordie Campbell’s success as an entrepreneur (SEEQ Technology; CHIPS and Technologies) and mentor to startups (Cobalt Networks, 3Dfx Interactive and NetMind). Montgomery’s conclusion is that prosaic decisions enshrined in the Articles of Incorporation–and even earlier, such a skills balance among the founders–can significantly accelerate growth and generate an exit event (acquisition or IPO) years sooner.

Book marketing aside, Lencioni’s proposition transcends the purported commoditization of strategy, marketing, finance and technology, just as Montgomery’s premise doesn’t suggest that creating the right structure for a corporation will fix a bad business model or prevent stupid decisions. Each approach creates greater alignment within the firm, and like a wise guide, encourages the consistent and positive habits that increase the energy and intelligence available within the organization for pursuing its objectives.

While Lencioni concentrates on organizational health and Montgomery focuses on organizational structure, they both focus on the way a firm’s culture shapes the values that drive decision making and execution. In this way the books are excellent complements. If one follows the path Montgomery lays out in Great from the Start, adopting Lencioni’s four-pronged approach to making organizations healthier will come naturally. Personally, I prefer to frame organizational health and structure as lenses that magnify a company’s execution in the areas of strategy, marketing, finance and technology rather than vice versa.

If I were to add a book to the mix, it’d represent the third leg of a triad, that a brand strategically engaged with customers provides another source of disproportionate advantage. While culture drives organizational health and healthy organizations are more competitive, I believe strategy, marketing, finance and technology are still very relevant. The upshot being, firms have a variety of ways to gain competitive advantage, although getting a staying ahead takes better and better execution.

Full disclosure: I read and commented on several drafts of Great from the Start at the request of John Montgomery, contributing enough to warrant a sentence in the Acknowledgements. Pat Lencioni was a classmate of mine at Claremont McKenna College, although I haven’t spoken with him in some years.

The “product” component of offerings, especially B2B offerings, no longer dominates the purchase decision in most cases. With offshore manufacturing and rapid software development leveling the playing field, customers are looking for the “whole product” as never before.

These changes in the business landscape create obstacles to traditional sales and marketing. Marketing can no longer broadcast messaging or even control it, and customers look to their sales rep more as a configurator than an advisor. Customers still need advice, but they want to control the process. Organizations need to adopt a new approach.

“Sales and marketing alignment” – getting sales and marketing to work more closely and share responsibility for outcomes – is but one piece of the solution. The silos separating sales and marketing must come down. Companies, especially CMOs, need to embrace customers as a powerful force to align the entire organization. The goal should be to build a better business able to thrive in a more competitive and service-oriented market.

Time and again in working with clients, I find customers represent a treasure trove of information and insights not just for tactical decisions, but for making executive-level policy decisions.

Customers don’t always want what you think

Using insights from customers, a client of mine selling software into vocational education gained incremental penetration, higher revenues and happier customers. Like all levels of education, the customers were under budget pressure. My client’s software was a large budget line item, and, as such, sales reps got an earful about limited budgets and the high price of their software. Sales reps began to balk at demands to generate higher revenue.

Deep-dive interviews underscored how the software was critical to the customer institutions’ own position in attracting students and faculty; they would be uncompetitive if they used anything less than the latest versions. Budget pressure or not, if the related course offerings were to remain viable, there was no question that the licenses would be renewed – and maybe even expanded. My client was in the highly enviable position of being first in the budget line. Despite the outcry, they could have actually raised prices.

The interviews also revealed that that their users – the instructors teaching courses leveraging their software – were deeply loyal and genuine fans who took pride in using and promoting the software. Raising prices in this situation would eventually threaten this loyalty.

What customers wanted was access to even more of the client’s applications. Many of them were working internally to drive adoption of all of the client’s software, including applications their institution had not standardized on.

We ended up recommending – with a lot of help from customer insights – a change to licensing that tied push products (those demanded by customers) and pull products (those the company has to actively sell). By adopting the entire set of applications, institutions paid a bit more but got greater perceived value. A true win-win solution. The client soon formalized this approach by offering an application suite.

Below are five ways customers can help you build a better business. The catch is that each benefit is the by-product of a transformed culture viewing the customer-company relationship in terms of multiple overlapping interactions rather than a linear series of transactions focused on making a sale.

1. Long-term loyalty. Purchased customer loyalty is volatile. Loyalty you earn is enduring. Strong alignment with your customers – and acting on what you learn – is a massive loyalty generator. Do this really well and customers feel they have a stake in your success. Having customers committed to your success is a game-changer in how you view each other.
2. Controlling costs. Some people still think being customer-centric costs you money. Not true. Whatever additional investments are needed is nearly always more than paid back by learning about activities that can be trimmed because they aren’t creating value.
3. Product / service development. You need to go further than soliciting customer input during the design process; you want to develop and nurture a sense of co-creation that taps deeply into your customers’ needs and creativity. Do that and they will go beyond answering questions and submitting lists of desired features to helping you actually design your complete offering.
4. Positioning and messaging. The best positioning and messaging not only communicates what you want to say, but does so in ways that reinforce audience perceptions of your company. You need to focus on what to say, but your customers can make major contributions in where and how you say it for greatest impact
5. Selling effectiveness. Having an inside advocate increases your odds of winning a specific sale. The same is true for the overall selling process. As with the marketing benefits in #4, connecting with customers so they identify with your company’s success creates a source of insights into the selling process and how you can increase your value. Great relationships and services are the new purchase drivers, supplanting product features and functionality to a large extent.

Those companies that master the new environment will flourish, while those that don’t will encounter increasingly challenging obstacles to success.

By aligning your interests with those of your customers, your company will adopt a more service-oriented perspective that will drive you to the next level of success.

I’m a vocal critic of loyalty programs that purchase customer “loyalty.” Program returns typically are low relative to the costs, and your “loyal customers” stay bought only as long as the rewards keep coming. While you incent behavior that looks like loyalty on the surface, you create a Sword of Damocles situation where one false move—say, cutting back on the program—creates an even worse situation.

Alternatively, investing your resources and culture in earning real loyalty creates a relationship able to endure the occasional misstep.

Wilderotter is adding a new twist, although the investomer concept is not new. Savvy start-ups encourage strategic investment by partners, but I have to admit I’ve never seen stock grants for consumers.

More than 1,500 companies already sell stock directly to investors, including Lucent Technologies, Home Depot and Wal-Mart. Loyal3 aims to further democratize the market for stocks by eliminating transaction fees and reducing complexity for very small investors with a no-fee, three click process. Loyalty3 clients such as Frontier Communications plan to create equity-owning customers, citing studies by Bain & Co. and others that investomers are more loyal, more likely to be advocates, more open to cross-selling, and less likely to churn.

Investomers create a positive dynamic in a strong market

Joint ownership–in the literal sense–is the textbook approach for aligning relationships. The behaviors cited by Bain and others represent the ideal for engaged customers. A strong performing stock creates a sense of partnership and/or conflicted motives (purchase behavior vs. investment returns) that act as switching costs in the not-so-rational world of brand preference. What more can you ask for?

A weak stock raises red flags

Stock ownership isn’t always a positive. While often unnoticed by most customers, a poorly performing stock is unlikely to go unnoticed by investomers. A company they believe in is expected to become more valuable. A poorly performing stock raises red flags, perhaps causing the investomer to question the firm’s management and/or the company’s offerings. Not the type of attention you want to foster, so the downside is huge if your stock doesn’t cooperate.

Economics poses an additional risk. While most consumers are not particularly rational when it comes to brand decisions, running the numbers is likely to reveal optimizing the purchase decision has higher returns than owning a few shares of the stock.

A better way to build customer loyalty

Ownership of a strong stock is an ideal incentive for driving greater alignment. Allowing customers to buy a few shares or even granting shares, offers an attention-getting incentive to drive strong alignment and loyalty. As long as the customer feels invested in your company, stock ownership is a positive.

Actual stock ownership may not be necessary. Tom Siebel captured much of this vibe in the early days of CRM with the Siebel Customer Index. The index tracked the stock performance of Siebel customers vs. the overall market. The message was that Siebel was doing a great job, and enterprises should buy their product and investors should buy their stock.

A languishing stock, on the other hand, makes a poor incentive unless the customer thinks it is badly undervalued, but likely to recover. Not sure I’d want to operate under the dual pressures of delivering great product or service value day after day, and meeting stock performance expectations. If the stock price doesn’t recover quickly, you probably end up with a perverse incentive that actually decreases loyalty.

Outside of a few unique situations, the risks outweigh the benefits from a loyalty program standpoint. That doesn’t mean companies don’t benefit from customer stock ownership, just that you want them to approach stock ownership as an investor rather than as a kickback for being a customer. Victor Kiam’s claim that he liked his Remington Razor so much he bought the company forms the basis for a healthy partnership. Free stock as a reward creates a different dynamic.

When viewed as a by-product of building a better business, the pursuit of customer loyalty creates a much healthier dynamic than trying to purchase loyalty.

The dangers of decay are exacerbated when recession triggers the decision to develop a new strategic marketing plan, but recovery takes hold during implementation.  People want to believe their preliminary efforts are largely responsible for the improving results, and therefore there is less need for the new plan and its new positioning, programs, metrics and approaches–all of which require change.

This situation is more perilous than it may seem.

Specifically, backsliding creates three dangers to a quality implementation that lurk in the months after the marketing plan is approved.

Danger #1: Thinking the market will wait for you

Your new marketing plan was presumably developed either in anticipation or in response to changes in your market, technology, customers or competitors. The forces driving these market changes will push forward without regard to your inaction. By failing to implement your plan–or delaying full implementation–you undermine your company’s long-term competitiveness.

Danger #2: Forgetting why you started in the first place

Lean times focus minds and sharpen thinking. An unexpected upturn in business takes peoples’ minds off the urgency that led to your new marketing plan. A rising tide may lift all ships, but it doesn’t make your boat more seaworthy than it was before. Lean times present an opportunity to drive change rather than react to it. Fortunes are won or lost in such situations. By forgetting why you started, you miss an opportunity to push ahead while competitors may be struggling.

Danger #3: Getting distracted

Peaks often follow valleys. Businesses that retrench during lean times often reach a point where rebounding growth is constrained by resources. Where you were struggling to get orders, suddenly you are struggling to fill orders. In the rush to marshal resources, it is easy to down-prioritze investments. A strategic marketing plan is an investment, consuming extra resources before the payoff begins. By taking your eye off the ball, you risk not only the payoff, but your investment as well.

Although drifting back into comfortable old habits and practices comes easy, such situations present the perfect opportunity to re-focus on your most strategic customers and applications. In lean times we may accept non-strategic deals, but there is no excuse to do this in good times. It’s a bit counterintuitive, but when business is strong and you could fill your coffers with easy deals, you should instead concentrate on the most strategic deals. Non-strategic deals are dead ends at best and much worse if they divert development and support resources in the future. Saying “no” to non-strategic customers is excellent leadership.

Weak marketing plan implementation impairs business health in one more way. Each time the forces resisting change (or as they think of it, staying comfortable) prevail, the resistance gets stronger. Weak implementation becomes a habit, and your business further suffers. Just as bacteria exposed to incomplete antibiotic treatments grow stronger, exposing your company to weak implementations leads to unpleasant surprises in the future.

In the long run, sliding back into old practices leaves you ill-equipped to deal with the next downturn, aggressive new competitor, or market shift.

Related posts:

• Mission Clarity Cranks Performance “Up to Eleven”

Marketing is now expected to nurture and develop relationships before they become leads …and after they become sales. Buyers resist being sold to until much deeper into the buying process, so marketing remains involved much longer. Even after the sale, Marketing and Sales need to team closely to establish and nurture interest and relationships. This is the environment today.

Companies risk alienating potential customers if they sell too hard, too soon. Abundant information, from online product information to peer reviews, alters the traditional sales funnel in important and fundamental ways. The traditional sales funnel with its sequential steps and metrics no longer describes the process for many sales. In adapting, companies can choose to go half way or all the way. This is where Marketing’s role really expands.

Impact on Marketing Strategy: Two Paths

Half way is adapting to the new, less-salesy sales funnel. Customers are “nurtured” while they gather information, especially using social media. Customers have the option of remaining engaged after the sale, but companies vary in their commitment once  they pocket the customer’s money.

Going all the way represents a huge new opportunity, recognizing that building better customer relationships itself is the source of incremental value and introduces an element of service into the customer-company relationship regardless of the offer. Replacing the 100-year-old, transaction-oriented sales funnel with an interaction-centric relationship model initiates ripples of change throughout the company, from sales and marketing, to support, finance and development. This is one reason why the SaaS software experience feels so much better.

Once you start focusing on interactions, you’ll experience customers eager–sometimes literally begging you–to help in a plethora of ways from honing marketing messages to setting development priorities. By embracing this type of relationship and building your strategy around fostering and developing these types of interactions, you create not only a higher performing company, but a more resilient one that thrives in good times and bad. Replacing the transaction-oriented approach with an interaction-centric one  changes the game, but marketing needs to lead the charge.

Related articles:

• Re-Inventing Product Management with LOVE

What happened was that his marketing strategy had gone stale.

A stale marketing strategy carries a high, but largely underappreciated, cost.  Big wins, high-performing customer relationships and achieving the next level are celebrated, but the contra events are often missed entirely. Lost business, under-performing customer and/or partner relationships, and the inability to get to the next level are but a few of the costs of a stale marketing strategy.  The staleness starts in marketing, but extends to business development, partners and sales until everyone is underperforming.

I’m talking about a deeper view of marketing than out-of-date brochures and advertising that’s lost its zing. Those are things that are easily fixed, and in most organizations can be addressed by a small number of people. Correcting a stale marketing strategy calls for broad organizational understanding and support because it reaches across functional areas, even if it is driven by the VP of Marketing. A good marketing strategy results in an organization fully capable of competing in the current marketplace and poised for the next level of growth and profits.

Detecting staleness

A good rule of thumb is, if you feel you are behind, you almost certainly are, but you might not be deficient in the ways that you think you are. At some point, an awareness takes hold that you are doing the same things that brought you success in the past, but without seeing the same results. This is what Trevor noticed. I see this frequently in service businesses. The typical reaction is to go “back to fundamentals” and work harder. (See also the Nigel Tufnel Approach above).

Truly going back to fundamentals, however, entails revisiting goals and the environment.  Doing this often reveals changes in the market and customer expectations that doom the old approach to declining returns even if the inputs are increased.

Customer relationships are rapidly changing.  Most importantly, customers have access to much more information about you, your offerings and your customers, much of which you can’t control. Increasingly, customers don’t even bring your sales reps in until much later in the sales cycle. Because customers have access to so much more information, the ways marketing adds value is changing and your marketing needs to adapt.  If you believe that marketing should lead sales, you understand the challenge.  If you believe that sales–or any other part of the organization–leads, check out my recent article on the changing role of the CMO.

Getting to the Next Level

I helped Trevor to realize that his marketing needed to shift from case studies describing skills to a variety of content highlighting the results his company delivered to his customers.  More than a vendor, his customers desired a partner who could provide continuous value across many interactions rather than primarily in the final product.

A marketing strategy is a comprehensive plan that must to do a lot of things well.  Go to market, pricing, channel, communications, and social media plans are among the individual elements in a comprehensive marketing plan. In the emerging social enterprise information is shared more broadly and marketing needs to support the actions of everyone who may interact with customers–which could, and should be, almost everyone.

At a strategic level, does your marketing support your organization’s overall strategy while setting a clear course that all parts of the organization can follow? Marketing’s internal customers are not just marketing, or even sales and marketing. In an increasingly connected and social world, every aspect of your organization is “customer facing.”  Marketing strategy needs to reflect this.  Marketing has the opportunity to be a hub for customer and market information, gathering it in and distributing it out to all parts of the organization.

At a tactical level, does your marketing plan balance outreach to new customers, nurturing existing customers and thought leadership? Does it accurately reflect the specific constraints of your situation: budgets, other resource constraints, the people that must execute the plan and the competitive environment.

Getting started

An effective marketing strategy starts with a deep understanding of customers, partners and your market. From there you can build the right programs, create the right content and establish the appropriate pricing to deliver outstanding value to your customers.  Remember, if you think your marketing is stale, it almost certainly is. It’s a good idea to periodically study customer expectations and contrast them with your own.  The resulting gap analysis is a powerful tool for getting disparate parts of your organization onto a common page.