Perceptions of the Impact of Internal Marketing on Business Performance in South Africa

Abstract

Business practitioners in South Africa are moving away from competition based on tangible factors and are searching for ways to improve their business performance by developing the intangible factors of business that define their sustainable competitive advantage. Internal marketing is a new concept that is receiving attention in terms of how its processes can impact business performance. The literature suggests that the management of internal marketing health from the consumer‟s perspective creates an increased probability of achieving improved shareholder value. This research studies the impact, from a South African perspective, of internal marketing on business performance as measured by shareholder value. The research methodology was qualitative and data was collected by means of in-depth interviews with respondents from Deloitte and Touche‟s „Best Company to Work for‟ competition 2007. Twelve respondents were interviewed by the researcher. The interviews revealed that companies are realising the importance of internal marketing activities to develop their employees from within the organisation. Defining factors for internal marketing effectiveness are purposeful communication, employee development, aligning departmental activities, accountable and transparent behaviour, motivation, and hiring the right people to „fit‟ the organisation. The success of these factors is dependent on the support for internal market orientation as a focus of organisational leadership. An investment of time and money needs to be made to develop the above factors and contribute to their success. These factors impact the business processes and service delivery that creates value for the end customer. A customer who perceives value will remain a customer and new customers are gained successfully. The result of customers gained and retained is an increase in cash flow, which affects the shareholder value of the organisation. i It is recommended that organisational structure and leadership need to be aligned to produce effective internal marketing. Internal marketing needs to be viewed in synergy with an organisation‟s operations for internal marketing to have an impact on business performance. To be able to create customer value organisations need to align business processes to organisational objectives and empower employees through clear communication, value-adding activities and effective leadership. Based on the perception of the respondents and the literature study internal marketing improves business performance through increased customer value creation. However, organisations do not perceive internal marketing to be an independent factor for the improvement of business performance. For an organisation to be successful internal marketing cannot be viewed in isolation. An internal marketing effort is only one method for an organisation to achieve the improvement of business performance