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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About Author

Marketing attribution modeling

I just found Mr. Kfir Pravda’s article “Revenue attribution 101”  Mr. Pravda’s key question was: How do you measure revenue attribution – money and profitability for marketing activities. He had split the revenue attribution measurement according to touchpoint sequence from last to first and combined as customer journey. I agree with his measurement frame and guidelines. It’s a great article. I would recommend reading it.

Mr. Pravda’s article got me thinking about how do I actually approach this subject in my planning and implementation process.

First: I always start attribution modeling from owned channels

  1. What is their capacity to bring traffic and visitors (eg. stores and online)?
  2. What is their capability to convert recognized customers?
  3. What do people actually look in to and buy?
  4. Who are the customers actually – what kind of attributes, motives, interest contexts etc. do they share?

Once you have your own channel conversion, increased owned media demand generation impact and marketing automation tuned effective for the first time purchase t’s time to get more people interested.

Second: With the knowledge about contexts, customers and motives that generate interest and traffic it’s rather easy to recognize interfaces and channels that enable you to present a relevant and appealing messages for customers. This first touch planning is very much data directed iterative testing and learning process. What ever works, you scale up and automate in any given channel from online to direct marketing, telesales, face-to-face sales or advertising. I do prefer channels that I can measure direct ROI from, but I’ve also seen how media marketing has created stronger customer relationships and willingness to pay premium. These secondary KPI’s are about brand attributes, preference and willingness to pay premium.

Third stage is about learning and planning how to increase customers’ basket size, purchase frequency and expand customer’s buying behavior to more than one category. This stage is about using marketing automation technology in order to create service automation customer care programs for great customer experience and sales.

This process is completely founded on customer journey analysis and understanding in an omni-channel environment.

I think you might find these articles interesting:

Admap best practice article: How to map customer journey
Marketing’s new and re-designed 7P’s
Managing Brand – The most profound KPI’s and measures /
From marketing automation to service automation
Marketing Do or Die – managing customer interfaces

What about others? How do you approach marketing attribution measurement and planning in omni-channel environment?

About Author

Toni Keskinen ,Chief Editor for Future CMO Movement (http://futurecmo.org)
Toni.keskinen(at)futurecmo.org
http://www.linkedin.com/in/tonikeskinen

Marketing’s new and re-designed 7P’s

Marketing Mix 4PMarketing used to be about making companies APPEAR to be better, increasing brand appeal etc. Today marketing is about MAKING BETTER COMPANIES

The omni-channel, real-time, everything’s available and traceable environment we are currently living in has changed the marketing fundamentals quite radically. The world is no longer the same place for which The marketer E. Jerome McCarthy proposed the four Ps classification in 1960. This age requires us to re-design them. Actually, in my opinion we should question the old truths and re-define the entire concept, role and meaning of marketing.. go back to the fundamentals and adjust them to this time and age. I hope this article sparks interest and willingness to join in and continue the discussion at Future CMO LinkedIn Group

The new 7P’s

  • Position – in customer’s mind
  • Performance – the user experience, capability to meet expectations
  • Proximity – How close the brand is to it’s customers, Customer intimacy
  • Price  – Price is no longer a fixed figure
  • Presence – instead of Place
  • Perceived product
  • Promotion

POSITION

There is a lot of everything. Customers instinctively make their lives easier by using their mental shortcuts, heuristics, in order to make sense of the surrounding wealth of messages and impulses. The position a brand holds in the customer’s mind connects it to certain attributes, contexts, values, benefits and purposes. Actually, our brain gives an emotional tag to every single piece of information before entering our conscious mind. Branding is about training customers’ brains and winning certain position in their minds. This is why it takes a long time to really gain a meaningful position as a brand. That’s also why brand extensions are not a certain success, as the position the brand has in customer’s mind only consist of certain learned connections.

Because of these reasons I would define Brand as a position in the customers’ minds. During the past decade people have also learned to use brands as their road signs when searching for products, services, solutions, ideas and inspiration. For example in travel and telecommunications markets the number of category searches has dropped, while brand searches have increased. Instead of searching for smartphone or holiday, customers search operators, smartphone manufacturers and travel agencies by brand. To people, brands stand for direct access to information they are looking for. Such behavior makes the top-of-mind position even more important than it has been before. Smartphones or 4G are minimal interests, while Samsung and Apple have strong demand. The data also shows how Android has become a brand on it’s own and has an even stronger demand than Samsung has.

Mobile Google trends

PERFORMANCE

When customers do buy a product or service they have certain expectations for what they bought. Depending on how well the brand meets those expectations, it influences the customer’s personal experience and view on the brand’s performance. Value for money experience is a very important measure for a brand and shared experiences influence the brand’s Net Promoter Score directly. Performance should be measured through the customer’s entire relationship with the brand, across every single experience they share. In my opinion we should include PERSEVERENCE as part of the performance. The customers expect you to stay interested in them and continue to deliver high value. One-shot experience is not enough, no matter how good it is. The real performance must be proved over time also in case of product failure or other unexpected events.

In September 2013 HBR published an article: “The truth about Customer Experience” by Alex Rawson, Ewan Duncan, and Conor Jones. In their experience, most companies measure customer experience by touch points or single engagements. Such an approach will tell you how did that single engagement meet customer’s expectations. It does not say anything about customer’s satisfaction over time. In case this is the only mean to measure performance in a corporate KPIs, it will create an illusion of performing well. In their article, they proved the declining customer satisfaction over the length of customer relationship. When you think in terms of performance, you need to continuously improve your service, in order to keep your customers happy. In my Customer Journey studies I have also learned that, the reasons why customers choose to buy a certain product, or a service, are not necessarily the same ones that will keep the customer happy post purchase on a longer term.

Performance measures are also changing the marketing as a practice, changing management and the ways of managing change. Today, everything can be easily tested in small scale, scaled to global level and measured in real time. The marketing practice has been measured with rather elusive figures like top-of-mind, preference, awareness and attributes until recently. Now marketing has become an actual business unit that should have a business plan, revenue forecasts and profit expectations. This is finally something that other members of the board understand. This is why the marketing as a practice is moving up on the corporate power ladder. Corporate management is already expecting CMO’s to take responsibility for corporate digital transformation. In my opinion the creativity factor associated with marketing function has more potential in this new order than ever before when its performance is measured right. When customer understanding, creativity and performance metrics are connected across corporate strategy and operations, possibilities of developing business, competitive advantage and brand become infinite. We just need to follow the path companies like Tesco, Apple, Google and Amazon have opened for us over the past two decades. In that time the technology and ecosystem developed to its current level of sophistication and accessibility allowing us to join in and follow the paths these giants have already proved effective.

PROXIMITY

Proximity is a synonym for distance. In order to create trust and relationship with customers, brands need to get close and personal with their customers. At best, you can talk about customer intimacy and connecting the brand to people’s self image. We have a chance of having a dialogue and become a part of peoples everyday life via different channels like Facebook, apps, online services, even external bought mediums at personal level. Although the Internet and all it’s applications have a lot to offer, PEOPLE belong in this category too. Person-to-person communications are the primary way of connecting and even getting imprinted to the brand. People and corporate culture represent the brand in human form. The old truth about brand being as good as its salesman is still true. Customers meet people while making their choices, have support needs or they want a reclamation taken care of. People are the very core of trust experience and in many businesses customers imprint on people serving them. In such cases the brand experience and loyalty has it’s foundation on personal relationship: it’s not about B2B or B2C, it’s about Human-to-Human. The current view is, that those companies that best connect their physical experience in an omni-channel world will win the hearts and minds of their customers.

In my opinion the Apple Store concept is one of the best examples of creating a strong human interface and online customer relationship together. The experience at Apple store is that all employees are there for you, concentrating on your concerns and help you with your needs. There are often more employees than there are customers, which just stands for Apple’s priorities. The store is a place for brand experience and it is not measured by sheer efficiency like most other stores are.

Apple store

Picture source: http://zerogeekspeak.net/2014/06/16/av-forward-training-customerprofessional-relationship-dynamics/

PRICE

Price used to be a rather fixed figure. In this age price has become a rather elusive measure. The new approaches to pricing are about yielding models and price variety between customer segments or distribution channels. There is one price for me, and another for you, although the product and the seller are the same. There is a price for me right now and another tomorrow.

Online environment has made it possible to democratize offering and make pricing transparent by using aggregators and comparison services that find prices from different sellers and present them in one single view. This kind of approach has democratized the marketplace, because the aggregators only show certain comparable basic functionalities and push the brand further away from the customer. This approach has increased the meaning of pricing volatility and transparency. People on the other hand love such services, because the offering with large selection, customer reviews and low prices can be found and bought from a single location fast and conveniently. Actually these players like Expedia that is offering Hotels.com, expedia.com, Trivago and those alike them, are creating direct relationships with customers and effectively drive prices lower (and their profit margin higher because they effectively own demand). Smaller players, who have less known brands but can offer services and products at lower cost, can access demand and challenge better known brands due to this logic.

The demand for lower prices is growing and now it’s also connected with certain brands known for their low prices. In January 2014 Amazon reported that its’ more than 2 million marketplace sellers sold more than a billion units globally. In their annual report Amazon also reported higher profit margins, because everything they sell in their marketplace generate pure profit. Amazon, like big brands, have the demand, selling other businesses’ products don’t cost virtually anything for them.

Here’s how demand is developing in case of accommodation business:

Travel Google Trends

PRESENCE

I think that presence has replaced place on this list. In the digital era, presence equals availability and direct access to buying. Presence is a more flexible concept than place that is physical. Social media is a method of expanding presence across customers’ peer groups and generating recommendations, participation and coverage in general. Aggregators also scale presence further. Customers will choose a brand among those present. It is to say that expanding presence is likely to directly impact sales. Out of sight – out of mind, is the name of the game.

When I have been studying Customer Journeys and customer’s decision making, I’ve learned that there exists a market segment of people who are at the state of “pending decision” or “pending action” in many categories, especially in case of consumer packaged goods. Let’s say that you, for example, need to buy a new toothbrush and you decide to do so. The decision is already there, but it could take months before you actually make the purchase. In such cases the sheer presence where customer makes the purchase increases sales even without any kind of promotion. The same logic applies in many other cases too. I have personally become completely loyal for a contact lens seller LensOn. They send me an email once my previous order is likely to be nearly consumed and I only need to click once to renew my order. They know me and their presence takes place at the right time inside my personal space. I consider that great service. Their presence is perfect – out of sight and not bothering me at other times, only serving me proactively when they know I need it. LensOn has effectively increased my contact lens spending, because I have not run out of them since my first purchase, almost four years ago.

PERCEIVED PRODUCT

A PRODUCT is too often defined by companies as how they see and envision it. This is naturally flawed/biased and is where many companies make a mistake in the first steps of selling and marketing their product/service. Especially engineer lead organizations that are very product detail focused. In reality this should be PERCEIVED PRODUCT, making an enormous paradigm shift from companies defining a product, to understanding that the PRODUCT is actually only and exactly what we can get the consumer to perceive it to be. This adds the element of communication responsibility and understandability to the 7P’s equation. Most companies think they have the best product, but still fail, because of an enormous perception gap in the definition of the product in their minds and the potential customers minds. Perceived Products is naturally tightly linked to the second P = PERFORMANCE, which is all about (repeatedly) living up to, and exceeding the product perception and quality expectations of the customer (The definition of Perceived Product came from Jarno Aho, OMD Finland.)

What makes the concept of Perceived product especially important, is the fact that customer experience about a product or service is firmly embedded on expectations. When expectations are really high, it is difficult to meet them. On the other hand low expectations are easy to exceed and translate them to endorsements. Perception has a major influence on brand demand and preference. Branding has everything to do with it.

PROMOTION

Here’s the Wikipedia’s definition: “All of the methods of communication that a marketer may use to provide information to different parties about the product. Promotion comprises elements such as: advertising, public relations, sales organisation and sales promotion.[1]” Another way to approach promotion can be divided in four major categories:

  • Owned media (own customer interfaces and direct channels for customer communications)
  • Earned media (social media and PR)
  • Partner media (retailers, resellers, bundling and packaging partners, etc.)
  • Paid media (advertising, SEM, etc.)

Important measures for promotion are reach and impact to brand awareness, preference, willingness to pay premium and convert sales. In the Internet age of overwhelming availability of data, own media has increased it’s capacity to impact sales tremendously. Search engine’s page rank can be improved, own customer data can be leveraged very cost efficiently and the relationship with customers can drive further reach with earned social media and dialogue with customers. In the current online centric customer relationships in which marketing and servicing merge as one single messaging, it’s increasingly difficult to define where the product or service ends and marketing/promotion starts. You could say that the core customer service and customer relationship processes have become promotional activities in the age of open online dialogue. Partnering influence reach and presence very effectively too. These new possibilities have diminished the role of paid mediums and increased promotional capacity and scalability at a low cost. Data driven marketing enable paid media’s role as an extension of customer relationship marketing even if the customer has never left his/her contacts.

These were my 7P’s. In case you can agree with them, I’m sure you can also agree with this. Marketing used to be about making companies APPEAR to be better, increasing brand appeal etc. Today marketing is about MAKING COMPANIES BETTER. The difference between these two roles is so great, that it demands us to open our eyes and re-define marketing as a practice for the needs and opportunities of today.

Further reading:

Organizing Marketing for Success: CIO-CMO collaboration

Forrester Research and Forbes made a study and article about CIO-CMO collaboration: “Why The Most Important C-Suite Relationship For Marketers Is Still The Trickiest” The article concentrate on the challenges and approaches to enable and enhance collaboration and how to create common ground and language between the two very different specialist areas. I did agree with everything that was said in the article, but I couldn’t help thinking whether CMO-CIO collaboration is actually enough. Customers today engage with companies in multiple touchpoints and environments, their expectations change along their customer relationship and -journey (check out article: definition for Customer Experience) and their motives and needs have great variation. In my opinion CMO should be in charge of customer experience, promises, concepts and methods that drive great brand experiences, brand loyalty and engagement. However, the reality is that currently many of those channels and touchpoints are managed by customer service and business units or online service development unit. Often the research and analytics are also outsourced or in a separate silo. In case the CMO really has the wide customer experience management role, I agree that CMO-CIO relationship can drive phenomenal success, in case that is not the case, there must be even wider collaboration across business units. Here’s Accenture Interactives documentation about the subject: “The CMO-CIO disconnect – Bridging the gap to seize the digital opportunity”

Tom Asacker captures why customers think of corporate experience  holistically. A brand, he says, is “one, interdependent system of behavior”. The problem is that in too many organizations the “system” has many masters and each wants independent control of their domain. CMOs, who might be expected to have responsibility for the overall experience as of right, do not. That’s because large chunks of the interface with customers, and the factors that influence that interface, remain for the most part outside of their control. They do not fit neatly into the “normal” org chart definition of what constitutes marketing. (Full article: Brands: One System Of Touch)

Some time ago I wrote an article in which I claimed, that the marketing organisation is like an engine from 60’s. “The Duke University’s CMO Survey 2013 results highlighted again the need for marketing and CMO’s to carry more responsibility and integrate better with the corporate management and operations. It seems to me that marketing is facing the same evolution that car engines have gone thru since 1960′s. In the 60′s car engines were large, heavy, powerful and impressive but their gas consumption was just terrible and their efficiency unacceptable in current evaluation. Currently engines are much smaller but deliver a lot of power with very low gas consumption. The big and impressive modern engines have amazing power with acceptable gas consumption. The engine game is all about efficiency, as it should be – and the same rule apply to marketing management”.

Inbound marketing technology provider Hubspot has created their view of agile, rapid, realtime, evidence based marketing function and organisation. They don’t actually define the business units that should be involved, that must be considered case by case. Hubspot’s process is based on SCRUM-software development process and methodology. I find this approach to marketing quite appealing and interesting. Inbound marketing is about creating content and turning that content and stronger online traffic in to demand and leads. The approach is all about relationship marketing in the digital era and omnichannel environment. Please comment if you have any experiences about implementing such process to your organisation? Check out the presentation:

I’m working with company’s customer interface development and customer experience design. What I see in my everyday business, is clear need to break thru silos and increase collaboration. The SCRUM-process and organisation outline in the presentation must be considered separately for each organisation. The SCRUM-team should be a group of people influencing customer experiences across the Funnel and customer relationship in order to really make most of the approach. Short term analytics and A/B-testing are naturally important tools in such approach to marketing, but also the long-term development must be carefully considered. The brand image changes rather slowly and is an outcome of everything the company does. The SCRUM process easily change perception to short-term development and generate blind spots in larger scale opportunities. Team like this must make sure that they have both insight and topsight views to what they are doing and developing.

Please, share your experiences about how to organise marketing function for success!!! What worked, what failed?

Author: Toni Keskinen, Marketing Architect & Customer Journey Designer

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

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