To Market, to Market

This column is third in a series comparing federal and private-sector management in business planning, human resources and customer service.

nder the leadership of Vice President Al Gore, government agencies have increased their focus on how they serve customers. After all, that is what government is all about. In October 1995, Gore's National Performance Review published the useful Putting Customers First '95: Standards for Serving the American People.

The great irony of this situation lies in the disrespect that so many government employees have for "marketing." It's one of the most important business management tools in the private sector and the one that has the greatest impact on customer service. Unfortunately, many government employees who are not familiar with the profit motive believe that marketing is akin to hucksterism. Perhaps that is why the word "marketing" is not mentioned one single time in Gore's book. In fact, marketing is a business tool reliant on a good bit of science.

Marketing has several definitions, but one of the most concise is "the process of determining what people want and delivering it to them." That is exactly what government is all about. Government really is the ultimate marketing organization, taking taxes from its customers and in return providing products and services.

The private sector, by contrast, takes in revenues, and payment is a matter of personal discretion. In government, customers are often given less opportunity to choose what they want from their government because so many decisions in a democracy are by consensus. If you're not part of the majority, you may not like the outcome but you'll still pay for it.

The definition of marketing says one must "determine what people want" before we deliver our products or services. That process involves research-actually going out and asking people how they feel about certain issues-and then using that research to design our offering. That's what is called being "marketing driven." A lot of so-called research in government is, unfortunately, anecdotal.

Selling a Service

The Forest Service created a prototype for marketing-driven government that is quite successful. This marketing effort is designed to improve the Forest Service's recreational development on the 192 million acres it manages. Many more people visit Forest Service land for recreation than they do National Park Service land. However, the Forest Service does not have an adequate budget for recreation facilities, and the backlog of needed infrastructure repairs has risen into the billions of dollars.

The Forest Service is one of several agencies responsible for the experimental Recreation Fee Demonstration Program created by Congress. Under the program, people who visit certain recreation areas are charged a fee of several dollars. Normally such fees are sent to the Treasury, but under the demonstration program they are retained to be reinvested in the area where they are collected.

The Forest Service had 50 demonstration sites, which were managed with different degrees of expertise, despite an attempt at central support. The program had a very uneven quality around the country and suffered from local criticism in many places because the public was uncertain how it served their needs. Furthermore, many people felt that, as taxpayers already, they were being subjected to an additional tax burden. So the agency hired Robert Shulman, a marketing consultant who has worked for many major corporations, to show employees how to research user reactions to the program and use that input to design a better approach to dealing with the public.

The marketing plan Shulman designed for the Forest Service included these approaches:

• Use research to conduct a market climate assessment: How do people feel about Forest Service activities?
• Based on the research, divide the market into distinctly different groups of people pursuing recreation who need to be treated uniquely.
• Define the product line (hiking, fishing, boating, swimming).
• Determine pricing acceptable to both the public and the Forest Service.
• Create a day-to-day communications plan to explain what the Forest Service is doing.
• Design customer service training and standards based on what the research indicated is important to people.
• Measure performance, again using research to see if people are satisfied with what the Forest Service is doing.

Mixed Reviews

The Recreation Fee Demonstration Program enables Forest Service managers to balance responsible land stewardship with recreation management, making it consistent with the agency's natural resource conservation goals. But opponents of the program fear the Forest Service is promoting "industrial recreation," which would ruin the forests with overcrowding for the sake of bringing in income to offset declining budgets. These critics neglect to consider the strong public support for recreation in environmentally sound forests and that citizens would judge the experiment a failure if environmental decline becomes a problem. That result would be clearly indicated in marketing research designed to measure how people feel about the quality of the forests after the project has taken hold. Thus, a marketing-driven project safeguards the public's long-term satisfaction.

Expanding the Model

Using the Forest Service model, the federal government could conduct a test to introduce marketing. Marketing departments could be established in up to five agencies, based on proposals submitted by agency heads describing how they can benefit from such an effort. Selection officials would be recruited from the National Partnership for Reinventing Government and the Office of Management and Budget. Following a three-year test period, if the experiment is successful, an unlimited number of agencies could be selected.

The goal of the test programs would be to use marketing research to improve the design and delivery of specific agency products. They would measure customer satisfaction, before and after implementing the changes, and any improvements in economic efficiency. The projects would focus on:

• Defining the business (product, market and so on).
• Defining and conducting marketing research to determine how customers feel about current offerings.
• Creating a mission statement.
• Defining accountability for results.
• Preparing marketing plans with complete financial projections.
• Measurably improving customer satisfaction.

To be marketing-driven is to listen to the customers and to heed what they say. However, the many roadblocks to conducting consumer research in the federal government must be removed by OMB, the guardian of the rules in this area.

Next, contractor-hiring guidelines must be changed to allow marketing consultants to work with government managers. Consultant spending for the three-year test could be limited to $250,000 a year per agency. But buying such "soft" or intangible benefits is difficult in government. Government likes hard "deliverables," and there would be few in this situation. However, marketing has shown its worth, and trained professionals should therefore be enlisted to ensure the test is conducted properly.

Each marketing department would recruit a marketing director from the Senior Executive Service. The Office of Personnel Management would also create three other SES positions-assistant directors-without reducing other SES allotments. Total staffing for each marketing department would be limited to 50 people-again without interfering with other agency head-count allotments.

The government would do well to remember the observation of Wayne Green, an entrepreneur instrumental in developing the personal computer: "Doing business without marketing is like winking at a girl in the dark."

Francis P. Pandolfi, who has spent 25 years as chief
executive officer of a number of private firms, was the first chief operating officer of the U.S. Forest Service. After three years in government he returned to the private sector this year.