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When I think about board member’s day to day life and board meeting’s average content, I know it’s full of big decisions. What is our growth strategy? Are we willing to invest millions of euros/dollars in technology in order to enable customer relationship strategy and automation? How can we reduce our churn? How can we lower over all costs and increase productivity? Thinking big is important, but I’ve come to conclusion that thinking big also makes board members blind to potential that is at their reach with minimal investments.
I’ve been working on direct marketing, sales development, customer journey analytics and customer experience- and customer interface design since 2004 and learned that the potential is amazing. Realizing the potential often only cost pennies, but requires new point of view and strong experience. So what is this really? It’s BEHAVIOURAL ECONOMICS. Using BE in order to rapidly create major changes has to do with Choice Architecture and Nudges, leveraging behavioural patterns. It’s very much like Service Designing, but doesn’t necessarily require total make over, just adjustments. I decided that I collect and publish some of the actual outcomes that I’ve discovered with my clients so that there is tangible proof of what I am talking about. These cases are anonymous and from multiple market areas including both B2B and B2C cases:
Conversion: Sales increased by 240% by only re-designing the way the product was introduced and how customers actually were steered to made the purchase. Investment level 5000€ – sales value in millions
Sales: Changing messaging order and starting marketing by allowing own members to buy first, before others. Creation of momentums inside the campaign. Sales index was 200% in a first year and 260% in second year compared to the original target budget. Investment level – no change. Double profitability impact: higher margins and stronger sales. The sales impact was + 20 millions.
Churn reduction: By changing the way how the company did invoicing, the company’s churn reduction was almost 1/3. Investment level in thousands – savings/improved loyalty > 1 million
Customer service cost reduction: Changing the way invoicing was done, we were able to cut contact center calls to half and allocate that free capacity to proactive contacting of customers who had given critical net promoter scores. Multiple impacts: NPS increase, higher loyalty, higher ARPU, lower cost to serve. Customer feedback also gave insights to overall service and product development. Investment level in thousands – impact in hundreds of thousands
SEO/SEM improvement: Cost of acquisition is often a critical profitability factor. In one case I analysed company’s current reach of SEO and SEM and came to conclusion that 1) Their all key words were targeting the last moments of decision making = most expensive 2) They completely missed the contexts that made their service interesting and valuable = high reach, low cost. Also, they renewed their website, which cut their lead generation to half. The solution: conversion fixes on website with minimal cost, new approach to SEO/SEM. Investment – re-allocated current marketing budget, projected impact more than 200% sales increase
Proactive service messaging: Sending customers service messaging with automation multiply their frequency to use service, increase spending and reduce churn. Investment apr. 100K, sales increase impact in millions.
What board members should consider:
We already have technologies and on-going spending – can we improve their impact
We already have thousands/hundreds of thousands/millions visiting our customer interfaces. Can we improve conversion to sales?
What is our level of contact center costs? How many contacts is there? What is causing those contacts? Can we do something about it?
What is our churn level (leaving customers)? What does that mean in euros/dollars? Can we do something about it?
We have tons of data. Have we really understood the value buried in it? How can we transform data into money (operational improvement with current offering – potential for new businesses and offerings)
One case I am currently working which is special for one major reason, its public, is Kela (Finnish pension insurance company). KELA is government managed and doesn’t have competitors, which means that I can talk about the case without breaking any NDA’s. Due to a legislation change, Kela is going to take over a new service area in the beginning of 2017 that currently employs 600 working years in employee resources. I have a privilege to analyze how customers are currently using Kela services, how and why they use office- and call center services. Based on this data I am looking for ways to increase self service level and decrease cost of servicing. The goal is, that by changing the customer interfaces and service processes we can decrease the service need so much, that Kela DON’T need to hire 600 more people to fulfill the new responsibilities. Since I started analyzing data, interviewing customers and customer service people, we have already found improvement points that allow Kela to cut hundreds of thousands and eventually millions of calls or manual applications. Very little user interface element changes alone can reduce costs by 1,5 million euros in one single service segment. These findings are now in process to be realized with lean UX workshopping.
There’s one specific finding that I just have to point out. In every application context Kela gives an average decision making time. The idea to give an average time is natural and intuitively right way to approach the customer need. However, there is a problem. Giving an average time for decision will create expectations. Giving an average time actually means that HALF of the applicants feel they get below average service, get worried and call. The number of such calls is +200K in total. What can we do? We can change expectations by changing ONE LINE across all services.
“The decision making typically takes AT LEAST xx time”
The change of this one line has very meaningful benefits:
half of the customers feel that their service EXCEEDED expectations
The other half is more patient
The projected saving for this very simple change is at the level of +1 million euros. The cost to make that change is 0€. When scaling all improvements together the savings will be calculated in multiple millions.
What is that KELA case really about? It’s about recognizing why people get worried, feel anxiety, what they don’t understand and how can we improve their feeling of confidence that things are going well. In practice we improve customer experience. In a commercial context this means higher NPS, stronger customer relationships, higher demand, higher conversion rates, lower cost of acquisition… the list is endless and it’s full of direct profit impacting factors.
What I suggest for your next board meeting is, that you take the board consideration list above and put it on your agenda. Then honestly consider if there is room for improvement. My experience is, that there always is. Then contact a person who has real experience about recognizing improvement points, analyzing the data for potential and capacity to create insights and design changes that make millions in ROI.
This is what I do.
Here is a short introduction to my offering and how does it impact company’s customer centric transformation, management, culture, infrastructure and processes: Behavioural Economics offering
Let me know if you want your company to take a leap to a whole new level of productivity. Let’s have a chat and see if we both get excited 🙂
+358 50 55 222 76
Mr. Simons recently spoke with Babar Khan, the entrepreneur in residence turned managing editor in the Dubai office of Ephlux Insights and the former CMO of Application Services with Ephlux in the MENA region. They discussed strategies to detect and develop ideas that have the potential to impact how companies think about competitive advantage. Edited excerpts of the discussion follow.
What are the key drivers of successful innovation-driven entrepreneurial (IDE) ecosystems?
We operate from our global Headquarter in Berlin, Germany. In fact, one of the reasons why we do this is because this city has developed into some sort of ‘European Silicon Valley’. A historic city, lots of free time activities and low living costs have attracted many young international professionals. They tend to be more innovative and hence we have seen an incredible growth of small and medium sized tech firms.
People are one of the major drivers of innovation if they get the right environment to work and foster in. What also helps are flat hierarchies. Many established companies have failed to reinvent themselves because the same people that have been there for years have been trying to control and manage progresses too tightly. Only if it is part of the company culture that going against the stream is worth a try, it will lead to innovation. In conclusion: Bringing together the right, young and ambitious people and motivating them to try and make mistakes will give an innovative edge over your competitors.
What digital capabilities does Rocket Internet focus on?
Over the last years, Rocket Internet has gathered significant experience and best practices especially in the eCommerce sector all over the world. Particularly from a technical perspective we are able to do things right the first time by looking at what Rocket ventures have done before. This includes scalability of the platform but also other important topics such as security.
Beyond that, Rocket has established an enormous global network of brilliant people. We as Carmudi benefit from this as we ourselves operate all around the world. Hence, there we have access to a large pool of first-hand knowledge and experience that we can utilize in all of our markets. For example in Pakistan we have direct connections to many of the major online players in the country.
What data is most critical to your people’s ability to work smarter?
For us customer data is absolute priority. We use a variety of tracking tools to gather quantitative data but also a lot of qualitative feedback to constantly reevaluate what our users like and don’t like about Carmudi. Of course this data needs to be 100% accurate. Only then it allows us to get a clear direction on what we want to achieve as a company. By channeling our effort on what makes a difference to our users, we work smarter and more efficiently overall.
How do you derive value from business complexity while keeping that complexity manageable?
Business complexity has never been something we are trying to achieve in any way. However, rapid growth and expansion automatically increases the complexity of operations. We counter this through clarity and simplicity in hierarchies as well as direct and to-the-point communication. We operate in Asia, Middle East, Africa and Latin America. The only way we can keep this young but global operation manageable is pulling it together as much as possible. This means communicating with each country at least once a day. Global calls also do not require a set meeting time. We are always reachable and mostly only a click of a button away.
What metrics do you use to track whether you are delivering customer satisfaction on a daily basis?
Although we are not an eCommerce business in the classic sense, we use very similar metrics. One of the KPIs we look at is the conversion rate of how many users that come to our website actually inquire with our sellers for any of the offered vehicles. Furthermore, we measure the engagement on our site, i.e. metrics like how long do people stay and how many pages do they view in one session. Furthermore, we gather qualitative feedback from our users. This is made possible for example through direct dealers (or more generally speaking, sellers), events but also through e-mail questionnaires we send to our valued users. We appreciate any feedback and we also spend a lot of time evaluating and acting upon it.
How have you gained a competitive advantage in the digital economy?
We benefit greatly from international synergies. With our global headquarter located in Berlin we have access to world class resources and people with a lot of international experience. We couple this with local talent in the countries we operate in, such as Pakistan. This a somewhat “glocalised” approach, which comes down to combining synergies from experiences and learning around the globe with localized knowledge in the countries we operate in. So far we have found that this is one of our greatest strengths in delivering outstanding value to our customers.
How does Rocket Internet create, identify, and evaluate new venture opportunities?
In our case it is actually remarkably simple. Car classified websites have been super successful in many of the developed markets around the globe such as the US and Germany. In combination with Rocket’s expertise in emerging markets, we are convinced that we can provide a great offering to our clients in Pakistan and other countries around the globe.
In your experience, how has the process of starting new ventures varied geographically and culturally?
Of course differences between geographies and cultures are huge. Our approach is one of Glocalisation. We identify international best practices to maximize synergies between different markets. With these best practices we enter the market in a relatively standardized way. However, as we continue to learn more about a specific market and regions within it we continue to localize our approach. From our experience this gives us a great competitive edge. We keep the speed up but build something our local customers want.
What’s your advice to aspiring entrepreneurs on navigating the venture capital investment process?
Unfortunately, I cannot share any details on this. However, one advice I can give to other entrepreneurs is that being convinced yourself of what you do helps a great deal in convincing other people that your venture has a great future ahead. Hence, always question yourself whether you are really on the right track.
How should aspiring entrepreneurs start enhancing and expanding their networks?
From time to time, networks can be incredibly helpful. Always remember that if you want something from someone you must always be willing to give in return. Approach people with an open and helpful attitude. Don’t think of it as building a network but rather as getting to know people. This way your relationships will be more personal and hence way more fruitful.
Thank you very much, Mr. Simons, for sharing your perspectives with us.
Over the past couple of years I have been involved in the development processes of SME’s and some major companies with hundreds of millions or billions in turnover. These processes are about change:
- The emphasis is moving from advertising and external media to own touchpoints and communications with own customers
- The marketing as such is becoming more and more targeted and measurable. Marketing has a business case and acts more and more like a business unit
- The view is moving from products and services to customers and customer centric insight driven development
- The development requires companies to change the way they operate and how they are organized
- Big data about customers, their behavior and their needs is required in order to enable the change
- The change requires companies to re-consider their KPI’s and what data do they use in order to increase transparency and enhance and empower internal innovation and cross-silo collaboration
- This change must be managed and management must change in order to enable the change for better
I recently published my view on the new and re-designed 7P’s for marketing. In this article I already underlined the fact that marketing has changed profoundly. Brands are no longer created – they are earned. Brands live in customers’ minds and they grow from experiences.. own and peer experiences. In my opinion CMO’s are at the very core of corporate Must Win Battles like:
This is why I would say rather confidently that the path from good to great brand includes these stages:
First: You need to have goals and vision. They act as a unifying master plan that everyone in the company can understand and accept. What kind of brand are we trying to create? What kind of customer experience and and relationship are we trying to deliver and earn? What kind of impacts are we trying to get?
Second: When you analyse the customer journey accross all touchpoints and channels, you get to see how are you currently performing, what and where do you need to improve. This is where the magic happens between your brand and customers
Third: You need to take a look at how does your company actually operate and how is it managed. Does your current ways support and enable the customer interface operations that you are trying to achieve. Are you organized right, do you have right kind of KPI’s, are different diciplines and silos working together or do you lose insights between gaps and inevitably cause corporate autism?
Fourth: Does your corporate infrastructure enable everything mentioned and planned above? Do you have legacy systems and technology, disconnected data etc. In case the technology and infrastructure doesn’t enable the change, how do you take action? What kind of roadmap and investments are required? What can be done fast, what takes more time and effort? What can be piloted and can you start the learning curve growth with some manual work that enable more effective technology implementation?
This same approach to change management can also be seen as work that moves from practical customer interfaces insights and understanding to top – not top-down. This is how it works:
When I have been running these cases I have learned that this approach works very, very well. The reason is that everyone is involved and the process in it self actually enhances the learning and feeling of unity, shared goals and willingness to change. This is because the process inspires, makes difficult theory work feel practical and easy to adopt. Very often the process generates several small victories and improvements that can be implemented immediately. The good experiences start building up and people get the feeling that these things are really happening and we are really doing something meaningful. Once the plan is ready, the organisation has already moved several steps to the right direction and has become excited about the development. For the management this is extremely valuable situation, because they can just enable what the organisation is asking for instead of trying to order and manage changes top-down.
The reality is that the use of data and data driven operations are requiring new approach to technology and companies need to adopt it some how. Here’s an example about the use of external data ecosystem along with own data
The role of internal and external data:
This is how I see the brand development in this day and age. Do you agree/disagree? Would you have any cases, experiences or hints how I could develop this approach further?
- How to enable smart company and avoid corporate autism
- Brand is a verb
- Marketing’s new and re-designed 7P’s
Managing Brand – The most profound KPI’s and measures /
From marketing automation to service automation
- Managing customer interfaces
I found a great article from Slideshare about the role of analytics and data-driven decision making in all aspects of marketing to focus on the voice of the customer and drive revenue. The best performers simply work harder and more methodologically. The process and tools need to be in place and they are being actively used. This is all quite obvious, still too rarely executed in real life.
This is in short, what is supposed to be in place and in operational execution:
Let’s make a mental note, that this study and results are from 2011. Marketing analytics for social media and marketing automation have become much more influential since then. However, this study is a great reminder of the fact, that performance comes from hard work and dedication.
Author: Toni Keskinen, Marketing Architect & Customer Journey Designer
Join FutureCMO Movement LinkedIn Group here
Source: Aberdeen CMO Study
This is a presentation that McKinsey consultant, Tim McGuire, made at the recent Direct Marketing Association conference. It is very thought-provoking and inspiring one, because it is about practical value and applications of data. In direct marketing scoring models and regression analytics have been an approach any seriously result oriented marketing responsible has already tested. However, the availability of data and applications in the rich and influential online environment has exploded the value to completely new level.
The CIO’s are currently challenged with new needs that come from marketing department and marketing department can no-longer operate without collaboration with ICT responsible people. Although Big Data sounds like an elephant, you don’t need to eat it with one bite. Majority of Big Data corporate scale initiatives can be done manually in smaller scale or with less expensive technologies. Testing, piloting, learning and calculating business cases from them enable solid foundation for larger investments and management attention.. even urgency. Every change starts from recognition and inspiration. This presentation might just spark that first step towards major transformation. Enjoy and share with your management team!