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Segmentation 3.0 – disrupting marketing, media and management

Designing advertising, services, products or doing media planning requires us to understand customers and target markets. The more we understand about behavioral preferences, attitudes, lifestyles and multiple other variables, the better we can do our jobs. Combining all sources of data: research, analytics, buyer segments in real time bidding (RTB) targeting engines, qualitative research.. its such a wealth of data that it has become too big to manage. Right now we need to be able to simplify and turn such wealth of data in to understanding and actionable priorities. This is exactly what segmenting should be all about.

Segmentation 1.0 is about creating customer understanding inside organization. The segments are actually stand alone pictures and stories about customers. These segments can’t be connected to data, which means that they steer creativity but don’t offer KPI’s, real business management tools or monitor market share changes.

Segmentation 2.0 is about more data driven and actionable segmentation. Dynamic interest grouping with online targeting tools allows you to calculate probability of click or purchase and adjust your investment/segment accordingly. Same method applies to existing customer analytics, which offers steering such as next best offer, likelihood of negative churn or the level of monetary value of different segments. It’s already about making data actionable. However, these technology specific, not market level segments.

There are two cases of Segmentation 2.0 that are now leading the way to 3.0 available in Finland. Finland is interesting because of advanced population register allowing you to do interesting solutions easier than elsewhere. However, these learnings will soon become internationalised.

The story about Finnish church is quite eye opening. Since 2000 the Finnish national church membership level has dropped from 85% to 72%. The Church is in crisis.

Church churn

Church has been responsible for registering population since the beginning of organized society in Finland. Everyone who gets baptized start paying church tax as part of their national taxation. My personal church tax was more than 1000€ last year. Losing members means losses in church taxation and losing young people means losing their life time taxes calculated in billions.

Church needed tools to understand their members and ways of preventing churn. Actually the church needed to re-invent them selves. They needed segmentation. Jarmo Lipiäinen, head of Kotimaa’s sales and marketing recognized this challenge and took action. Member 360 was born. This segmentation divides people in to segments by their religious tendencies and multiple other lifestyle variables. This segment tag is attached to everyone in Finland, member or not.

Screenshot 2016-03-16 10.17.58

Picture: Main and sub-segments

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Picture: Example profile – Disconnected experience seekers

Making the segmentation applicable required tools. Jarmo Lipiäinen led the project and they created data visualization tools for parishes. You can now look at areas and understand what kind of segments are there and buy addresses to people from different segments. This allows church to speak to their members and prospects in language and perception they can agree with. Church is not just about religion, it’s a second layer of safety net for under privileged people and has multiple other roles in society . People don’t leave church only for religious reasons, they expect church to act for greater good and help people. Church stands for a lot more than God.

Since the Member 360 was introduced, now +100 parishes are using the tools and changing the way church works and is relevant to their members. Church is now rewriting their story, hiring service designers to design engagements and services for members. One experiment, internet priest with chat, was very popular among young people who were in distress but would never have reached out to church advice or someone to talk face to face. The role of church, the message and ways of being part of peoples’ lives is now changing fast. Church is learning member centricity.

Commercial 2.0 segmentation

Another initiative took place simultaneously on commercial side, Fonecta Buyer Classification. This toolkit looked at people’s lifestyles and buying preferences and was also connected to the entire population. On top of that, it is also connected to   media buying tools and TNS research data. I have personally implemented multiple cases with buyer classification in travel, restaurants, hotels, telco and retail. Buyer classification has 8 main segments and sub-segments.

  1. Budget-Concious young adults
  2. Bargain hunters preferring finnish purhases
  3. Parsimonious Pensioners
  4. Brand-Focused thrill seekers
  5. Ordinary citizens
  6. Service-seeking couples
  7. Family-focused quality seekers
  8. Solid and prosperous elite consumers

The segments can be attached to your own customer database which allows you to see how many people there are in each segment, how they behave, how valuable they are, what do they buy. You can use this understanding to reach out potential new customers out there based on insights from your own data. Buyer classification allows you to connect internal and external realities with same segments and also monitor market development in numbers: who’s winning and losing what kind of customers. Business is not just simple numbers – won and lost, its very much about value too. The whole point of segmenting is about understanding where to concentrate your resources and optimize your profitability. You have to make choices, segmenting allows you to do make better decisions for those that matter most. This kind of generic segmenting attached to media buying and external data is a whole new game for business KPI’s and corporate management. It’s a possibility to connect creativity, resource allocation and business goals together

Human 360 – Next generation – segmentation 3.0

The next level is currently entering the market. Same segments are now connected to online behaviour too. You can now do online media planning by segments and use same segments in real-time-bidding. That’s a minimum standard in this day and age, but there’s more.

Member 360 and Buyer Classification were single purpose segments that could be adapted to other purposes but weren’t optimized for them. The next generation is about connecting multiple segmentation tools together:

  • 1st You have your own core segmentation or generic segmentation that has been made for your business sector’s specific needs. This segmentation is used for business management and company wide KPI’s
  • 2nd You have supplementary contextual segments for further insights: eg. Food, travel, technology, sports, politics, religion, fashion, housing,… you name it

To say it simply, the new generation approaches individuals holistically. People have different kind of passions and interests, capabilities and life situations. These contexts can be translated as passions and orientation. You can now approach people based on their orientation and you can analyze what kind of passions and orientations your current and potential customers have. You can also calculate scores for each segment allowing you to evaluate which approaches to your customers have strongest likelyhood of meaningful impact. Creation of business scenarios and relevant communications has never been easier.

Screenshot 2016-03-16 10.22.30

Such insight can be used for creative planning, media planning, new service development, partner selection,.. well, designing the future of the company.

Segmentation 3.0 enable us to connect 4C’s together and create a corporate GPS for success:

Screenshot 2016-03-16 10.22.42

Sofar Google has given a price for words with Google Adwords. This kind of segmentation will give similar price variation for people, it becomes the unifying currency in media buying. Some people have a much higher profitability potential than others. The future of media profitability will be dependent of reaching those audiences and people, advertisers are willing to pay most for. We are truly entering a new era in data driven analytics, planning, marketing, creativity and management. This development will have major impact on general management, mediabuying practices and entire creative industry. This kind of methods and tools will allow us to work miracles in unseen scale.

Aller Refinery

This development will further enhance marketing’s strategic role in management and strategy. Data will enable us to manage end-to-end processes better than ever

Screenshot 2016-03-16 10.22.54

Author Toni Keskinen and Jarmo Lipiäinen have published “Journey with customer – from product centricity to symbiosis strategy” –book in Finnish 2013.

 

Future CMO Commercial Community Introduction

The goal for Future CMO Commercial Community is to create a network of highly capable individuals who can act as supertemps or highly advanced specialists who can act as catalysts for customer centric, marketing and organic growth driven strategic and operational transformation for their clients. Below,  there are directions and requirements for those who would like to join this community and offer their services in Futurecmo.org. Future CMO is a platform for Symbiosis Strategy and I welcome you to join. Futurecmo.com will also be published later in 2014. Join now and we’ll get better service up and running soon. There will also be new and improved FutureCMO.org.

Here’s initial offering description:

Toni Keskinen, Founder and Cheaf Editor of Future CMO
+358 50 5522276
toni.keskinen(at)futurecmo.org
http://www.linkedin.com/in/tonikeskinen
Located in Helsinki, Finland
Available for speaking engagements and consulting globally

Jarmo Lipiäinen, Co-Founder, Business Director and Consultant
+358 40 525 7289
jarmo.lipiainen(at)asiakkaanmatkassa.fi
http://www.linkedin.com/in/jarmolipiainen
Located in Helsinki, Finland
Available for speaking engagements and consulting engagements

About Future CMO Commercial Community: Anyone can contact Toni Keskinen and request membership in the Future CMO Commercial Community. The only requirement for enlisting is that you have original, fresh, insightful and important insights to share with the members. The best source for such insights and content is your daily client work which is why the most ideal members are people who actually get their hands dirty and do what is required to be done. Experiments and practical work generate the most interesting content. I don’t really think that this community is suitable for academics. The minimum requirement for membership is that you write at least one article in a month. The goal is that Futurecmo.org becomes a service with very high quality content and subsequently serves all members as a marketing & learning platform. Joint effort will increase reach and impact more than anything a single person could do. In case you are accepted as a Commercial Community member, you will get publishing rights to this service. There will be two types of FCMO Commercial Community members a) Supertemps b) Specialists.

Specialists:You should have practical, unique and original thoughts, ideas, insights or cases to share. Specialists should also be capable of connecting their specialist area in to general marketing and management realities.

Some questions that might help you recognize the supertemp inside yourself:

  1. Do you have both breadth and depth in your skillset at practical and strategic levels? Are you the one who recognize what, why and how should be done in order to drive much stronger performance, growth and profits?
  2. Do you have experience from multiple business areas with different business logics and aplications to value creation and competitive advantage?
  3. Do you have difficulties leveraging your full capacity in you current work?
  4. Do you want to practice your skills and learn much faster and more holistically and pragmatically than is possible in a regular specialist role?
  5. Are you happy moving from one company to next without a fixed team and do you feel comfortable facing challenges by your self together with a client’s own internal team changing in each engagement?
  6. Do you have a network of specialists around you, who can fulfill your shortcomings reliably and rapidly so that you can solve any given challenge you come across?
  7. Are you capable of driving co-creation development, designing customer centric operational change, business modeling and -cases and managing projects across corporate silos, levels and specialist ownerships like sales, CRM, online, analytics, BI, customer service, marketing, research or ICT?
  8. Do you impress clients with you skills, accelerate development, drive results and generate strong recommendations for your work?

Typical Must Win Battles that give us direction for relevant content creation:

  1. Best customer experience (Goals: loyalty, LTV, cross & upsell, high NPS)
  2. Innovative solutions: Creation of competitive advantage, distinctive and special offering capable of delivering substantial value, high quality at highly competitive price
  3. Continuous and cost-efficient new business (Goals: new customers, demand generation and stronger conversion)
  4. Lean and effective operations and processes – strong bottomline (Goals: highly productive organisation capable of delivering superb customer experience at comparatively low expences by using new technologies, online environments and automation
  5. Creation of inspired and winning corporate culture: Inspirational and very satisfying workplace capable of understanding and driving development and change. Corporate recognition as very prominent employer for hungry and innovative new talent, Topline growth energize the company’s employees and focus their minds on opportunities, innovation and growth. Growth is a lot more inspiring tool for profitability than trying to save the company to mental death
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