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Loyalty in an interactive digital market


The concept of loyalty is a very profound human emotion like love and trust. Loyalty is an outcome of shared values and experiences, forged with time. It’s not a fling, its about integrity, trust and dedication. Loyalty truly is the holy grail of brand relationship even in the interactive digital marketplace. When we think about loyalty between people, we know that it takes a long time to develop such deep feeling of trust. The same aspect of time certainly applies to brands too. Brands are concepts you can see, feel and experience, even have a dialogue with via customer interfaces and people representing the brand in question.

Well, think hard and consider which brands, products or services are you loyal to? I would imagine there are some. Then think, which brands show genuine interest in you, making your life easier, helping you, respecting your wishes, sharing your values, trusting you completely. Can you think of any?

Companies are quite good at “doing things right”, professionally and operationally delivering what is expected from them. The superb quality of certain product does create trust and loyalty as such due to rational and emotional consideration. This is especially true when your life could depend on that product. On the other hand companies are not that good at “doing the right thing”. Doing the right thing has to do with a context of engagement, feeling of fairness and trust. If your phone breaks a day after the guarantee closes, what does the company do? In case you have bad luck and you fall behind you payments for some period of time, what does the company do then? If the company has a choice between 10% higher profit margin and environmental or societal benefit, which will they choose? There is a lot of data that shows, how profitable “doing the right thing” actually is in case of reclamation. When you do the right thing, listen to your customer, pay attention and do your very best to make things right, the customers reward such deed with their wallets and hearts.
So, my advice for brands is coming straight out of the Bible, Matthew 7:12, The Golden rule: “Do to others whatever you would like them to do to you.” This truth is eternal and applies to Brands on- and offline just as it does to people. Loyalty truly is a concept that takes time to evolve and it can only be earned over time.
Well, the concept of loyalty, in case of commercial operation, means that brands are measuring their brand loyalty with KPI’s like RFP analysis (recency, frequency and monetary), length of customer relationships, life-time-value, share of wallet and Net Promoter Score. All of these measures have to do with loyalty, but they could also be about something else. Not all behavior that appears to be loyal has to do with the concept above. Let’s take a look at commercial loyalty strategies:
1. Rational Loyalty
2. Emotional Loyalty
3. Habit based loyalty
4. Imprinted customers
5. Legal loyalty
6. Structural bonds
Rational loyalty
Most loyalty programs don’t deliver brand loyalty, really. That is due to the fact that people have all loyalty cards and they pick cherries from where ever they happen to find best offer at that point in time. Points based loyalty programs are often buying loyalty from customer. You get more discount when you buy more and you get offers only available for members. Loyalty can be completely rationally driven model that create a behavioral pattern for customers to buy when it’s cheap. Naturally, they don’t if you don’t have an offer for them. In the open online market its very easy make comparisons.
Most often, members also get bulk messaging in which there is nothing personal. A membership equals the license to sell. Selling is often positive. Customers consider selling as active relationship in which the company is offering new services and value for them (servicing by selling). Buying several products or services from a single company generate stronger relationship and lower attrition probability. Everything above is basically positive, better than no program. However, when customer relationship is based on rational decision, another company with more aggressive approach can do considerable damage.

Emotional loyalty
Emotional loyalty has to do with the true concept of Loyalty. Brand as a whole has its foundation in customer experience, quality, integrity, service, ethics, trust, corporate responsibility and values. If the brand feels right for the customer he’s less likely to consider competitors. Also, the loved brands become part of customer’s own identity and they don’t lose customers without warning. If customers truly love your brand, they let you know if your pricing or position is having a strong challenger and they actively ask your approach to the situation. Emotional loyalty is not price driven. You can have healthy margins and customers accept it. In such a position customers also offer their helping hand and are much more open to participate in open innovation or co-creation dialogue or giving you advice how to improve your service even further.
In current business environment there’s too much of everything all the time. It’s very difficult to differentiate yourself by offering or pricing. The truly emotionally driven approach to loyalty is to consider how the company can show it’s loyalty towards customers. How do you take care of your customers? How do you make certain that the value you are delivering to your customer becomes even higher? How do you solve problems that your customers have?

Habit based loyalty
In most businesses there comes a time when customers re-consider whether to buy the same brand again or to buy something else. If the customer is involved in continuous relationship it requires active sign-off from the current relationship. If you can turn single purchases in to continuous relationships in any way, you are likely to drive much higher loyalty. That’s the best part. Once the customer is engaged in continuous relationship it requires time and effort to close it. The bigger the required effort is, the less like people are to go thru with it. Some of the best psychological themes for loyalty are laziness and minimizing points of discontinuity creating experiences like billing. One of the great ways of improving loyalty is allowing customers to have automatic payment methods directly from account or via credit card (eg. Netflix and Spotify). As a result customer does not get direct invoice for the service delivered but it’s included in credit card invoice or directly paid from account. Attrition probability drop is quite significant with such a method and the relationships could continue for as long as the credit card is valid.
When people establish behavioral patterns like reading a newspaper every morning, their likelihood of attrition is much lower. Habit based loyalty is really about keeping the status quo. Low profile and making certain that there is no need for active consideration for the customer enable very profitable type of loyalty.
I have have been completely loyal to LensOn contact lens selling online store for the past four years. This is because they send me an email enabling me to repeat purchase with only two clicks. I didn’t even remember the brand, but in case I didn’t order instantly I would go back to my email and search: “contact lenses”. This search will bring me the email I am looking for and with only two clicks I’ll order new package of contact lenses. Because my credit card information is already stored in the service, this habit is extremely easy for LensOn to maintain.
Another fantastic case of habitual loyalty is online banking. The first online bank was issued in Finland and since then the whole retail banking has changed completely. People no longer have a reason to go to the bank. They can take care of all their finances online. As an outcome people have become user interface loyal. Only in case of major need for relationship driver service, like mortgage, people would consider changing their bank relationship. Online banking is like electricity, as long as you get it when you need it, there’s no problem. If you don’t, you have a major problem. If the service keeps on going there’s nothing to question the current relationship. Online banking enabled huge cost cuts and automated service processes. Cost to serve is now marginal. Once online banking was introduced and became a habit for customers, the vast majority of customers became profitable. Banking margins and profits have grown and the profitability has increased without attrition.

Imprinted loyalty
Customers are not necessarily loyal to the company, but person they are in a relationship with. If customers get imprinted to their counterpart and the person stays with the company, relationships could be very strong emotionally, rationally and habitually. Trusted person can be an enormous asset for a company. The online revolution has diminished the role of person-to-person relationships in consumer businesses. The role of brands and trust in service processes has substituted the void to some extent. It’s not quite the same but works too.
The company’s customer interfaces and people servicing customers should still be trained to reach for such relationships. The brand is as good as the person representing it. Some major hairdresser chains evaluate their employees based on the fact, how many of the hairdresser’s customers book their next visit from the same hairdresser. This measure is beautifully simple and revealing. Being a great hairdresser is not just about the quality of your work, it’s very much about the whole experience. Especially women open up and discuss at the hairdresser. They could easily spend two hours with the hairdresser and spend a lot of money on the experience. It’s about being heard, appreciated and pampered along with getting your hair cut and dyed.

Legal (Contractual) Loyalty
Mobile operators in Finland suffered from very high attrition rates after number portability was enabled. Churn rates reached +30% level even though customers were very happy with their operators. This is a great case proving that customer satisfaction DOES NOT EQUAL loyalty. Customers want to have a new mobile phone every two to three years. The need to get a new handset created natural discontinuity to relationships. Mobile operators have an orientation to offer good deals for new customers and winning higher share of dynamic market. This orientation led to higher advantage for changing a company than staying with the current one. These operators had same level of perceived value and customers had rarely real preference. Most customers had only options that were equally good in general. Only differentiating factors were the brand communications and current offers.
The operators started selling customers 12 month agreements, which offered lower cost calls in the evenings or weekends. These agreements sold quite well and led to lower attrition rates. Once 3G bundles were introduced they included 24 month agreement and were sold with handset subsidies. Against your 24 months agreement you got the mobile phone at about half price. These agreements dropped attrition rates below 10%. In other words agreements offered steady relationships and predictability. As a result mobile operators profits increased and people purchased more expensive mobile phones, which enabled major increase in the use of data creating completely new mass market. Everybody won. After the 24 month agreements ended, the attrition rates increased back to 15-20%. Although the attrition rate increased, they didn’t reach previously familiar 30% rates.
Human nature is lazy and towards many product and service ranges, indifferent. In order to gain market share in a business like this brand has to actively sell and create discontinuity with sales. Electricity agreements are a great example of this. Very few people compare electricity pricing and actively change a power company unless it’s actively sold. When you get a call offering you -5-10% and the offered power is produced with water and greener than your current option, it’s easy to agree. Even better, the new company also close the previous deal so that the only thing you need to do is say ”yes” on phone. It is possible to surprise a competitor with heavy attack in a case like this. Unless the competitor has closed agreements for certain period of time, they are likely to lose a lot of customers almost over night. Who would start comparing for 5%? Very few would. Who would accept such offer when it doesn’t require any effort? Quite many will. Only thing hindering people to accept such an offer would be to tie them in the relationship with an agreement for certain period of time.
Loyalty by structural Bond
What could you sell your customer to make him dependent on you? Structural bond is an interesting approach to loyalty and how to create value in which the customer becomes dependent on.
When Polar Electro introduced their wrist top computers with heart rate monitoring they soon created online Personal Trainer in the end of 1990’s to supplement additional training advice for users beyond possibilities of the cadget in it self. Personal Trainer recorded all your training to a database and created record. It helped analyzing your training requirements and results very effectively. In the early 2000 this was a ground-breaking innovation. When all your training history was online, Polar Electro had a structural bond on you. If you wanted to change to more advance training tools, you had to buy another Polar wrist-top-computer in case you wanted to keep your training record ongoing. Currently mobile phones have same functions and you can use variety of platforms for storing your data eg. Samsung back-up, Apple iCloud or Android saving to Google account. These platforms effectively still create structural bond although some of them are now cadget independent and available to iPhone, Nokia and android. Still, Polar Electro’s Training Tool is an effective loyalty driver for everyone who has been using it for the past decade. The current rush to “internet of things” will produce massive offering of services just like Polar Electro’s training tool. As this market is only just opening, every brand should consider right now, how can they lock their customers in.

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

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

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

Loyalty certainly is something worth thriving for. Just remember the Golden rule when you are making choices – even though you work in the interactive digital market place.

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About Author

Business Design.. with customer centricity

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

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

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

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

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How to create an intelligent company and cure Corporate Autism?

Big data is the catch phrase inspiring corporate management right now. I agree that it is the direction many companies should choose to take. However, the reality is that challenges are not in systems and technology. Most important challenges can be found from our own ways of working and thinking. In this presentation I explain what is corporate autism about and how to cure it. Please comment and give us your feedback if you find this approach eye-opening.

View more PowerPoint from Toni Keskinen
If you find the idea about Corporate Autism interesting – take a look at “Lost insights and corporate blind spots” article.
And yes, I do think CMO should endorse, initiate and lead this kind of project. Managing brand, customer experience and customer journey require CMO to have access to rapid and relevant information in order to make decision on priorities for investment allocation and goals for those investments.
When you are really trying to find out practical advice, how to improve customer experience, find out where to invest and why, start from the bottom and work your way up. Top-down strategy work is often very difficult to apply in to processes and real daily work. Bottom-up work deliver rich and practical improvement advice ready for roll-out.
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Insight IQ

I read a very interesting article from HBR, April 2012 issue. Shvetank Shah, Andrew Horne and Jaime Capella wrote an article about how good data won’t guarantee good decisions and most companies have too few analytics-savvy worker. If you are not able read that excellent article from HBR, here is a couple of points from it.

We have already discussed in this group about the new era of decision-making and importance of customer insight. Ability to collect, store and analyze the big data has grown explosively and companies spend a lot of money analyzing customer data. BUT. And this is a big but although you have the best BI tools ever but if your organization cannot capitalize it the investments are useless. Like Shah, Horne and Capella stated in the article: ”For all the breathless promises about the return on investment in Big Data, however, companies face a challenge. Investments in analytics can be useless, even harmful, unless employees can incorporate that data into complex decision-making. At this very moment, there’s an odds-on chance that someone in your organization is making a poor decision on the basis of the information that was enormously expensive to collect”

Shah, Horne and Canella created Insight IQ, method that asses the ability to find and analyze relevant information. They evaluate 5000 companies from 22 countries. The founding’s were interesting. Three groups were found: ”unquestioning empiricists”, visceral decision makers” and ”informed skeptics”

Companies are seeking for ”informed skeptics”. They are data-savvy workers who are able to make good decisions. They have strong analytic skills, ability to balance judgment and analysis. However, the study found that only 38% of employees and 50 % of senior managers fall into this group.

Shah, Horne and Canella identified four problems that prevent organizations from realizing better ROI in Big Data:

  1. Analytic skills are concentrated in too few employees
  2. IT needs to spend more time on the “I” and less on the “T”
  3. Reliable information exist, but it’s hard to find
  4. Business executives don’t manage information as well as they manage talent, capital and brand

Well, how to develop more informed skeptics? It demands constant competence development to increase data literacy and join information into decision-making. And of course, organizations have to give the right tools for analyzing the data.  Ongoing coaching is essential and formalizing the decision-making process based on data and information. Shah, Horne and Capella stated that “many of the best data-driven cultures have formalized the decision-making process, setting up standard rules so that employees can get and correctly use the most appropriate data. Companies should make performance metrics transparent and embed the in job goals. They should also make sure that compensation systems reward dialogue and dissent. Great decisions often need diverse contributions, challenges, and second-guessing”.

Tiffany and BCBSNC are the great example of companies who have shown growing awareness of the pay-offs from Big Data and data literacy.

Is your organization underinvested in understanding the information and maximize Big Data ROI?

Source: Harvard Business Review April 2012,

Article: Good Data Won’t Guarantee Good Decisions

Writers: Shvetank Shah who leads the information technology practice at Corporate Executive Board, Andrew Horne and Jaime Capella, who anre managing directors at Corporate Executive Board

Lost insights and corporate blind spots

This is a post about current state, corporate malpractices. Corporate standard is to use apr. 20% of the value their data assets provide.. well it could actually be even less. This post is about recognizing the needs for change and offer some ideas about how to get it done. These are just some learnings from searching insights while doing customer journey analysis and service blueprings for companies. More will be published in the book – Customer Journey Management  September 2012, which I’m co-authoring with Jarmo Lipiäinen

“Open mindness.. may be defined as freedom from prejudice, partisanship, and such other habits as close the mind and make it unwilling to consider new problems and entertain new ideas. (But) it is very different from empty-mindness. It includes an active desire to listen to more sides than one; to give heed to facts from whatever source they come; to give full attention to alternative possibilities; to recognize the possibility of error even in the beliefs that are dearest to us.” -John Dewey How We Think 1933

The above text came from Mrs. Madeline L. Van Hecke’s book, “Blind spots – Why smart people do dumb things”. Well, it’s not just people becoming blind in their own lives, but also at organisational level. When you are working in an organisation, it’s natural to start taking things for granted: what is impossible, what can be done, how is it done in general, etc. Gradually thinking some things are impossible or too difficult which leads to tunnelling – narrowing sight, dismissing things that should be reconsidered. Conventions are effectively blind spots. Being busy makes it difficult to take a wider look from must-have details, short cuts (best practices) that made you effective could make you blind. It’s all very human and natural. However, it’s also dangerous. All cases that have been described earlier are actually common sense customer behaviour. These cases were not very special in nature. Still, they could be hard to detect. After they have been detected they seem obvious. Why is that? The biggest reasons are the company practices that are fractured in silos and responsibilities making it difficult to see the big picture. Within a company different parts of organisation are also having different perspective in time. CEO and marketing are looking in to the future trying to reach goals and measure the progress toward it. Sales and customer service are experts in NOW. HR and CFO are looking in the mirror, which is past. Having this kind of variation in perspectives result challenges. Having fractured information spread around organisation just emphasizes the effect. Management teams are struggling with complexity and it’s especially difficult to combine Top sight with Insight.

Let’s take a look at commonly used practices, business as usual. I am simplifying a little bit in the following but I have seen bad use of money and poor practices and learned from them. Current conventions equal money spent anyway, and they also result assets. The value of these assets is higher when combined. Single asset does not tell a story as well as combined data and resources. Innovation is often found between disciplines, not inside one.

Marketing department is often using tracking tools for recording awareness, preference, advertising recall and also often buy data about competitors marketing spending for benchmark. In the current marketing landscape decision-making is concentrating and result smarter tools for decision-making. Previously marketing department was fractured in PR, dm, online, retail, tactical, events and brand advertising. Currently the structure of marketing department looks more like a single entity and is often combined to sales organisation. Different mediums and approaches are analyzed simultaneously and results are compared against each other. CRM, advertising, email marketing, in store promotions and other actions are planned as a whole resulting improvement in effect. All this data should result very much information that help recognizing customers needs, understand what drives value for them and how to deliver it. Lately the tools that analyze social media also enable tracking the company’s volume, share of voice and reputation in social media. Marketing department is actually drowning in research and data. The sad reality is, that very often, marketing management is not considered as a driving force for the company’s business development though. CMO’s have hard time justifying marketing investments and in down economy these investments are easiest to cut down. The insights and learning that could be used for overall performance development represent often only fraction of their potential value. CMO’s role is to make most of the company’s current state, justify higher margins by improving brand and increase awareness, preference and consequently sales. That is a valuable role but not optimal though. Customer relationships should be considered as strategic source of insight and improvement vehicles.

CFO. Financial departments tools for analyzing performance, costs, production efficiency has improved dramatically due to improved business intelligence tools and rapid access to ERP (Enterprise Resource Planning) data. Financial departments use this data to recognize cost cutting opportunities and improving over all profitability. That’s valuable information also and has natural position in the board of director’s decisions. However, the combination of CFO’s analysis, marketing research, CRM and operations offer so much deeper understanding. Data tells you what has happened, it doesn’t explain it and it doesn’t offer best possible insights for innovation. Very often innovation is invisible in CFO’s figures until it’s been implemented. If you were Nokia’s CFO, by the time iPhone effect shows in your data, you are already terribly late.Managing with knowledge does not mean managing with financial data, which is an outcome, not the cause.

Sales. In business-to-business and major single purchases the sale departments have effectively adapted sales funnel analysis with CRM tools and use those tools for analysing success and managing resources. In these businesses sales is often working quite closely with marketing because the whole process is designed around a funnel: prospects, leads, offers, closed deals. The challenge in this approach is that sales is considered as a-push action only; offer customer the products and services that the company has. Best sales organisations take a deep dive in customer’s situations; dig challenges and position products and services, as a solution for customers needs. These organisations thrive. Push sales don’t do very well in the current situation although most of the sales reps still meet customers to present their inventory and end up bargaining to close deals. If sales team stop to listen the customers and discuss about needs and optimal solutions, they hold very much information that can be used for business development. Listening customers also drives brand equity, trust. Customers could get imprinted at best.

Experienced sales manager can give input for new product or service value proposition, how they appeal customers, even at very first concept level. They can also give valuable insights for improvement. This resource is most often neglected and the new products are presented for sales when it is time to start selling them. Such practice neglect tremendous immaterial resource, which is also responsible for selling it to the client. If they were fully behind the new product and their opinion would have been heard, it would certainly have double effect: product improvement and winning spirit.

Human Resources. HR is an out-dated name for a unit in general. The business is about skills and culture; know how, education, change management and indeed, human capital. HR does analysis about internal employee satisfaction. This information is giving feedback about how employees feel about their employer, atmosphere, colleagues, management and company’s direction. This information is also valuable as such and helps recognizing improvement areas. However, unleashing employee capability is not best harnessed with that alone. In Customer Think blog Dr. Graham Hill presented case Toyota, that explained how the Toyota implements a million improvements in their processes in a year, which come from their employees. 95% of these ideas are implemented within ten days after submitting them. People adapt to what they are supposed to do and start following the procedure as directed unless the company purposefully start breaking habits and offer recognition for those who challenge the current ways with better ideas. Small ideas result major changes when there is enough of them. HR should be the aggregate of human capital within the organisation. First allowing and then aggregating these ideas and feedback has enormous power that is available at any time. Engaging employees like this also improve satisfaction, because company start paying attention to its employee insight assets.

Gary Hamel presented fantastic cases of harnessing employee capability for innovation in his book “Future of management”. In his book he explained in detail how for example Whole Foods Ltd. has given employees the freedom of developing their unit within a grocery store. The team also

choose manager among them selves and decide whether to hire a new person in the team or not. The new hire means sharing bonuses and makes people think whether the new resources really result value that is worth sharing the upside. Whole Foods and Toyota are great examples of employee power to drive excellence when a company decide to really take advantage of these opportunities.

Customer service. When customers hesitate, face challenges or feel disappointed they call to customer service. This is one of the most important moments of truths there are. Customer service is actually a fevermeter of the company’s situation. For every call there is at least 10 more people who feel the same way but don’t bother to call. Very often customer service is considered as a cost and measured in “cost to serve”. The goal is to have fewer calls and cut costs in person-to-person service needs. This approach is acceptable but should not entirely replace personal service with online. Dissatisfied customers should be thanked for their effort to contact and inform about their experience. The resulting data about customers’ feedback should directly feed product, service and process development. Customers who give feedback should be recorded in CRM and engage with them with ways to improve the performance of the company in the areas where the customer feels the company has failed. These people are assets, not cost. Customer service personnel learn very effectively how different value propositions, marketing and other actions will result feedback for them. One client of ours showed all offers and campaigns to customer service team before publishing them and got almost always good feedback for improvement. Customer service team recognized expressions that would result confusion and issues that would potentially result dissatisfaction. They need to know what goes out in order to prepare for feedback, but they can also help in improving the outcomes.

Online Analytics. The online environment offers a wealth of data. You can track anything in real-time. Online has become a major influence in sales and because of the data, it also has clearer goals and action points than brand advertising for example has in general. Companies that take most advantage of online potential use effective analytics tools that enable optimization of online service’s potential. Data driven online development is actually using very similar methodologies that have been developed earlier for direct mail testing. The golden rule in analytics is to “look at their hands, not their mouths”. Asking people’s opinion is secondary to testing. Direct marketing has taught, that for example stickers and other dumb feeling parts in the mailing should not be used because they increase the cost per mailing. The tests have shown that leaving them out result e.g. 20% decrease in sales. Even though no research ever has approved such tools they still work. Same apply in online analytics. Most companies only track visitor and conversion rate of their online service.

Those figures are important but represent only fraction of the opportunity. If a company has 100 000 visitors per month and 2,5% of them purchase 50€ worth in average, it means 125 000€ in sales per month. If the company uses analytics tools and multi variant testing effectively, they could increase the online services success in search engines resulting 20% increase in traffic and double the conversion rate. As an outcome company would sell 300 000€ per month.

Online environment is probably the fastest source of incremental sales growth that is also cost-effective to produce. Multivariant testing means testing for example alternative landing pages, home pages, headlines, triggering offers, value propositions etc. The goal is to continuously make improvements bit by bit increasing the overall success. This work does not mean re-designing and implementing the service but small bits of it. This kind of process is likely to result very high return on investment. Ainoa Helsinki, company concentrating on online marketing optimisation has developed Banner Suite called tool that enable using banner templates and creating variety of different headlines and pictures within the banner. Production of variation cost very little. Implementing such approach and optimizing the use based on resulting conversion has increased success incrementally. The same methodology represents multivariant testing when developing home pages and e-commerce services. Online analytics tools tell where the customers came from, which content did they use, for how long and where did they go next, which search terms did they use, which paid links or banners did they click and much more. All this data is used for online service development. All that available data would also offer food for insights about how that data could be used for business development, marketing in other channels and sales. Currently most of this data is only used for single channel development though.

Research function serves variety of needs of business units, marketing, product development, sales and management. Research departments make market research, buy mystery-shopping analysis, test products and benchmark the company against competitors. Voice of the customer researches also aim at understanding the value creation in detail compared to competitors. Customer satisfaction research is a must tool for all research departments. The challenge is that in order to create actionable insights, the best results are possible when analysing several of these studies simultaneously. The worst case scenario, that is all too common, is that single study does not create actionable insights and is indeed wasted money. Research practice has outdated practices also that must be recognized. Customer satisfaction research is a great example. When studying customer satisfaction customers are promised that their answers will be analyzed anonymously. That sounds good at first but downsize the potential upside effectively. There are two main reasons for it:

1. Anonymous responses. Anonymity means that if customer has had bad experiences the company has no way of fixing their failure. In the current media landscape, that is very much social media driven, even low percentage of customers who have been dissatisfied can result very bad publicity. Web does not forget and published bad experiences could have very long tail in effect. Anonymity also mean that the potential of actually recognising where the company has failed could have been turned in to asset. Most customer driven companies would be delighted to recognize dissatisfied customers and engage in dialogue for them and use these customers opinion for improvement with open innovation and user driven co-creation methodologies. Dissatisfaction should be recognized as an opportunity to create competitive advantage and customer satisfaction studies should be completely re-considered. Voice of the customer study is a step in to right direction but it could be improved even further. We are aware that this claim has certain level of conflict with ESOMAR rules and regulations for research. ESOMAR is a forum, which set standards for research agencies. However, it would also be accepted according to ESOMAR that people’s responses would be dealt with individually in case it’s told for the customers in the study and approved by the customer. This is rarely done though. The basic rule is that you only report results according to demographics and other quantifying factors. Looking at the same issue from customer perspective is completely different issue. When people know that they are giving information about them, they expect companies to act on that information. When they tell they were dissatisfied with something, they expect the company to pay attention and make it right. Currently used anonymity make it impossible.

2. Looking back in time. Customer satisfaction studies often concentrate on perceived value in the past. Looking in to past is fine and offer valuable information as customers can only comment on experiences they have actually engaged in. If company would concentrate in customer value creation, it would not be satisfied with past though. Customer satisfaction study should be re-positioned as customer service study that has a time span from past to future. People engage with the company by giving feedback.

Company could offer value for that engagement by promising better service in the future. Such value proposition justify questions about how customer would prefer to be serviced in the future, what interests him, in what kind of contexts the product or service use would take place, does the customer have more than one roles as a buyer. Great example of several roles is travel: Travelling with family, with a spouse, with friends, with colleagues in work related situation etc. One person could fit in several segments and offer much higher sales potential than the one segment the company has recognized earlier. Customer service questionnaire should be placed in the heart of personal communications planning and be used as revenue driving dialogue tool instead of just recording experiences in the past. The money spent in customer satisfaction study will not result much ROI, customer service approach will. One thing about research is that they can do research and report results, but they can’t give analysis based on the results in great depth. In order to create effective insights research results should be analysed against operations. This is actually why media agency Toinen is doing a lot of research and analysis for our clients. Research alone is knowledge, analysis of results, operations and effects as a combination result insights. Research agency cannot give the most valuable advice because they are most often completely external; research department does research and often is not well aware of what is going on in the market place. These things result blind spots. The more you know and the bigger picture you have of the whole, the better analysis you can do from research. Outsourcing research to research department completely is most often a bad decision. Outsourcing it to an external partner who is not actually involved in operations is even worse.

CRM. The CRM is no longer just taking care of your existing customers but has developed further, closer to open dialogue in social media resulting social halo effect which increases company’s transparency, trust and immaterial value stretching to potential customers. Taking care of your own customers is currently resulting endorsement and becoming a media on it’s own right. You can’t really run Social CRM according to real CRM ideology without capturing individual customer buying behaviour. You can’t manage what you can’t measure. However, you can create CRM for your own customers, which leverage Social mediums in the approach. You can create personalized emails to your customers, just as well you could publish in your customer’s wall on Facebook or use Twitter while taking care of your customers. Customer’s primary communications tools should be applied as your tools. Adapting to customer behaviour is becoming easier and you can exceed expectations by applying new ways of communicating.

Conclusions of Business as Usual defects

Companies are often blind to the assets they have at their disposal. The information is often fragmented in the organisation and does offer the management tools that would really drive excellence. It’s not about money though. Companies spend money in data collection as described above anyway. What is missing is the aggregation of this data that would combine different sources of information in to tools that would effectively drive development of the company. This is why Bigdata-idea is currently so popular. But let’s not forget that it’s more about mindset and recognition of these opportunities than about extra cost. Aggregated data would support business development, marketing, sales and improvement in people skills and at best, creativity and innovation. Dialogue instead of research would create relationship equity instead of just data. Considering what would give you the ultimate knowledge about your business isn’t rocket science. Your can and should break corporate habits and start capturing much higher return on current investments.

So, if CMO doesn’t take action, who does?

SEE ALSO:

Business Design with customer centricity

How to enable smart company and avoid corporate autism

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

 

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

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

Join FutureCMO Movement LinkedIn Group here

Critical Responsibilities and Competencies – Strategy

Critical Responsibilities and Competencies

Strategic Planning

  • Work closely with business leaders and key resources to understand business objectives and issues in order to align marketing strategies that will support goals.
  • Develop a roadmap for creating and maintaining a performance driven marketing program, accountable to overall business and financial objectives.

Marketing Strategy

  • Develop and manage integrated customer-facing strategies and strategic objectives that maximize customer value.

The strategy must identify and address customer segments for each of company’s core offerings, and understand and maintain focus on Customer Lifetime Value, reduced Churn, and overall Profit Volume for the company.

  • As the brand champion, they must define clear positioning for the brand as a whole, and each core brand/offering. Identify opportunities to build and strengthen brand equity and ensure branding guidelines are followed consistently throughout the organization.

Develop and support internal and external communication programs to ensure company, product and market positioning consistent with the company’s strategies and vision.

  • Oversee all media surrounding the brand, including PR programs, Social Media, Events (manage outsourced), Sponsorships, Paid Search, Display, Direct Mail, etc.
  • Manage vendor relationships, as needed, pursuant to marketing objectives.


Strategic Planning

  • Work closely with business leaders and key resources to understand business objectives and issues in order to align marketing strategies that will support goals.
  • Develop a roadmap for creating and maintaining a performance driven marketing program, accountable to overall business and financial objectives.

Marketing Strategy

  • Develop and manage integrated customer-facing strategies and strategic objectives that maximize customer value.

The strategy must identify and address customer segments for each of company’s core offerings, and understand and maintain focus on Customer Lifetime Value, reduced Churn, and overall Profit Volume for the company.

  • As the brand champion, they must define clear positioning for the brand as a whole, and each core brand/offering. Identify opportunities to build and strengthen brand equity and ensure branding guidelines are followed consistently throughout the organization.

Develop and support internal and external communication programs to ensure company, product and market positioning consistent with the company’s strategies and vision.

  • Oversee all media surrounding the brand, including PR programs, Social Media, Events (manage outsourced), Sponsorships, Paid Search, Display, Direct Mail, etc.
  • Manage vendor relationships, as needed, pursuant to marketing objectives.
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