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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
Service Design is a ground breaking methodological shift towards customer centered business development. I can’t underline enough how important this new dicipline is in creating completely new and very influential business models. Service Design should also be used in marketing just as effectively.
In my opinion, marketing should evolve in to such direction where we are designing the entire customer relationship from consideration to purhcase and continuously improving relationship with earned trust. Custom communications according to customer behavior is one key issue, because the company should be capable of adapting to customer’s needs and motives, not the other way round. Customer centricity and customer centric innovation accross all touchpoints is the very core of the game.
This presentation is very thorough and insightful approach to Service Design. Check it out and think how you could use these ideas and methodologies in your approach to service designing marketing
When a customer initiates conscious consideration and buying, he’s often the one who’s 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 initiate 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,… There is an exception though, in case it is possible for you to earn a position as a trustworthy and respected specialist, then you can sell with specialist recommendations. This approach to sales works much better than hard selling. In the end the customer is quite likely to buy something he could not have imagined before actually entering the journey. He does the decision eventually and your role is to influence the choices he makes if you know how to do it.
Check out a collection of Customer Journey Map visualisations in Pinterest “Customer Journeys and touchpoints”
The things that are often neglected, which I find very important are:
- Chain of events > you need to know and understand the people flow across channels and touchpoints
- Competing & neutral touchpoints > You need recognize and understand also the impact of your competitors touchpoints. Your channel capasity to convert customers is the key and you must understand that the customer is not visiting your touchpoints only, but your competitors too. Increasing your conversion and business dynamics score is the ultimate goal of the entire Customer Journey work
The mapping of the customer journey is composed of he following parts:
0. Customers: Who are they? How do they live? What kind of life style and life stage are they in their own lives? What is their socioeconomic status like? How can you reach them? What kind of behavioural conventions their everyday life has in the context of your offering? What do they value? What kind of solution would they appreciate? Who are your most valuable customers? How do customer profiles differ from one product category to another? What kind of potential can be found from your existing customers from cross-selling point of view? What kind of people keeps your company in business now and where can you find growth potential?
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?
7. Business systems, research and analytics
What kind of information your systems currently store from your customers’ behaviour? How could this data help you serve your customers better and create systematic methods for continuous development of your company? Consider ERP, CRM, Online analytics, Contact Center systems, email communications, customer satisfaction and voice of customer studies, reclamations, customer feedback and ideas for improvement etc. How does the infrastructure combine different data sources and make it available for people working in customer interfaces? Do you have marketing automation software in use that could adapt your operation and communications to individual customer’s behavior and store customer’s online engagements and interests that enable realtime action and individual customer care models?
Here are a couple of visualisations I find particularly informative and inspiring:
One by Desonance
Another by Hear of the Customer: Customer Journey Experience Map – Top 10 requirements
Here is a great presentation about how the job gets done and what is the impact on business performance:
also check out how to manage customer interfaces
Author: Toni Keskinen, Marketing Architect & Customer Journey Designer
Join FutureCMO Movement LinkedIn Group here
I just found Dr. Rod King’s Blue Ocean dashboard and process tools from SlideShare today and thought about how necessary it is to understand the whole value creation process in order to manage brand effectively. The number one branding responsible inside the company is actually the CEO, as he is often the only person in a company responsible for the total experience.
Brand identity is a reflection of the company, it has to be real and true. False promises and wrong kind of identity only generate dissatisfaction and distrust. You are what you are and you can improve, but you can’t stretch too far. Marketing is often responsible for the identity design, business managers are responsible for the experience. This approach doesn’t work anymore – The brand from the customer’s perspective is one single entity and the experience and perception must be a solid combination.
Mr. Graham Hill, well-known and great CRM and customer experience expert whom I respect very much just published an article: How Stupidity, Short-termism and Immorality Ruined Marketing in Customer Think -blog. Here’s a quote:
“If you take a step back you will see that the ethos of marketing has changed over the past 50 or so years. It used to be the driver of a three-step process of 1. understanding what customers want, 2. organising to give it to them profitably and 3. telling them all about it.
Today, this has been changed so that marketing is now the driver of a much more intrumental three-step process of 1. create more stuff that we already make or that competitors make, 2. tell customers about it over and over again, and 3. manage away the customer queries, complaints and returns as cheaply as possible.”
In my opinion the article just emphasized how important it is to act now and change the way how companies organize for marketing and define the role marketing has within the organization. (Below the article there is also great dialogue about the matter.) Read here
The CMO’s should have the best view on how the customers both perceive and experience the company and translate that reality for business owners and the CEO. Mandate for this position comes from the customers. The CMO’s role is to understand how the product/service range and customer experience influence the overall value experience, brand perception and preference, demand and capacity to generate premium pricing. CMO should define how the company should position different products and services in order to optimize the overall growth, sales and profit margin.
Dr. Rod King’s tools for Blue Ocean dashboard tool felt like rather easy and rapid tool for over all view creation, opening eyes for the whole. Here it is:
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).
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:
- Brand perception = attributes that translate as customer perception of context, value and personality
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:
- People preferring your brand (Lower distraction sensitivity – driving on GPS)
- Neutral customers, who consider you as an option along others (no GPS) and
- 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 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.
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
- 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.
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
- Branding = Change Management & Operational Excellence
- Marketing’s new and re-designed 7P’s
- CMO’s inside Tornado
- Marketing has an identity crisis
- Customer Journey stage 1: Brand as a platform
- Customer Journey stage 2: Initiation
Author: Toni Keskinen, Marketing Architect & Customer Journey Designer
Join FutureCMO Movement LinkedIn Group here