Business Book Review

Thursday, October 26, 2006

Book Review: Breakthrough - How Great Companies Set Outrageous Objectives—and Achieve Them - by Bill Davidson


Author Bill Davidson, a former USC management professor, and now a management and corporate leadership consultant, bases his 2004 book, Breakthrough on classic examples of high-profile, turnaround businesses such as IBM, Caterpillar, and American Standard. These companies illustrate successful breakthroughs. No matter how strong the performance, all corporate success cycles do, eventually, end—unless a company’s leadership has the foresight to plan for further innovation.

The breakthrough principle—and its potential for either success or failure—is, surprisingly, not based on a company’s size, resources, market position, or age. The secret that breakthrough companies share is the determined pursuit of what Davidson describes as “outrageous” objectives. Because most firms go through a success cycle only once, it can be to a company’s advantage to look at other organizations for lessons that will make an inevitable process more efficient and more effective.

The lofty positions of market and sector champions mark the peak of the success cycle. These orbits, once achieved, are not sustainable without further rocket thrusts.
Progressive Insurance provides customer service that is profoundly superior to its peers while cutting the cost of auto repair at the same time. USAA’s customer satisfaction and loyalty levels are the envy of its industry, as are its costs.

Breakthrough is, according to Davidson, an innovation that triggers superior performance and provides the transition from one success cycle to the next. It is a bridge to higher market positions, in terms of value share and market share. It is innovation that has to occur on an enterprise-scale, significant enough to shape an emerging company, or to re-invent and redefine an established player. The result is a completely new business model that exhibits, according to Davidson, “superior operating and profit performance, leading to both a new corporate profile and a new market position for the breakthrough company.” Although breakthrough can occur anywhere within an industry’s structure, from start-up to market leader, the most common place for a company to “break through” is at the entry point to the market.

An alternative to using breakthrough as a bridge to higher market positions is to use it to establish a company in the position of “niche master”: to focus on “securing and defending” a specialized success zone in which the company can compete successfully, thereby avoiding head-to-head competition with the larger primary players in an industry. A “niche market master” supplies a distinct market need, and serves a distinct customer set with a distinct supply and value chain. A number of companies, however, have also used breakthrough to make the “niche switch.” Progressive Insurance, for example, which was the niche leader in substandard (high risk) auto insurance coverage, not only successfully defended a foray by Allstate, a strong number two inner-circle competitor in the standard auto insurance market, into its niche, but subsequently, as a result of employing a breakthrough strategy, turned the tables on Allstate by breaking out of its niche and “storming” into the standard auto insurance market. “Many of the most spectacular examples of breakthrough innovation and subsequent success cycles originate in the niche master zone,” says Davidson. “Allstate’s foray into Progressive’s segment had triggered a series of forces that would reshape much of the insurance sector. Progressive’s innovative response to invasion by a larger inner-circle competitor provides a classic example of the breakout niche strategy. A number of the most successful insurgents in our research sample are breakout niche players—established, secondary competitors who use innovation and industry experience to seize market leadership.”

Within a market or industry, breakthrough innovations must fundamentally alter customer service standards, cost positions, cycle times, and value propositions. In doing so, they lead to “differentiated, disruptive offerings” that “shatter the competitive equilibrium, creating space for the breakthrough company.” To accomplish this, breakthrough innovations must come from large-scale, long-term initiatives that make use of advanced technologies and radical process innovations to achieve leaps—not just advances—in operating performance, financial results, and market position. It is the nature of breakthrough innovations that often results in multi-dimensional competitive advantages—cost leadership, superior customer service, and increased market and value share. Countrywide Credit, for example, in its breakthrough in the home loan market became a cost leader by reducing the average transaction cost to $748, from an industry average of $2,357. It became a service leader by achieving dramatic improvements in customer service, and by reducing loan approval cycle times by 90 percent or more. It became a product leader, as well, by adding product enhancements, such as the ability to lock in interest rates at any point in the cycle. Improvements in quality, service, and product features, according to Davidson, offer superior value to the customers while cost and cycle time reductions drive improved margins.

Market leadership comes to firms who can achieve these kinds of breakthroughs. The first step is to focus on a breakthrough strategy. “Reality tends to favor new entrants,” says Davidson, “yet agile incumbents can seize sources of innovation . . . by thinking about their business from the perspective of a new entrant.” First and foremost, breakthrough strategies focus on “outrageous goals,” goals that force companies to consider alternative processes and technology platforms. Breakthrough companies are “early adopters” of new technology, and are often involved in the developmental stage of new technologies, though they typically, according to Davidson, do not invest more than the average company; they concentrate their investments on leading-edge solutions that support a focused strategy. In addition, they focus on great leaps forward, rather than on incremental improvements. “Breakthroughs focus on creating tomorrow’s processes, not on improving today’s.” Breakthrough companies emphasize customer care over cost reduction, and they make creative use of their human resources by providing the flexibility to fundamentally redefine job descriptions and roles to make the best use of employees’ talents and skills. Breakthrough strategies create new business growth opportunities as a result of the technologies and processes the company develops. Progressive Insurance, for example, with its original innovation in claims settlement methods, not only repositioned itself in the market, it also dramatically redefined the auto insurance industry.

It is Davidson’s philosophy that “breakthroughs smash traditional trade-off logic by offering radical gains in multiple dimensions in operating performance.” Pursuing operating excellence in existing core areas leads, he predicts, to growth in new areas. And, the investment in infrastructure is paid back quickly from immediate operating gains, which then provides free platforms for new business development. Progressive Insurance’s investment in the automated claims management system (PACMAN), developed at a cost of $30 million, paid for itself in less than two years because it did, in fact, streamline the claims process so well, and then served as a springboard for next-generation services for Progressive. Finally, breakthrough strategies drive increased benefits to all stakeholder groups—at the same time.

To make these breakthrough innovations possible, an enterprise principle that both underlies and connects a strategic mindset and a leadership philosophy has to be at work. For large-scale initiatives to be implemented across an entire company, there must be a commitment to a single, integrated plan, or strategy, which is focused on innovation and outrageous objectives. Breakthroughs cannot be achieved in business environments where entrepreneurship, independence, autonomy, and decentralization are the defining core concepts of the company. This was the task before Lou Gerstner when he took over IBM in 1993: he had to change the company’s strategic direction, business model, culture, and management mindset.

Gerstner approached the company from the customer’s standpoint, and he focused on integrating business units rather than dismembering them, as many IBMers advocated when Gerstner took over the company. He created a Strategic Leadership Council, in which senior leaders met to develop, and then execute, a core strategy for the company, a strategy that would focus on solutions and services. IBM’s “mainframe mindset” had to change to a solutions-and-service centered approach. By 1995, IBM was reinforcing its integrated business model with innovations built around the power and reach of the Internet. By 2000, “Old Blue” was once again “Big Blue” by virtue of being “Breakthrough Blue.”


A thorough knowledge of your company—its resources, current profile, core competencies, and core identity—as well as knowledge of the external environment in which your company operates, are essential considerations before launching breakthrough strategy planning. Firms that have a decentralized management structure are poor candidates for breakthrough strategies, says Davidson. Key factors in pursuing a breakthrough strategy are the capacity to focus on a single, core strategy for three to five years, or longer, along with continuity in senior leadership. “The fundamental question is who has the insight and gumption to shape and launch a breakthrough strategy in any market and the persistence to stay focused as a team to execute it.”

Breakthrough strategies are not for all companies. Competitive considerations are extremely important. Companies considering initiating breakthrough strategies must consider the core competitive positions, roles, structures, and dynamics, beginning with the role played by the market leader vis-à-vis a particular company’s position, as well as trend lines for other competitors. In addition, it is also important to understand market scope and boundaries. Is a business its own universe, or is it part of a larger market structure? Precise market definition depends upon three factors: supply side differentiation, demand side differentiation, and competitive strategies. “Focused pursuit of a narrow market becomes hazardous,” Davidson says, “if the market in question will be subsumed into a broader business model.” Understanding the dynamics of globalization and shifts in market boundaries are also essential to planning strategy.

Few firms enjoy the luxury of being able to choose a maintenance strategy. In most settings, market trends will erode the effectiveness of even the most successful strategy foundations sooner rather than later.

Once an organization determines that an outrageous goal or objective is appropriate for growth, for renewal, or for continued existence, planning a breakthrough strategy is the next step. Whatever the goal, says Davidson, profile initiatives and operating performance provide the key engines for reaching it. Gains in competitive position and financial results come from these two key drivers. “Radical innovation in operating performance—process innovations—appears to be the single best driver of breakthroughs,” according to Davidson. Toyota, for example, achieved great success with the introduction of Lexus—a profile innovation—that allowed Toyota to expand the company’s profile by entering the upscale, luxury auto market. However, the success of that breakthrough was due to Toyota’s manufacturing system, including its Just-in-Time (JIT) inventory. Dell Computer is another powerful example of how innovations in operating performance carried what was once a marginal competitor to worldwide market leadership in PC sales. Breakthrough for Dell came in 1995 when founder Michael Dell focused his company’s sales on the Internet. But, says, Davidson, Dell’s breakthrough was more than just a sales channel innovation. Dell was the first to embrace mass customization of PCs. “Dell was the first company to perfect a now-generic breakthrough strategy that combines mass customization; customer-specific product design; just-in-time supply chain solutions; and rapid, remote fulfillment and service. The result was typical of successful breakthroughs—rapid sales growth and rising margins.”

Struggles often arise between insurgent companies (new entrants) and incumbents for market leadership. To win these struggles, insurgent companies must have a breakthrough strategy that delivers results in the marketplace. Incumbents, on the other hand, can innovate as well. “Established market leaders can make the leap to next-generation business models, reshaping themselves and their markets in the process,” says Davidson.

Business engineering lies at the heart of breakthrough. Corporate and market transformation requires a critical mass of design and engineering effort.

However, many incumbents find themselves unable to keep pace with the changes that will inevitably take place in their market. For Davidson, the “source of paralysis” for market leaders is, generally, allowing existing processes and practices to become so deeply embedded that they limit the company’s ability to adapt to newer, more effective models. This trend includes the inability to embrace new information systems technology. In addition, says Davidson, dedication to existing channels of distribution can also create resistance to innovation. “To successfully innovate, an industry incumbent . . . must abandon its commitment to legacy channels, processes, practices, products, technologies, business models, and mindsets.”

Incumbents often have a choice to make: continue with a market model and profit generator that will eventually become passé (while slowly allowing market share to go to insurgent companies), or convert to the new order of business in the industry. The challenge for incumbents is to abandon their comfort zones, and their obsession with day-to-day operations and short-term financial results, and move into the new order of business. There is an interesting psychological underpinning to executives’ reluctance in moving forward with innovation—a fear that the very practices and success strategies that built a company’s success will in turn render it obsolete or relegate it to the role of a less powerful entity. It may, in fact, take a crisis to shake leaders out of their complacency.

Market leaders who are agile incumbents must remain on the offensive against insurgent competitors. Market leaders must develop a mindset that is quick to embrace, and to introduce, innovations, and go even further by setting the vision and direction for change and innovation in the industry. They must always take the high road to “ensure industry peace and prosperity,” define the industry’s borders and establish relationships with related industries. They must do all in their power to increase “generic” demand for the product or service. They must also look to the future, Davidson says, by continuously modernizing their offerings, and improving the customer value proposition. Market leaders—incumbents—in short, must revolutionize, or be revolutionized. Optimization strategies, such as those practiced by GE, says Davidson, are unlikely to support sustained leadership. Nor should incumbents rely on acquisition to renew themselves. Acquisitions, if entered into, says Davidson, should be “component” or “point” acquisitions, “where specific elements of a future business model or market profile are brought into the organization” and integrated into the core business of the organization. Strategy should lead to acquisition, not the other way around. Internally generated endogenic growth has more potential than “out-of-body” exogenic growth (growth by merger, spin-off, joint venture, etc.). Endogenic growth will create and nurture next-generation business.


From his study of seventy plus companies, Davidson identifies a generic pattern for successful breakthroughs: enterprise leaders establish a clear, actionable agenda and focus the company’s resources on an outrageous objective and a specific set of implementation priorities. “The modus operandi practiced by successful breakthrough companies can be described as aim, ready, fire. They establish a clear target and specific initiatives, align the organization, provide implementation structure and resources, and manage execution in a focused and systematic manner.”

Davidson highlights one variation of this process. Occasionally, he says, breakthrough strategies emerge after an innovation has occurred. At that time, leadership can seize on a broader strategic potential that has resulted from the innovation to renew the company’s business model and subsequently move toward more ambitious goals. This Davidson calls “leveraging a discrete innovation into a broader breakthrough in profile, market position, and financial performance.” He offers as example, Vons, a Southern California grocery chain, that pioneered point of sale (POS) scanners at checkout counters in the 1970s, introducing the technology years before other retailers. Investing in advanced technology not only led to multiple operating benefits (speed, efficiency, service level, and accuracy of the checkout process), it also created new business growth opportunities. The card readers captured valuable customer information, for example, that was used to support a sophisticated mailing list business for the store’s private-label products. Charles Schwab, another of Davidson’s breakthrough companies, was the first in the brokerage business to discover the power of the Internet and to combine online technology with the company’s hallmark dedication to customer service.

More typically, the breakthrough cycle begins of necessity when the survival of the company is at stake, as in the examples of American Standard, Caterpillar, IBM, and Mervyns. In these cases, as with most breakthrough companies, the search for a core strategy that would not only renew, but in reality, save the company started the new success cycle. Virtually all breakthroughs by incumbents are in this category. It is not absolutely necessary for the company to be facing disintegration, but leaders will need to find the weakest link—usually an emerging market crisis—and “magnify it to create an atmosphere of crisis,” as ADP’s John Gaulding did with the company’s automated claim service, transforming the company before the crisis hit.

The aim, ready, fire process needed to transform a company—and its industry—must follow a highly structured framework in order to manage the transformation. The aim phase allows the organization to collect, synthesize, and focus market knowledge and self-knowledge. The outcome of Phase I, Aim, must be a single, integrated strategy with specific, actionable initiatives supported by the senior management team. In Phase II, Ready, the senior team bonds together in support of the strategy, and then engages the rest of the organization with a message that says, “We are changing, here is why, here is what we are aiming to achieve, here is how we plan to do it, and here is your role and our expectations.” Phase III, Fire, is the execution of the strategy. To assist in the successful execution, it is desirable for the organization to prioritize its portfolio of projects and clearly establish the projects critical to successful implementation of the breakthrough strategy. Likewise, an organization should establish a program and project management (PPM) function to structure, staff, start, support, and secure the projects as prioritized by the senior team.


No other single factor carries as much weight in determining the success of a breakthrough strategy as the senior leader’s role. Davidson goes so far as to say: “The question is not so much the quality of the individuals in the team: rather, it is a question of their ability to work together as a team.” Working as a team requires a senior leader who has the personal capacity to oversee what often may seem like a superhuman effort. A part of this personal capacity is in-depth operating experience in the company, and in the industry. The senior leader must be multi-talented; he or she “must play the combined role of general manager, coach, and quarterback of a professional football team.” The senior leader must have a combination of what Davidson refers to as “humanism and directiveness,” a combination of boldness and humility, innovation and groundedness. “The best breakthrough leaders are grounded visionaries,” says Davidson.

And, if senior leadership deserves the credit for a successful breakthrough, they must also answer for the failure. Davidson points to one single, deadly—but, as he says, quite common—“failure factor”: an inability to align core members of the senior team around a common strategy. Other failure factors can include a lack of hands-on ownership and management of the strategy once the organization is into the implementation phase. Ironically, companies are often acquired during their breakthroughs, which often result in a loss, or transition of leadership, an effective death sentence for breakthrough. Failure can also result from poor strategy, but strategy is ultimately the responsibility of the CEO. “Any grand goal,” says Davidson, “especially those of a financial nature, are pipe dreams without grounded performance and profile innovations that convert into growth, improved margins, and enhanced market position.”

Endnotes by chapter and a subject index are provided.


Davidson’s greatest contribution in this readable, well-paced book based on his observation and study of more than 70 companies is to stimulate, even provoke, thought about a company’s readiness—and commitment—to moving to the next level of corporate success. Davidson wants readers to ask—and be able to answer—“Is my company ready for breakthrough?”

Davidson defines and outlines what breakthrough is—and is not. He balances the theory, and the practice, of breakthrough planning and strategy with specific case studies, so that the reader is not bored with too much theoretical text, nor overwhelmed with too much statistical data in support of the theoretical text. The book can also be used as a primer or checklist for would-be breakthrough companies and CEOs. It is important to note, however, that Davidson’s focus throughout the book is on incumbents, rather than on start-up companies at the entry point to the market.

Some of Davidson’s most insightful comments involve the paradoxes inherent in breakthrough strategy. An obsession with core operations and markets—seemingly to the exclusion of diversification activity—provides powerful platforms for growth in new areas (chapter 1). “Dig down deep enough into the details of your operations, apply radical approaches, and perhaps you will break through to the equivalent of China—a vast new market opportunity.” Likewise, in chapter 6, Davidson shatters the almost universally accepted mantra that “no revolution was ever led by the establishment.” To illustrate this, he cites American Standard, “the oldest, stodgiest company we could find,” as perhaps the single best example of breakthrough, a company that, according to Davidson, “set world speed records in corporate transformation.” To achieve breakthrough—and this is a key concept—a company does not necessarily have to be the initiator of change, or innovation, within the industry, but it does have to embrace innovation, and integrate it into its core business. A breakthrough company is a leader, not a follower.

Davidson has organized Breakthrough with an inductive approach. His outline of the specific components of breakthrough strategy planning and implementation, along with the accompanying case studies, are concluded in chapter 8 by reflection on the nature of senior leadership in breakthrough companies, which he has identified as the single most important factor in the success or failure of breakthrough. He contrasts his choice for best breakthrough leader, American Standard’s Mano Kampouris, with Ford Motor Company’s Jac Nasser, whom he also describes as a superb breakthrough leader.

What was the difference between American Standard’s spectacular success, and Ford’s potential transformation, which, in Davidson’s words, “slowed to a crawl?” Nasser seemed to be doing everything right in terms of breakthrough planning. He had an in-depth knowledge of the company’s operations, and he created an ambitious vision for the company, which he converted into a series of key initiatives to modernize and globalize Ford’s operations. He communicated with, prepared, and trained the organization. High-priority projects were launched with the appropriate staffing, resources, and senior support. At the same time, according to Davidson, Nasser also launched a performance culture program that called for forced performance rankings and mandatory retirement for the bottom 10 percent of the company. Ford’s traditional corporate culture began to view the transformation efforts as too harsh in their handling of people, thereby allowing an “us and them” schism to form, which led, ultimately, to Nasser’s replacement.

Davidson’s careful research over 10 years, and with more than 70 companies, has led him to believe that although directiveness (command and control) is essential, and that both high executive and high employee turnover are to be expected in the implementation of breakthrough strategies, humanism (as evidenced by CEOs like Mano Kampouris and Lou Gerstner with their respect for the individual, and their investment in the development of human capital) is a significant accelerator of breakthrough. A number of Davidson’s benchmark success stories (ADP’s ACS group and Progressive Insurance, for example), employed high directiveness without a corresponding high humanism. But for a successful, sure, and swift execution of breakthrough, there seems to be no substitute for a combination of directiveness and humanism. Successful breakthrough, and the resulting market or niche leadership it brings will, eventually, bring a company once again to the need for yet another breakthrough. If a company has built a success cycle based on directiveness and humanism, it should be well positioned for the next breakthrough effort.

Reading Suggestions

Reading Time: 6-7 hours, 238 pages in book

The author develops his basic premises and instructional guidance on creating a breakthrough strategy in four chapters: chapters 1, 2, 3, and 7. If you are not familiar with the concept of breakthrough, these are the essential, must read chapters. If you are familiar with the concept of breakthrough and with market definition, it is possible to read only chapters 1 and 7—chapter 1 because it gives an overview, particularly of the success cycle and of breakthrough strategy principles, and the power of breakthrough as evidenced by four companies, Countrywide, Progressive, NBtel, and C.R. England, and chapter 7 because it details the process—the three important phases in the development of breakthrough.

Chapter 4 provides moderately detailed examples of successful breakthrough companies. Appendix I also contains bite-size summaries of the core strategies of 50 companies, including those highlighted in the book. Davidson does not develop new concepts in chapter 4, but uses this chapter to highlight well-known corporate examples. Chapters 5 and 6 discuss market leaders/industry incumbents and their characteristics, and are recommended if your company is in that category. Chapter 8 contains the characteristics of a successful senior manager or CEO, as well as characteristics of those who will not be successful.


Chapter 1: Breakthrough Dynamics
Chapter 2: The Enterprise Principle
Chapter 3: The Strategic Setting
Chapter 4: Champions of Breakthrough
Chapter 5: The Mindset of a Market Leader
Chapter 6: Advice to Incumbents
Chapter 7: Aim, Ready, Fire
Chapter 8: The Leadership Factor
Followed by two appendices

About the Author

Bill Davidson was a tenured professor of management at the Marshall School of Business at the University of Southern California from 1985 to 1998. He is the author of several other books on management, including The Amazing Race and 2020 Vision (with Stan Davis), which was selected as Best Business Book of the Year by Fortune magazine in 1992. He is currently chairman of MESA Research, a strategy and leadership services group.
For more information, please visit:

Review: Ageless Marketing - Strategies for Reaching the Hearts and Minds of the New Customer Majority - by David B. Wolfe with Robert E. Snyder


In the 1960s, an age-based “get-them-young-before-some-other-brand-gets-them” marketing mantra emerged in answer to the suddenly large and growing young adult consumer market. According to Wolfe and Snyder, however, with the emergence of the New Customer Majority, consisting of people 40 and older, this aged-based idea has become outmoded. In Ageless Marketing, they present a practical alternative to the 1960s’ approach—one based on the values and desires that appeal to people across generations and that extend the reach of brands because of its inclusionary focus. Integrating new discoveries about human behavior, gleaned from genetic and brain research, and integrating these with time-tested concepts of development psychology, the authors provide a behavioral foundation for viewing and capturing customers that far transcends traditional statistical renderings.

“A fact overlooked by the prevailing Madison Avenue mind-set is that … this New Customer Majority, not youth and pre-middle-aged adults, is the primary source of today’s leading views, values, and behaviors in the marketplace.”
“Experiential segmentation prompts customers to insert themselves into a company’s customer portfolio by enticing their imaginations to flow toward its brands like a cartoon character led toward a tasty treat by a visible stream of aroma.”
In the past, 25-to-44-year-olds contributed more to the GDP than any other 20-year age group, but according to Wolfe and Snyder, this is no longer the case. As a result of the fact that 18-to-34-year-olds declined by 8 million during the 1990s (triggering the end of sales growth in many youth-oriented industries), the 25-to-44-year-old age group will have lost 4.3 million between 2001 and 2010. Thus, spending in this age group is projected to decrease by $115 billion during this period. In sharp contrast, the population consisting of 45-to-64-year-olds will grow by 16 million during this decade, becoming the New Customer Majority, and causing sales to grow by a projected $329 billion. And, by 2010, spending by people 45 and older will be $2.6 to $1.6 trillion more than spending by people between the ages of 18 and 39.

This aging customer universe challenges traditional ideas about segmentation. It is much easier to segment younger people and target them according to the characteristics by which they have been classified, simply because the worldviews, values, and behavior of young people tend to be more closely aligned with those of their peers. However, as people age, they become more individuated and more complex. Thus, those in the New Customer Majority are not so easily classified into any particular type of customer group, but fall into one segment and another, depending upon the shopping context. This means that as the adult median age continues to rise, the challenges of researchers and marketers will become more complex. Wolfe and Snyder believe that meeting this challenge requires seeing these “second-half” customers through a new consciousness.

People in second-half markets tend to be defined more by their core values and lifestyle profiles than by their ages. Around 40, people commonly experience a “personal paradigm shift” in which pursuit of ambitions is moderated by pursuit of balance. Questions like, “What is my life about, anyway?” and “At the end of the day, what matters most in life?” become primary considerations. After years of catering to the needs of their “social self,” these individuals begin a journey of self-actualization toward the “real self.”

Thus, in marketing to this New Customer Majority, it is crucial to understand how the forces of self-actualization drive changes in life purposes, core needs, and buying behavior. Sex, invoked to sell everything imaginable, is no longer the big “S” word in marketing, but has been replaced by the new big S word, self-actualization. And, though Gen Xers and Gen Yers have not yet begun a self-actualization journey, their behavior still seems to be deeply influenced by the New Customer Majority. As boomers pass into and through the autumn of their lives, the sheer weight of their numbers ensures their occupancy of the “psychological center of gravity” (PCG) and their influence on all society.

The authors insist that marketers cannot connect deeply with the hearts and minds of customers who are on this self-actualizing track if they project values that are more appropriate to the lifestyles of the young—lifestyles characterized by narcissistic and materialistic values that make product features, functional benefits, and economic value more salient. General ignorance of this fact, Wolfe and Snyder say, is playing a big role in the declining productivity of marketing.

Because dealing with emotional dimensions of customer behavior is more crucial in second-half markets than in first-half, basing marketing on “experiential segmentation” (i.e., brands are positioned according to the experiences they might lead to) can be more effective than basing it on the features and functional benefits used in market segmentation. By enabling customers to define a brand in terms of their perceptions rather than those of an advertising copywriter, experiential segmentation makes it easier for customers to make an emotional connection to the brand. This is a cornerstone of ageless marketing—a discipline based on values and desires that appeal to people across generational divides. Thus, it extends the reach of brands because of its inclusionary focus.

Wolfe and Snyder note that no two people perceive a product message exactly the same way—that in addition to inherited traits, life history, and present life circumstances, current season of life is a factor in each person’s perceptions. However, because each season is subject to inherent developmental objectives and catalysts, there is a great deal of predictability to these differences.

In Spring (childhood—the first two decades of life), which is characterized by fantastic, magical themes, the developmental objectives involve the acquisition of basic intellectual, emotional, and social skills needed to enter and navigate adulthood with reasonable success. This depends on play (i.e., modeling life), through which learning occurs.

Summer (young adulthood—the second two decades of life) is characterized by romantic, heroic themes. During this period, individuals integrate into social networks and undertake roles that serve their vocational, social, and personal aspirations in order to complete the development of their social selves. Here, the catalyst is a yearning for work, because work provides the material proof of a person’s social and vocational accomplishments. Thus, Summer is the season of acquisitiveness.

Fall (middle adulthood—the third two decades) is a season characterized by realistic, introspective themes by which individuals advance their inner selves to a higher quality of self-expression. This advancement involves an integration with the social self to yield a more resilient and balanced personality. Thus, the focus changes from becoming someone to being someone—it is a move toward a simpler life in which individuals progressively shift away from a focus on things to a focus on experience.

Winter, which constitutes the remaining years is characterized by ironic, paradoxical themes. It is a period of yearning for reconciliation with the world, the self, family, and friends. The result is a transcendent serenity that deepens one’s satisfaction with life and ameliorates any discomfiture with what the future may bring.

Wolfe and Snyder offer this season-of-life framework as a guide to more effective consumer research and marketing. They believe that basing marketing research, strategies, and execution on the developmental objectives and catalysts on the customer’s season of life will make marketing communications more relevant. Understanding the processes and milestones of psychological maturation offers a penetrating 360-degree view of the consumer that forms the backbone of developmental relationship marketing (DRM), Wolfe’s new paradigm for consumer research and marketing. DRM, “a … nonalgorithmic framework for discovering salient information about customers and for guiding the development and implementation of marketing programs,” is offered as an alternative to CRM’s dependence on algorithms. According to the authors, by reducing customers and their attributes to a mathematical problem, CRM reduces crucial nonquantifiable dimensions of the customer’s subjective self; however this subjective self exerts a strong influence on an individual’s motives for buying. CRM systems do an excellent job of tracking what people do, but they do not come close to tracking why people do what they do.

By marketing to values, rather than to age, and by being sensitive to season-of-life factors, marketers can extend their brand’s reach. The key to capturing the hearts and minds of the mature audience lies in first understanding both their most important values and their least. Values are defined as “(a) relatively stable thought or beliefs, (b) about desirable behaviors or ways of living, (c) that transcend situations, (d) guide decision making, and (e) are ordered by relative importance.” Thus, while “values guide actions and judgments across situations, attitudes and opinions are ‘domain-specific’.” For this reason, Value Portraits® offer a new approach to market segmentation that more effectively predicts the marketplace behavior of individuals in their Fall and Winter seasons.

Value Portraits are the results of a set of new, unique studies conducted by J. Walter Thompson’s Mature Market Group and Market Strategies’ Seniors Research Group of adults 45 to 61 and 62 and above. For the 45-to-61-year-olds (“leading-edge boomers”), 34 different values were summarized into the 14 dimensions (ranked from the most to least important )of altruism, family ties, intellectual curiosity, psychological well-being, spirituality, balance, leadership, civility, warm relationships, excitement, regret, conservatism, recognition, and national security. Values held by adults 62 and older were summarized into 14 dimensions: self-respect, family ties, faith and religion, warm relationships, kindness and compassion, intellectual curiosity, health and well-being, fun and happiness, conservative attitudes, financial security, power and recognition, excitement, and material possessions.

The authors note that the most critical factor in understanding the power of this research is that while all the values exist for all humans, they exhibit different degrees of intensity, depending on how individual experiences have shaped individual beliefs, and can, thus be categorized into such useful segments as “Woeful Worrier” “Liberal Loner,” “Fiscal Conservative,” “Active Achiever,” “True Blue Believer,” “In-Charge Intellectual,” “Intense Individualist,” “Hearth and Homemaker,” “Low-Energy Loner,” “Aloof Affluent,” “Educated Aficionado,” “Modern Moralist,” “Status Seeker,” Anxious Achiever,” “Intense Individualist,” and “Happy Helper.” This values-based segmentation has excellent potential to help marketers achieve greater insight into which words and phrases to use and which to avoid in each universe. Moreover, it will result in marketing to an ageless market because it eliminates chronological age as the sole basis of categorization and evaluation. When marketers take known information and look at it through the values lenses of their target market, they do not run the risk of filtering this information through their own eyes, which may hold strong biases concerning what a particular age demographic might mean. For, the reality is that as leading-edge boomers begin to age chronologically, there will be so many numbers, life stages, and types of boomers that trying to make sense of it all can be confusing, costly, and ineffective.

“Using values as a foundation upon which demographics can be overlaid, it is possible to narrow the size of the market … turning the ocean-size market into a swimming pool size target filled with very good prospects.”
“Connecting with customers is about doing the right things to get their attention and generate positive first impressions. … [which] are mainly a product of right brain mental processes.”
Given the differences in the meanings that older and younger customers draw from marketing messages, the natural assumption might be that it is unrealistic to develop messages for multiple age groups, which is, of course, the objective of ageless marketing. However, Wolfe and Snyder have found that when older people are targeted, younger buyers are easy to pick up. The key is to connect with customers by projecting their values through symbols that stand for those values and by using presentation techniques that speak across generations.

Marketing messages will only get into the conscious minds of the customer if they “earn a thumbs up” in the unconscious reaches of the brain. Thus marketers must consider five brain facts when creating marketing messages: (1) The right brain works in sensual imagery rather than in words. (2) Right brain images are direct reflections of reality as gauged by the senses, not abstract symbols of reality, such as words on a page. (3) The right brain leads in determining the relevance of incoming information. (4) Because the right brain looks for patterns/relationships, it forms a more holistic image than the left brain, which focuses more on detail. (5) The right brain is inclusionary and detects relationships; the left brain is exclusionary and detects categories.

If the right brain fails to sense a relationship between the interests of the individual and the contents of a product message, the product message has little chance of surviving information triage, which the authors define as “a set of processes by which the brain reduces information flow to what the conscious mind can manage.” Thus, the right brain may be thought of as the gatekeeper to the left brain (i.e., information relevance rather than novelty of presentation is more often the catalyst of intentional attention to the contents of a message). This is more so among second-half customers because they are less intrigued by fantastical novelty than are younger minds.

The authors note that it is a confirmed fact that “absent emotional response to a stimulus, a person cannot substantially relate the object of the stimulus to his or her personal interests.” The hemisphere principle of marketing communications—lead with the right; follow with the left—flows from this fact. Nonetheless, though emotional arousal precedes rational processing, what induces emotional arousal is subject to season-of-life factors.

Another element to consider is the tendency of effective right brain-oriented communications to be more subtle than left brain-oriented communications. Studies have found that “A subtle approach works better because it has a chance to get past the consumer’s barrier of skepticism.” A subtle approach also allows the customer’s imagination to define the product/service in terms of his or her own values, needs, and desires. However, when marketers combine elements that appeal to both sides of the brain, a “cognitively holistic” message results that is more effective with older consumers.

Due to their many years of experience, older customers are also more comfortable going with their gut feelings because their first impressions tend to be more complete than those of younger customers, who tend to pay more attention to the details of the trees rather than to the big picture of the forest. However, the quickness of second-half customer to make decisions based on first impressions does not mean they are more opinionated and less likely to switch brands. A 2002 study, underwritten by AARP, found that product category is a better predictor of brand loyalty than age, price is a stronger motivator among younger people for switching brands, and older people are more willing to switch to higher-priced brands to get better quality. Product messages also work best when first impressions are pleasing. “Fear ads” that scare people might work well with some, but they can damage a brand’s image in the eyes of the larger market (second-half customers), which would rather be pleased than shocked.

Context is another factor that shapes the significance of symbols, which have both objective and subjective meanings. First-half customers generally depend more on consensus-based objective meanings because more of their behavior is dependent upon what others think. People in second-half markets tend to depend more on subjective gut-feeling meanings. Some symbols have meanings that are specific to given peer, socioeconomic, and ethnic groups, while others are somewhat universal. Some have meanings that are uniquely shared among people in particular developmental and/or lifestyle stages. And, some meanings are influenced by mood. Thus, it is essential that marketers realize that what they think a marketing message means is not always the meaning customers attach to it. Customers are more interested in the meanings they themselves infer than in the meanings the marketer implies.

It is important to note that people sometimes infer meanings that lead to perceptions unsupported by reality. It is a situation (called meaning transference) in which the customer transfers the values from one object to another, despite objective reality—for example, when big taillights on a Chevy come to mean good engineering, simply because Mercedes uses big taillights. Thus, marketing messages that stimulate meaning transference can be more powerful than messages designed to invoke rational responses. This is due to the fact that, when meaning transference is stimulated, emotionally charged responses are produced that override left-brain cynicism or prejudice. “Sensation transference,” the process by which consumers transfer feelings from advertising and packaging to the product itself, is a similar phenomenon.

Finally, it is imperative to be aware of negative symbols, particularly those replete with “anti-being experience” meanings. When a product design or a service conveys symbols of conditions that repel, discomfort, threaten, or thwart a person from being what he or she wants to be, it triggers “identity values-originated self-preservation imperatives.” Regardless of age, people do not like messages that remind them of what they do not want to be: however, the older the market, the more important it is to refrain from subjecting people to anti-being experiences. Given the importance of the New Customer Majority (without whom, the authors note, many companies cannot grow their sales), it makes sense to double check every marketing communication for symbols created by those who lack full sensitivity to the value of various symbols among older people.

According to Wolfe and Snyder, it is an empirically proven fact that “a marketing message or brand must generate emotional arousal for customers to be able to experience the message or brand as having personal relevance to them.” Brand loyalty starts in the emotional right brain; customers bond with a brand when that brand generates pleasure that customers want to sustain. A product message that emphatically connects with customers in this way immediately gets their attention. When customers experience this kind of empathetic connection, they feel, rather than think the sender of the message is believable. This is why selling features and benefits (left-brain argument advertising) does not work as well as right-brain drama advertising, which evokes feelings. Before individuals can think something is believable, they must feel its credibility.

Although the importance of ongoing dialogue has long been stressed as a means of producing a 360-degree view of customers that promotes credibility, asking customers what they want, and how they want it is not a dialogue. It is a request for information that does not allow for the multidimensional nature of believability. A customer’s perception that a company is interesting is the first step; however, truly believable dialogue depends on three attributes: (1) conversational reciprocity, (2) reciprocal empathy, and (3) reciprocal vulnerability. It is not enough to invite consumer input; an enterprise also needs to show concretely how the consumer’s input actually influences the company to do something. It is not enough for a company to connect empathetically with consumers; it must make it possible for consumers to connect empathetically with the company and with the company’s brand. Finally, empathy is closely related to vulnerability, for when people express empathy, they reveal something of their private selves and, thus, become more vulnerable. Moreover, vulnerability, just like empathy, is also a two-way street that humanizes both sides of the marketer-consumer relationship.

Taking physiological changes associated with aging into consideration also begins the process of establishing believability and, thus, is another essential part of building empathetic bridges. Any marketer committed to getting a 360-degree view of second-half customers, must become aware of alterations in the five senses of sight, hearing, taste, smell, and touch, as well as the inevitable decline in muscle strength and cognitive abilities, correlated with aging. These all beg for fundamental alterations in the design of products, packaging, marketing messages, point-of-sale environments, and service delivery—alterations that customers of all ages would be more than willing to embrace.

* * *
Bibliographic notes by chapter and a subject index are provided.


In 1990, Wolfe wrote Serving the Ageless Market, which warned, “The Seniors are coming!” in hopes that corporate America would pay attention to the demographic-driven phenomenon just beginning to transform the marketplace. However, the business world was, at the time, preoccupied with the information technology explosion (among other things), employing it to lower costs significantly and make historic productivity gains in the process. Nonetheless, marketing, which thrives on information almost like no other discipline, became increasingly less productive, while consuming ever-increasing portions of the corporate budget. As Ageless Marketing drives home, “Consumer research and marketing have failed to realize the relationship between changes in the leading values, views, and behaviors of the marketplace and the New Customer Majority.”

This comprehensive exploration of why research and marketing have lost their way frequently veers off the beaten track of mainstream marketing ideas to offer a view from the perspective of a “new consciousness” that has many novel elements—the implications of which are profound. Thus, if one is only interested in tweaking a few marketing techniques and processes, this is not what is to be found here. Wolfe and Snyder have made a compelling case for changes so fundamental as to (in their opinion) rival the transformation wrought by the dawn of the Age of Enlightenment. They are quite serious, for they believe, without equivocation, that the welfare of the entire economy and thousands of businesses depends on an understanding that marketing’s mind-set must change to accommodate the arrival of the New Customer Majority as “the most powerful force in the consumer marketplace today.”

So, what are these novel elements? First, the new consciousness arises from seeing customers through the lens of developmental psychology, thus, offering insights into customer behavior that cannot be gained through traditional consumer research and marketing. These insights emerge from the integration of key empirically derived findings from brain science to formulate a new paradigm of developmental relationship marketing so as to facilitate an “authentic” 360-degree view of customers.

Secondly, the authors’ attempt to reduce the role that opinion plays in marketing decisions by offering a foundation firmly rooted in empirically grounded behavioral science that allows marketing to move beyond anecdotal knowledge and statistical “caricatures” of customers. The objective is to stop the parsing of human beings into dehumanized and dehumanizing numbers that obscure why marketing has been underperforming so grossly. The other objective is to provide the necessary tools for identifying and implementing marketing solutions that are eminently more effective in this era of the New Customer Majority.

Thus Ageless Marketing introduces a wholly new framework, formed by two essential human-behavior planks, which the authors says have been long ignored in consumer research, marketing practice, and the academic world: (1) The roots of behavior lie in an individual’s biological makeup and, thus, are beyond the reach of the conscious mind and traditional consumer research. (2) The conscious mind senses, perceives, thinks about, and acts on urges that originate outside of human consciousness. This integration of biology and psychology provide an understanding of behavior that is impossible to obtain with most surveys, focus groups, or other traditional tools of marketing.

Wolfe and Snyder open up new vistas of thought and exploration for those who complain (and rightly so) that: Advertising no longer works because mass channels of communication no longer exist. Product innovation no longer works because competitors can copy and offer success innovations in no time flat. Internet branding no longer works because generics are gaining market share. And, CRM doesn’t work for fast-moving consumer goods. The authors offer an antidote for marketing itself, which has fallen victim to its own mistakes and society’s consequent lack of trust. And, they throw out a strong, much needed life line to “Alice, the Seeker”—those individuals who have no particular distinction as a consumer, who are of little importance to marketers targeting mature adults, but who represent a huge, difficult market. Ageless Marketing provides the necessary tools for capturing that overlooked segment and gaining trillions in the process.

Reading Suggestions

Reading Time: 25-27 Hours, 380 Pages in Book

Ageless Marketing’s primary objective is to plot a path “toward a new consciousness that will clear away a numbers-saturated fog that obscures a clear-eyed view of why marketing has been grossly underperforming.” However, because this path is off the beaten track of the mainstream, there’s a lot of virgin “forest” through which one must trek. Wolfe and Snyder have organized, integrated, and evaluated insights into human behavior, classical developmental psychology, and new discoveries in genetics and brain science to build the common foundation that they feel has, to date, been lacking in marketing. As a consequence, they combine reports of original research, reviews of the literature, analyses of theoretical developments, and practical guidelines into a comprehensive and complex tutorial in which detail is layered upon detail and then explored from every possible perspective. It is a painstakingly researched and written work that demands a painstaking reading.

With that said, we recommend that you commit to setting aside the time to read no more than one or two chapters at a time. As you read each chapter, you will find what appears to be a lot of repetition that may tempt you to skip and skim. Don’t. These recurring themes from brain science, developmental psychology, sociology, demographics, the authors’ personal experiences in the field, etc., are like the indispensable pieces in a jigsaw puzzle: Separately, they may appear to be redundant, but without them, it is impossible to construct a full picture of current and future consumer behavior.


Chapter 1: Why Marketing Stopped Working
Chapter 2: Statistics Don’t Buy
Chapter 3: Second Half Customers Seen Through a New Consciousness

Chapter 4: Nature versus Nurture
Chapter 5: The New S Word in Marketing
Chapter 6: The Biological Roots of Customers’ Needs and Behavior
Chapter 7: Seasons of a Customer’s Life Interlude

Chapter 8: Value Portraits—a Matter of Values for the Fall and Winter Seasons of Life
Chapter 9: Value Portraits—a New Approach

Chapter 10: Life Satisfaction
Chapter 11: Family Connections and Complexities
Chapter 12: The Three Lifestyle Stages of Adult Life

Chapter 13: Symbols
Chapter 14: Building Empathetic Bridges
Chapter 15: The Truly Ageless Market
Appendix: Research Methodology

About the Authors

David B. Wolfe, considered an international expert on consumer behavior, laid the conceptual basis for Ageless Marketing through his pioneering work in developmental relationship marketing (DRM)—a marketing platform he originated. Wolfe is also the coauthor of The Forty Plus Market (1988), the author of Serving the Ageless Market (1990), and has written numerous articles for American Demographics, the Journal of Consumer Marketing, Marketing Insights, and the Journal of Health Care Marketing.

Robert E. Snyder, former head of the Mature Market Group of J. Walter Thompson, is currently a partner with Retirement Living Services of Hartford, Connecticut. He is widely regarded as an expert on the values, belief systems, and buying habits of older Americans, and continues to act as a spokesperson for Value Portraits® , a proprietary joint project between J. Walter Thompson and Market Strategies, Inc.

For more information, please

Review: Creating Customer Evangelists - How Loyal Customers Become a Volunteer Sales Force - by Ben McConnell and Jackie Huba

Creating Customer Evangelists is not about religion; rather, it is about how traditional marketing and advertising is changing. The innovative business owners and executives who have changed the rules have taken their example from the world’s religious evangelists—those believers who roam the world spreading the word about their faith and beliefs. Religious evangelists and innovative business executives know that beliefs are based on emotional connections, on deepseated convictions, and the promise of a better way.

Authors Ben McConnell and Jackie Huba, veteran marketing communications strategists, describe how customerdriven referrals can determine a company’s success, or lack of success. Future customers, according to McConnell and Huba, often hear about a company, and its products and/or services, first from a friend, family member, or colleague. If they are loyal, satisfied customers, these friends, family members, and colleagues are key “influencers”—evangelists—for future customers.

In the book, the authors examine seven small, medium, and large companies in varied industries to illustrate how they have created, and use, customer evangelists to maintain successful, profitable businesses, even in uncertain economic times.

“When something helps people become better people, people support it. They tell everyone about the experience; in other words, they become evangelists. ”
“The roots of Krispy Kreme’s grassroots marketing are in avoiding big budgets. Low or no budgets help companies think creatively about their marketing tactics, contends [marketing chief Stan] Parker.”
“Being a good company is like being a good lover: First, you ask your partner what they want, then you give it to them. Then you ask them if they liked it. If they say yes, you give it to them again! That’s what customer service is all about: being good to people.”
--Dallas Mavericks’ owner Mark Cuban

Customer evangelists are different from loyal customers. Loyal customers buy from you, or use your services, on a regular basis. Their loyalty may be the result of convenience or low prices. They are repeat customers, but not necessarily loyal customers. Customer evangelists display several key attributes. They not only purchase your product or service, they believe in it, and they strongly, even passionately, recommend the product to family, friends, and colleagues. They provide you with unsolicited feedback or praise, and while they will forgive occasional dips in service or quality, they will also let you know when quality is not up to par. They extol your company’s virtues. Buying or using your product or service makes them feel connected to something beyond themselves. A customer evangelist is a like friend who will be with you through good times and bad, and who becomes, in effect, a “volunteer” salesperson for your company.

Analyzing this phenomenon, McConnell and Huba believe that people are willing to help companies succeed if they have had a great experience of their own as a result of purchasing a product or service from the company. There is, according to McConnell and Huba, an intrinsic human desire to help other people have the same great experience.

In studying companies which consistently weather uncertain economic times without losing profitability or making major budget cuts, the authors discovered similarities in the marketing strategies and the customer relationships of these companies which can be broken down into six tenets of success: (1) these standout companies continuously gather feedback from customers and act upon it; (2) they make it a point to share their industry knowledge freely; (3) they expertly build word-of-mouth networks to promote their product or service; (4) they encourage customers to meet and share; (5) they devise, whenever possible, smaller, or specialized offerings of products and services to get new customers to try them; and (6) they focus on making the world, or at least their industry, better. These tenets can be applied across the spectrum of business—small, medium, or large—and can apply to any industry.

Customer evangelism has risen to the fore in large part because of the failure of traditional marketing techniques. The foundation of most marketing strategy today remains the four P’s (Product, Place, Price, and Promotion), principles developed in the early 1960s in a very different business climate than that of the early 2000s. In addition, many, if not most, company executives view marketing as being synonymous with advertising. Advertising messages are now so pervasive in our society (the average person is exposed to more than 3,000 advertising messages—in various forms—each day), that they lose their persuasive power, according to McConnell and Huba. With so much competition, mass media ads must “scream louder and more often just to squeeze through the clutter,” resulting in what the authors call “desperation marketing”—a sign that nothing else is working.

In our “instant gratification” society the marketing function, in many of today’s companies, offers a path up the ladder of success within the company based on shortterm goals and profits. Taking their cue from Wall Street, many marketing managers are promoted on the size of the budget they grew and managed, rather than on the longterm results they achieved, customer satisfaction, and the relationships they built with customers and vendors. Part of this personal gratification is the drive to continually acquire new customers—the authors call it “the thrill of the chase,” or “marketing to new customers is sexy”—through the process known as “branding.” Research has long shown that acquisition of new customers is five times more expensive than keeping current customers happy. Keeping current customers happy is hard work the authors say, and less likely to bring accolades to the marketing manager on his or her way up in the company.

A good example of the declining effectiveness of traditional marketing is Pepsi’s 2001 ad campaign featuring pop sensation Britney Spears. The soft drink giant hired Spears to launch a multi-million dollar campaign, one of the most expensive in the company’s history. One year later, not only did the sale of Pepsi products not increase, they decreased by one percent.

McConnell and Huba’s premise is that times have changed, and that our marketing model must also evolve from the message platforms based on traditional advertising and direct mail to one based on building customer loyalty and goodwill. Focusing your business, and your marketing, on creating customer evangelists is, McConnell and Huba contend, the most profitable approach to acquiring and retaining customers.

Customer evangelism is the most effective form of advertising possible (and it is, in large measure, free) because the “volunteer salesperson” is a proven, trusted friend. The advice comes from an independent source, not the company or business itself, making the message a genuine testimonial. It is more than targeted marketing; it is “personalized” marketing. Customer evangelists are the ultimate salespeople, according to McConnell and Huba. They know the target audience(s) better than the company because they are themselves the target audience. They can locate others (prospective customers) like themselves faster and easier than the company can, and they know how to translate the value proposition, and personalize a company’s product or service.

Customer evangelism is a philosophy about both customers and relationships. Everything in a company that creates customer evangelists is literally focused on the customer and on ways to keep customers coming back. These companies learn everything possible about their customers by interacting with them. “Most people in business are committed to the customer in spirit,” McConnell and Huba write, “but lack the tools and tactics to fully embrace this commitment.”

They identify three keys to a successful marketing program driven by the concept of customer evangelism. First, the company must offer a great product or service. Customers know what makes a company’s product great. Ask them—it is what customer evangelism marketing is all about. A great product or service satisfies a need, want, or desire. It is easy to use, easy to find, and easy to purchase. It is of good quality and value, and, in some fashion, makes the customer’s life better and/or solves a problem. However, high quality alone does not guarantee a great product. Sony’s Betamax system and IBM’s OS/2 are two examples of high quality, state-of-the-art products that lost out to their competition, JVC’s VHS system and Microsoft’s Windows, because JVC and Microsoft created not a superior product, but a more carefully crafted marketing program.

Second, companies that practice customer evangelism marketing have an emphasis on their customers that can be described as maniacal. And last, customer evangelismdriven companies understand that business is all about people—and relationships. These company executives look at customers as trusted friends, not as numbers or demographic groups to be targeted with military-like campaigns. McConnell and Huba liken the relationship between company and customer to that between people who are dating. Savvy executives and marketing managers know that people are loyal to people, not to brands and logos.

To begin implementing a customer evangelism marketing program, McConnell and Huba make five recommendations. First, free yourself from the four P’s to re-think promotion as a two-way process—as a dialogue with prospective customers. The key is conversation, not self-promotion. Second, understand that the best advertising is free. Word of mouth promotion from your customer evangelists is free, but it has to be earned. Third, focus on the long-term rather than the short-term. Fulfilling sales quotas and profits are important, but not when they drive companies to take a short-term view of taking care of customers. Next, make certain that your customers love you, and then begin asking if they will open their networks and refer your product or service to others. Finally, believe in your customers. McConnell and Huba report that investing in customers over time will result in higher profits and lower operating costs. Evangelism marketers believe that, without fail, doing the right things for customers will be rewarded tenfold with repeat purchases, and with new customers who purchase because of the recommendation of current customers.

“A common element among our seven case study companies is an unwavering emphasis on an enjoyable experience. A utilitarian experience is not memorable, but an enjoyable and fun experience creates buzz.”

Although the approaches may be different, in researching companies large and small in various industries that successfully practice customer evangelism, McConnell and Huba found six common themes. These companies practice customer plus-delta, “Napsterize” their knowledge, build buzz, create community, make “bite-size” chunks of their products and services, and create a cause.

Regardless of the industry, all of these companies know what their customers are saying about them because they encourage customer feedback. These companies have mastered what McConnell and Huba call “customer plusdelta.” The “plus” indicates an understanding of what the company is doing well, and of what the customers love and evangelize. The “delta” represents the areas that need improvement. These customer-centered organizations tend to use very simple tactics to understand what their customers are thinking and saying without investing large sums in marketing research; in fact, practicing customer plus-delta at various customer touch points may make traditional market research obsolete.

McConnell and Huba’s golden rules of customer plusdelta include genuinely believing that customers have good ideas; gathering customer feedback at every possible opportunity; focusing on continual improvement; actively soliciting good and bad feedback, and not spending large sums of money doing it; seeking real-time feedback; making it easy for customers to provide feedback; using technology to make the process easier; sharing customers’ feedback throughout the organization; using the input to make changes, and communicating these changes back to customers.

The customer plus-delta process is valuable to a company because it builds loyal, and ultimately, more profitable customers. Xerox, for example, learned in the early 1990s that very satisfied customers were six times more likely to repurchase their products than customers who were simply satisfied. Customer feedback will improve, and in fact cannot help but improve, the quality of a company’s products and services. Asking for feedback impresses customers and shows that a company cares. Customers will tell their family members, friends, and colleagues that this is a company that values its customers and their opinions. Customer feedback can also help a company evaluate new concepts and new products before those services and products are officially launched, often saving time and money, and lessening large-scale financial risks. Build-A-Bear Workshop’s CEO, Maxine Clark, reports that customer advice has developed 99 percent of her company’s products.

How does a company execute the customer plusdelta strategy? McConnell and Huba recommend making real customer contacts. Herb Kelleher, the chairman of Southwest Airlines, one of the seven companies profiled in the book, routinely flies on Southwest’s planes as a “pseudo” flight attendant, and sits with customers to find out what they are saying about Southwest. Similarly, Dallas Mavericks’ owner Mark Cuban often sits with fans in the $8 seats, talking with them about their experiences at games.

The Internet has made interacting with customers easy and cost-effective. Search engines allow marketing managers the opportunity to learn what people are saying about the company in newsgroups and on email discussion lists. A company’s Web site can be constructed so that a page encourages customer feedback, and from that page complaints, questions, and inquiries can be answered, with the same page providing an opportunity for customers to post what McConnell and Huba call “love letters” about the company’s products or services. The Web also makes online customer surveys a more viable option than more traditional, and more expensive, research methods such as focus groups. In an October 2001 Wall Street Journal article, Procter & Gamble’s director of consumer research services reported that P&G had discovered that Web-based feedback is five times cheaper and produces data four times faster than a traditional consumer survey.

Companies that focus on creating customer evangelists also exhibit a willingness to share their knowledge with customers, with business partners and vendors, and with the industry in general—what McConnell and Huba call “Napsterizing” your knowledge. Companies that share their intellectual property and business processes with customers—and partners—increase, say the authors, the perceived, and the actual value of their products and services and can open the door to new products and services. The Internet, and other technology which allows information to be shared at previously unimaginable speed, has made possible the Napsterization of a company’s knowledge. Customers today often expect open platforms and try-before-you-buy products and services. These are usually customers who also like to share information and data.

Napster-like models are viewed as good for the marketplace because they prompt industries to reassess their market position, and ultimately, their value to their customers, and Napsterization is seen as having a positive effect because knowledge widens the information portal to customers and allows customers to have a stronger ownership of a company’s product or service, which makes it easier for customers to promote and share information with prospective new customers. Napsterizing a company’s intellectual efforts can help create industry standards and mean wider acceptance of products and services.

Building the buzz, or spreading the word, is how McConnell and Huba describe the third tenet of customer evangelism marketing. Buzz, as defined by Emanuel Rosen in his book The Anatomy of Buzz, is “the aggregate of all person-to-person communication about a particular product, service, or company.” Buzz can help people, i.e. new customers, discover your business faster than traditional marketing programs can. How powerful is buzz? The consulting firm McKinsey & Company estimates that at least 67 percent of the U.S. economy is influenced by buzz. Virtually any business or industry is buzzworthy.

Companies can take advantage of the buzz that is going on around them by discovering who the “influencers” are among their customers and by forming relationships with these influencers, or “hubs,” as Rosen calls them. Then, company executives are able to target the hubs with new products and services. Bringing the hubs to events where they can talk with others gives hubs incentive to evangelize a product or service to their network. Apple, for example, holds its twice-yearly event MacWorld so that Mac enthusiasts have the opportunity to renew friendships, talk about their love for the Mac, and interact with CEO Steve Jobs. Buzz-based programs using everyday influencers—customers—can be a substitution, or an addition, to the mass media approach that most public relations and marketing strategists use.

By creating memorable experiences for customers, companies and organizations can create sources of buzz and add to the value of their products. For the Dallas Mavericks’ Mark Cuban, and his marketing chief, Matt Fitzgerald, their goal is for fans to have a fun and memorable experience, not just attend a basketball game. Buzz, however, is not just for the sports or entertainment industries. Retailing success story Build-A-Bear Workshop creates a memorable experience for its young customers by involving them in the manufacturing process of teddy bears and stuffed animals.

Memes are another tool a company can use to help it build and spread buzz. Memes are self-explanatory concepts that move quickly, like viruses, through groups of people. Examples of memes are, according to the Oxford biologist who coined the term in 1976, tunes, ideas, catch phrases, and even clothing fashions. Successful examples of memes are “Got milk?” “NBC—must see TV,” and “Intel Inside.” Memes allow customer evangelists to tell a company’s story easily.

Organizations that make evangelists of their customers often create “customer communities.” These communities create a sense of belonging, of being a part of something bigger than themselves. For companies, customer communities build loyalty, provide valuable feedback, and lead to increased sales. For customers, the benefits include advice and support, and an opportunity to connect with like-minded people. Building communities, of necessity, will work differently for different industries. What is the same, however, is the interaction between company representatives and customers in such a way as to allow the company to understand its connection with its loyal customers.

Companies use a variety of in-person events and online communities to accomplish this goal. Saturn, a division of General Motors, hosts its annual ultra-successful two-day extravaganza, the Spring Hill Homecoming, at the Spring Hill, Tennessee manufacturing plant, to bring together 60,000 owners and guests every summer. Other community-building strategies include clubs, such as the Nestle-owned Buitoni pasta’s “Casa Buitoni Club,” a community and loyalty program with a database of 200,000 customers; user groups, such as Harley-Davidson’s Harley Owners Group (HOGs), which boasted more than 650,000 members in 1,200 chapters in 2002, allowing Harley owners to share their passion for riding and Harley ownership; online bulletin boards such as the forums Dell and Microsoft provide for their customers; email discussion groups and newsletters; and fan Web sites. O’Reilly & Associates, the technical book publisher which McConnell and Huba profile, publish 35 different newsletters, with special newsletters for librarians, professors, and book retailers.

Devising specialized, smaller offerings—what McConnell and Huba call bite-size chunks—to get customers to “bite,” is the fifth tenet of customer evangelism marketing. Breaking a company’s product or service into bite-size chunks reduces the potential risk for a decision maker who is purchasing from the company for the first time. It shortens the sales cycle, and also helps to eliminate possible inhibitors to the purchase, such as cost or time. A small, specialized offering can get the product into customers’ hands and minds quickly and easily—and it can create buzz by introducing the product to more people who will then, in turn, tell others about it. Finally, it provides goodwill with customers because it provides value without requiring a large-scale purchase.

Consumer packaged goods companies, such as Procter & Gamble and Unilever, have used bite-size chunks, or sampling as it is known in the packaged goods industry, for years. Most people cannot resist the opportunity to try something that is new—and free. The technology industry has also had much success with bite-size chunks. Many consumer software companies allow prospective customers to try a product for a limited time, usually by providing a full-featured version of the software that can be downloaded for a limited number of uses.

The companies McConnell and Huba profile show how bite-size chunks can be used in virtually any business or industry. Krispy Kreme employees offer new customers a free doughnut, or an extra one to the customer waiting in line. SolutionPeople, the creativity consulting firm, offers a daylong session for prospective customers to see what the firm’s complete corporate brainstorming package is like. The Dallas Mavericks’ fans have the opportunity to “try out” season tickets by purchasing five-game and ten-game packs of tickets before upgrading to a full season-ticket status. IBM’s “Test Drive” program allows programmers to test Linux applications online without having to buy IBM hardware.

Customer evangelism begins with a great product or service that has come from a visionary leader who has recognized a need. The product or service becomes the object of an almost cult-like customer following (witness the Macintosh phenomenon Apple created) that supports the product. As the customer following grows, supported by the company, it begins to organize itself around a cause. Steve Jobs’ vision was to bring computers to people, to unleash productivity and creativity, and as the authors tell us, when something helps people become better people, people support it and a cause is born.

Emotional attachment to a product or service is one of the keys to creating customer evangelists. McConnell and Huba identify two simple ways to build emotional attachment: adopt an existing charitable cause (often called cause-related marketing), or sell dreams instead of products, following the Apple example.

American Express led the way in the adoption of charitable causes with its campaign to support refurbishment of the Statue of Liberty in 1983. While raising $1.7 million for restoration work, American Express Card usage rose by 28 percent during the campaign’s first month and new card applications increased by 45 percent. Subsequent research published in the Cone/Roper Cause Related Trends Report found that Americans consistently support cause-related programs, with 80 percent of Americans preferring companies that commit to a specific cause for a long period rather than those that choose multiple, short-period causes. Other successful companies that espouse causes of nationwide interest include Ben and Jerry’s support of environmental problems; The Body Shop’s involvement with environmental and human rights concerns; Wal-Mart’s participation in children’s charities, education, and community-based issues; and Avon’s wellknown association with women’s health issues, particularly breast cancer awareness.

Some companies sell a dream—something bigger than themselves. They show customers that they exist for more than annual profits; they evangelize how they help customers live better lives. Selling a dream is not, however, a product of the marketing department. To succeed, for customers to experience its genuineness, it must be an embodiment of the principles and values of the organization’s leaders and employees. Among companies that sell dreams are the often-mentioned Apple; Southwest Airlines’ promotion of “freedom” to connect easily and frequently with loved ones; Starbucks, whose coffee shops provide meeting places for neighborhoods and communities; and the Dallas Mavericks, who create emotional memories for fans in the city of Dallas.


To demonstrate the six tenets of customer evangelism in action, McConnell and Huba profile seven organizations from varying industries: Krispy Kreme, SolutionPeople, O’Reilly & Associates, the Dallas Mavericks, Build-ABear Workshop, Southwest Airlines, and IBM. Although all seven practice the tenets of customer evangelism in greater or lesser degrees, depending upon the nature of their industries and the demographics of their customer base, most companies stand out in one or two particular areas of evangelism.

Winston-Salem, North Carolina-based Krispy Kreme expertly builds the buzz, according to McConnell and Huba. The company offers a hot product—hot literally and figuratively—that generates tremendous word-of-mouth advertising. Doughnuts are emotionally satisfying treats; when customers have a good doughnut, they tell others so that they can have the same experience.

The company has mastered the art of strong, creative PR efforts for the opening of new stores. Openings become media bonanzas that draw large crowds, and company executives routinely make themselves available during openings to capitalize on community interest in the store and the product. In addition to memorable store openings, the Krispy Kreme mobile doughnut machine, which debuted in 2002, takes the Krispy Kreme experience on the road to places where stores are not yet open. The company cultivates customer goodwill, exploits buzz opportunities, builds friendly, “down-home” relationships with the media, and has a go-slow growth plan that is obviously working—each Krispy Kreme location typically rings up $2.5 million each year in sales.

Gerald Haman, founder and president of Chicago’s SolutionPeople, a 14-year-old creativity, innovation, training, and consulting firm, created a marketing methodology to investigate what companies need, and then to create tools and ideas to meet those needs. He creates customer evangelists by “Napsterizing” his knowledge. Haman developed a unique and helpful tool—the KnowBrainer, a product that looks like a deck of cards with a binding that contains thought-provoking questions to motivate users to think more creatively about their problems—that is a handheld encapsulation of his methodology. It creates a lot of buzz, and he creates an enjoyable, interactive experience for customers to help them conduct more successful brainstorming sessions in their own companies. Haman, who is a grassroots “networker” with the media and with the business community, offers prospective clients a one-day seminar at his Chicago studio (the Thinkubator) to test out for several hundred dollars what his Fortune 500 clients pay up to $100,000 to experience over several days.

Like Haman, Tim O’Reilly, founder and president of technical publisher O’Reilly & Associates, is a strong proponent of “Napsterizing” his company’s knowledge, and in the process, he not only creates a community of loyal fans, he has also created a cause centered around openstandards software, thus encouraging the development of the open source movement. O’Reilly has largely built his marketing strategy around technology advocacy issues—to the admiration and devotion of loyal customers—which has positioned him as an industry leader. The company’s Web site offers a wealth of information—free—and the Safari Tech Books online project brings together many technical book publishers to put books online as a subscription service, resulting in huge amounts of information being available outside the company’s core products. The fount of O’Reilly knowledge is available not only online, but also in the annual conferences that bring customers together and provide a forum for the company to understand issues important to its customers. “Ideas grow in value as you spread them,” O’Reilly says.

McConnell and Huba describe Dallas Mavericks’ owner Mark Cuban as a rebel with a cause, out to make life better for Mavericks fans. He’s accomplishing this goal largely by creating community. The Mavericks are now a success both on the court and in the back office, largely through the efforts of the colorful Cuban, who in his unceasing drive to please fans, often converts missteps into marketing bonuses. How many other professional sports owners flash their email addresses on the scoreboard to solicit fan input? He connects with his customers by being accessible, by focusing on the customer experience, and by offering incentives and opportunities for joining his cause. The Mavericks’ marketing strategy is responsive and flexible; customer feedback delivered from the top down, rather than from the bottom up, results in a more responsive organization.

At a time when traditional retailing has been faltering, Build-A-Bear Workshop is thriving. The company’s founder, Maxine Clark, a retail veteran, knows what is missing: theater, emotion, and connection, all of which Build-A-Bear capitalize on in creating customer evangelists for the stuffed animal retailer which now grosses over $100 million in revenues four years after its founding. The experience that young customers have of “building a bear” in the company’s stores is part of the sale, and creates a memorable experience which, in turn, builds buzz. The company continually solicits customer feedback and aligns it with employees’ compensation, a strategy that keeps the store responsive to customers and results in repeat memorable experiences. Clark understands that before you have customer evangelists, you must have employee evangelists. Build-A-Bear also adds in-store events and new products based on customers’ input.

Like Build-A-Bear in the retailing world, Dallas-based Southwest Airlines remains a strong, profitable airline at a time when virtually every other company in the industry is facing serious financial problems. Southwest remains aloft because of the dedication of its customer evangelists, evangelists created through unfailing response to customer feedback, an ability to build the buzz, and its creation of a Southwest community. The company’s somewhat maverick corporate culture is fueled by its employees who are encouraged to show their personality and whose flight attendants, in particular, are known for a wacky sense of humor, which generates tremendous buzz. Back-office managers are encouraged to work frontline jobs occasionally to hear directly from customers. A fun work environment translates into a fun environment for customers, company officials believe. And, the company does not neglect to pay special attention to the airline’s best customers and to treat them well outside of the terminal.

IBM, considered by many an unlikely organization to espouse customer evangelism, has good reason to do so. The company has invested $1 billion into making the Linux operating system a part of its core strategy, and is investing in Linux development centers around the world, training sales, marketing, and professional services experts to evangelize Linux to customers and developers. Like O’Reilly & Associates, IBM is embracing a cause—open source software—as much as a technology, and what’s more, it is making large portions of its intellectual property widely available to customers and developers. The technology giant, according to McConnell and Huba, is trying to avoid the trap many technology companies have fallen into, that of thinking that they know what is best for the customer and that technology customers don’t know what to ask for if it hasn’t been invented yet.

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Endnotes by chapter, references, and a subject index are provided.

Although the six tenets that McConnell and Huba discuss undergird the concept of customer evangelism as a marketing strategy, the case studies show that there are other contributing factors in a company’s ability to develop, or embrace, evangelism.

It must all begin at the top with the company’s CEO, founder, or president. A number of the case study companies have a CEO who is, if not flamboyant and colorful, at least media-worthy, outspoken, and willing to challenge the industry status quo. Evangelism is a top-down strategy; it requires employees who are committed to the company and its vision. The CEO, no matter how great his vision, cannot accomplish it alone. He/she must have employees to help carry it out; this, then, implies a management philosophy that can successfully recruit and retain employees for the long term.

In challenging the industry status quo, the CEO must have a commitment to a cause or a movement that has popular support among the vast majority of consumers and an investment in long-term relationships—with employees and customers—as opposed to a philosophy that focuses on short-term profits. Companies driven by customer evangelism marketing look askance at Wall Street, and have a non-traditional business philosophy that sees business as interactive and in many cases (depending upon industry), even theatrical that is built upon the emotional or intellectual bond customers have with a company’s product or service.

Although much emphasis is placed on the changing roles of marketing and advertising, it is important to note that McConnell and Huba don’t eschew marketing or advertising as an organized corporate function; rather, they advocate incorporating customer evangelism into the marketing mix, which will result not only in smaller sums of money that have to be devoted to the more traditional forms of marketing, such as direct mail and focus groups, but also an increase in the volume of customers—and ultimately revenue—because of the powerful influence of customer evangelists working on the company’s behalf.

It may be difficult for an analytical person to accept the tenets—the faith—that drives customer evangelism. Customer evangelism marketing may seem idealistic and even vague, without ready at hand calculations of return on investment. However, the practice of evangelism in American business is not new, and may be traced to Guy Kawasaki and Apple Computer in the 1980s. Apple sold the dream of increasing people’s productivity and creativity using personal computers. Kawasaki created—and sold— an image of a company that wanted to change the world. The company created, unintentionally at the time, customer evangelists.

Reading Suggestions
Reading time: 6-7 hours, 196 pages in book

There are three ways you can approach this book. First, you can read the entire book, which is written in a fastpaced, engaging, and readable style that makes liberal use of bulleted and numbered text to highlight key ideas.

Second, you can read the first eight chapters, which make up a little less than half of the book. Chapters 1 and 2 provide an overview of McConnell and Huba’s basic ideas, and develop the concept of customer evangelism. Chapters 3 through 8 take each of the six tenets of customer evangelism and discuss them in detail.

Third, you can read chapters 1 through 8 and then select from the table of contents the remaining chapter(s) that are most applicable to your industry as chapters 9 through 15 offer seven case studies of highly successful companies that practice customer evangelism. For example, if your business is retail or is product-oriented, you might read chapters 9 (Krispy Kreme Doughnuts), 13 (Build-A-Bear Workshop), and 14 (Southwest Airlines), or any one of these, in addition to chapters 2 through 8. At the end of each case study chapter, an evangelism scorecard is presented which offers a quick, at-a-glance summary of how the company demonstrates the six tenets of evangelism.

The authors do not introduce new concepts in chapters 9 through 15; rather the case studies provide slightly more in-depth illustration of the six tenets of evangelism marketing strategy. In actuality, a number of the strategies discussed in the corporate case studies have either already been referred to, or, in some cases, already discussed in chapters 3 through 8. Chapter 16 contains a final recapitulation in bullet-point/check-list format of the six tenets for readers who are considering implementing customer evangelism as a marketing strategy.

The four appendices following chapter 16 offer ways you can create evangelists for your company and ways to measure the success of evangelism marketing.

Chapter 1: Customer Evangelism: A Manifesto
Chapter 2: When Customers Believe
Chapter 3: Customer Plus-Delta: Understanding the Love
Chapter 4: Napsterize Your Knowledge: Give to Receive
Chapter 5: Build the Buzz: Spreading the Word
Chapter 6: Create Community: Bringing Customers Together
Chapter 7: Bite-Size Chunks: From Sampling to Evangelism
Chapter 8: Create a Cause: When Business Is Good
Chapter 9: Hot Marketing Now: Krispy Kreme Doughnuts
Chapter 10: The High-Flying Solutionman: SolutionPeople
Chapter 11: The History Lessons of O’Reilly’s Wars: O’Reilly & Associates
Chapter 12: The New Mavericks of Marketing: The Dallas Mavericks
Chapter 13: A Bear Market for Retailing: Build-A-Bear Workshop
Chapter 14: A Cause, Not Just an Airline: Southwest Airlines
Chapter 15: The Billion-Dollar Cause: IBM
Chapter 16: Customer Evangelism Workshop Followed by four appendices