A theory of marketing
One of the greatest benefits I get from working across different sectors is the constant flow of ideas and techniques from one to another. A couple of months ago, I spent an afternoon with the Head of Strategy for one of the UK’s largest and most successful retailers.
We were talking about marketing strategies that they’ve been working on to influence customers, and to create a sustained change in their buying habits.
It was a phrase that sounded very familiar. “Have you ever heard the term: Theory of Change?” I asked. He hadn’t, so I explained it.
Theory of Change is a tool used by an increasing number of large charities and non-governmental organisations, including several of my non-profit clients, to help them work out how to go about creating deep, lasting social change. It helps them work out ways to solve very complex problems, like eradicating child poverty in Ghana, ending the abuse of working horses in Jordan or Afghanistan, or helping people recover from drug and alcohol dependency in Nottingham or Newcastle.
The process starts by getting experts together in a room, and drawing out everything they know about the situation: how and why it happens and what they’ve learned about changing it. They capture that knowledge in some form of visual representation: a relationship diagram or a flow-chart that they can tweak and refine until they have a shared theory about how lasting change can actually be brought about. That provides a common framework for them to collaborate; to organise their people, projects and influence around each of the contributory factors.
Like any theory, it’s only as good as the evidence behind it, but once it’s been put out there in black and white, it can be continually tested and refined by the results that come back and the insights they provide. It’s a living, learning document, about how to create lasting behavioural change, and it becomes more and more effective over time, which is why it’s potentially such a powerful model for marketers.
Consider two groups of customers: one is promiscuous - they shop around the competition, the other is loyal and only shops with you. There will be loyal ones who were promiscuous in the past but something changed; some sequence of events triggered them into a new behaviour. If you want more people to make that change, your marketing needs to unpick those examples, to understand why they behaved the way they did, and to build a theory about when, how, and what you could do to promote that change in other people.
There will be plenty of data from your previous activities to support some parts of your theory, but you’ll find other parts are purely based on assumptions. The more you can design specific tests to prove or disprove those assumptions, and to develop your theory end-to-end, the more effective your campaigns will become. And in time, the theory will reshape your entire marketing strategy.
My retailer friend wrote to me a few weeks later to tell me they’d already started using the idea. They’d developed their own theory of change, and it was already being used to set the focus of their next wave of marketing trials. The main thing, he said, was that it had given them absolute clarity on the difference between what they thought they knew and what they actually knew about how they influence customer behaviour, and shown them where they needed to close the gap.
Britain, once described as a “nation of shopkeepers”, has arguably the most advanced and sophisticated retail industry in the world. So it’s heartening to see that even they can learn some useful ideas from the cutting edge of non-profit thinking.