new rules of customer service

I’d like to start the new year off by expanding on the post that ended the year — marketing has no definition and no rules.

This post generated a bit of discussion on LinkedIn, including this comment (user name omitted for privacy):

There is a lot of principles and concepts in marketing, but there is a lack of methods and technical tools creating added value! the discipline requires a tremendous theoretical rebuilding, and research should focus more on pragmatic and real problems and get emancipated from the gate keepers that are encouraging for example this jeopardization of discipline! i think, the first step to get on our feet is to have a self critical look on our practices! there is a great opportunity for marketing, but the way work is done should change! even great scientific journals are driven by names and “academic brands” and we do not see a clear contribution for articles extremely reputed and cited

Now, I think the author is right about some aspects of marketing. Getting published in top journals (or any academic journal for that matter) means getting past gatekeepers who have a vested interest in maintaining the status quo and show their risk aversion by accepting papers from known “brands”. But, reducing marketing knowledge to a few top tier marketing journals under represents the state of marketing knowledge. Many academics, like me, publish respected blogs — like Hausman Marketing Letter, where we expand marketing knowledge unfettered by gatekeepers. And, many of us maintain extensive consulting practices that ground our research in cutting-edge marketing practice.

But, I think his major premise — that marketing lacks methods and technical tools for creating value — is totally without merit. Today, I’d like to focus on value-creating tools and methods within marketing. Recognize, however, that all the concepts from my earlier post link to specific tools and methods for implementing the concept.

Marketing Tools And Methods

Here are just a small subset of the plethora of marketing tools and methods that create value.

Customer lifetime value

The concept of lifetime value shows that not all customers are equally valuable to a firm and, in fact, some customers should be “fired” because they cost more to maintain than to lose. Other customers represent so much value that firms should expend additional efforts to keep these customers.

Here’s a basic formula for Customer Lifetime Value (CLV):

(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years)

Firms can segment customers into groups based on the value they bring to the firm and strategies developed to retain the most valuable customers while discouraging customers who represent little or negative value. That’s what your bank does with all those seemingly stupid rules. For instance, if you have very little deposited you may pay a fee or have limited services (such as a maximum number of checks written per month). That’s because you represent a negative CLV with your small balance. Meanwhile a larger depositor gets free stuff and more personalized services.

Wanna calculate your customers’ lifetime value? Here’s a great resource to help. Learn more about customer lifetime value from this resource, which includes an example using Starbucks.

4-Factor model to assess digital marketing performance

The 4-factor model is my own concoction, building on a model designed to assess sale force effectiveness. The model looks like this:

sales = amplification X sentiment X marketing intensity X close rate

Using this model requires some work as most of these values aren’t readily available, but sums of other values. For instance, amplification is a reflection of the reach your posts get across social media sites, so you’d need to sum up the engagement you get for posts on each network across some time period, such as a month. The same is true of marketing intensity where you need to sum up your marketing efforts both online and offline by adding in coupons and other promotions, advertising costs, as well as the cost of content marketing efforts.

Using the 4-factor model not only shows how successful you are over time, it provides actionable insights to increase your market performance by highlighting where you’re efforts fall short and which factors have the greatest impact on marketing performance in your market.


Now, let me say upfront that I’m not a big fan of SERVQUAL, but it is a marketing tool that gets a lot of respect in certain corners. SERVQUAL stands for service quality and is a means for assessing how consumers feel about your service.

SERVQUAL can be used to assess performance over time, but it’s real strength is in highlighting which areas of performance need additional work.

Perceptual mapping

A perceptual map is a tool for evaluating how customers feel about your brand compared to competitors.

Building a perceptual map requires consumer data regarding the most significant factors driving customer purchase — such as price and quality. Traditional perceptual mapping could only use two factors, but newer computer visualizations allow multiple factors as input for 3-D maps.

Perceptual mapping identifies where your brand is weak compared to your competition. Perceptual mapping also identifies gaps where new products might be successful in generating profits.

Text analytics

Analyzing consumer utterances has a rich history within marketing that was borrowed from cultural anthropology. Ethnography, the study of cultures, applies to studying subcultures of consumption and it’s been used to draw important insights into the beliefs and values of subcultures such as the Harley Owners Group, Jeep owners, people at flea markets, Nike and Apple enthusiasts, and many others.

Harnessing these tools to understand social media posts offers great insights into not only how consumers feel about brands, but what problems they face and where existing products fall short in providing solutions to those problems.

IBM estimates that 80 percent of data is text data, so having the tools to analyze this data is increasingly important.


Within the pricing element of marketing, a number of tools exist and that list is expanding every day. For instance, psychological pricing works. Professors also study how consumers respond to incentives like coupons, rebates, and free products to predict which will be most effective with a particular target market.

Closing Remarks

These are just a few of the hundreds (maybe thousands) of marketing tools and methods creating value for firms using them correctly on a consistent basis. In fact, I would argue that marketing, which once looks more like it’s cousins in psychology, is looking a lot more like its more quantitative economics cousins.

A subtle shift began about 10-15 years ago and is strong now than ever before. That shift means marketers need to prove their strategies are successful. But, more importantly, marketers must be more data-driven in predicting successful strategies.

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