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Business Design.. with customer centricity

Here is my presentation that is about Business Design and how you lay the foundation of business development and value generation on customer journey and diminish the complexity to understandable and measurable insights and practices to marketing, operations and R&D. Recognition and simplification is the way to go and insights come from that. I’ve just landed back to my roots and start Business Development consulting which is really about customer and total marketing driven corporate transformation. That’s why it was relevant to take a look back and make a fusion from past to current.

I came to conclusion that past was already right – but required a lot to learn in order to develop the understanding and methods further.. Even if your theory and concept were perfect – making it a practice and a reality takes a lot of sweat, consideration, trial and error, right context, position and organization. However, enjoy. This material was better than I remembered (I was a founding member at Taivas Business Design and OneExperience planning director before my assignment as marketing architect at Toinen PHD and starated Future CMO transformation consulting and coaching in Jan 2014). 

WHY THIS ONE EXPERIENCE FAILED TO SCALE INTERNATIONALLY?
One Experience was a cross-channel behavior analytics tool and methodology we at Taivas Group started developing already back in 2004. Professor for Masscustomization Jarmo Suominen (MIT/UIAH) contributed to the theory and framework tremendously in the beginning and I led the project turning the ideology in to OneExperience online platform. This tool was extremely advanced back then but also represented a Utopia as practice. It turned out the tool was not viable back then due to siloed ecosystem which made it totally impossible to distribute and scale globally as a SaaS planning platform. Combination of qualitative and quantitative studying methods and total planning approach delivering insights about customer interfaces, brand status, distribution channels and product/service qualities it was impossible to integrate in WPP organisation and scale with Ogilvy Group, JWT, RMG, G2, GroupM, MillwardBrown… Why? We talked to everybody and they all loved it. Well, you would have needed to involve crm, online, advertising, promotion, creatives and media planning from separate organizations and align all their efforts for unified practice and goals. The same applied to client organizations. CMO’s at that point were more brand and advertising directors than true business drivers with full marketing spectrum and integration to operations.
That.. well.. was utopia in 2007 when we launched the tools.  We did good in Finland where we were a single team working for clients in Finnish culture with low organization hierarchy enabling collaboration directly with CMO, board of directors and business managers responsible for operations. We did great results but could not turn OneExperience in to international business as such.
The world has changed over the past five years.. This change is now reaching the tippin’ point. Perhaps we are closer to that Utopia now.. or are we? This change involves every one in the ecosystem and everyone inside corporate management. This is what we are now trying to do at ToinenPHD in Finnish scale. Is the world ready for scaling this kind of Total marketing approach and Customer Journey driven ideology in to practical daily work. Are CMO’s and the ecosystem ready for it now? Is it possible to make Utopia a reality?
SEE ALSO:

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Managing brand – the most profound KPI’s and their impact

Brand as a roadsign

If your brand was a road sign and didn’t have context, emotions and expectations attached to it, it’s like there was no sign at all and the road to destination wouldn’t look comfortable or secure. If the sign does have a meaning for the customer but you are trying to sell something that is out of that world, it’s likely that you face difficulties creating interest, demand and closing deals. Brand extensions are not an easy game either and you should be prepared to work a long time to change and expand your brand perception before making money. Brand can be associated with very narrow specialty or more generic qualities. However, brand is not brand if it’s not recognized and it doesn’t stand for something. Virgin is a great example for a branding of attitude and founder’s mindset more than specific product or service range or Apple, which has done usability and design profile along with technology. Technology isn’t why people pay more for Apple than PC though. You can become a mini brand having all qualities of the brand in smaller area or niche business and then expanding that area. That’s the most likely way of actually succeeding in brand building profitably. (Check another article: Brand as a roadsign)

Real brands can emphasize optimisation of buying when they are considering customer journey. People pay attention to their signs and are likely to consider them when choosing a solution from the brands context. It’s about keeping the customer’s attention and closing the deal. For labels, it’s about selling.. and selling cost money. No one will buy a label unless it’s much cheaper or someone actively sells it to the customers. This is a major challenge when trying to penetrate a market and getting your product or service noticed and approved. Gillette is a great example of using brand as a defensive force. When new brands have tried to enter a market, Gillette has issued 3 at the price of 2 offers and stuffed people with their products for a year resulting zero sales for the newcomer.

The most profound brand related KPI’s (Key Performance Indicators) that influence the customer journey and commercial success most are:

  1. Awareness
  2. Top-of-mind
  3. Preference
  4. Brand perception = attributes that translate as customer perception of context, value and personality
  5. Liking

Brand awareness

Brand awareness, spontaneous and aided, are profound figures. A roughly acceptable brand heuristic is that awareness often equals trust. If the brand is well-known, it is likely to be considered and trusted also. However, there are eg. Car brands that are very well-known but don’t have appeal resulting sloping sales regardless of their brand awareness. If the brand is un-known it doesn’t exist in customer’s consideration and therefore has no way of making major sales without very pro-active sales activities or increasing the awareness of their brand. Even if a customer would notice the brand, he is likely to ignore it.

Top-of-mind is a figure telling which brand people first think of, when asked to tell which brands they would consider. In many cases top-of-mind is very important. Especially, in fast-moving consumer goods and e.g. Phone services in which people call to ask for advice. 911 must have almost 100% awareness and a top-of-mind position in order to be able to help people when they need it.

Preference rate could be considered as a GPS device that takes the driver to the right destination. When you are driving with a GPS on, you don’t actually pay attention to alternative options and act on the directions the GPS is giving for you. Strong habit and strong preference rate have very similar behavioural influence. Preference is often asked from customers before they actually initiate buying process. It’s a measure telling what brand people think they would most likely buy. It’s an important indicator of brand health and should be treated that way. It is a meaningful KPI figure. However, it can also be misused. In most brand-tracking cases that we have seen people have been told to choose the most preferred brand even if they didn’t have one. We have allowed customers to give none as an answer. No preference combined with potential brand options has been a very efficient way of capturing business dynamics. In some businesses we have analysed 76% of customers had no preference but a majority had three brand options that were equally good in customer’s eyes. There is no GPS to consider in those markets. No preference percentage gives a meaningful indication of customers consideration but it requires from the tracking that it also track brands that customer consider as option for the most preferred brand.  If the brand you are working for is not in top three as a preferred brand or is not considered as an option, your brand doesn’t exist in the customer’s consideration. The very first thing to do in case of any business is to become considered! If you are not considered, no one will buy you unless you sell the brand in actively.

Let’s consider a practical case in travel for example. TNS and Kantar Group are offering national and international studies that have very large sample size and concentrate on customers’ perception of brands, their most recent purchases and lifestyle. In case of travel you can share customers to roughly three groups:

  1. People preferring your brand (Lower distraction sensitivity – driving on GPS)
  2. Neutral customers, who consider you as an option along others (no GPS) and
  3. Those who wouldn’t even consider you or would certainly not buy

Based on such data, mostly used by media agencies for their clients, you can tell how many people are in each group nationally, what have they purchased most recently and what are they like, demographics, lifestyles and behavioural preferences. Having this knowledge is a great eye opener and really supports management work in defining priorities and how to engage with people. Behavioural differences between preferring customers and neutral are very important. Considering sales the ratio of preferring customers is around 2/3 most recent purchases and in case of neutral customers around 1/3 or less.  Customers who are neutral let all competing brands to their consideration and check all available offers or use comparison platforms, which narrow comparison and democratize brands to same level of information. In such environment brands lose their opportunity to create unique experience and services in a meaningful way. Preferring customers on the other hand come directly to company’s website or directly contact their customer service and thus allow direct service experience by the brand.

BRAND PERCEPTION

Brand perception has to do with people’s heuristics of the brand. What the brand means for them? What is it related to? What is the context? In different businesses there are clear factors in brand perception that have a clear connection to sales. Such factors could be eg. Trust and security, technically advanced, great design, cool, fun, high quality, leader in trends, most durable, etc. In each business it is important to leverage qualities that influence decision-making most and stay in touch with the market and what kind of qualities drive it. The change of drivers could be fast and profound like it was in case of Nokia. Nokia is no longer the most appreciated mobile technology brand it used to be. Apple’s iPhone and Google Android are shaking the business profoundly. Understanding which attributes drive sales, marketshare and preference should guide the priorities in brand development.. in all customer interfaces and communications.

BRAND LIKING

Preference often require conscious consideration, comparison and decision making. It is best suitable for product and service areas where you make “bigger” decision. Liking is more subconscious and spontaneous emotional reaction to the brand. Liking could also be the first step to preference, an opportunity to become noticed and considered.

Liking the brand is a figure that has become more and more important due to digital influence. You can have high preference without liking because of superb product price/quality without being liked very much, but liking the brand has direct influence in preference even if your qualities were not quite that superb. There’s more to liking though. People have more currencies than the content of their wallet. They can speak their mind, write blogs, rate your product, influence your search results or offer you very important feedback or ideas for improvement.

Brands cannot be “created” one way – it’s the people’s perception of a company or product. Brand is no longer a noun; it has turned in to a verb. You could actually think brand as an agreement between a customer and company. Customers can agree or disagree with the agreement, resulting a perception, which could be good or bad. However, a brand cannot exist without the other party. Brand is social by nature. Still, a brand has never been as social as it has now become because of social media and online influence channels that customers are now very effectively and actively using. Customers have real power now that is global, not just local peers. No doubt that customer behavior has changed. It has completely changed in many areas and will continue doing so. Digital influence is the biggest disruptive force along the customer journey.

In current automated communications and self-service oriented world where customers are made responsible for servicing themselves there are many practices that don’t really support brand’s emotional development. Majority of companies consider customers as mass medium, measure “cost to serve” and try to push cost down, build loyalty programs that ask you to buy more and show loyalty in order to get higher discounts and benefits or offer time based commitments as agreements for discount. It’s very much a world of rational thinking. Rational is good but also neglect customer’s social currencies as value. You could call this approach “the indifference marketing”.

In social mediums people interact with their peers. It’s often, but not necessarily, a private space. In this space a brand could gain enormous value if customers would accept it within this context. A customer has enormous social capital. He can judge the brand as stupid or embrace the brand and support it. Customers are actively using their capital and they are getting more and more effective tools at their disposal just to practice this capital to the most. For example WOT, Web Of Trust, crowd sourced trust-rating of websites and brands has currently almost 60 million people rating brands and websites. Any people who have WOT application in their browser has reputation score visually presented after every single link available online.

WOT is a wonderful example of customers’ currencies becoming more and more influential. WOT is an ultimate rating tool. If some company act unethically, spam, or in any way prove not to be trustworthy, >30 million people in WOT start giving red to the brand . As an outcome, company’s online reputation score will become lower and eventually red. Red means, that if you try to enter the company’s website, you get a full page size warning stating that other people have rated this site to be dangerous and not trust worthy. Would you do business with such a company?  How likely are you to do business with a company like that has bad trustworthiness?

Social influence online has an enormous steering power. As people treat brands and companies as entities anything and everything the company does also influence their trust rating. If a brand is misusing child labour or employees, has unfair practices, questionable ethics or doesn’t respect environment, it shows in their trustworthiness score. Customers currently rely very much on other online users feedback, even if they are complete strangers. As companies have noticed that people love to rate products and brands and are interested in comparing them, new companies and services emerge constantly. The power is moving a way from institutions like traditional mediums, which have made product reviews and thus defined which products sell and which don’t. Currently smart brands are turning customers to their ambassadors and creating same effect, only it’s completely dependent on people, the customers, which make it feel very interesting and trustworthy.

Currently customers are taking the ultimate power and becoming sellers them selves by turning blog pictures in to online retail channel with Kiosked –service (kiosked.com). E.g. A fashion blog can sell every single garment or accessory represented in photos appearing in the blog. People are creating their own audiences and creating their own image by blogging and making their bellowed products available for followers and readers. Brands are just chips in customers’ games, which they can endorse or decline. Again, liking the brand is the number one thing driving such endorsement.

Liking influence all currencies the Customers have:

  • His personal detailed information
  • Promise to record purchase history (loyalty card)
  • Decision power to all his own purchases
  • Freedom of speech and opinion
  • His own time
  • His personal peers and personal status amongst them
  • Endorsement
  • Own creativity, experiences and ideas.

Of all the currencies above, I argue that most are not rationally driven and liking the brand influence them all!  You can’t tell people to tell others they love your brand or tell them to recommend your products and services to others. Also, you can’t expect people to help you make your products and services better unless they do it with their own free will. It’s all about liking.

The most advanced brands have understood that these emotionally driven assets could prove to be extremely valuable and find ways of harnessing them. Open innovation and customer boards are great examples of just that. The good companies will win. Forget about the Adam Smith’s invisible hand, it’s become very visible and very effective. Blogs, ratings, discussion forums, Twitter, Facebook.. It’s written all over the digital canvas.

SEE NEXT:

How segmenting 3.0 changes marketing and management https://futurecmo.org/2016/03/16/segmentation-3-0-disrupting-marketing-media-and-management/

How to take advantage of Brand’s position very fast with Behavioral Economics Making millions with pennies – Behavioral Economics approach

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

The beginning of customer journey – Initiation

Image

The customer comes to a crossing and stops because the brand successfully engages with him or something changes in the customer’s situation. In most customer journeys there is a defining moment when a person gets actively interested in buying, initiated. That moment can be identified rather reliably. Something makes a person actively start considering about buying something. Active purchasing consideration does create memories because it’s done.. well, actively in your conscious consideration. Active consideration could take years in some cases or it can spark purchase spontaneously. Depending on the category, differences are huge but also within a single product group customers’ behaviour have vast differences. In many smaller decisions the consideration is less profound but still, when ever you are breaking a habit or really considering about doing something, you can recall doing so when specifically asked about it. In fact the customer is the specialist in his own experience and we can learn from him. Best way of getting to know the dynamics and learning about the reasons for people to get interested is by doing one-to-one interviews. Interviews are actually for discovery, expedition trip to customer behaviour and drivers, differences and variety. Group discussions easily make people indicate rational behaviour although it was not. We would suggest one-on-one in-depth interviews or questionnaire before a group discussion asking person’s own thinking. In the group discussion some of the key findings could be thoroughly opened. This kind of approach enables capturing human behaviour more reliably.

There is a methodology in Psychology called Interpretative Phenomenological Analysis (The Psychologist, vol 18, No1, January 2005) It has been developed for analysing people’s lived experiences. The methodology avoid making assumptions and does not test hypothesis. The person’s experience should be recorded as authentic as possible. They are done in one-on-one meeting. Interpretative means that the researcher looks for things that are distinct (i.e. idiographic studies), but will also attempt to balance this against an account of what is shared (i.e. commonalities across a group of participants). Researcher reduces the complexity of experiential data through rigorous and systematic analysis. Analysis relies on the process of people making sense of the world and their experiences. I use this methodology in Insight interviews and then create quantitative study based on these findings in order to quantify which phenomena has most meaning and can these phenomena related to specific business and brand be segmented in some way or result difference between segments and brands.

The best way we could come up when working on One Experience cross-channel buying behaviour mapping tool, was to start with one-on-one interviews and learning about the people’s reasons to get initiated in the first place and continue to map out the cross-channel purchase behaviour.

The initiation of the active consideration is often a result of certain drivers and motives in certain context being prompted to active consideration by certain touch point in certain channel. These reasons, channels, motives, contexts and drivers should be recognized and quantified in different target groups. They are the very foundation of profitable marketing operation.

You can roughly divide reasons to initiate in commercial and non-commercial reasons. Commercial reasons have to do with advertising, direct marketing, outbound telemarketing, retail, point-of-sale promotions, sales people and so on. Non-commercial reasons have to do with magazine reviews, word-of-mouth, actual need because of losing or breaking the old product, tradition based behaviour (e.g. in travelling every year at the same time), change in a living situation (e.g. moving) and so on.

Further, initiation can be divided in initiation in general and initiation to the brand. Initiation in general is about how the customer became interested in acquiring certain product or service in general and these reasons are often non-commercial when asked from the customers directly. This is not completely true because something has created the need in the first place. That’s why it’s also important to ask about their initiation to a purchased brand. Becoming initiated to certain brand is more likely to be commercial. In most cases you can narrow these reasons to a few major ones per segment. This information will help you decide where and what to do in marketing. How to effectively reach people and how to choose the message and content in most appealing way.

The Apple iPod is a great example of a product, which had  ”a long activation” period. The iPods were originally too expensive for many people who would have loved to get one. After some time, the price of the iPod reached tippin’ point, level which enabled most people to get one. At that point iPod rose from most wanted niche product to dominant brand. The MP3 format, iTunes and making CD digitization easy were the enablers of MP3 revolution. ITunes and buying music online were Apple’s strengths. However, the product design and user experience made it the most wanted brand and later on dominant market driver leading the way. Currently it has been predicted that when eye surgery costs come down to the level of 1500€, people choose surgery over new classes. Markets could change profoundly and rapidly.

We have learned from several cases that the brands often don’t know why and from who’s initiative customers got activated. In one case our client, advertiser, was wondering why their demand had suddenly increased dramatically and they made record sales without doing anything specifically. This company had very effective sales process delivering superb customer experience and consequently very high sales conversion. After running customer journey study for them we found out these people were originally activated by a competing company, which had launched a major direct mail campaign. The product was expensive and people wanted to take another offer just to be certain. This incident delivered record sales for the competitor. It’s likely that the active brand also sold more than in average but it’s absolutely certain that they also lost major part of their potential sales.

When you are concentrating on customer perspective you are simultaneously doing very effective competitor benchmarking and learning from their success too. In best case the competitor becomes your best salesman without knowing about it. You can also learn from competitor’s success.

In retail store you can roughly share products in two categories: must have and nice to have products. These products life cycle could vary greatly. In one CPG case that we analyzed we found three most common patterns in getting initiated. The first one was planned. People wrote on their shopping list that they will buy this product. The second was buying in stock when the product was in discount. The third was the biggest one… People who had made a mental note they should buy the product. However, this product was not in the priority list, which resulted ”pending activation”. These people were activated to purchase by just seeing the product in store or seeing an offer about it. The major sales increase for promotion was due to the fact that they had promotional spots that prompted people’s attention and activation by just being there. The sales would have increased even if there were no discounts because people just forgot to act on their decision. In many cases there is latent behaviour that must be recognized in order to optimize profits. There’s no need to offer major discounts if just being there does the job or offer smaller discount or on-top offer in order to justify the extra visibility in store and also activate stock buyers. It also has major indication in the media strategy. If the brand’s awareness and other KPI’s are in order, the most important goal is to have continuous activation going on generating faster re-purchases and increase in the market value. Depending on the product’s role in customer’s life there would also be possibility of creating CRM or social relationship management (SRM) approach that would keep customers active and engaged with them in product and service development.

Testing in the real environment is the only way to get a true business case

Making people move is a fundamental marketing goal. In order to optimize marketing effect, you must study, test and learn what kind of trigger and content create most response. You should also learn in which context or medium people would be most likely to act on the advertising and which interaction channels deliver best results. Consider, what is the role of your own mediums like website, retail or CRM. How can you leverage earned media like discussions online and press or other PR. Are there ways of collaboration with partners that would result synergy and low-cost leads? Where and how much should you invest in paid media like TV, print, radio, outdoor and online. You can manage what you measure and optimizing the mix takes a lot of learning, trial and error to make it right.

The second equally important issue is to learn where you should steer people post activation: online, mobile, customer service, retail or create a first action which help you support customer thru out the journey and purchase. Again, there are good learning’s available but each business is unique.

Consumers want to have control

Today’s consumer want to control the process of choosing and avoid being sold at. Pushing is irritating and considered as a bad customer experience. When customer has a medium in which there is a lot of choice he has the control. Customers choose what to concentrate on, and how much time they are willing to use in learning about product. Customers can choose to continue shopping online, in retail, mail order or to go and see the product live or choose not to do anything.

Advertisers have an opportunity to increase communications to own customers and creating own mediums in print and online. Previously marketing focus was mostly about finding new customers, although majority of the sales came from existing customers. Customer magazines and catalogues are part of customer loyalty, mobilisation marketing. The respondents consider the magazine or catalogue as respect of customers own space, time and consideration.

Buying is not easy

Marketers often assume that selling is hard and buying easy. For customers it is not easy to really understand the scale of offering and relevancy of it. At personal level they have ways of learning in their own time. Often the retail experience is too hectic and nervous for learning at own speed. Online services and catalogues allow people to have their own time and space. In one case outbound represented majority of initiation, but fraction of the transactions.  Banner ads are often judged wrongly due to this – people initiate but make transactions elsewhere.

Consumers consider concrete pricing, product pictures and good presentation of products as valuable service that makes buying easier. It’s easy to see for example how much catalogues and online travel advice decrease the need of personal advice from travel agencies and enable online buying.

The difference between emotional brand advertising with very little information and buying information sources is obvious.

Conclusions about Initiation

Initiation and getting activated is about prompting attention and making the person move. No matter how long there has been a latent interest, there’s always something that changes in offering, customers situation or the market that gets people activated. What is that, what is the motivation behind, what is the customer’s mindset at that point, which brands customer considers as options, which does he prefer if he does? Understanding this has a major influence in the overall marketing strategy.

In order to understand how customers are best reached it’s also important to understand the need of advertising and shopping consideration. For many brands there would be possibilities in helping customers learn about their value proposition by really making great product descriptions and photos for shopping medium use. Although the customers would not buy from these sources, they still learn from them. That’s free media that really hit the target. Brand’s own online service should be the source of ultimate information that really answer customer’s questions and engage with the customer resulting action.

When we were studying the different mediums capability to influence customers and how brands currently work, we came to conclusion that when brands are rapidly learning new, they are simultaneously forgetting old. Customer’s behaviour does change but when competing retail brands e.g. drop catalogue and go purely online, the other brand might gain advantage.

When measuring success brands should concentrate on how much did the advertising change customers perception of the brand positively, did the advertising justify higher price or increase the interest in wider audience with current price or did the advertising just activate people with discounts, which is good in the short run but could damage the brand in the long run. Which mediums performed best compared to the investment? If some mediums under performed was it due to the medium or advertising content? If you can answer all these questions post campaign, your capability to improve further is much better and you can actually predict outcome much better than previously which justify the spending.

What do you think? I’d love to get some comments :)

If you liked this one, check out how to manage customer interfaces and pre-initiation stage along the customer journey Brand-as-a-roadsign.

An article about the next stage in Customer Journey here: Choosing and buying – cross-channel influence

More advice about how to map and stury customer journey is available at https://futurecmo.org/2012/12/01/how-to-map-and-study-customer-journey/

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

How to map and study Customer Journey?

Customer Journey Mapping

http://www.servicedesigntools.org/tools/8

Generating and visualising the map is one thing, capturing data and understanding to generate it is another thing. I’ve done Customer Journey mapping and analysis since 2004 and learned a lot about the differences in methodology and their value. I’d like to share some of my experiences here.

The first thing to start with is to consider how you approach this task. I’ve learned that when the designer him self engage in customer journey mapping and research, the time spend in studying is actually effective planning time. Outsourcing this work to a researcher makes everything much harder. When you as a designer and planner are responsible for planning, you have a completely different idea about what to study and pay attention to instead of researcher.

I’ve learned that starting the work with qualitative interview really help in understanding what it is you need to pay attention to. In the qualitative interviews I have used methodology that has a name in Psychology: “Interpretative phenomenological Analysis”. See more from Psychology – magazine This approach thoroughly study customer’s lived experiences from their perspective. The point in this is, that you need to understand the whole big picture with different touch points, different brands and their content, value proposition and services. You need to see from the customers eyes and experience the market in full. Once you have studied 6-8 people like this, you will be ready to write quantitative study for those customers who have recently done the process or are currently in it. Here’s one sample story about buying a GPS navigator and about conflicting interests along the Customer Journey

How to divide the study in phases?

Customer Journey

Majority of the potential innovation driving information is easy to access in case you have a customer register. Considering other journeys apart from buying customer journey, each journey should be separately studied and measured post delivery. I normally study acquisition journey as one study from brand-as-a-platform to Choosing and buying and also ask about post-purchase satisfaction. Using is another study or it can be combined with re-consideration phase, whether people leave or re-buy. Loyalty as such is very much tied to using phase or experiencing the service, which is why combining the latter two would also be a good idea. Always study both won and lost customers. Especially the customers who were lost have a lot to give. By combining different customer groups you will have a better understanding how the market actually works.

If you don’t have a database in use, you can recruit respondents from a panel source with this brief. Depending on the business and brand, the company’s reach in the market place differ very much. If it is possible to find out the number of new deals customers are doing annually, it’s easy to calculate how many did ask for a proposal from you. Closed deals are calculated as conversion from proposals. There’s also hidden movement in companies data they are not aware of. For example customers that are members of your loyalty program also buy from your competitors. Every now and then it’s healthy to ask from current members what they have recently purchased in order to find out how to best approach them and minimize loss of sales and risk of losing members to your competitors. Recently lost customers got initiated for some reason too. How did that happen and why did they not continue their relationship with your brand.

Along with studying customers afterwards, it is very eye-opening to follow what they are doing and to interview them right after they have made their choice. This is different from mystery shopping, because the emphasis is on the customer, not on the store personnel.

The third important source of information apart from customers is your internal organisation working in customer interfaces like helpdesk, customer service, maintenance and sales. They know what questions are frequently asked, what challenges (product failure, need for advice, compatibility issues etc.) are causing most of the costs for the organisation. They are also excellent advisors when considering options how to solve these challenges.

Marketing research often looks into the future perspective and ask about awareness, top-of-mind, preference and shortlist of potential brands. These are all good measures and valuable, but intentional – and could easily lead you to a wrong direction unless you have other KPI’s (key performance indicators) and tools to complement them. The challenge about researching future is that people are quite bad at acting according to their own intentions. Habits, convenience and instincts drive behaviour to unexpected directions that are difficult to predict by research. These studies also often miss a major point. They ask customers which brand they prefer and make them choose one, and consequently fail to recognize the fact that people might have only brand options and not a specific preferred brand.

Example: In case 76% of the customers have a pool of options but they don’t have a specific preferred brand, it means that most of the market is floating. People only have options and consider brands as equally good. When the time comes the best or first/nearest/most conveniently available deal will win regardless the brand as long as the brand is within the pool of options.

When a customer initiates conscious consideration and buying, he’s often active. He’s making searches online, reading ads, discussing about his interest with friends and family, reading product reviews, asking questions from professionals and stores, visiting several websites and outlets, asking opinions and advice. Majority of this behaviour can be analyzed online or with research.

When the customer initiates this journey he’s in charge. At least that’s how he feels. That needs to be taken for granted. He makes decisions. While he’s in charge, he’s being influenced by media, marketing, brands, professionals, sales people,… Eventually the customer is quite likely to buy something he could not have imagined before actually entering the journey. He does the decision eventually but you can influence the choices he makes if you know how to do it. The mapping of the customer journey is composed of he following parts:

1. Touch points: mediums, services, personnel, re-sellers, physical spaces, online. 

Do you have control of the touch point or does a partner manage it? At what point of a customer journey is the customer getting involved with a certain touch point? What can you do in that moment and what are your goals and KPI’s? Can that specific touch point result in to an acquisition or do you need to direct the customer further? What kind of roles a single touch point has and how can you make certain all roles are played out right along the customer journey?

2. Service moments and context

What are the most likely contexts in which the customer engages with the touch point? What is he trying to do? How can you help him achieve that? How is that done? How could it make your product or service look more appealing or at best, a most likely option?

3. Motivation and drivers

Are the customers reaching out for you or is it the other way around? In what kind of mindset does a customer engage with your brand? What could drive him further instead of abandoning your brand? What are the conventions and customs in your business and how could you exceed customer’s expectations by breaking them? Are there other companies that have a similar logic to yours and could you implement their approaches, which already have a proven logic?

4. Decision making process

What is the customer’s decision-making process like? Is he doing it himself or using a consultant or services for comparison? Are there predictable qualities in customer’s selection process that would enhance your capability to adapt your organisation to the customer’s behaviour with right content, value proposition or services? How does the customer move from one stage to the next?

5. Triggers and Moments of truth (initiate/choose/drop/buy/attrition)

Where and at what point are the most important moments of truth defining the majority of your business success? What triggers them to decide or act according to your will? Can you trigger customer behaviour? How can you do that most effectively and which kind of approach result in best outcomes? Why do you win and what do your competitors do better if you lose business to them? How can you outperform your competitors’ actions?

6. Post-purchase satisfaction and recommendations

Would customers buy again if they had a choice? What is your Net Promoter Score Index? What were they satisfied about? Was there dissatisfaction? How can you improve your customer experience in order to earn higher opinion? Do your customers discuss about your product online or face to face? What are they saying? Are they endorsing your brand? Could you use their endorsement for others who are still considering it?

Customer Typologies by behavior

You can easily argue this is not the whole truth. Not all purchases are done like this, consciously working thru a cross-channel decision-making process and eventually buying something. That’s right. And that’s why we needed to create a model for defining critical customer journey models for different kind of purchases. Conscious cross-channel purchase journey is most likely in case of ”3i” purchase. That is High interest, -involvement and/or -investment product or services. However, the buying models and patterns are more complicated than that. Also the behaviour dynamics differ between products, service ranges and between same category brands. You can divide customer behaviour in three major types: Adventurers, Flyers and All-inclusive cruisers

Adventurers: Journey driven people are interested in the products and their qualities. You need to support their needs and change or influence their attitude in order to break in to their awareness. As they search and compare, you need to be able to justify to them why your solution would suit them and guide them to decide and purchase your product/service. These people really consider their user experience and share recommendations in case your performance is beyond expectations. Supporting their needs helps you to perform better with other people representing different behaviour type.

Flyers: Destination driven people also need to be influenced at “need and attitude” -level in order to create better awareness of your offering and it’s qualities. However, this is more about leveraging past reviews and feedback from journey driven people. Destination driven people are more likely to be influenced by e.g. Magazine reviews of your product or other independent sources of information. With such support you can just concentrate on tactical advertising in order to encourage decision and purchase making. Destination driven people are interested in the user experience and reviewing their own experience to others.

All inclusive cruisers: Public opinion driven people accept your offering when it’s widely used and they are completely certain that choosing your offering has no risk what so ever. It’s all about tactical advertising and encouraging purchase. They are not likely to share their opinion to others or recommend your products or services.

The share of each of the previous groups vary by product category and brand. The rules of engagement apply and they must be considered in the mapping too. These laws apply like gravity and this means  that same tools and methods in marketing certainly don’t apply to every case in the same way. Here is the rules of engagement map: a) Level of 3i and b) who’s the active party.

Customer journey rules of engagement

I know doing this kind of mapping sounds like awful lot of work, but I can guarantee that doing it is one of those things you celebrate most later on. Trying to compile data from different sources or doing this with qualitative interviews will deliver 70% right answers and generate innovation too, but doing it this way will give you more insight than you have ever got about your competitors success and failure, understanding the role of different channels and information sources and about market dynamics in general. This approach is a gold mine.

Well, there are a number of ways how to maps and document customer journey. They are all ok, but built for different purposes and they offer different kind of value. One great source of information for visualisation and internal/qualitative process is http://www.servicedesigntools.org/tools/8

What do you think? I’d love to get some comments 🙂

SEE NEXT:

Key questions when stydying Customer Journey

Customer Journey stage 1: Brand as a platform

Customer Journey stage 2: Initiation

Customer Journey stage 3: Choosing and buying – cross-channel influence

also check out how to manage customer interfaces

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Conflicting interest and Customer Journey

Garmin Navigator

This is a real story, which really shows how little things and conflicting interests influence customer journey.

On one sunny Saturday morning I was browsing thru door drops, marketing leaflets from home electronics stores, cataloguers, hypermarkets and such. For more than a year I had been following the price development of systems cameras by Nikon and Canon. While doing that I had also got interested in GPS navigation. On this sunny Saturday there was a sale for TomTom Navigator at the price of 75€. It was a limited offer, only 400 pieced nationally. Package included maps for Western Europe. When the clock was closer to 10am, the opening hour, I decided to drive to Gigantti and buy the GPS navigator.

I came to the store and looked for the right one. I asked from the seller and she showed me where the model was. She also said that there had been a mistake in the ad, the package only had Scandinavian maps in it. I asked how much more would it be with European maps?  105 €. The salesman showed GPS navigation models on the wall. ”Here’s TomTom”. Next to it I noticed Garmin model that had the same price as TomTom. I asked if there was any difference between Garmin and TomTom. The salesperson said Garmin had better battery life. That was it. I walked out from Gigantti with Garmin 245. The purchase customer journey was done.

Let’s consider this journey and it’s implications to different players.

Me, the customer:

I was very happy, although I paid 40% more than intended but 105€ wasn’t a problem eventually. I was highly price-oriented customer who was looking for ”good enough” solution and was not interested in more advanced solution or bigger screen. Because of the basic functionality needs I had I was also not interested enough to look in to product specifications online, product reviews or discussion forums. This product will get the job done anyway. At home, the product exceeded expectations. It had much more functionalities than I was expecting. They had minor meaning compared to the basic functionality, none of them was more important than the battery life, but it was a positive surprise.

Gigantti store:

Closed 40% more sales than I had intended to spend. The experience about the store was positive and the sales person’s advice was good, which means that the store will get more money from me later on. Was their error in the ad intentional? Probably not but they should still analyze how the error influenced their GPS navigator sales in general. What did customers come to buy and what did they actually walk out with?

TomTom:

Complete failure. The brand might have made a special deal for the campaign resulting change in price image. After reading that leaflet customers think, that you can get TomTom with European maps at the cost of 75€. It easily becomes the market standard. You are making a bad deal if you pay more for it. Price/value ratio sounds perfect but actually it wasn’t real because of the error in the ad. That’s ok if you go to Gigantti and they tell you about the error. If you don’t you just expect that TomTom’s are now cheap. It’s most likely that TomTom does some kind of post campaign analysis and comes to completely wrong conclusions unless they understand how the purchase dynamics in the low price category GPS really works and how their campaign influenced customer behaviour in general.

Garmin:

Great success. Garmin did nothing but made a deal anyway.  Well, I had positive image about Garmin in advance and the sales person just gave me the last defining fact that led to decision to buy Garmin. Now that Garmin closed a deal with me and got me registered, I am quite likely to buy other stuff on top later on.  Was Garmin’s success intentional? In reality the sales person’s advice could have been founded on her own perception or Garmin had analysed the differences between brands and intentionally launched training for retail sellers which states that their battery life is better than TomTom’s. How much longer? No idea.  It never came up.

Questions?

 In the cross-channel decision-making journey customers move instinctively. There are conflicting interests, opinions, and influencers along the journey. How do you manage that? What do you know about the journey in practical level? Brands win and loose or worse, sell competitors products, without knowing it. Are you selling your competitors products? How do you manage chaos?

Have you got similar experiences? I’m looking for more real life experiences 🙂

More about how to map and study Customer Journey here https://futurecmo.org/2012/12/01/how-to-map-and-study-customer-journey/

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Marketing DO or DIE – Managing Customer Interfaces

In case of any company that is selling products and services that people are interested in enough to find more information about, have customer relationships with continuous or repeated purchases, succeed or fail because of their customer interfaces. In the current business environment, where the competition is hard and people have other players available in a ‘click’, you can not afford to fail in converging visitors or people who get interested to buyers. For CMO, these are the new priorities:

  1. Most accountable and rapid growth is available from current customers, their loyalty, re-purchases and cross-selling increasing lifetime value. This game is all aobut customer experience
  2. Strongest growth of customer base is available from own customer interfaces by expanding their reach and increasing conversion rate. The core goal is to recognize these people and start servicing them in order to sell (=selling by servicing and inspiring approach)
  3. Other market – non customers, is most unaccountable and most difficult to really increase ROI from. Content marketing driven SEO success, positive social media, referring traffic and general positive WOM are all free medium generating new visitors to own customer interfaces.

CMO has a rather large liquid capital to invest and in most cases its has been spent on external media channels and advertising. As I am writing this the old spending habits are changing rapidly. Instead of trying to advertise the company’s image, preference and top-of-mind to the new hights, smartest CMO’s and companies are concentrating their efforts on customer experience and customer interfaces. Customer Journey and how to manage it is very much dependent on data and it is now rather easy to capture that data, which is changing the game rapidly (There is nothing wrong with advertising, but I have witnessed way too many times that the advertising has increased demand in general and sold competitors products. So, don’t advertise in case you don’t know that your customer interfaces actually deliver sales to your own brand. Once you do, they will sell also when your competitor is advertising and your own advertising will deliver much higher ROI)

When designing the customer journey and marketing priorities the external touch points are as valuable as their capability to pull people to the company’s own interfaces. Once they are on the company’s interfaces it’s vital to recognize them, which makes it much easier for you to inspire, serve and create feeling of trust or trigger purchases. Own interfaces are as valuable as their capability to convert visitors to buyers or at least recognize who the potential buyers are. In banner advertising this kind of action is called re-targeting, but that secondary compared to marketing automation tools and rich CRM data captured with 1st party cookies. So, here’s a how you can break the picture above in to more detailed contributors along the customer interfaces:

It’s actually not that difficult to pull together data about these interfaces and their contribution to the corporate overall success. Once you have all that data pulled together it is much easier to concentrate on how to make the whole system work more efficiently. These frameworks are tools for Topsight -kind of view. However, they give you a better perspective about what is the role of advertising and what could be possible with your existing customer interfaces, natural traffic, visitors, people considering your product and learning about it, or the role of CRM and existing customer database.

Once you have understanding the next level would be about creating systematic and automated tools and processes for further scale. Here is one more frame for such approach (cycle for success) in the online marketing environment:

This cycle for success starts from customer understanding: Who, what, where and why we should target. The budget allocation for “who” is the foundation for potential to succeed.
The second stage is about performance attribution explaining the active performance of a creative portfolio. Multivariate testing (MVT) with variety of creatives and continuous improvement of best campaigns will deliver you results that are several times better than regular practices deliver.
Clicks however are not money. You must take the time and make sure that the process delivers sales eventually. That is about optimization of landing pages and customer journey. Very little things can deliver much better sales. I don’t think there is any other area in marketing where you can get such amazing ROI that you can get from increased conversion.
Once you do create sales, you also create customer database. Analyze them thoroughly and it becomes an asset you can feed back to the allocation model and create effective marketing automation in order to optimize customer life-time value. Customer understanding is also the best food for creativity.
This is the cycle of success I think will become standard within the next few years.
Everything explained above is already working in practice. Its still very much about continuous learning but already there – not in the distant future.

From Poor-Data and Poor-Insight to Rich-Data and Better-Insight

As we already know, organizations have ability to collect, store and analyze massive amount of data from multiple sources. They have spent a lot of money managing this big data. Investments in technology and analytics are useless unless employees can use data, information and knowledge in their decisions-making.  Many companies are facing a big challenge in data-driven decision-making. Good and rich data won’t quarantee good decisions on their own. I posted May 2012 an article about Insight IQ. It was based on April 2012 issue of the Harvard Business Review where Shvetank Shah, Andrew Horn and Jaime Capella argue that Good Data Won’t Guarantee Good Decisions. In this article I continue this theme a bit further.

Shah, Horn and Capella found that there are three main types of decision makers:

  1. Visceral decision makers (gut feel decisions)
  2. Unquestioning empiricists (rely on the number alone)
  3. Informed skeptics (gut feel with data)

If we consider the matter in data perspective I defined simple data collaboration or data insight maturity scale. It emphasizes level and maturity of data collaboration in decision-making.

Organizations on the right ‘high side’ are capitalizing the data in decision-making. They combine the gut feel with data and can drive decisions that make a real difference in productivity and profitability. They can drive real competitive edge from and behind the data. They drive all necessary information from markets for better decision-making. They know their customers and customer journey. Although the decisions can be very complex with limited amount of time and there are many options to choose from, they can still make the decisions and carry out them fast. These companies are the winners. They have hit the jackpot, but unfortunately I see these kinds of companies quite seldom. However, that is the goal to go for.

Another way of looking at this variety in corporate behavior is to divide companies in three categories according to state of data maturity. There are three types of companies: data collectors, data analyzer and data innovators.

1.       Data collectors

These companies are collecting and learning which data is important for their business. Light segmentation is used and it is more building and focusing on different customer groups. Analytical skills are very low and decisions are made as gut feel or based on basic sales figures and income statement

2.       Data analyzer

These companies have systematic way of collecting and storing data. They are invested in the technologies that are available to analyze the data. They can do basic business reporting but are not able to drive the real value behind the data. They are good at analyzing and reporting but suffer the lack of interpretation skills to drive deeper business insight.

3.       Data innovators

These companies are more comfortable with big data sets and technology. The focus is in how benefit from actionable insights and strategic big data. They have effective ways to share business information across functional areas that better decisions can be made. They have many data-savvy employees and data-driven decisions are informality in C-Suite.

Steps from data collector to data innovator

It is all about people, process and technology. Here are six steps to improve data-driven decision-making.

1. Emphasis on right data

  • collect all relevant information into one single platform
  • from business understanding to data understanding
  • automate the data collection process

2. From silos to holistic business view

  •  map all the relevant data, which is essential for decision-making
  • data preparation, consolidation and visualization are necessary
  • CMO & CIO partnership

3. Choose the right technology

  • find technology that meets your business demands
  • choose technology, which accept and read data from any source

4. Online reality

  • today’s business and business environment needs real-time data
  • online data as enabler of quick decisions and insights
  • rapid resource allocation
  • online business management and intelligent decisions

5. Create strategic marketing dashboard

  • KPI’s by channel
  • true values from returns and investments
  • identify risks and opportunities
  • measure and lead the customer journey

6. Create systematic analytic skills competence development program for employees

  • find the data-savvy workers in your organization
  • make them to train everyone else of their analytics skills and method
  • leverage analytics know-how widely in your organization
  • C-suites as exemplary for others

Big Data, Big Decisions and Big Management Change

Big data is out there. Data volumes, velocity and varieties have multiplied, in fact exploded.  The big question is how to find the best ways to make all of it and how analyzed data is changing decision-making ways and management. Are big decisions based on analyzed evidence or intuition?

Many organizations are thinking how to drive the real business value behind big data. They are drowning with data and don’t know what to do with it. To drive competitive edge from big data, organizations need new competence and new management style. These are very big issues in today’s business environment and get accentuated all the time. For example, Gartner’s top 10 strategic technology trends for 2013 addressed strategic big data and actionable analytics. These two trends were number six and seven. And believe me, these two trends are raising top of that list the near future.

Ten years ago I created Intelligent Contact Management (ICM) concept at MicroMedia. It was holistic approach for sales and target marketing. The main idea was to translate inside and outside, online or offline data into information, information into deep knowledge, knowledge into action and action into measurable results. Action means in this case multichannel sales and marketing approach. Right and relevant message to right targets at the right time. Way of handling and managing touch points in customer journey.  The concept of ICM presents in picture below.

Is there any significant changes in ten years. Nothing much, except tsunami of unstructured information has swept over. After ten years we are facing with information that comes in varieties and volumes we could ever imagine. That is not a threat, it is the big opportunity to handle and manage more precise information for predictions and decision-making.

Big data is a management revolution.

There was a very interesting article about big data and management revolution in Harvard Business Review, October 2012 issue by McAfee and Brynjolfsson.  They wrote that “data-driven decisions are better decisions – it’s as simple as that. Using big data enables managers to decide on the basis of evidence rather than intuition. For that reason it has the potential to revolutionize management”. I could not agree more, using and analyzing data for evidence-based decision-making is the quantum leap from hunch and “super intuition”. This leap composes a big managerial challenge.

Are data-driven companies’ better performers?

There is a lot of buzz and skepticism about the real value of being data-driven organization. McAfee and Brynjolfsson made a research to find real evidence that using big data will lead to better business performance. They interviewed executives at 330 public North American companies about management practices, both organizational and technological and their annual reports. The major finding was that companies using big data and data-driven decision-making are performing better financially and operationally. In fact they are 5% more productive and 6% more profitable than their competitors.  But, and this is a big but, 32% of respondents set their companies below 3 at 5-point composite scale when asking is your company data-driven. So, there is a lot of work to do in this field.

Destroy the empire of HiPPOs

Is your organization making decision HiPPO-style? McAfee’s and Brynjolfsson’s definition for HiPPO: the highest-paid person’s opinion. These executives are making decisions based on their experience and old intuitive patterns. The big question is are these executives ready to cancel their decisions if analyzed data is telling the opposite than their intuition and hunch. The answer is yes and no, but the big shift is happening. In today’s business world, executives can rely on data and predictions. The biggest factor is that they can ask the right questions. When the data-driven decision-making movement advances further, HiPPOs will mute and extinct. New data experts will arise. Future CMO will be this kind of expert in executive group.

Manage the big change

McAfee and Brynjolfsson picked up five management challenges when moving towards data-driven company and evidence-based decision-making.

Leadership

  • create leadership teams, set clear goals, define success and focus on asking the right question
  • do not forget the human insight
  • think creatively
  • communicate clearly with employees, stockholders and stakeholders

Talent management

  • employ data scientists

Technology

  • invest in technology
  • update IT competence

Decision making

  • create cross-functional cooperation
  • locate the big information and decision-making in the same place
  • improve problem-solving techniques
  • ask the right questions

Company culture

  • move actively away from hunches and instinct
  • do not pretend be more data-driven than you really are
  • forget the HiPPO-style decision-making

The big data will become a key basis of innovation, productivity and competition. According to research by MGI and McKinsey’s Business Technology Office there are five ways in which using big data can create value. First, big data can create value by making information transparent and usable widely inside the organization. Second, organizations can collect more accurate and detailed performance information, analyze it and drive performance. Companies are using big data and analysis to make better management decisions. Third, big data allows ever-narrower segmentation of customers and therefore much more precisely tailored products or services. Fourth, actionable analytics improve decision-making. Fifth, big data can improve the development of the next generation of products and services.

In the end, one rule of thumb to remember: Big data will never replace Big thinking!

Loyalty for pragmatists – it’s not about loyalty schemes

This post is about loyalty. Loyalty is about people’s willingness to stay as a customer or re-purchase when the time comes. Attrition is about customers leaving the company (defect).  For one reason or another customer relationships end inevitably, in grave at the latest. Here are some learning’s about reasons for attrition and ways of avoiding it as well as possible.

Most established companies could get enough new customers relatively easy. The biggest effect on revenue comes from attrition. In many cases new customers could take two years to breakeven. When any customer who has been a customer for more than two years leave or stop buying repeatedly, it’s directly away from profits. If customers leave before breakeven, their effect has been negative. The easiest profit increase would be an outcome of increased loyalty.

Let’s take a look at some loyalty strategies:

  1. Rational  
  2. Emotional Loyalty
  3. Habit based loyalty
  4. Legal loyalty
  5.  Structural bonds
  6. Imprinted customers
  7. Symbiosis strategy (subject to another article: Symbiosis-strategy-creating-the-ultimate-value-proposition/)

Rational loyalty

Most loyalty programs don’t deliver brand loyalty, really. That is due to the fact that people have all loyalty cards and they pick cherries from where ever they happen to find best offer at that point. Points based loyalty programs are often buying loyalty from customer. You get more discount when you buy more and you get offers only available for members. Loyalty program effectively lower the best customers profitability. It’s completely rationally driven model that create a behavioural pattern for customers to buy when it’s cheap. Naturally, they don’t if you don’t have an offer for them.

Most often, members also get bulk messaging in which there is nothing personal. A membership equals the license to sell. Selling is often positive. Customers consider selling as active relationship in which the company is offering new services and value for them (servicing by selling). Buying several solutions from a single company result stronger relationship and lower attrition probability. Everything above is basically positive, better than no program. However, when customer relationship is based on rational decision, another company with more aggressive approach can do considerable damage.

Newspaper and magazine subscription sales are a great example that illustrates what kind of damage you can do to the market with your own actions. Short-term victories could easily result long-term losses. Similar fight has also been raving around mobile handset and connection plans. When companies are concentrating on new business, they easily neglect the effects of such orientation to their current customer base resulting negative churn. Another example could be mortgage marginal wars, selling home loans at almost non-existent loan marginal just for the sake of market share. People could be lazy but they are not dumb. If loyalty becomes twice as expensive compared to small efforts and feels unfair and at worst offensive. Such strategy is not likely to create a lot of sympathy or feeling of being appreciated as a customer.

If you are making strong offers, you need a justification for them. Justification equal short term and special conditions enabling such offers. If you don’t have justification people start expecting lower rates in general and just stop buying at normal price. Rational loyalty is a strategy that works for price fighters and low cost offerings that don’t have a brand or other competitive tools. For others, rationally driven programs without further consideration should be considered dangerous. Buying loyalty is bad for business.

Emotional loyalty

In many cases one of the strongest driver of loyalty is the brand. Brand as a whole has its foundation in customer experience, quality, integrity, service, ethics, corporate responsibility and values. If the brand feels right for the customer he’s less likely to consider competitors. Also, the loved brands don’t lose customers without warning. If customers love you, they let you know if your pricing or position is having a strong challenger and they actively ask your approach to the situation. Emotional loyalty is not price driven. You can have healthy margins and customers accept it. In such a position customers also offer their helping hand and are much more open to participate in open innovation dialogue or giving you advice how to improve your service even more or what new services they would love to buy from you.

As the world is becoming increasingly transparent any actions the company does influence the brand. Where is the production done? How does the employer take care of employees? How environmentally conscious the company is? What kind of values the company is having it’s foundation on? How do those values show for me as a customer? In current business environment there’s too much of everything all the time. It’s very difficult to differentiate yourself by offering or pricing. For customer loyalty programs stand for them showing their loyalty to the company. There are stages from bronze to gold and your role is to climb up that ladder. If you do, you get stuff even cheaper. Great. Completely opposite strategy that is more emotionally driven is to consider how the company can show loyalty towards the customer. How do you take care of your customer? How do you make certain that the value you are delivering to your customer becomes even higher. How do you solve problems that your customers have?

IKEA is an amazing case of combining rational and emotional value in to a complete package. IKEA has justified their “democratic” business approach by making it clear to all customers why they can offer premium quality at low cost. How they are solving your challenges at home at affordable cost. IKEA marketing is about Scandinavian design, the advertising highlight high quality and beauty and the prices next to products are not the core message, but they effectively look like a bargain in that context. IKEA Family loyalty program is quite rationally driven but the company brand has more to it. IKEA’s service processes are also in place and it’s easy to return or exchange purchased products without questions asked. Once you have visited IKEA, the other options don’t really feel the same ever again. If IKEA had chosen to emphasize price, they would have been just another low cost player and would never have become such dominant global player.

Habit based loyalty

In most businesses there comes a time when customers re-consider whether to buy the same brand again or to buy something else. If the customer is involved in continuous relationship it requires active sign-off from the current relationship. If you can turn single purchases in to continuous relationships in any way, you are likely to drive much higher loyalty. That’s the best part. Once the customer is engaged in continuous relationship it requires time and effort to close it. The best psychological themes for loyalty are: laziness and minimizing points of discontinuity creating experiences like billing. One of the great ways of improving loyalty is allowing customers to have automatic payment methods directly from account or via credit card. As a result customer does not get direct invoice for the service delivered but it’s included in credit card invoice or directly paid from account. Attrition probability drop is quite significant with such a method. Actually, customers find out about the invoice after it’s already paid. Another great way to avoid attrition and increase predictability is to sell service for certain period of time.

When people establish behavioural patterns like reading a newspaper every morning, their likelihood of attrition is much lower. Habit based loyalty is really about keeping the status quo. Low profile and making certain that there is no need for active consideration for the customer enable very profitable type of loyalty. If you have any way to enforce habits you should take them.

If the business environment is turbulent and advancing very rapidly you could come to situation where your existing customers are clearly paying too much to the point where you just can’t justify it anymore. Finnish telecom operator Elisa doubled broadband customers speed twice in two years because the price of bandwidth was decreasing so rapidly. This approach generated strong loyalty and healthy margins because the brand actively improved service level according to market conditions. Such approach strongly enforced customer’s habit and decision to stay with the company instead of changing to another one. Combination of rational and emotional response enforced habit.

Another fantastic case of habitual loyalty is online banking. The first online bank was issued in Finland and since then the whole retail banking has changed completely. People no longer have a reason to go to the bank. They can take care of all their finances online. As an outcome people have become user interface loyal. Only in case of major need for relationship driver service, like mortgage, people would consider changing their bank relationship. Relationship driver services are major issues that are big enough to question the current relationship. This is rare though and in case the bank meets, even close, the other offers, people will stay. Online banking is like water, as long as you get it when you need it, there’s no problem. If you don’t, you have a major problem. If the service keeps on going there’s nothing to question the current relationship. Online banking enabled huge cost cuts and automated service processes. Cost to serve is now marginal. Previously most of the profits had come from bigger investors and bigger loans. Once online banking was introduced and became a habit for customers, the vast majority of customers became profitable. Banking margins and profits have grown and the profitability has increased without attrition.

Imprinted loyalty

Especially in case of professional service, customers are not necessarily loyal to the company, but person they are in relationship with. If customers get imprinted to their counterpart and the person stays with the company, relationships could be very strong emotionally, rationally and habitually. Trusted person can be an enormous asset for a company.

The online revolution has diminished the role of person-to-person relationships in consumer businesses. The role of brands and trust in service processes has substituted the void to some extent. It’s not quite the same but works too.

The company’s customer interface, people servicing customers should still be trained to reach for such relationships. The brand is as good as the person representing it.

Some major hairdresser chains evaluate their employees based on the fact, how many of the hairdresser’s customers book their next visit for the same hairdresser. This measure is beautifully simple and revealing. Being a great hairdresser is not just about the quality of your work, it’s very much about the whole experience. Especially women open up and discuss at the hairdresser. They could easily spend two hours with the hairdresser and spend a lot of money on the experience. It’s about being heard, appreciated and pampered along with getting your hair cut and dyed.

In car sales it’s a known fact that the best car salesmen have customer relationships that follow them and exchange from one car brand to another just because the person is advising them to do so. Getting people imprinted to the people they are buying from should be considered as a strategic loyalty approach.

In business-to-business customer relationships the change of contact person is one of the most likely discontinuity probability increasing situations. Relationships are personal and the new person equal almost the same as changing the partner. It is really important to handle such situations carefully.

Legal (Contractual) Loyalty

Mobile operators in Finland suffered from very high attrition rates after number portability was enabled. Churn rates reached +30% level even though customers were very happy with their operators. Customers want to have a new mobile phone every two to three years. The need to get a new handset created natural discontinuity to relationship. Mobile operators have oriented at offering good deals for new customers and winning higher share of dynamic market. This orientation led to higher advantage for changing a company than staying with the current one. These operators had same level of perceived value and customers had rarely real preference. Most customers had only options that were equally good in general. Only differentiating factors were the brand communications and current offers.

The operators started selling customers 12 month agreements, which offered lower cost calls in the evenings or weekends. These agreements sold quite well and led to lower attrition rates. Once 3G bundles were introduced they included 24 months agreement and were sold with handset subsidies. Against your 24 months agreement you got the mobile phone at half price. These agreements dropped attrition rates below 10%. In other words agreements offered steady relationships and predictability. As a result mobile operators profits increased and people purchased more expensive mobile phones, which enabled major increase in the use of data creating completely new mass market. Everybody won. After the 24 month agreements ended, the attrition rates increased back to 15-20%. Although the attrition rate increased, they didn’t reach previously familiar 30% rates.

If customer is not really experiencing very bad service, they are likely to stay in the current relationship. Human nature is lazy and towards many product and service ranges, indifferent. If customers are happy, they could ask offers just to bargain with current partner. That’s still better than losing clients. People rarely start actively comparing other options if they are satisfied. If they do, it’s most likely to check the pricing. In order to gain market share in a business like this brand has to actively sell and create discontinuity with sales. Electricity agreements are great example of this. Very few people compare electricity pricing and actively change a power company unless it’s actively sold. When you get a call offering you -5% and the power which is produced with water and greener than your current option, it’s easy to agree. Even better, the new company also close the previous deal so that the only thing you need to do is say ”yes” on phone. It is possible to surprise a competitor with heavy attack in a case like this. Unless the competitor has closed agreements for certain period of time, they are likely to lose a lot of customers almost over night. Who would start comparing for 5%? Very few would. Who would accept such offer when it doesn’t require any effort? Quite many will. Only thing hindering people to accept such an offer would be to tie them in the relationship with an agreement for certain period of time.

Loyalty by structural Bond

What could you sell your customer to make him dependent on you? In case of larger IT companies, structural bonds are the biggest driver of loyalty. When you buy an ERP (Enterprise Resource Planning) system and your company becomes completely dependent on it to function, you certainly have bought a structural bond. It’s an interesting approach to loyalty to create value in which the customer becomes dependent on. There’s interesting consumer applications to this too.

When Polar Electro introduced their wrist top computers with heart rate monitoring they soon created online Personal Trainer to supplement additional training advice for users beyond possibilities in the cadget in it self. Personal Trainer recorded all your training to a database and created record. It helped analyzing your training requirements and results very effectively. In early 2000 this was a ground breaking innovation. When all your training history was online, Polar Electro had a structural bond on you. If you wanted to change to more advance training tools, you had to buy another Polar wrist-top-computer in case you wanted to keep your training record ongoing. Currently mobile phones have same functions and you can use variety of platforms for storing your training history. These platforms effectively still create structural bond although it’s now cadget independent and available to iPhone, Nokia and android. Still, Polar Electro’s Training Tool is an effective loyalty driver for everyone who has been using it for the past decade.

Facebook also has such a structural bond, your friends that are already there. When everyone is already there, it becomes very difficult to leave and completely stop using it. It is also very challenging for other services to get really active users, because Facebook is a strong habit and it holds your entire social life and has become big part of yourself – part of who you are and how you represent yourself to the world.

Attrition

No matter what you do, some customers will leave eventually. Still, applying effective win back strategies could diminish negative churn. One company actually managed to winback 80% of already lost customers. Win back operation was probably the most profitable function the company had ever created.

When you are trying to develop your company’s customer relationship excellence, you can’t just look in to customers who are happy. Their responses will only strengthen the status quo and hinder innovation and adaptation to changing business environment. Lost customers on the other hand are a great source of insight and improvement advice. Any information that help you predict discontinuity, increase the probability of re-purchase, or shield customers from competitors influence and decrease retention clearly increase profitability.

Some actionable and easy advice

Here are some advice for improvement in loyalty, customer experience and business with customers using your services or products:

  1. When you are developing your offering and customer relationship, you should try to recognize the contexts and motives your customers are using your products and services in and what is their value in use. Understanding value in use and delivering a service experience hold insights for improvement and innovation. Single purchase could be changed in to continuous relationship by turning your product or service in to a platform that allow creation of even higher value and new solutions that increase value, profitability and scale.
  2. You need to have a communication channel with customers. If you have a loyalty card offering or continuous relationship that is easy. If you are selling 3i- services or products (high investment, -interest or –involvement), people are willing to give their contacts for you. If you are in FMCG of CPG business, you should still strive to get people to connect with you directly or using platforms like Facebook or Twitter. Direct connection with your customers enables feedback, advice, and introduction of new, capturing dissatisfaction and making it right. Connection to customers is vital for improvement and creating a feeling of relationship – it’s the company’s most valuable asset. It should be taken care of keeping that in mind.
  3. If you collect data from your customers, they expect you to use it. Asking questions from customers and capturing their customer behaviour on card transactions equal promise. Brand’s responsibility is to redeem that promise.
  4. Communicating personally is respect. Understanding customer and communicating personally show appreciation and create emotional loyalty. Asking questions and responding personally is rarely used method of engaging and creating emotional relationship that is capable of breaking habits and creating new ones.
  5. Analogical is becoming premium in the era of digital communications. Face to face, phone service by a person and traditional mailings are becoming statements of respect and appreciation in highly digitalized businesses. Just think about receiving a letter from Facebook or Apple. That would really be special J A hand written note as a letter would really indicate that someone has taken the time to consider you personally.

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

Planning 3.0 – combining Creative, Communications, Experience and Business planning = Customer Journey Management

Admap published a writing competition results – best articles about “Planning 3.0”– How will we be planning in 2020? The winner, Nick Hirst said “We need to transcend the often polar disciplines of ‘conceptual’ (creative agency) and ‘practical’ (media agency) planning to deliver, not communications, but great brand experiences.”

I couldn’t agree more! Although mr. Nick Hirst’s and other rewarded articles were great, what really made an impression to me was the pre-words the judges wrote. They analyzed the articles they received and came to conclusion that the future of planning looks like… ‘We don’t know’, or at least, ‘we don’t agree’.

According to judges the most striking theme about the entries was not about how the entries were presented but how they represented a clear new chapter of planning, not necessarily a consistent chapter, but a new one nonetheless. This new era could be dubbed the, ‘the post-specialist era of planning’. 

Planning has grown around specialists in data and analytics, user experience, information architecture, trend analysts, digital strategy search optimizers, social media and crm gurus… Until now, the dominant conversation about strategy has been about the need for these specialists, and for them to be distinct and separate from what has gone before.

Entries to this Admap Prize competition no longer championed the specialists as skill sets that deserve their unique place. Instead, they argued that they should be the very future of planning in its entirety; the planning specialism becomes the planning mainstream.  According to judges, authors wrote of the data and analytics skill as simply becoming planning – all tasks of planning would become measurable and, therefore, the measurement/analytic skill would become planning. Or, the specialist skills of social media strategy would become the fundamental of brand planning, given the very social future that brands face.

According to main judge, JWT’s Guy Murphy two things will happen

1. There will be a sense of planning returning to be a more singular and holistic way of working. Certain planning tools will become the norm for all planners – just as the notion of ‘paid, earned and owned’ seems to have become standard currency for media thinking today.

2. Planning will become more influential. The assimilation of its new-found specialists skills will make it a richer, more effective and more confident force. It will make a decent fist of managing the huge and growing complexity that faces brand building and communication. This will shift the role it has been playing.

In my opinion 2020 is far far away and everything mentioned above is already happening. Planning is rapidly facing new requirements for its effectiveness and moving towards more holistic view. Actually this holistic approach is gaining momentum in general.

Last week IBM organized “Smarter business day 2012” event in Helsinki. Data analytics was an issue there too. What IBM’s director for Analytics division Juha Teljo presented that the whole analytics business is moving from application centered approach to analytics centered approach by 2020:

So, along with planning, also the whole infrastructure is becoming analytics – that is planning – centered.  Once I search about this matter, I also found IBM’s view on how to create Analytics Center of Excellence inside your own organisation. The 150-page material is attached here: 5Keys to BA Program Success

The winning article by Nick Hirst agreed with this idea of holistic planning. He recognized User Experience planners as the first breed of future planners: “User experience goes way beyond Information Architechture. While the latter is a specific discipline concerned with the organisation of information to ensure its swift, intuitive navigation, User Experience considers the experince of the user as a whole: their expectations, their level of interest, their attitudes  even how they feel. Concepts like surprise of disruption, or even entertainment – all proven tools for affective and effective communications – are anathema to a classical Information Architect, but entirely within the imaginative realm of the User Experience Architect.

Even now they think about both the effect of an indivicual, small experience – a piece of copy, a picture, the way a button workds – and the overall journey. Even now, some agencies are recognizsing the ‘planneriness’ of what they do, and reconceiving them as Experience Planners. But just imagine what would happen if we unleashed that kind of thinking on everything else that comms agencies do now.”

I think the future of planning will be even more amazing than expected and I do think that Nick Hirst’s dream is becoming reality. Here’s what I think:

  1. Planning marketing will be about planning competitive advantage, that is corporate strategy and operations. see Forbes article here
  2. Corporate Image will be more and more about actual experiences and shared opinions – planning will be about designing and managing customer interfaces and experience. Article here https://futurecmo.org/2012/11/10/marketing-do-or-die-managing-customer-interfaces/
  3. Comms and marketing to customers will become service experiences – event based automatic communications that integrate with the customer’s situation and needs in any given location or interface. Marketing automation becomes service automation along the customer’s journey. The center of gravity will be the Customer Journey understanding and design.
  4. Planning will become more holistic than ever – we are moving towards business design. At this point planners will become the McKinsey’s consultants of tomorrow or McKinsey’s consultant will take care of the business design on behalf of marketing planners of today. McKinsey is already moving towards customer journey and experience planning, see this article http://cmsoforum.mckinsey.com/article/winning-the-consumer-decision-journey#.UIOLl_Mukic.email I would take it even further, here’s why https://futurecmo.org/2012/10/21/customer-decision-making-journey-flow/

Companies that are taking analytics and planning seriously are already doing much better than their peers. By 2020 you really have to be great in order to survive. And let’s not forget – analytics is useless without understanding and decisions (generate corporate autism) – planning and management. I thinks this means the dawn for customer journey planning and management as the new breed of holistic planning work!

SEE ALSO:

“The CMO 2013 Study insights and what CMO’s should do now”

Lost insights and Corporate Blind Spots

Business Design with customer centricity

How to enable smart company and avoid corporate autism

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

http://www.linkedin.com/in/tonikeskinen

Join FutureCMO Movement LinkedIn Group here

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