New technology, including the Internet and database software, have turned the traditional marketing model upside down, enabling companies of all sizes to identify and focus on the people most likely to buy. The payoff: They achieve their objectives for a fraction of what it used to cost.

The technological revolution has transformed sales and marketing. The relatively low cost of Internet services and of sales and marketing automation make it possible for any company to compete by applying what is coming to be called the New Marketing. The result is a significant savings in time and money and a sales organization that requires fewer high-paid "closers."

Only a few organizations have caught on to New Marketing and made it a part of daily life, but many more are on the way. It can be used effectively by large consumer-goods companies and business-to-business marketers alike. (To rate your organization's progress on this evolutionary scale, see Are You a New Marketer? at the end of this article.)

Because of its low cost and high efficiency, New Marketing makes it possible for small and midsized companies to compete against much larger organizations.

New Marketing has evolved in response to an historic convergence of three trends: the increase in educated, empowered consumers, a growing commitment by many companies to retain good customers, and advanced, low-cost technology.

THE WAY IT WAS

Before the advent of low-cost Internet and database technology, marketers resorted to highly inefficient marketing methods that favored companies with the most money to waste. Because it was impossible to identify precisely most of the people interested in their products or services, companies generally relied on strategies that inevitably delivered a vast audience with little interest in buying. Even today, consumer-goods advertisers that advertise in national magazines and on TV pay to reach millions of people who would never consider buying their brand. Similarly, business-to-business advertisers in nearly every industry pay to reach thousands of purchasing managers who have no use for their product. Despite the traditional media's efforts to "narrowcast" their audiences, it is generally impossible to target people searching for information on a specific topic at a specific time.

In addition, the high cost of database systems has made it difficult for organizations of any size to keep track of anybody but their most serious customers. Few consumer marketers track their customers, though some, such as the airlines, do a fairly good job through frequency programs. And until recently, almost none could track serious prospects. Many of the world's largest business-to-business marketers don't know the names of their prospects. Typically, they depend on their salespeople to maintain such information, a practice that can backfire when those people resign and take the prospect list with them.

Not only do the old methods force marketers to waste a lot of money, but they lack any means of measuring their impact, even in business-to-business situations, which generally lend themselves to targeted marketing more readily than consumer goods. Many advertisers still embrace John Wanamaker's dictum: "I know half of my advertising works, but I don't know which half."

Before database technology, it was impossible to keep track of what happened to every inquiry about a product or service. The cost couldn't be justified, and it really wasn't necessary, because no one else could do it either.

An underlying problem: Traditional marketing organizations often are hampered by a sharp division between the marketing and sales departments, and they place little emphasis on making sure that all employees help deliver on the promises made in marketing and sales efforts.

THE NEW MARKETING

With New Marketing, marketers seek to target people in a buying and planning mode and to build a relationship with potential customers over time. While the details of a New Marketing plan depend upon the product or service and its market, the basics are the same for all companies:

• The Internet enables your organization to target people searching for information about your product or service category for much less than traditional marketing.
  
  
• Inexpensive database technology, including sales-automation software, makes it possible for companies of any size to identify the people most likely to buy and to focus their sales and marketing efforts accordingly.
  
  
• Relationship-building strategies aimed at best prospects and customers yield a much higher, more measurable return on investment than traditional marketing.
  
  
• New Marketing works because it appeals to consumers, saves marketers time and money, and provides measurable results pleasing to the accounting department and top management.
  
  
• New Marketing lowers costs in three ways: (1) It enables your organization to focus marketing resources on the people or businesses most likely to buy; (2) It lets you track the results of every sales effort, including the source of new business and the potential value of each customer or prospect; (3) It emphasizes retaining customers rather than continually spending money to replace them.
  
  
• New Marketing does not replace advertising strategies designed to build brand identity; it takes marketing to the next step by addressing serious prospects when they're in a buying mode.
  
  
• New Marketing requires total cooperation between the marketing department's effort to identify serious prospects and the sales department's attempts to turn them into customers.

TEN PRINCIPLES OF THE NEW MARKETING

1. All efforts of the organization are directed at identifying, selling to, and satisfying customers, one by one.
   
   
2. Consumers and business buyers are overwhelmed with information and pay little attention to marketing messages unless they are relevant to immediate needs.
   
   
3. Consumers and business buyers are much more likely to respond to a marketing initiative when they are actively searching for a product or service.
   
   
4. Consumers and business buyers have become smarter and increasingly cynical about false claims.
   
   
5. A company can increase the chances of consumers or business buyers paying attention to its marketing campaigns, Web site, and newsletters if it provides useful information that people can trust.
   
   
6. Low-cost database software and sales automation make it possible for almost any organization to determine the return-on-investment of its marketing efforts.
   
   
7. No marketing will work unless key employees and middlemen have the training and motivation to deliver on the promises made in sales and marketing campaigns.
   
   
8. Sales organizations can do a much better job if organized into "hunter" and "keeper" teams. Hunter teams are organized, trained, and motivated to identify potential customers. Keepers make the presentations, go for the close, and work to maintain the customers.
   
   
9. Sales and marketing functions must be seamlessly aligned.
   
   
10. Mass-marketing techniques, such as advertising, direct marketing, and trade shows, get better, more measurable results when linked to a New Marketing strategy.

THE INTERNET

The principal tool that enables you to communicate with people searching for information about your product or service category is the Internet, and it's not expensive. If you focus your Web site on useful content rather than flashy gimmicks, you can maintain it profitably for as little as $10,000 a year.

Even though household and business penetration have not yet reached mass-market level, the volume of users combined with the low cost of Web strategies makes the Internet economically viable. Most companies fail to profit from the Web because few understand its role in the marketing mix.

The Internet is not, as some would have you believe, a replacement for traditional media, at least not yet. It's an alternative medium with a powerful defining attribute: It allows users to get specific information on demand when they need it, any time, day or night. Despite its obvious qualifications for target marketing, however, many media companies and marketers make the mistake of trying to make the Internet into a mass-marketing tool that performs the same function as cable TV or national magazines.

From an advertiser's perspective, the Internet is economical in the broadest sense of the word. To promote its information service, for example, the Sales Marketing Network buys ads on the Internet that appear when people look up key words related to sales and marketing. Payment is based on the number of people who see the ad.

Like TV in its early years, the Internet has a major problem: content. A lot of information on the Internet either duplicates what is readily available in print or is of poor quality. Most commercial Web sites are no more than electronic brochures that provide little useful information.

PUTTING THE WEB TO WORK

Any organization can profit from the Internet by:

• Having a Web site with useful information related to the organization's product or service category. For instance, the Sales Marketing Network provides readers with how-to and reference information about sales and marketing. A pest-control company in the New York City area offers constructive tips on identifying and controlling pests.
  
  
• Using the Web site as a relationship-marketing tool by giving people such things as access to proprietary information or special pricing and services. Reward your best prospects for providing their names, addresses, and e-mail addresses. After all, their willingness to reveal information about themselves can reduce your marketing costs.
  
  
• Understanding the many ways in which the Web can subtly educate your potential customers while providing them with useful information.
  
  
• Using promotion techniques to attract people to your Web site and to encourage them to provide you with demographic information. Airlines, hotels, credit card companies, and long-distance companies get a lot of data from customers simply by offering incentives to enroll and participate in frequency marketing programs.
  
  
• Knowing how to market your Web site. Instead of just putting your Web address in direct mail brochures and ads, tell people what they'll get for visiting it. For instance, a currency-exchange bank advertises a Web site in which people can get the latest rates free as well as find out where to change their money.
  
  
• Making the Internet site interactive by allowing people to participate in games and by creating "chat rooms" of regular users of your product or service. This won't work for simple, limited-use products, but there are two other ways that can be used by any company: an ask-the-expert service or a complaints center.
  
  
• Understanding the principle of "curriculum marketing." As people navigate through your site, they are fed messages in such a way that they can't fail to understand your marketing proposition.
  
  
• Knowing how to use customer information. Once you've captured the names and addresses of people who have volunteered them, it's critical to keep sending useful information and added-value offers to keep the relationship going. If you communicate electronically, there is almost no cost involved.
  
  
• Respecting privacy and time. When people register at your site, disclose how you intend to use the information. And don't send unsolicited e-mail to people who haven't voluntarily provided their e-mail addresses.

DATABASES AND SALES AUTOMATION

Until recently, the cost of obtaining and maintaining data made it impractical for all but the largest companies to track customers and prospects, but hardware and software prices have come down to a point where almost any company can do so.

Before you begin the process, assess your needs carefully. Major consumer companies generally have information-systems departments to create such databases. But business-to-business marketers with prospects numbering in the tens of thousands can make do with sales automation software that ranges from simple off-the-shelf products to customized solutions appropriate for large organizations.

Sales automation software makes it easy and inexpensive to turn your sales force into a prospect-tracking system (see Doc. 7025, Sales Automation). The key processes to be automated include:

• keeping track of potential prospects by source, buying qualifications, and timing;
• communicating with potential prospects at the right time by telephone or mail;
• tracking what happens to each prospect over time.

With these programs, salespeople maintain prospect information on their laptop computers and regularly upload information into a central database. At any time, top management can see how many prospects the organization is working on, the quality of those prospects, and the status of each account.

More powerful database software and hardware is necessary in the world of consumer marketing, where prospects can number in the millions. Even the marketers of such products as toothpaste and chewing gum can benefit from knowing the names of the people most loyal to their product. It enables them to conduct targeted mailings to stimulate sales, often with the help of coupons or other promotional devices. Remember, too, that almost all organizations sell business-to-business. Most consumer-goods companies do that with separate sales organizations that sell to distributors and other resellers.

FINDING THE BEST PROSPECTS

Ideally, a database will help your company better understand your customers' needs. Every contact with a customer should be regarded as an opportunity to get more information to serve that end. Once your organization has the appropriate software and hardware, it needs strategies like those below to identify the people most likely to buy:

• Telephone sales. Once a salesperson has made contact with a customer or prospect, he or she loads the information into a contact-management database accessible to management and to others who might have cause to contact the prospect, such as marketing people or customer service representatives.
  
  
• Face-to-face sales. Because field salespeople have regular contact with prospects, they are in a great position to add, remove, and update information on customers and prospects-if management requires them to do so.
  
  
• Promotions. Frequent buyer programs, customer clubs, rebate and coupon offers, free samples, and gift-with-purchase offers all can be used to identify people interested in your product or service (see Doc. 6020, Frequency Marketing). To be effective, however, these offers must be crafted to identify people interested specifically in your product or service category. Beware of big sweepstakes or contest offers that generate lots of entries but few potential customers.
  
  
• Warranty and customer cards. Many consumer marketers overlook this inexpensive way to identify customers and communicate with them over time.
  
  
• The Internet. If your Web site provides useful information or access to added-value offers, as airlines do with their rate-saver sites, consumers will register and provide you with information about themselves. Frequent flyer programs have proven that consumers willingly divulge personal information in return for the opportunity to earn free trips.
  
  
• Customer complaint telephone services. Most organizations fail to take advantage of customer complaint telephone lines, not only to mollify disgruntled customers and detect potential product or service problems but to identify the customers who have taken the trouble to call. These people should go right into the database.
  
  
• Ask-the-expert telephone services. Many companies offer consumers a toll-free telephone number they can call to get additional information about products and services. These people, too, warrant being added to a prospect database.
  
  
• Frequent shopper and checkout scanner information. Increasing numbers of retailers, notably in the grocery trade, have frequency programs or other shopper clubs that induce customers to provide personal data that is updated with each purchase. Many stores sell this data to suppliers.
  
  
• Customer-referral programs. Word-of-mouth advertising is well worth tracking. The most frequent method is to offer customers an incentive to refer someone else to your organization.

SELLING TO THE PEOPLE WHO WANT TO BUY

Consumers as well as business people are so barraged with information and have so little time that they show little interest in any marketing pitch unless they're in a buying mode. Under these circumstances, the New Marketing works well because it is dedicated to addressing prospective purchasers at just the right time. Example: Food-gift marketers that review the buying habits of their catalog customers and call them up the following season with suggestions for similar purchases (see Doc. 7045, Targeting Sales.)

DISCIPLINES OF THE NEW MARKETING

Since New Marketing is focused on identifying serious prospects and converting them into long-term customers, it requires an integrated, cross-functional approach that puts new demands on marketers:

• Profiting from the Internet requires, besides technical knowledge, background in editorial processes and information marketing so that you can anticipate what information people will want and in what format.
  
  
• Database and sales automation technology requires not so much technical knowledge at the management level as the marketing savvy to create profiles of likely customers and identify new products and services based on what prospects and customers tell you.
  
  
• Relationship-building requires a mix of traditional disciplines, such as meetings, frequency programs, and promotions, as well as a new information strategy based on providing customers with useful, objective information.
  
  
• Teamwork between sales and marketing departments may require a major effort to break down distrust on both sides. That cannot be accomplished without the commitment of top management.
  
  
• Getting people to carry out the New Marketing requires traditional incentive programs, along with training, meetings, recognition, and other internal communication strategies.

BUILDING A CUSTOMER RELATIONSHIP OVER TIME

Most marketing and sales campaigns emphasize what the organization wants to say about itself in the form of self-serving brochures and "information kits." Marketers that want to build genuine credibility use the following relationship-building strategies, varying their selection according to the economics of the product line and the number of potential customers.

• Newsletters, written by experienced business journalists (not advertising copywriters), that provide useful information on the sponsor's product or service;
• Special offers and promotions tied, if possible, to the level of loyalty;
• Eligibility to participate in special sponsored events or "customer councils";
• Exclusive information services via the Internet;
• Access to advanced levels of education in the field.

TEAMWORK BETWEEN SALES AND MARKETING

Ever since sales and marketing emerged as separate disciplines following World War II, the two groups have failed to mesh in many companies. The marketing department feels frustrated by the sales department's inability to capitalize on the opportunities it creates. Salespeople are convinced that business comes from their own efforts and that the marketing department bogs them down with bad leads.

As a result, most organizations can't even tell where their business comes from, let alone determine the return-on-investment of their sales and marketing dollars. Perhaps that was excusable in the days of Rolodexes and file-cards, but it isn't today. Even the most basic contact-management program enables you to track the outcome of every lead by source and salesperson.

The New Marketing organization brings sales and marketing people together to figure out the most effective way to generate and qualify leads. When salespeople see the benefit of a marketing program, they participate and make it pay off.

THE NEW SALES ORGANIZATION

Every organization knows that the more their salespeople prospect, the more business eventually comes in. But most salespeople dislike the grim process of finding the names of decision-makers, writing letters, and following up with telephone calls, not to mention being rejected eight times out of ten. The more senior the salesperson, the less willing he or she is to prospect. The result: Most organizations don't do enough prospecting.

One reason the New Marketing is so successful is that it divides responsibility for the five basic steps of the selling process:

• identifying a decision maker;
• making contact through letters or phone calls to get an appointment;
• making the presentation;
• closing the sale;
• maintaining the customer.

Under traditional marketing, the same people perform all five tasks, but the New Marketing stratifies the sales force, often using part-time employees to do the basic job of identifying decision makers. In many cases, a junior salesperson follows up on sales letters and calls to get appointments. Making presentations and closing the sales, however, is generally reserved for high-level salespeople. Depending on the status of the account, post-sale contact often is shared by junior and senior salespeople along with customer service representatives.

This strategy frees the best salespeople to hop on the biggest opportunities and ends the charade that they'll do much prospecting. It opens up an excellent training area for new salespeople and automates the process of finding decision-makers. Using these methods, a sales organization of only two people can prospect and close 1,000 accounts a month.

The tiered approach also works well with follow-up on leads from advertising, direct marketing, and trade shows. Because most traditional marketing programs generate only one to three good leads for every ten people who respond, salespeople are apt to choose a few they like and throw the rest away. Many leads don't get systematic follow-up, and most organizations never know what they get from their advertising investment.

MANAGING THE NEW MARKETERS

Precision marketing does little good if the customer ultimately walks away dissatisfied. Research by the Forum Organization, Cambridge, MA, found that more than two-thirds of customers abandon a supplier because they don't like the "look, touch, or feel" of the organization. That's alarming news for any company, because it's widely known that it costs much more to acquire a new customer than to keep one. Yet many organizations fail to live up to their marketing promises and suffer continual customer defections.

One of the most common reasons for this is the failure to motivate and train lower-level employees so that customers get what they expect-or more-from the company. To make sure that customer satisfaction is uppermost in the minds of everyone in the organization, companies embracing the New Marketing build employee involvement through internal marketing, training, performance-improvement campaigns, and recognition programs. By letting employees in on corporate goals and strategies, these companies avoid many blunders of the past. For example, a New Marketing company wouldn't launch an ad campaign without making sure all employees understood its purpose and were prepared to live up to customer expectations every step of the way (see Doc. 3020, Incentives: Strategies for Success).

NEW MARKETING SUPPLIERS

Selling Communications Inc. may be among the first to define New Marketing, but many marketing service agencies offer at least a few of the disciplines necessary to implement this approach. Don't rush out to hire one, however, until you've done the hard work of determining your organization's commitment to New Marketing and a vision of how it can be applied to your circumstances. Once you've come up with an overall strategy, you can select from suppliers in the following fields:

• Internet developers. There are many of these outfits, so look for a company that understands the importance of high quality content and can produce it. A good developer should also have the marketing savvy to convert content into lead-generation or target-marketing opportunities.
  
  
• Database marketers. There are thousands of direct marketing companies; you'll have to ask a lot of questions to find the ones that can provide the right mix of services for you. Remember, though, that nobody knows your industry better than you do. In the business-to-business arena, it's often cheaper to get on the telephone and find out the name of a decision maker than it is to buy lists that are bound to include a lot of unqualified recipients. New Marketing calls for highly targeted, personalized name development plus the ability to create an effective campaign and follow it up with the appropriate sales effort (see Doc. 1020, Customer Profiling and Modeling).
  
  
• Promotion agencies can provide many of the services appropriate to identifying and motivating consumers, but you'll need to find one that also has the editorial skills required for the information-marketing component.
  
  
• Many incentive companies claim to offer integrated people-performance strategies. Look for one that asks about your business objectives and audience before even bringing up the idea of offering awards for performance. Proposals should be based on the needs of your organization and should not assume that you require an incentive program. The ultimate solution may entail such things as meetings, communications, and training and have nothing to do with incentives.

BOOKS

While no book uses the term New Marketing, the following ones address many components of this targeted marketing approach:

Cracking the Value Code: How Successful Businesses Are Creating Wealth in the New Economy ,by Richard E.S. Boulton, Barry D. Libert, and Steve M. Samek. This book, which is based on a three-year study by the consulting firm Arthur Andersen, gives clear, plain-English guidance for helping your organization identify, create, and consolidate the valued assets it needs to vault high above the competition. It examines the gamut of these possible assets (physical, financial, employee-supplier, customer, and those intrinsic to the organization) and, to show them in action, provides plenty of fun, fact- and figure-filled miniprofiles of New Economy dynamos, from robustly reengineered old warhorses like IBM, Coke, Pepsi, and Sara Lee to brash, new digital-age brats: Dell, Compaq, Cisco, idealab!, and Starbucks. Available at Amazon.com, $21.60.

eBusiness or Out of Business: Oracle's Roadmap for Profiting in the New Economy, is by two Oracle executives, Mark Barrenechea and Larry Ellison. The book encapsulates Oracle's vision for succeeding on the Internet. However, it was written before the meltdown, so it will be interesting to see how the vision measures up to current reality. 236 pp. 2001. McGraw-Hill Higher Education. $19.96 through Amazon.com.

Why People Don't Buy Things: Five Proven Steps to Connect With Your Customers and Dramatically Increase Your Sales ,by Harry Washburn and Kim Wallace. By teaching sales people how to recognize different buying profiles, this book offers a wealth of strategies and tactics to break out of nonproductive patterns, forge new relationships, and turn promising prospects into repeat customers. Available through Amazon.com, $16.80.

Capturing Customers.com, by George Colombo, calls itself the first post- "dot com" book about sales and marketing. It describes the impact that businesses can create when they combine their "online" sales and marketing efforts with more traditional offline activities. $22.99. Available through Amazon.com, $18.39.

Aftermarketing: How to Keep Customers for Life Through Relationship Marketing, by Terry G. Vavra, describes all of the processes necessary for customer retention at both large and small businesses. This book comes closer than any other to addressing all the elements of the New Marketing spelled out in this article. $15. Available through Amazon.com, $12.00.

Relationship Marketing: Bringing Quality, Customer Service and Marketing Together, by Martin Christopher, Adrian Payne, and David Ballantyne. This book, which broke ground six years ago by outlining relationship marketing, provides an excellent overview. However, it lacks implementation details and doesn't take into account advances in Internet and database technology that have taken place since its publication. Available through Amazon.com, $39.95.

Relationship Marketing for Competitive Advantage: Winning and Keeping Customers, edited by Adrian Payne. A collection of articles from some of the nation's leading academic researchers on all aspects of customer retention, including internal and external marketing, employee motivation, and long-term relationship-marketing strategies. Best for those who want to understand the internal as well as external marketing issues involved with one-to-one marketing, as well as those who want an international perspective. Available through Amazon.com, $49.95.

Friendship Marketing: Growing Your Business by Cultivating Strategic Relationships. This book puts marketing on the most personal, one-to-one level by identifying the elements of friendship and relating them to business relations. It has little to do with technology, but everything to do with sales techniques. $18.95. Available through Amazon.com, $16.11.

The Loyalty Effect, by Frederick Reichheld, is a landmark book on the power of employee and customer commitment. Harvard Business School Press. $24.95. Available through Amazon.com, $17.47