The Fifth “P” of Marketing

Traditionally, basic marketing has taught the “four P’s,” Product, Price, Promotion and Place (distribution). When our economy was based on product producing companies, this worked well and those companies which practiced these basic principles were among the leaders in consumer products.

However, the world has dramatically changed. In an expanding consumer-driven economy, the “four P’s” were the key, but today things are dramatically different. Today’s is a service economy with a mature consumer base and limited opportunities to expand that base within the country. Increased brand volume can only be found through increased brand share, and competition is greatly intensified. As a result, margins are thinner and the search for additional consumers more expensive.

In such a market, customer retention is typically far more profitable than customer acquisition. Today’s marketers must focus on building enduring brand loyalty – a relationship with the customer. How do the four P’s work in this arena – not very well? Today, it is a fifth “P” – People, which has become the most dominant factor in marketing success. What people? Our Employees!

It is our People who touch the customer and determine, by their interactions, whether our business thrives or not. Our “customer facing employees” may be the most powerful marketing resource available to differentiate us from our competition and build those key customer relationships.

A Gallup study of more than 6,000 consumers (performed in 2003) tested the impact of employees (People) against the other “four P’s” of marketing. The result, whether in automobiles, fast food, retail, electronics, airlines, banking, or long distance telephone service, it was the Employees rather than location, price, or even product quality that brought customers back.

What are the implications of this research? While product quality, pricing and location all remain relevant factors, it is our employees and the relationships they build with customers that provide the greatest differential advantage. So, what are you doing about those interactions?

Do you recognize employees as a marketing resource? Are they recruited and managed as the brand builders (or, at times, destroyers) that they can be? Does your customer service system and training create those critical abilities to connect with the customer?

Employees are far more difficult to control than pricing or promotions or even product quality – and that’s critically important when setting out to assure a consistent customer experience. Customer-facing employees are by far the most difficult customer touch-point to manage to assure consistency of experience. Still, it is because this difficult-to-manage resource isn’t an easy solution that it has proven to be such a powerful one for companies ranging from McDonald’s to Southwest Airlines.

In this summer’s Olympic Games, we had the opportunity to watch basketball teams from around the world compete. These teams devote massive amounts of time to practice and are coached in their performance, both individually and as a team. Too often in business, this just doesn’t happen. We expect employees to work as a team and to accomplish our goals, without training, coaching or practice. Each individual is left to improve their own set of skills.

A Louis Harris Poll of the American Workforce five years ago found that only 19% of the employees in an average company even knew what the organization’s goals were. Of those, only half understood how their work contributed to those goals. Can you imagine a basketball team where the majority of players didn’t know where the goal was or how they fit into the game plan?

Instead of coaches, in business there are managers. Managers should know how to coach, but many do not. Coaching molds a person’s attitude, behavior, and skills. Instead, too many managers seek to control and direct, many using punitive means to gain performance improvements from those they are responsible for developing. Others just leave it to the employee to figure it out and wonder why the results are not coming.

When it comes to customer service, this has not proven successful. Building a real customer service organization requires both systems and training to bring every employee to a level of understanding and performance that differentiates the business from its competitors. It starts from the very top of the organization and must permeate throughout. Only when every executive, manager and employee has the same consistent understanding and approach can the business truly thrive in this new economy.