Mark Reinke, Group Executive, Customer, Data and Marketing at Suncorp Group shares with Darren the challenges for marketers in service industries in shifting the business focus to the customer and the opportunities for marketers in leading the change to a customer centric strategy.
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Transcription:
Darren:
Welcome back to Managing Marketing and today I’m talking with Mark Reinke, Group Executive, Customer, Data and Marketing at Suncorp and actually, a long-time friend. So welcome Mark.
Mark:
Thanks Darren, good to see you.
What has changed?
Darren:
Now it says here, Customer Data and Marketing, I guess where I’d like to start this conversation is how for you, has the balance changed between customer data and marketing in say, the last 3 years?
Mark:
That’s a good question Darren. I think all marketers would say they’ve been customer-centric. I would certainly argue that my marketing career has always been centred around the customer.
But I think what’s changed and changed substantially is we have unquestionably transformed and transitioned quickly from that being an engagement with customers in the communication context to an engagement at an experience level.
Darren:
Well that’s a big difference, isn’t it? Because with traditional marketing of the 4 Ps, promotion was the main way we interacted with customers, wasn’t it?
Mark:
Well I think in some ways I could argue that the principles are still the same. So if you went back to the basics of the 4 Ps, really what you’re doing here is joining those back up and perhaps over time, they’ve become a little bit disjointed.
A lot of marketers, actually most marketers, particularly in my business which is a services business a tangible product, in reality you’re orchestrating an experience and that experience is combined of part price, part product, part the distribution experience and part the way it’s presented.
Darren:
Yep.
Mark:
I think what’s different now is people, consumers and customers, their expectations are set outside your category.
Darren:
Yes.
Empowered customers with higher expectations
Mark:
So financial services many would say has a level of expectation that’s lower than some retail categories or e-tailor categories. But I find that’s now changed. I just simply do not except as a customer, that I can get great service and beautifully tailored personalised experiences from my local coffee shop, and not get them from my banker or insurance business.
Darren:
And not only that, they’ve been empowered now through social media. Customers could always walk away, couldn’t they? If they didn’t like the service you’re giving them, they could walk away.
But now they’re empowered because they’ve almost become publishers in their own rights through social media. They’re not just telling their neighbours in complaining about poor service, they will tell everyone that listens and everyone on the internet. So that makes it a much more powerful voice from them.
Mark:
I think that’s absolutely right Darren. I think in reality, this is a globalised phenomenon. This transcends boundaries of brands. It transcends states, nations in a way. So behaviour is fairly ubiquitous now.
I mean, in our business, we have this sort of saying that customers expect more and have more power. And if we don’t start re-orientating to that world, then in reality we will cease to be global
Darren:
It’s interesting, you pointed out that expectations are set outside of your category, because there was a time when we would say, “Oh well, all banks are the same”, or “All Telcos are the same”, or whatever are the same and we’d just put up with it. Airlines are the same.
But I think you’re right. Overall, people are no longer seeing boundaries in their expectations.
New kinds of business models
Mark:
No, no not at all. And I think most businesses, certainly mine now see that tomorrow’s competitors arguably even today’s, are not coming from within your category.
So because consumers have now voted with their own behaviour, you will see categories change based on competitors that bring business models that are really effective in technology and retail and they’ll bring those to financial services and we see that today.
So they design and orchestrate those experiences as if you were a technology enabled retailer, not a bank and what’s interesting is, you don’t have to have the big infrastructure of a bank, hold the capital, take the risk, you can plug into a bank to do that.
So increasingly what I would say from my business is, we do not want to become the utility into which someone else plugs and delivers those experiences, we want to be the orchestrator of those experiences. And that’s where the customer I think takes on a new meaning beyond just the person that buys the product at the end of the day.
Darren:
Yeah, because being reduced to being simply a service provider and no longer having that customer interface completely takes you out of the market and makes you a commodity, doesn’t it?
Mark:
Dead right, dead right. And I think what we’re seeing, certainly in financial services for the last 200 years, is this has been a value chain model that over time, things have aggregated together and are being provided by one bank, one insurance company, one brand.
What you can see now, technology is allowing new start-ups and smaller businesses to compete on a level playing field with a 200-year-old business that’s capitalised at a hundred, billion dollars.
What they’re doing is, de-bundling that value chain. Pretty much in other words saying, “I can provide a really simple and personalised service to you at the front Darren, but I don’t have to do all of that stuff at the back”. I can have someone else do that. The business models of yesterday would’ve said, “No, you can’t do one without the other”.
So what I think is great about this is that it pushes people like me to think about our business in a different way and get serious about customers in a way that is non-superficial. You need to change your business model over time if you’re serious.
Darren:
Because the thing about this whole transformation is that for those very large, capitalised businesses and high-risk businesses, the fear of having to transform the business model is often what stops them moving forward. You’ve got such a large investment in infrastructure that to actually rethink that is a major risk, isn’t it?
Mark:
Absolutely. I mean, the hardest thing any company can do, and there are many case studies of where it couldn’t be done, is to disrupt yourself. Nokia is a great example.
Brilliant technology, outstanding marketing, outstanding customer experience, could see the future, had the right partners, but couldn’t press the button when it really counted to re-orientate that. They had all of the ingredients. But I think having the ingredients is one thing, it’s another story having the ability and courage and the narrative in a way for the market.
So if you’re a publicly listed business, to be able to talk to your shareholders in a way that says, “I can see that you need to re-orientate this business and what I’ve bought into is still valuable.” And I think that is what’s very difficult for large and listed companies to do, is tell that story of an emerging or transforming business model in a way that’s comfortable for investors. I think that’s the challenge for people like me – to do a much better job of.
Darren:
That’s why we’ve seen the disruption in traditional categories that have been led by companies that have embraced the starting point of customer experience and used technology.
Again, I was at a presentation last week where someone used that slide of the world’s largest taxi company that has no taxis and the largest retailer that has no stores and all of that. But the consistent thing is that they’ve been able to rethink from a technology point of view, the customer experience. And then they’ve done the infrastructure from behind the scenes.
Mark:
Yeah that’s right. What we’ve learnt, and I think the Air BNB, Uber models and the many others that will come, they all have one thing in common; they’re all platform based. And platforms to me are just a code for being able to connect up things that were never connected and to be able to scale incredibly quickly and at relatively low cost.
And what’s changed that is the Cloud. Cloud and computer power and probably exposed APIs, APIs that allow me to be able to plug other businesses in so that I can provide a suite of services.
Darren:
That’s right. They haven’t had the infrastructure to worry about protecting. In some ways, your business gets to a size where you’re so focused on protecting what you have that you put yourself at risk because technology has completely reshaped the way we think about the way we do business.
Mark:
I think Darren it’s like playing cricket and you’re a batsman and you’re on 99 and you think, “I just don’t want to get out. I just don’t want to get out”. And what happens?
Darren:
You go out because you’re playing conservatively rather than playing for the win.
Mark:
You’re playing to protect and that’s you know, a real challenge. It’s not an easy one to overcome because often you don’t think you’re doing that. It’s easy with the wisdom of 20/20 hindsight.
I think most businesses believe they’re making the right decisions but you do need provocation, you need external provocation to continue to push. You need great boards that are open and pushing as well to continue to reinvent and you know, I’m lucky, I’ve got both of those.
Rethinking Marketing
Darren:
So to go back, Mark, to something you said earlier, which is in some ways this whole transition, this disruption that’s happening, has got people to rethink marketing.
They have to embrace or string together all of the original principles of marketing and it’s really interesting because while technology is disrupting all parts of business, from my perspective it has had a fundamental impact on marketing, hasn’t it? It’s completely changing the way we think about marketing principles or the way they’re implemented.
Mark:
The way they’re delivered I think. I suspect Darren, we could argue it, but I think the principles remain the same but the way that you can deliver this at scale, at speed and in such a personalised way, I think that’s revolutionary.
I think we always would have had aspiration to do that and perhaps done it in pockets but it simply was not possible to do it at scale and at speed. And it is now. And it feels, if done well, it feels incredibly empowering for customers to be in control, to have things that reflect their needs, their behaviours. That’s pretty exciting stuff for consumers.
But it does transcend silos in businesses and that’s really tricky. The enemy of speed and simplicity and personalisation is complexity and as businesses are more successful, of course they add more complexity, and complexity is the enemy to delivering that.
So you have this sort of tension between doing really well and then finding that you’ve created exactly what you didn’t want for your customer which is too many touch points that are doing things in too many different ways.
Darren:
Many of the CEOs that have said that we need to be customer-centric or we need to be customer focused or that they’re putting the customer at the front of the business, have inherited legacy models that are full of silos.
I know from my own personal experience of banking over the years that I’m either seen as a business customer or a personal customer or a credit card customer, because there is no way for the silos to be able to see me as one person. It’s almost like I turn up each day and I’m a different person, you know?
Mark:
Yes, that’s right.
Darren:
The fact is that those silos actually are 2000-year-old structure which came from the Romans. The Romans put armies into silos because it was a much more effective way of fighting than just a whole rabble of people bashing the hell out of each other.
The British embraced that and then during the Industrial Revolution, they formalised that format. And then along in the 20th Century, we’ve suddenly got marketing and marketing itself embraced this war attitude because we have target audiences and direct mail campaigns. And we’re going to hit our targets.
But now in the 21st Century, because of technology and the ability of technology to deal with large amounts of data and create huge amounts of connectedness, isn’t it time that we actually go deeper and rethink the whole purpose of the structure of business and the way it’s done?
Mark:
That’s a big question Darren.
Darren:
I know. But I think because of marketing being so impacted and marketing being at the forefront of any business, sales and marketing and all aspects of that is at the forefront of the customer.
So can we actually get to the point of having a customer experience if we’re aligning the whole business to the customer rather than having these structures which work very well if you’re a Roman legion or an industrial manufacturer.
Mark:
Well look, I think that that’s entirely a good synopsis of 2000 years and I think my business, Suncorp, would be a great example of that. One of the reasons you’ll see “data” in my title is that we, like most businesses, broke our customer down and put them in 13 different warehouses effectively.
Well, we put some in a distribution warehouse, some in a product warehouse, some in risk, some in pricing. In reality, they’re pieces of a person and that person’s behaviour so I am working to put that back together. There’s only one fundamental premise underneath all of that, that connecting stuff adds value.
Connecting data, connecting experiences. I mean, the Apple model I would argue is based entirely on the power of connection. Never, never create a solution or a service for customers that doesn’t work with an existing service that you have. So things have to work together. Now that cannot happen in any business and it certainly can’t happen in mine if our information is disparate.
Darren:
Of course. And that’s where technology is. You know there’s a lot of talk at the moment around customised experiences and personalised experiences and the two are different. I mean, customised is really just modifying the experience to suit a segment of people.
Mark:
Mass customisation.
A new era of personalisation
Darren:
Mass customisation. Whereas personalised is actually getting down to the one on one and it’s interesting because people talk about that but actually Lester Wunderman, and I’m sure you’ve read his work, this is from the 50s and 60s, actually was able to map out a customer experience.
But Lester’s technology in those days was having a room full of typists that would type out personalised letters. They actually had to type out the whole letter to mail it off and then the person responded to it, they had the next letter they’d send of and so on and so forth. In today’s technology age, we can actually mimic exactly what he wrote 30 or 40 years ago or more, but do it in real time.
Mark:
Lester was a great example, he was quite prophetic in a way. It’s just, we’re catching up now at our ability to do it at scale. You can even do this in small businesses, but really it’s a pretty exciting time I would argue, to be a marketer or anyone who’s got responsibility for creating experiences that are truly personalised at scale.
That stuff is easy to talk about but not so easy to do. So technology is the enabler but you’ve still got to work out how, you’ve still got to work out what problem to solve for customers because there are a hundred problems but only really a handful that are going to make a difference for customers.
You’ve got to work out how to design that and that’s what I think is also very exciting from what I see in the industry at the moment Darren, where that user experience, that sort of, CX type skill set is so in demand, so valuable, because you can have again, all of the ingredients, but I think there’s still a part, an art to putting together the signs.
Darren:
Well because we’re human beings. The thing is, and this is the reason why I love behavioural economics because if numbers worked, if we could actually understand human beings through numbers, through data alone, then you’re assuming that human beings are rational.
Now, it’s been proven that classical economics which was based on us being rational beings, supply and demand, you know, all of those theories were actually based on rational human beings. The fact is that we’re totally irrational. The only saving grace for business is that we’re predictable in our irrationality.
Mark:
Entirely right.
Darren:
The only caveat I’d put there is artificial intelligence will be able to learn at some point when it gets to the right stage, we’ll be able to learn our rationality. But I think until then, it still requires that human input which is where marketers come to the fore.
Marketing for me has for too many years been the support for business. I think, and we can talk about whether it’s marketing or customer, but marketing has the role or the opportunity to really be at the forefront. My definition of marketing, is the face that the business shows to the market. That’s marketing.
Mark:
Well my definition Darren would be similar but I only use two words and that is to sense and respond.
Darren:
Right.
Mark:
That can run on a number of levels. For the company to sense whether its model is relevant and if it’s not, to respond. To sense customer needs and to be able to respond to those in real time. To sense customer behaviour and to be able to change that experience in real time.
So I absolutely agree with you but as you said, what was true for Lester Wonderman and David Ogilvy and all of those guys was that it’s part art, part science. It’s just now that I think you can have a really powerful combination of those in a way that’s transformational and you mentioned behavioural economics.
I think in my business, we’ve got to create experiences that build trust, empathy, gamification and to deal with your point, cognitive biases that people have. That is behavioural economics so social science meets data science and it’s still my belief of where this is going and that I think is just exciting.
Marketers can be at the pointy end of that and in doing that, I think you end up with a business that’s resilient rather than one that’s good today but runs out of ideas or runs out of relevance tomorrow.
Where does purpose fits into the conversation?
Darren:
So picking up on your relevance and sensing whether a business is relevant, where do you think the rise of the conversation about the purpose of a business comes in? A lot of companies are now trying to find or, not find, because purpose exists within every organisation, it exists because it has a purpose, right? If there was no purpose, then why does it even continue?
But this idea of finding an articulating purpose because there are lots and lots of different companies in the same category and they’ve got no way of even being distinctive other than the colour that they’re painted or the words that are stuck on there. Where do you think purpose fits into that conversation?
Mark:
Well I think to your point Darren, I think we would all argue purpose as being central to our brands, central to our businesses, but I think probably time will judge us fairly harshly there.
I think that purpose, while noble, has been still skewed to things that are important to us, perhaps important to our shareholders. I mean, if you go back to Simon Sinek’s “Why”, I think almost all of the big companies I talk to, and small, they’re pretty engaged around this in a non-superficial way.
The best example I saw was a couple of months ago, we took our Executive Team, like a lot of Executive Teams, to Silicon Valley and we spoke to a whole range of start-ups. Now, if you’re a start-up there, it’s very hard to get great talent. And Google or Facebook or LinkedIn or anyone else can pick your staff and pay them two and three times what you’re paying them and when we ask them, “What kept your staff there?” they all said the same thing completely independently and it was purpose.
Having a meaning beyond making money. They are very clear on their purpose in a community sense, in a shared value sense. My new boss, our new CEO, on his first day he said, “We are going to change our language from delivering value from our customers to delivering value for our customers”. Language matters.
Darren:
Absolutely.
Mark:
Getting that right, particularly in a service business, for people to come to work in a way that makes a difference to real people every day, it’s really powerful.
Darren:
You know Jim Collins in “Built to Last” and “Good to Great”, says all the time, “The companies that have a clearly articulated purpose and constantly reinvent the way the purpose is actually delivered to customers or into the market, are the ones that continue to grow”.
In fact, I loved his example with Disney. He said, “Walt was the heart and soul of that business and was able to drive it forward. When he died, the reason Disney lost its way for about a decade was because Roy, rather than being the heart and soul, was trying to replicate Walt’s legacy by saying, what would Walt do?”
Now the danger there is that you just end up reproducing what happened in the past, you reproduce the behaviour, not the reason for the behaviour, not the purpose of the company. You just say, “Well, he wouldn’t do that”, but time moves on and it wasn’t until Michael Eisner came back into the role and he re-embraced the original purpose about magic and then just delivered that forward.
I’ve just had a few negative reactions from some people when we talk about purpose because they think it’s just like brand positioning. But in actual fact, it goes much deeper into the company, but it’s the role of marketing, don’t you agree, to bring the purpose out in a way that engages employees, customers, the category?
Mark:
I think marketing has a critical role to play. It’s part catalyst, part storyteller. But where it’s incredibly powerful is when you can engage all parts of your organisation and help build and shape and guide that purpose.
But marketing should be the catalyst and they should be the way of bringing that to life in a way that, if it’s done well, is actually quite emotional. So agreed. But, it’s much more than brand position.
Darren:
Absolutely.
Mark:
It has to be a compass to define direction and big decisions. If you’re not making big decisions on which businesses to be in and which not to be in based on your purpose, then that purpose is probably fairly superficial.
Darren:
Yeah, that’s why I think it works at a corporate level. It may not work so well at a brand level. You know Unilever embraced brand purpose and then they’ve got Dove saying real beauty and links saying sexual success at the same time and it’s the one company.
How does Unilever sit comfortably with two purposes that are almost at cross purposes with each other?
Mark:
It’s difficult to do Darren. We have the same issue with many brands and a corporate purpose. It’s hard to get right. But it’s worth spending the time and marketers should be at the pointy end of it.
What skills are needed in this era?
Darren:
You mentioned before that this is an exciting time for marketers. What do you think should be the skills that marketers, your peers, the people that are working under you coming up in the new generation as marketers, what are the things they should be looking to do? What are the skills and capabilities? What are the areas that they should be focusing on to really prepare them for this opportunity that seems to be waiting for us?
Mark:
Well I work from the notion that learning beats knowing. So the number one thing I would say, even outside of the areas that I think are important and I’m happy to touch on those is that you cannot bring a mentality that I now know. I have to learn and I have to be prepared to learn constantly because this is changing and changing really quickly and it will continue to for some time.
Having said that, I think there’s a balance of two or three things. You mentioned behavioural economics, I’ve got to say, I think that’s right at the heart. It’s not new, but I think it’s more important than ever; the way people make decisions is critical. The different cognitive bias that’s made there, so to me that’s part social science, and it needs to be there.
You’ve got to be comfortable with data. And I don’t mean just data for data’s sake, but finding meaning in data. There is meaning there, it takes time and effort to find it and knowing what questions to ask, but there is no doubt in my mind.
Then the third leg in my mind is how technology can simplify journeys for people and you cannot be afraid of it. Those three things, in fact, trying to bring them together in a way, I think you can write your own ticket. If you get that right, it will not just allow you to be a great marketer, you can build businesses and you can run businesses because the people who are going to be running tomorrow’s businesses are going to understand those three things because that’s where the value is.
Darren:
Yeah, they’ve replaced the old human resources balance sheet. Those things are still there and maybe not replaced. They’re the three new ones.
Mark:
Well I think that the others are still there Darren but they’re not going to be differentiators of performance. The differentiators of performance are going to be understanding behaviour and building experiences that just are so elegant that they actually either change that behaviour or acknowledge that behaviour, that’s powerful stuff.
Darren:
Underpinning all of this, and you touched on it before, is the fact that we still need the ability to create strategy underneath it, okay. Because all of these are activities in a way, they’re disciplines. But the other concern I have with the industry is how strategy has become almost debased because everyone does strategy, you know?
How many strategists are in the circle of business that you’re in? I’m sure you’ve got media strategists, social media strategists, data strategists, technology strategists, everyone is a strategist, right?
Additive and reductive strategies
Mark:
If I go back to your military metaphor before though, there’s a lot of strategy, alright, so that’s fair. But what I find is strategy is kind of turned into doing everything. And military strategy would say in a way, it’s the art of choosing what not to do. What things to consider but not do.
Darren:
Perfect.
Mark:
But that’s at odds at times with the approach of let’s test and learn and do a lot of things. But having said that, I think where we could do a better job is not trying to back every horse, every day.
Darren:
And that’s, Sun Tzu, the earliest strategist, very popular in the 80s, very early in the book he says, “Strategy is what battles not to fight, what enemies not to engage, what emperors not to follow”, strategy is a reductive process.
Mark:
Correct.
Darren:
I find too often these days it’s an additive process and the biggest frustration for companies and marketers especially, is that when you follow the advice of all these strategists who have really become salespeople, where are you going to ever meet a social media strategist who doesn’t suggest that you use social media? Where are you going to find a media strategist who says you shouldn’t use paid media? They’re salespeople, they’re not actually strategists.
Mark:
But I think it puts the onus back on the client Darren. I mean, more and more the onus has to be on the client to go back again and again to the customer problem you want to solve, to be incredibly crystal clear on that and then be reductive in terms of how you’re going to deliver that because you’re dead right, I think it is additive to a degree.
In my business that’s perhaps no different to anyone else, we have a lot of partners as you know, and they’re very good partners and they have great advice and our skill ultimately has to be to take the great advice but to pick a course of action and execute on it incredibly well. We need to do that rather than taking every piece of advice and executing every piece of advice because that way we really just do a good job of nothing.
Darren:
From my perspective, this is where you talked about art and science before, the maths men and the mad men. Strategy will always be something that requires human beings, and I actually think great strategy is an art.
Much of the technology and the science and the maths is about informing the decisions we make in the art of strategy. There’s art in creativity and things like that, but the thing that we’ll never be able to replace is the ability of the human brain to absorb lots of information, lots of different suggestions, but then to be able to make decisions around building a reductive strategy that achieves huge success.
Mark:
I’d be in violent agreement with that Darren. I mean, my experience has been that data is incredibly useful in defining the problem. Albert Einstein I think it was, said give me an hour to solve a problem and I’ll spend 55 minutes on defining the problem.
So I think the data is so good in making sure you’re solving the right problem to start. It’s also really handy to actually be reductive in some way because it can rule out some strategies. But I do think you need your own commercial acumen, your own experience and intuition, to say “I think this is the right strategy and I should execute it in these proportions, at this speed”.
Yeah, I think there is an X factor there and that’s why it’s just not ubiquitous. If it was that easy, you would have algorithms to help your strategy and you would be successful.
Darren:
You’d be able to look it up. It’d be like a prescription, “Oh I’ve got a pain here and here’s the therapy for it”.
Mark:
I wish it was that easy.
Testing and learning vs failing fast
Darren:
Yeah, it’s not. The other thing I just wanted to pick up on was, you mentioned before the test and learn, right? And I think having come from a science background and worked in medical research, I think testing and learning is the most valuable thing we can do because when the world’s changing so much we can’t take history and apply it because it’s no longer relevant. So we need to test and learn.
The only mistake I see being made over and over again, and you’ve probably seen this as well, is that people test too many things at once and so the results are meaningless.
Mark:
Yeah look, I’m as guilty of that as anyone I think Darren. I think we try to use methodologies that help us avoid that but from time to time, we do. We take and employ methodologies like agile which is Dev-ops, so you’re testing but you’re not testing just for knowledge. You’re testing so that you can inform the next iteration and get to that iteration fast.
Amazon really started with the MVP minimum viable products so what’s different now is in the past, we would test a product, we’d test a proposition in a theoretical sense, in groups. What we now do is build something as a prototype and put it in the market and sometimes they don’t work, sometimes they do. But we’re able to iterate fairly quickly from that rather than just testing lots of propositions and never really getting to a commercial end.
Darren:
So the best thing I heard last week at this conference was, “Fail fast is a mistake”, okay? Because failure is if something doesn’t work and you learnt nothing from it. But testing something and having a negative outcome, as long as you learnt what caused that so that you could then reiterate, is different. Which is where agile comes from.
Even if something fails, I’ve learnt from it so I can move forward. But you know, I think too many people think of “Fail fast” as, “It’s okay to fail”. No, don’t fail, learn from your mistakes so that you get better at it.
Mark:
Well I don’t think any of us really want to be doing testing that equals throwing a lot of things at the wall and seeing if some of them stick. I mean, you’ve still got to have a hypothesis. Go back to your science analogy Darren, I think you have to have a hypothesis and you’re testing a hypothesis, which isn’t just, “I’ll put 10 things out there and I hope 1 works”.
You have a view of what could fail and therefore how you would learn from that to then form your next hypothesis. I think we’re getting better at creating the hypotheses that we want to test rather than just putting something out there.
Darren:
Mark, this has been a fabulous conversation, I wish it could go on for longer but we’ve run out of time. It’s always a pleasure and I love the way you think. So thank you for spending some time having a chat.
Mark:
My pleasure Darren.
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