ValueStrat helps businesses know where they are currently and what they need to do, to get to where they want to go. For this, we provide essential strategic plans and approaches - "Keys", to open up competencies + clear inefficiencies.
ValueStrat gets to the DNA of business - Desire, Need, Ability - to help you ask some critical questions as above. Explore this site or email firstname.lastname@example.org for more.
Tuesday, April 14, 2015
Do You Know Your Customer?
If you were asked this question, do
you come up with a quick answer that goes like “Yeah, we have a powerful, state
of the art CRM technology that integrates data analytics into our Customer
Services and Support System which provides us a rich understanding of the who,
what & where of our customers so that, in turn, we are able to provide
customer delight”, or something along those lines?
Now let’s just turn this question
around and say that a salesman walked into your conference room and made a
presentation that promised “a high end, state of the art system that would
integrate your existing CRM with powerful predictive data analytics and an
advanced Customer Profiling System that would provide you with comprehensive
customer insight that enables you to deliver rich customer experience”. How
would you react?
“Interesting, but do you know our
customer? Heck, even we are not sure”, right?
You can use technology to get
information about your customer, but do you really know your customer? Do
you understand what makes them buy your products or services and what makes
them leave you and go to the competition?
Studies show that while product and
attractive pricing are key, most customers defect primarily because of
unhappiness with the way they are treated by the service. According to Arthur
Middleton Hughes, in the telecom industry roughly 75% customers leave, while
another industry survey says that over 90% of those leave, do so without any
warning! We all know how much it costs to acquire a new customer; hence, when a
customer leaves, you lose not only the future revenue from this customer but
also the resources spent to acquire the customer in the first place.
So, how do you ensure zero customer
And, how do you benchmark customer
value so that you can improve customer focus?
After all a business cannot ignore
profitability and customer defections have a great impact on the bottom line. Therefore
the natural question that pops up is “how can you be customer-centric and
increase customer life-time value”?
It is common knowledge that businesses
are run with great excitement, self-belief & “customer data” in the belief
that their idea or product is going to be the next killer in the marketplace.
That is a good place to start, however, self-belief, customer profile and self-confidence
are hardly the only factors that will help you implement your ideas and deliver
value to your customers. You need more than that to keep you on top of the game
and the competition!
For example, a Delaware-based credit
card company, frustrated by letters from unhappy customers, assembled all
employees and announced that they would focus on a stratagem to satisfy and
keep each and every customer. The company started gathering feedback from
defecting customers. And it acted on the information, adjusting products and
processes regularly. As quality improved, fewer customers had reason to leave.
Eight years later, the defection rate became one of the lowest in its industry.
Without making any acquisitions, their industry ranking went up, and profits increased
sixteen fold. (Source: Zero Defections: Quality Comes to Services by Frederick
F. Reichheld and W. Earl Sasser, Jr. in HBR, September–October 1990 Issue)
There is no magic formula or marketing
magic wand that will do it, because one of the most critical aspects of
business is consumer behavior, which is neither completely understood nor
entirely within your control. However, there are some strategies that can help.
How do customers see you and how does your
business relate to them? Is your idea something that is “hot” only for you, or
is it something that your customers can relate to as appealing, meaningful and
beneficial to them? Keep in mind what is interesting to your customer, as
opposed to being self-absorbed about the product or idea that you hold. Once
again, some of the thought processes of the earlier question can help you.
So, go through some trials of asking whether
the potential customers see your company or startup as, for example, “An
exciting lifestyle company making haute-couture products that is so cool and
There are also some practical considerations
such as whether the customers have to do something differently to consume your
product like learn how to use it, the impression of good quality,
affordability, after sales service, etc.
In effect, how customers see your business has
to be in sync with the identity that you have established.
2.Market Presence (#MarketPresenceKey)
This is an interesting aspect of doing
business because it doesn’t really matter if you are a multinational behemoth
or a startup operating out of a garage. It is, simply, how you stack up against
the competition. By this it doesn’t mean how big an advertising or marketing
budget is or how many celebrities endorse you.
Industry experts, trade publications and
technology blogs are always favorable to small businesses and startups with
what they think is a “killer idea” or “game changer”. They may well use their
social and digital media following to showcase your product as the “next big
thing”. And, their considered opinion will far outweigh the marketing muscle of
the giant businesses!
rank high in terms of what you represent (Identity) and the market insight of
what you stand for is positive (Perception), then your first steps in creating
a market presence are taken.
How are you different and what is so
special about your products? This is not a simple thing to wrap your head
around, because it is not about your business or services or product being
better or less expensive or easier to use or of higher quality or more robust in
the various parameters of comparison. It is about innovation or a new way of
solving an old problem or an efficient way of doing something or a completely
new way of life!
Difference is what matters to the
customer because without that, they might as well continue to use the same
product or service or doing what they are doing the same way!
Find out what drives your customer.
How do customers explore, discover and purchase products or services and what
are you doing to facilitate this process? How can you personalize and make this
process interesting so that their experience helps resonate with your product.
How can you develop customer focus internally in the organization so that you
are able to increase customer value externally? Annie Gherini, head of
marketing at StumbleUpon, says, “The age of departmental silos is over, and the
unified efforts of all functional teams ensure that everyone is reading from
the same playbook, resulting in an awesome user experience.”It is, therefore, important to keep an
open dialog with the customer, but don't leave it to them to talk to you!
*** Added on April 21, 2015 *** Gautam Mahajan has a great article that adds to #TheCustomerKey, called "Are We Blowing in the Wind?" and he talks about how you can implement Customer Value culture in your organization. Tap here to read.
To summarize, these four basic but
critical questions will provide the framework and some finer detailed questions
relating to customer focus and value. And answers to these questions will flesh
out the framework and help you stay ahead in the marketplace.
ValueStrat Consulting @ValueStrat helps
businesses understand where they are currently and what they need to do to get
where they want to go. For this, we provide essential strategic plans and
approaches, called “Keys”, to enable businesses to open up competencies
and clear inefficiencies.
gets to the DNAof
business - Desire, Need and Ability -
to help you ask some critical questions such as discussed above. Check out http://www.valuestrat.in