Internal Marketing

Your Company's Next Stage of Growth

William Winston, Dennis J Cahill

• Editorial: Routledge
• Año: 2012
• ISBN:
  9781136459399
• Edición: 1
• Categoría: Commerce
• Categoría: Commerce Général

In today's business world, competence is no longer enough in an employee;competent employees are merely a starting point. Internal Marketing: Your Company's Next Stage of Growth details how you can improve employee effectiveness and therefore business—by marketing your firm to employees so they can more effectively serve outside customers and consumers. Employees need to be knowledgeable about their firm and confident in it and its products and services in order to perform their duties in an optimal manner. From this book, you will gain a thorough knowledge and understanding of the concept of internal marketing, how it can be implemented, and the benefits that will result.

Chapter 1
Definitions and Necessities

What is “Internal Marketing?” Why is it important? Is it a concept that is unique, or of unique importance, only to services-marketing firms, the context in which it is usually cited? And how does internal marketing differ from simply an internal application of the venerable Marketing Concept of the Introduction to Marketing textbooks?

Marketing Concept

The Marketing Concept is not new. It is now almost 40 years since John McKitterick (1957) put forth the idea that the Marketing Concept is a customer-oriented, integrated, profit-oriented philosophy of business. In the ensuing years, while there has been profound debate on the idea (e.g., Hirschman, 1983), the concept has survived. An undergraduate marketing text taken at random from my bookshelves devotes two pages of explanation and a chart to the Marketing Concept explaining—with little change from McKitterick—that it is a “customer-oriented, integrated, goal-oriented philosophy for a firm, institution, or person” (Evans and Berman, 1987:12-14).

One would expect that any concept so basic as to appear in an introductory textbook would be wholeheartedly subscribed to by practitioners and academics alike. In the case of the Marketing Concept, however, nothing could be further from the truth. Again, to sample my files at random, Hirschman (1983:45) proposes that the concept is not applicable to artists and ideologists because of “the personal values and social norms that characterize the production process” of these persons’ output. Berry (1988:28), in an article aimed at practitioners, states that the Marketing Concept “will continue to gain in importance and application.” Hampton and Lane (1982) state that the Marketing Concept is anathema to at least a large portion of the employees in the newspaper industry. John C. Crawford (1983:450) states that the Marketing Concept “appears to be an impossible philosophy to put into effect.… [It] is still loudly proclaimed but seldom seen. It represents the unattainable—the marketing Utopia.”

I have written often before to defend the Marketing Concept. Cahill (1992b and 1992c) takes a relatively lighthearted and untraditional look at ways to organize successful marketing efforts around the concept; Cahill (1992a); Cahill, Thach and Warshawsky (1994) look at the Marketing Concept as a way to prevent over-innovativeness to the detriment of client needs in professional service firms. Cahill and Warshawsky (1993) reiterate the importance of the concept even in high technology products, stating that these types of products are not exempt from the workings of consumer behavior which drives the Marketing Concept, despite the feelings of all too many people that high tech is immune from these considerations. Cahill, Warshawsky, and Thach (1994) similarly reiterate this fact, using the fate of two computer software programs as case studies. Thus, with this background of thought and writing on the subject of the Marketing Concept (rather extensive on a somewhat philosophical topic for a nonacademic), I am hardly “objective” on the subject, much less dispassionate. I strongly believe that the Marketing Concept, properly understood and correctly implemented, is one of the basic tools in the marketer’s tool kit. Without the Marketing Concept, good marketing—internal or external—is difficult, if not impossible.

Internal Marketing

Although there are earlier definitions of internal marketing— which will be detailed and discussed later in this chapter-what I consider to be the basic definition is enunciated by Leonard L. Berry and A. Parasuraman in their book Marketing Services: Competing Through Quality (1991:151):

Internal marketing is attracting, developing, motivating, and retaining qualified employees through job-products that satisfy their needs. Internal marketing is the philosophy of treating employees as customers-4ndeed, “wooing” employees… -and is the strategy of shaping job-products to fit human needs.

Although this definition is compact, it says quite a lot, and says it in unmistakable terms of focusing on employees and their needs. But it sounds less like marketing and more like something out of a text on human resources management. Indeed, in a critique of internal marketing as a concept-not aimed specifically at Berry and Parasuraman’s defmition-Rafiq and Ahmed (1993) attempt to draw a boundary around human resources management and tell the marketing profession to butt out. The reason for Rafiq and Ahmed’s concern is reflected in articles such as Bak et al. (1994:38) which specifically define internal marketing as using “a marketing perspective for managing an organization’s human resources.” Bak et al. then retreat somewhat from this imperialistic statement by rather lamely stating that the premise of internal marketing is that “internal exchanges between the organization and its employee groups must be operating effectively before the organization can be successful in achieving its goals regarding external markets”—a statement with which few modern managers would quarrel, but one which has little empirical support. Further, an anonymous reviewer of an early draft of one of the papers upon which some of this book is based defined internal marketing as “good human resource management with a view to satisfying external customers “-exactly the sort of expansive definition that worries Rafiq and Ahmed. In short, although Rafiq and Ahmed would probably approve of a market-driven organization, they are very concerned that such not turn into a marketing-driven organization.

Potential definitions of internal marketing are practically endless; I will provide only a very small sample of the definitions that have sprung up in the academic literature in the past decade. Johnson and Seymour (1985:226) state that internal marketing should “create an internal environment which supports customer-consciousness and sales-mindedness” among the personnel. Johnson, Scheuing, and Gaida (1986:140) define it as a “service firm’s efforts to provide all members of the organization with a clear understanding of the corporate mission and objectives and with the training, motivation, and evaluation to achieve the desired objectives.” George (1990), echoing Berry and Parasuraman above, describes internal marketing as a philosophy for managing the organization’s human resources based on a marketing perspective.

But the grandfather of all definitions is probably Gronroos (1981a, 1981b): “Selling the firm to the employees” who are treated as “internal customers.” The thought here is that the higher employee satisfaction that will result will make it possible to develop a more customer-focused and market-oriented firm. Gronroos then deals with strategic levels (1981a) and tactical levels (1981b) of internal marketing, hi a more recent article on the subject, Gronroos (1994:13) states that the “internal marketing concept” asserts that

the internal market of employees is best motivated for service mindedness and customer-oriented performance by an active, marketing-like approach, where a variety of activities are used internally in an active, marketinglike and coordinated way.

In short, internal marketing in its currently accepted guise is a philosophy of managing a relatively large service firm so that the employees are treated as customers by each other, since so often service encounters are dealt with by a succession of employees. This definition is all well and good, but too exclusive; and by its exclusiveness misses several opportunities to present itself as a central aspect of all firms.

First, the current definitions more or less miss the fact that organizations in our economic system exist to meet customer needs by selling goods and/or services to those customers. (I almost said “providing”—following the tenor of the current literature—but none of the approximately 60 definitions in my on-line thesaurus nor the dozens in my hard-copy Roget’s uses “sell” as a synonym for “provide” and I wish to focus on the exchange of services for money later on.)

Second, the definitions miss the fact that the organization must focus outward to the market, not inward to the employees. No matter how internal to an organization a service seems to be—providing computer support to the firm’s employees, for example-focusing on those “customers” and forgetting that there are customers beyond them outside, may lead to disaster.

Third, the definitions focus too exclusively on service firms. Although there has been a continued blurring of lines between service and manufacturing firms in recent years, with more manufacturing firms talking about how good their “service” has become, there are differences between service firms and others. Nevertheless, an expanded definition of internal marketing will encompass the same tasks at both types of firms; many of these tasks are as necessary in service firms as they are in manufacturing firms.

Fourth, these definitions miss what is probably the most important aspect of internal marketing—the fact that it is a practice of communication with employees. It is essential to let them know what is going on so they can do their jobs effectively and efficiently so the external customers and the internal customers are well served by the organization. They must also know which activities are acceptable and which are not. In short, the employees must be treated as partners-not customers—in the firm’s effort to provide goods and services to the buying public.

Fifth, as Randall and McCullough (1991) so bluntly point out, there is a difference between the internal marketing concept and internal marketing programs. Many firms may pay lip service to the internal marketing concept, as they do to so many other concepts and hot management ideas that are reported in the business press, but few firms become truly dedicated to putting programs into place because of the expense of time, energy, and money. When the crunch comes between “moving iron out the door” and doing what needs to be done to improve the work force so customer needs can be taken care of, all too often iron moves out the door. Period.

Why Internal Marketing?

This is, after all, why firms practice internal marketing—to make our external customers happy with us so they will continue to buy our goods and services. In fact, Compton et al. (1987:10) bluntly state that an “internal action program is a prerequisite for successful external marketing.” If the outside customer can get better service because of your internal marketing efforts, they will come back for more of what you are selling. This is true whether we are talking about a professional service firm, such as a law firm or an accounting firm; a service firm, such as a bank or a fast-food chain; a manufacturer, such as Chrysler or Apple Computer; a nonprofit entity such as a hospital or the Girl Scouts; or a governmental agency, such as the Postal Service or the municipal recreation department. If your internal marketing efforts do not deliver better services to your external customers, then every dollar spent on internal marketing, every minute of management time spent, will have been wasted. And, as Davidow (1986:53-70) reminds us, serviceability must be incorporated into the design from the beginning; good service is a strategic problem and starts at the top; bad service costs the firm money but good service earns it; and it is possible to segment customers on the basis of the service that they wish to receive. And as Rathnam, Mahahan, and Whinston (1994) report, it is now possible, with help from currently available technology, to design customer support teams and processes to produce effective coordination and customer satisfaction.

Grove and Fisk (1989, 1992) have opened a new metaphorical door by using drama to describe the service encounter. I want to open the door wider by expanding this metaphor to include its use in internal marketing situations. I will do so in some detail in Chapter 4; however, I would like to use this metaphor here to explain why we do internal marketing. Since a part of the firm’s “back office” provides services (either to the firm’s front region or to another portion of the back region) the back office also has a metaphorical front and a back region, overlapping in nature and potentially quite damaging. If the back office does not practice marketing internally, then the areas of the firm to which they provide services will resist—to the extent possible—“purchasing” services from them, no matter the corporate rationale for so doing. And the corporate rationale may be compelling. Nevertheless, if the back office does not follow the dictates of the Marketing Concept and does not expand upon that dictum by practicing internal marketing, all of the corporate compulsion will produce only sullen compliance at best.

I worked in the Trust Administration Department of a large bank for a number of years before moving to a smaller bank. As part of the recruitment effort, it had been made clear that I would be in charge of bringing the record-keeping function of the smaller bank’s savings plan in-house and dealing with the bank’s personnel department about the transition. I set up an introductory meeting among the current record-keeping firm, the trust department, and personnel. A very senior vice-president of personnel attended—without coat, feet upon the conference room table while waiting for the record-keeping firm’s people to arrive (quite in keeping with his normal behavior). This individual’s work contacts were almost totally “back office” in nature and he was used to being backstage but never onstage before an audience. Internal marketing as a concept, however, states that everyone is always onstage, even if it is only before an audience of fellow employees and not before a “real” customer. (In fact, this contrast of “fellow employees” with “real customers”—so frequent in actual firms—is fraught with danger; our fellow employees are our real customers, if we are support personnel.) In contrast, I was used to being “front office” a major portion of the time, meeting with customers and other outside service providers, and only went “backstage” for support services. This meeting turned out to be a disaster-primarily, it seems to me, because of this staging problem.

It is this point of internal versus external customers that seems to me to be both a strength of the internal marketing concept and one of its causes of confusion: few employees serve both external and internal customers. If we are support personnel, we rarely see an outside customer; if we deal with outside customers, we rarely deal with other employees as a provider--we are users of support services. Therefore, internal marketing may seem, to those who face outward, like a cheerleading session for support personnel and thus beneath their notice. “Customer-contact personnel” tend to have higher status in service firms, senior management tends to come from the contact area, not support; thus the customer-contact mentality tends to dominate such firms.

Internal marketing programs need, of course, to tie the two areas together with very strong bonds; it is this part of the “good human resource management with a view to satisfying external customers” statement denigrated above that makes sense. But whose vision of the firm is correct? Which vision is to govern? I would like to suggest a novel approach, one which (in different circumstances and to a different end) I suggested in Squeezing a New Service into a Crowded Marketplace (Cahill, 1995): Do some perceptual mapping analyses of your market. Internal marketing is not an end in itself; we practice internal marketing only so that we can do a better job of marketing externally. Find out what your external customers want; find out what your employees want; see where these wants, needs, and possibilities overlap. Management’s vision of the firm may not be what the customers of the firm want; management’s vision would need to change. The section in Chapter 6 on learning organizations offers reasons that seem to be imperative about how to develop a vision shared by the entire organization.

How Do We Practice Internal Marketing?

And how do we practice internal marketing? Before exploring full-blown, modern internal marketing programs, I would like to discuss two tried-and-true methods that are often overlooked in the rush to be stylish. Cross selling programs and gainsharing programs have been around for decades, both in service firms and manufacturing firms, and have proved their worth time and time again. It does not pay to overlook their applicability simply because they seem to be outmoded. They are not.

Cross Selling

Cross selling is a term from the financial services industry, one that I have not seen used elsewhere. Simply put, it is the selling by a representative of one department-such as the retail banking department of services available from another department-such as the trust department. This is a concept much honored in the financial services industry, and for three very good reasons. First, it is unlikely that a customer knows all of the services offered by a bank; he or she may need a trust account or commercial loan, but not know how to go about obtaining the service. Second, the services provided by banks tend to be fairly uniform: a safe-deposit box is a safe-deposit box, a commercial loan is a commercial loan. Therefore, a typical bank customer may have relationships with several different institutions around town; capturing more services per customer increases the bank’s profitability with very little sales effort on the bank’s part. Third, the more relationships a customer has with a bank, the less likely that customer is to leave the bank (unless the provocation is intense) thus increasing the length of profitability per customer. It...