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Business Design and Transformation process for growth

I have been privileged to be part of some major enterprise transformation processes over the past decade that have taught a lot about how do you actually enable and enforce change for customer centric, holistic, agile and innovative corporate culture. In the business world we are living in today, brands are created with customer experience and corporate culture. The capacity to serve customers in an omni-channel world the way they want to be served is becoming a competitive requirement instead of being an advantage.. This can not be done with silo organisation with responsibility barriers, split budgets, strict hierarchy, fixed roles and waterfall development processes. Those things are true status quo traps that will eventually kill any business sooner or later.

Just like Jeff Gothelf and Josh Seiden, the authors of Lean UX -book, I got fed up with cases that were perfectly planned but never implemented or the implementation was too far from the plan and naturally didn’t deliver as expected. I’ve also grown out of creating strategies and roadmaps and moved to actual change making. I really love Lean UX. Lean Start-up- and design thinking adjusted to established enterprise environment. Solving real problems, creating customer insights, direct applications and implementing them asap is much more rewarding for everyone involved than just designing the change. Getting results fast accelerate learning, inspire innovation and motivation beyond anything else. The gradual change is also much easier to manage than a complete turnover at once.

The key rules for success are:

  1. Outside-in > understand customers and markets first, then look at your offering, customer interfaces, brand, invoicing, agreement processes, up-sales, cc etc. Be honest and learn.
  2. Bottom-up > The need for a change should be recognized at the board level, however the change learning should start at the bottom – with people who are directly communicating with customers and know their frustrations and understand company’s challenges. Most often they can directly tell you what needs to be changed. Once you know these, you can take it to the board room and be honest again and learn more
  3. Do and learn fast, adjust and improve. Don’t try to get everything right before releasing something. There are no watertight facts before there are real life results. Most things can be tested small before scaling or making major investments before proof of concept. Stay curious and lean even in case of larger enterprise

Based on my experience, this approach works every time:

customer centric management transformationIt is crucial to work you way bottom up in order to obtain actionable insights

Bottom-up strategy creation and implementation

1. Create customer insight. Use customer data, analytics, scoring model, online data, research and any available data sources in order to understand who the customers are how do they behave. If you don’t have enough data, get it, make 1-2-1 interviews or research and mash-up other datasources. Create a customer journey map based on these findings and engage with people who work in direct customer interfaces like sales, retail, call center, research, support, invoicing, credit negotiation, specialists, etc. By connecting these two realities you can see a couple of things:

  1. Who are the customers, what are they doing, how and why?
  2. How does this customer behavior show in your customer interfaces, what are the most important pain points and frustrations customers have and what can you do about it. Once you have the facts, you can see how you can extract painpoints by re-designing the customer journey experience across customer interfaces and how that will reduce costs to serve while also improving NPS. That has a direct bottomline impact. Also, you can recognize opportunities that will help you sell more effectively, improve conversion rates and thus drive marketshare and sales up.

When you have understanding about the customers and you can define Customer relationship-, Customer experience vision, set goals and recognize their impact to revenue and bottomline. The Customer interface and customer analysis becomes the roadmap for better and enables a shared language thru organisation. Everybody can agree with the facts and understand their own role in the customers’ process. The discussion is around customer behavior and going forward, it’s not about blaiming anybody for their decisions in the past. The mandate for change comes frome the customers and dictates what needs to be done. This is why everyone can agree with it and don’t lose face or feel the need to defend prior decisions. In every single case this first part has been capable of igniting inspiration, trust in own capabilities to do meaningful changes and realize them. Insights and understanding create momentum that makes it possible for a company to change fast in a meaningful way. This change is done because people love it and their hearts and minds are burning to make an improvement. It’s not done because management has told employees to change or because the management team has come up with new organisation chart… This route to transformation can be rapidly implemented and the results are quickly at hand. These results justify futher improvement.

It has been interesting to learn, how much silent knowledge, un-tapped knowledge and supressed passion can be found in any given organisation. This capacity can only be realized by deploying the change within the organisation. This is why outsourcing the planning is not a good idea in my opinion. Carrying light inside with a bag doesn’t help, you need to light up the people. Once you release that passion and knowledge in constructive way, it will change the organisation permanently. The way of working will change, it will improve job satisfaction and willingness to push the limits further. At best, it will create a positive cycle for competitive advantage and growth.

2. The next stage is about turning insights and understanding in to systematic Way of Working. This is actually very practical consideration about recognizing responsibilities, ownerships over larger entities, creation of KPI’s and information flows or designing the approach to commercial management in general. Often there are factors like scorecards and conflicting interest in the organisation that need to be fixed, rewarding mechanisms or silo cultures that just need new perspective and solving. Very often dysfunctional organisation has everything in order on the surface, but multiple little things that paralyze the operational engine, innovation, productivity and motivation. Sometimes management isn’t even aware of such issues that could be historical relics that should have been solved ages ago.

What ever there is in the way of working, the new perspective gained in the first stage will help in finding solutions to them. The work is done gradually case by case and the excitement and positivity for change gradually take over the entire personnel. At this point, the company should reach a positive cycle that feeds winning mentality, job satisfaction and capacity to innovate.

3. The first two stages have already revealed the challenges that can be found from systems architechtures and platforms. While the first stage already enables major improvements with UX design and coding, the platforms enable strategic development and automation. This naturally takes more time and is different kind of project, but by this time the needs, benefits and requirements should be selfevident. As the learning has already started at frontend level, the understanding about available business benefits should also be clear for decision making and investment planning.

This kind of change can improve efficiency and productivity very fast without showing anything outside yet. However, when the company is really changing it should also show outside. In my experience advertising is actually very effective mean for internal change communication. The promises that the company gives outloud enforces the internal resolve to follow thru and deliver as planned. Advertising is about communicating the core values and that goes to own personnel, customers and the market. There’s just the question of timing that must be carefully considered. If the advertising starts too early and the personnel hasn’t really got on board, it might have double negative impact:

  1. internal feeling of disconnect between promises and capability to deliver and
  2. customers feeling that there isn’t enough substance behind those promises which could damage the brand and destroy the momentum that would have been available.

Like anything that has to do with people and emotions, these are delicate matters and require consideration. In order to do things successfully you need to have a clear plan but it has to be flexible enough so that it can be deployed in right order.

These transformation stories are truly interesting and educating processes. I’d love to hear your stories and experiences about them. Please comment and share 🙂

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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

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