A Real Simple Definition of Marketing
Times of rapid economic growth have a tendency to create bad habits. A quick scan of some business headlines illustrates the point:

Sound familiar? The headlines were real and about the same company (the name was changed to protect the guilty). Failed dotcoms, bad mega-mergers, greed and poor management cost the U.S. economy billions. Many corporate collapses could have been avoided if owners and marketers asked one simple question: what customer value are we creating?

As the economy gains further steam, don't backslide into bad habits. Get back to basics. A great deal of can be saved if companies will get real with their definition of marketing.

Marketing Defined
Peter Drucker (a renowned Management Guru) postulated that, "Because its purpose is to create a customer, the business has two - and only - two functions, marketing and innovation. Marketing and innovation produce results, all the rest are costs."

Unfortunately, the traditional marketing communications mindset is that a better, brighter and bigger ad campaign builds sales. Forget it.

True customer value is created by building a better mousetrap. Marketing is all about the experiences you provide to customers. EVERYTHING the customer sees, uses or interacts with, influences their perception of a product or service. If it's a great experience, customers will tell others. If it's bad, they will tell even more.

Customers, marketing and innovation combine to form winning businesses. So, moving forward, let's establish the definition of marketing as:

"Increasing value to customers profitably"

The definition looks a bit oversimplified. Maybe. But it's also very demanding. Think of it as a litmus test for gauging marketing investments. How? We'll explore the three components of this definition ? understanding customers; increasing value; and planning profitably. Since everything begins and ends with the customer, let's start there.

Not all Customers are Equal
Perhaps the most important rule of marketing is the Rule of Focus. You've likely read, heard or been told that you cannot be all things to all people. No matter what size your company is, any attempt to serve too many diverse needs isn't sustainable. Therefore, the Rule of Focus forces you to identify and serve the customers that think you're the best – the customers that you provide the most value to. The term 'niche' is over-used in marketing circles for a very good reason. It works.

Not every customer (or potential customer) will think your offer is the bee's knees. In most cases, they will seek out a completely different customer experience altogether. However, there is tremendous value to understand why they think this way. For starters, develop a profile of your most and least profitable customers. What's different about each group? Do any least profitable customers have the opportunity to become most profitable customers? If so, what would you have to do? Is there a better investment you could make in your best customers? It's a trade-off, but take the time to review your alternatives.

If you're unsure of what customers think, conduct some customer interviews. Be real. To paraphrase a line from the movie Jerry McGuire, ask them to "help you, help them." Be open to change and be willing to responding to what customers ask for.

Measurement Rules for Increasing Value
Without a doubt, any company must be proficient at observing customer behaviors and developing insights into why customers do what they do. More importantly, your firm must thrive on turning these insights into new value.

If you can't measure it, you can't improve it. So, to create new value for your customers, you will need to quantify the why. As you seek to quantify this experience, keep a couple things in mind:

1. Think and evaluate like the customer. Be flexible in how you observe and research customers' needs. Whether you market to businesses or consumers, they're likely to use a combination of objective (money, time, duration) and subjective (confidence, taste, personal self-worth) evaluation criteria. Either way, figure out way to quantify the customer's criteria.
2. Expand your definition of competition. Instead of competition, use the term "alternatives". Comparing the value you provide to direct competitors only can result in missed opportunities and a false sense of security. For example, you can chop carrots with an 8" chef's knife manufactured by competitor A or competitor B. Other alternatives for chopping carrots would include a food processor or mandolin. There's always an alternative.

Be objective about measuring the value you provide to customers. It will help ensure that your firm is more in love with customers than with its own products or services. This "outside-in" perspective is paramount to create new growth opportunities.

Profitability is Synonymous with Analysis and Planning
Armed with real customer insights, your firm is on its way to becoming highly competent at understanding, creating and delivering new types of customer value. That means that it's time for internal analysis and planning, or figuring out how you will deliver that value.

We won't go into too much detail here (planning is the subject of a future column). But when creating your marketing strategy and tactical plans, remember that it's about the customers. In fact, you may find it helpful to plan around the activities you could do with customers, rather the alternative of organizing plans around the products and services you provide. For simplicity, your business can:

• Acquire new customers
• Grow value (and revenue) with current customers
• Migrate customers to different offerings
• Fire the least-profitable customers (to invest more in the best customers)

The investments and tactics (i.e. promotion, new products, marketing communications, partner programs, etc.) you employ in each of these activities should be related the return on investment associated with that customer group.

Like anything, to be great at anything takes times, planning and the commitment. Marketing is no different. It requires profound insights into customer needs and the discipline to organize your firm around those needs.

To get started on a better path, get real with your definition of marketing...one more time, increasing value to customers profitably.

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