FOCUS caught up with Schultz at his Evanston office, where he is preparing a new course and research project on how investments in "internal marketing" can generate returns from external customers. Armed with a $300,000 grant from a consortium of companies, he and Northwestern's Forum for People Performance Management and Measurement is hard at work investigating how employees can be motivated, trained and empowered to better serve customers.

Nationwide Insurance Co. in Columbus, Ohio, is one of the many companies intrigued by the internal marketing issue, and they're keenly interested in how an organization can build it into strategic planning and measure the results. Richard Timpone, a marketing consultant in the Strategic Planning and Customer Relations Group at Nationwide, points out that internal marketing "competes with other paths to profitability," and Schultz says the Forum's goal is to demonstrate to Mr. Timpone how the concept drives significant long-term benefits by boosting employee performance to enrich productivity.

"External consumers are influenced by the internal promise deliverers: the employees, channel partners, customer service personnel, packing and delivery people," said Schultz, who argues that the most critical aspect of marketing right implicates the internal mission and the quest to get human resources, sales and marketing, and corporate communications working together. The first phase of the research is a national survey of marketing and HR executives to investigate how they can better integrate their work. "We want to address the question why the entire process of hiring, training, directing, motivating and managing employees so often is conducted independently of the marketing strategy and communications programs," said Schultz, "and why marketing departments typically develop strategies independently of HR, with limited awareness of whether employees' skills and attitudes are commensurate with the implementation demands." This is not a case of marketing imperialism, "I'm not suggesting that marketing and marketers take over the HR function. But marketing can help by working with HR to identify the key elements in employee motivation, including the effect of incentives and the development of training and improvement programs to help improve the delivery of the customer facing people."

Schultz argues that marketing departments spend millions conducting focus groups and telephone interviews and pre-testing commercials, yet "they invest a pittance, if that, at learning what makes retailers, delivery truck drivers and customer service people tick." The result is a very superficial approach to internal marketing. "We put up the banners, pin on buttons, hand out note cards and mottos with pay checks, all with a clever variation of the theme 'the customer is number one.'"

Some companies are already taking steps in this direction. Sprint's PCS division for one, recently completed an internal audit of its brand messages, which included in-depth interviews with some 40 senior executives and front-line workers. "We developed internal messages that are about to be rolled out," said Michelle Emerson, Group Manager, Brand Development at Sprint (and a Northwestern alumna). "The front-line employees in our stores, call centers and the field are our most important brand ambassadors. It doesn't matter how effective our ads are if our employees can't deliver on our brand message."

Schultz is optimistic that the IMC research project will provide some answers to the ongoing questions over the coming year. "Our goal is to understand how to motivate and train employees to deliver the kind of experience we're promising to consumers in our external programs, and how investment in internal marketing can provide major returns for external customers. In short, we're going to apply the same research and management rigor to the internal portion of marketing that has been demanded for so long of external marketing."