This is a post about current state, corporate malpractices. Corporate standard is to use apr. 20% of the value their data assets provide.. well it could actually be even less. This post is about recognizing the needs for change and offer some ideas about how to get it done. These are just some learnings from searching insights while doing customer journey analysis and service blueprings for companies. More will be published in the book – Customer Journey Management September 2012, which I’m co-authoring with Jarmo Lipiäinen
“Open mindness.. may be defined as freedom from prejudice, partisanship, and such other habits as close the mind and make it unwilling to consider new problems and entertain new ideas. (But) it is very different from empty-mindness. It includes an active desire to listen to more sides than one; to give heed to facts from whatever source they come; to give full attention to alternative possibilities; to recognize the possibility of error even in the beliefs that are dearest to us.” -John Dewey How We Think 1933
The above text came from Mrs. Madeline L. Van Hecke’s book, “Blind spots – Why smart people do dumb things”. Well, it’s not just people becoming blind in their own lives, but also at organisational level. When you are working in an organisation, it’s natural to start taking things for granted: what is impossible, what can be done, how is it done in general, etc. Gradually thinking some things are impossible or too difficult which leads to tunnelling – narrowing sight, dismissing things that should be reconsidered. Conventions are effectively blind spots. Being busy makes it difficult to take a wider look from must-have details, short cuts (best practices) that made you effective could make you blind. It’s all very human and natural. However, it’s also dangerous. All cases that have been described earlier are actually common sense customer behaviour. These cases were not very special in nature. Still, they could be hard to detect. After they have been detected they seem obvious. Why is that? The biggest reasons are the company practices that are fractured in silos and responsibilities making it difficult to see the big picture. Within a company different parts of organisation are also having different perspective in time. CEO and marketing are looking in to the future trying to reach goals and measure the progress toward it. Sales and customer service are experts in NOW. HR and CFO are looking in the mirror, which is past. Having this kind of variation in perspectives result challenges. Having fractured information spread around organisation just emphasizes the effect. Management teams are struggling with complexity and it’s especially difficult to combine Top sight with Insight.
Let’s take a look at commonly used practices, business as usual. I am simplifying a little bit in the following but I have seen bad use of money and poor practices and learned from them. Current conventions equal money spent anyway, and they also result assets. The value of these assets is higher when combined. Single asset does not tell a story as well as combined data and resources. Innovation is often found between disciplines, not inside one.
Marketing department is often using tracking tools for recording awareness, preference, advertising recall and also often buy data about competitors marketing spending for benchmark. In the current marketing landscape decision-making is concentrating and result smarter tools for decision-making. Previously marketing department was fractured in PR, dm, online, retail, tactical, events and brand advertising. Currently the structure of marketing department looks more like a single entity and is often combined to sales organisation. Different mediums and approaches are analyzed simultaneously and results are compared against each other. CRM, advertising, email marketing, in store promotions and other actions are planned as a whole resulting improvement in effect. All this data should result very much information that help recognizing customers needs, understand what drives value for them and how to deliver it. Lately the tools that analyze social media also enable tracking the company’s volume, share of voice and reputation in social media. Marketing department is actually drowning in research and data. The sad reality is, that very often, marketing management is not considered as a driving force for the company’s business development though. CMO’s have hard time justifying marketing investments and in down economy these investments are easiest to cut down. The insights and learning that could be used for overall performance development represent often only fraction of their potential value. CMO’s role is to make most of the company’s current state, justify higher margins by improving brand and increase awareness, preference and consequently sales. That is a valuable role but not optimal though. Customer relationships should be considered as strategic source of insight and improvement vehicles.
CFO. Financial departments tools for analyzing performance, costs, production efficiency has improved dramatically due to improved business intelligence tools and rapid access to ERP (Enterprise Resource Planning) data. Financial departments use this data to recognize cost cutting opportunities and improving over all profitability. That’s valuable information also and has natural position in the board of director’s decisions. However, the combination of CFO’s analysis, marketing research, CRM and operations offer so much deeper understanding. Data tells you what has happened, it doesn’t explain it and it doesn’t offer best possible insights for innovation. Very often innovation is invisible in CFO’s figures until it’s been implemented. If you were Nokia’s CFO, by the time iPhone effect shows in your data, you are already terribly late.Managing with knowledge does not mean managing with financial data, which is an outcome, not the cause.
Sales. In business-to-business and major single purchases the sale departments have effectively adapted sales funnel analysis with CRM tools and use those tools for analysing success and managing resources. In these businesses sales is often working quite closely with marketing because the whole process is designed around a funnel: prospects, leads, offers, closed deals. The challenge in this approach is that sales is considered as a-push action only; offer customer the products and services that the company has. Best sales organisations take a deep dive in customer’s situations; dig challenges and position products and services, as a solution for customers needs. These organisations thrive. Push sales don’t do very well in the current situation although most of the sales reps still meet customers to present their inventory and end up bargaining to close deals. If sales team stop to listen the customers and discuss about needs and optimal solutions, they hold very much information that can be used for business development. Listening customers also drives brand equity, trust. Customers could get imprinted at best.
Experienced sales manager can give input for new product or service value proposition, how they appeal customers, even at very first concept level. They can also give valuable insights for improvement. This resource is most often neglected and the new products are presented for sales when it is time to start selling them. Such practice neglect tremendous immaterial resource, which is also responsible for selling it to the client. If they were fully behind the new product and their opinion would have been heard, it would certainly have double effect: product improvement and winning spirit.
Human Resources. HR is an out-dated name for a unit in general. The business is about skills and culture; know how, education, change management and indeed, human capital. HR does analysis about internal employee satisfaction. This information is giving feedback about how employees feel about their employer, atmosphere, colleagues, management and company’s direction. This information is also valuable as such and helps recognizing improvement areas. However, unleashing employee capability is not best harnessed with that alone. In Customer Think blog Dr. Graham Hill presented case Toyota, that explained how the Toyota implements a million improvements in their processes in a year, which come from their employees. 95% of these ideas are implemented within ten days after submitting them. People adapt to what they are supposed to do and start following the procedure as directed unless the company purposefully start breaking habits and offer recognition for those who challenge the current ways with better ideas. Small ideas result major changes when there is enough of them. HR should be the aggregate of human capital within the organisation. First allowing and then aggregating these ideas and feedback has enormous power that is available at any time. Engaging employees like this also improve satisfaction, because company start paying attention to its employee insight assets.
Gary Hamel presented fantastic cases of harnessing employee capability for innovation in his book “Future of management”. In his book he explained in detail how for example Whole Foods Ltd. has given employees the freedom of developing their unit within a grocery store. The team also
choose manager among them selves and decide whether to hire a new person in the team or not. The new hire means sharing bonuses and makes people think whether the new resources really result value that is worth sharing the upside. Whole Foods and Toyota are great examples of employee power to drive excellence when a company decide to really take advantage of these opportunities.
Customer service. When customers hesitate, face challenges or feel disappointed they call to customer service. This is one of the most important moments of truths there are. Customer service is actually a fevermeter of the company’s situation. For every call there is at least 10 more people who feel the same way but don’t bother to call. Very often customer service is considered as a cost and measured in “cost to serve”. The goal is to have fewer calls and cut costs in person-to-person service needs. This approach is acceptable but should not entirely replace personal service with online. Dissatisfied customers should be thanked for their effort to contact and inform about their experience. The resulting data about customers’ feedback should directly feed product, service and process development. Customers who give feedback should be recorded in CRM and engage with them with ways to improve the performance of the company in the areas where the customer feels the company has failed. These people are assets, not cost. Customer service personnel learn very effectively how different value propositions, marketing and other actions will result feedback for them. One client of ours showed all offers and campaigns to customer service team before publishing them and got almost always good feedback for improvement. Customer service team recognized expressions that would result confusion and issues that would potentially result dissatisfaction. They need to know what goes out in order to prepare for feedback, but they can also help in improving the outcomes.
Online Analytics. The online environment offers a wealth of data. You can track anything in real-time. Online has become a major influence in sales and because of the data, it also has clearer goals and action points than brand advertising for example has in general. Companies that take most advantage of online potential use effective analytics tools that enable optimization of online service’s potential. Data driven online development is actually using very similar methodologies that have been developed earlier for direct mail testing. The golden rule in analytics is to “look at their hands, not their mouths”. Asking people’s opinion is secondary to testing. Direct marketing has taught, that for example stickers and other dumb feeling parts in the mailing should not be used because they increase the cost per mailing. The tests have shown that leaving them out result e.g. 20% decrease in sales. Even though no research ever has approved such tools they still work. Same apply in online analytics. Most companies only track visitor and conversion rate of their online service.
Those figures are important but represent only fraction of the opportunity. If a company has 100 000 visitors per month and 2,5% of them purchase 50€ worth in average, it means 125 000€ in sales per month. If the company uses analytics tools and multi variant testing effectively, they could increase the online services success in search engines resulting 20% increase in traffic and double the conversion rate. As an outcome company would sell 300 000€ per month.
Online environment is probably the fastest source of incremental sales growth that is also cost-effective to produce. Multivariant testing means testing for example alternative landing pages, home pages, headlines, triggering offers, value propositions etc. The goal is to continuously make improvements bit by bit increasing the overall success. This work does not mean re-designing and implementing the service but small bits of it. This kind of process is likely to result very high return on investment. Ainoa Helsinki, company concentrating on online marketing optimisation has developed Banner Suite called tool that enable using banner templates and creating variety of different headlines and pictures within the banner. Production of variation cost very little. Implementing such approach and optimizing the use based on resulting conversion has increased success incrementally. The same methodology represents multivariant testing when developing home pages and e-commerce services. Online analytics tools tell where the customers came from, which content did they use, for how long and where did they go next, which search terms did they use, which paid links or banners did they click and much more. All this data is used for online service development. All that available data would also offer food for insights about how that data could be used for business development, marketing in other channels and sales. Currently most of this data is only used for single channel development though.
Research function serves variety of needs of business units, marketing, product development, sales and management. Research departments make market research, buy mystery-shopping analysis, test products and benchmark the company against competitors. Voice of the customer researches also aim at understanding the value creation in detail compared to competitors. Customer satisfaction research is a must tool for all research departments. The challenge is that in order to create actionable insights, the best results are possible when analysing several of these studies simultaneously. The worst case scenario, that is all too common, is that single study does not create actionable insights and is indeed wasted money. Research practice has outdated practices also that must be recognized. Customer satisfaction research is a great example. When studying customer satisfaction customers are promised that their answers will be analyzed anonymously. That sounds good at first but downsize the potential upside effectively. There are two main reasons for it:
1. Anonymous responses. Anonymity means that if customer has had bad experiences the company has no way of fixing their failure. In the current media landscape, that is very much social media driven, even low percentage of customers who have been dissatisfied can result very bad publicity. Web does not forget and published bad experiences could have very long tail in effect. Anonymity also mean that the potential of actually recognising where the company has failed could have been turned in to asset. Most customer driven companies would be delighted to recognize dissatisfied customers and engage in dialogue for them and use these customers opinion for improvement with open innovation and user driven co-creation methodologies. Dissatisfaction should be recognized as an opportunity to create competitive advantage and customer satisfaction studies should be completely re-considered. Voice of the customer study is a step in to right direction but it could be improved even further. We are aware that this claim has certain level of conflict with ESOMAR rules and regulations for research. ESOMAR is a forum, which set standards for research agencies. However, it would also be accepted according to ESOMAR that people’s responses would be dealt with individually in case it’s told for the customers in the study and approved by the customer. This is rarely done though. The basic rule is that you only report results according to demographics and other quantifying factors. Looking at the same issue from customer perspective is completely different issue. When people know that they are giving information about them, they expect companies to act on that information. When they tell they were dissatisfied with something, they expect the company to pay attention and make it right. Currently used anonymity make it impossible.
2. Looking back in time. Customer satisfaction studies often concentrate on perceived value in the past. Looking in to past is fine and offer valuable information as customers can only comment on experiences they have actually engaged in. If company would concentrate in customer value creation, it would not be satisfied with past though. Customer satisfaction study should be re-positioned as customer service study that has a time span from past to future. People engage with the company by giving feedback.
Company could offer value for that engagement by promising better service in the future. Such value proposition justify questions about how customer would prefer to be serviced in the future, what interests him, in what kind of contexts the product or service use would take place, does the customer have more than one roles as a buyer. Great example of several roles is travel: Travelling with family, with a spouse, with friends, with colleagues in work related situation etc. One person could fit in several segments and offer much higher sales potential than the one segment the company has recognized earlier. Customer service questionnaire should be placed in the heart of personal communications planning and be used as revenue driving dialogue tool instead of just recording experiences in the past. The money spent in customer satisfaction study will not result much ROI, customer service approach will. One thing about research is that they can do research and report results, but they can’t give analysis based on the results in great depth. In order to create effective insights research results should be analysed against operations. This is actually why media agency Toinen is doing a lot of research and analysis for our clients. Research alone is knowledge, analysis of results, operations and effects as a combination result insights. Research agency cannot give the most valuable advice because they are most often completely external; research department does research and often is not well aware of what is going on in the market place. These things result blind spots. The more you know and the bigger picture you have of the whole, the better analysis you can do from research. Outsourcing research to research department completely is most often a bad decision. Outsourcing it to an external partner who is not actually involved in operations is even worse.
CRM. The CRM is no longer just taking care of your existing customers but has developed further, closer to open dialogue in social media resulting social halo effect which increases company’s transparency, trust and immaterial value stretching to potential customers. Taking care of your own customers is currently resulting endorsement and becoming a media on it’s own right. You can’t really run Social CRM according to real CRM ideology without capturing individual customer buying behaviour. You can’t manage what you can’t measure. However, you can create CRM for your own customers, which leverage Social mediums in the approach. You can create personalized emails to your customers, just as well you could publish in your customer’s wall on Facebook or use Twitter while taking care of your customers. Customer’s primary communications tools should be applied as your tools. Adapting to customer behaviour is becoming easier and you can exceed expectations by applying new ways of communicating.
Conclusions of Business as Usual defects
Companies are often blind to the assets they have at their disposal. The information is often fragmented in the organisation and does offer the management tools that would really drive excellence. It’s not about money though. Companies spend money in data collection as described above anyway. What is missing is the aggregation of this data that would combine different sources of information in to tools that would effectively drive development of the company. This is why Bigdata-idea is currently so popular. But let’s not forget that it’s more about mindset and recognition of these opportunities than about extra cost. Aggregated data would support business development, marketing, sales and improvement in people skills and at best, creativity and innovation. Dialogue instead of research would create relationship equity instead of just data. Considering what would give you the ultimate knowledge about your business isn’t rocket science. Your can and should break corporate habits and start capturing much higher return on current investments.
So, if CMO doesn’t take action, who does?
Author: Toni Keskinen, Marketing Architect & Customer Journey Designer
Join FutureCMO Movement LinkedIn Group here