Are Your Customers' Purchases Having Strategic Impact?
Thursday, July 19, 2007
Let’s get personal
I last blogged about the most effective way to market and sell into IT, which is still through high touch methods. Coincidentally, Eric Kintz of HP blogged not so long ago about customer centricity and making the relationship personal, but I am not sure if he includes high-touch selling in his perspective. I suspect many enterprises believe they are addressing customer centricity with strategic customer programs, one-to-one ratios on account management, executive sponsor programs, client loyalty programs, etc. Customer centricity, making it personal, and high touch sales methods hopefully enable us to better understand how our customers feel and think and show that we understand their business, their challenges and how they want to be treated and sold to.
Face-to-face meetings, personalized communications, exceptional support, digitally touching the customer through support, chat, affinity groups and the like, are all good ideas but, let’s face it, none of these tactics are relevant if your customer’s purchases have no strategic impact to their business or if they perceive no impact.
So how do you ensure that your customer’s purchases are having strategic impact? By understanding how your customers create and get value from purchasing from you. Through this understanding, both parties (seller and buyer) are sure to derive the greatest value out of the relationship. THEY – superior return on their investment, competitiveness, better relationships with their customers, increased market share, productivity, increased profitability. YOU – the same. Your company becomes strategically relevant when you can effectively articulate, build and deliver to a model based on VALUE.
For IT investments in particular, all stakeholders—finance, technology, business buyers—are looking for and want to be able to distinguish and derive the maximum VALUE that your solution brings to their company. In order for you to communicate and demonstrate value, a deep understanding of the customer is needed by the entire organization (read “high-touch”, “intimate understanding”).
From there you can begin to build a Value Model, but it requires that you understand your customer at multiple layers:
- The Customer’s customers layer – the individuals and organizations that buy from your customer
- The Customer’s corporate value layer – the ways your customer adds value to the businesses of its customers
- The Customer’s business process layer – the business functions that enable your customer to deliver value to its customers by delivering its value proposition more productively and efficiently
- The Solution layer – the products, services and support that you offer to your customer so they can solve a business problem within one of its business processes
- The Product layer – individual products that you offer to your customer to fill an operational need.
For more on this email Debra at email@example.com
Debra Colombana, Vice President of Client and Market Development Debra.Colombana@phelongroup.com
Create Accountability for Voice of the Customer
Monday, July 16, 2007
Our experience working with companies of all sizes and in multiple industries tells us that when companies neglect having a separate budget line for voice of the customer, when controls and methods, guiding principles and accountability are lacking, and when insights are not gathered holistically from the customers’ point of view, then money spent on gathering customer insight is a cost, not an investment. It is flushed down the proverbial drain each and every year.
See my previous blog which discussed how to retool your customer listening from the customer point of view. However, knowing how to structure your customer listening is not enough. You must have a master budget and build accountability to the budget in the areas of customer retention, repurchase, and referrability.
If you want to become a truly customer-centric company, if you want to be able to measurably tie corporate actions and decisions to customer insight and back to what matters most – investing every dime in growth and keeping your team focused on the dials that create value – you will also need to institute methods, controls and accountability around the dollars your company spends on gathering and leveraging customer insight.
Start by asking yourself, who on your management team is staying up at night when a customer defects, does not renew or only buys in piecemeal? Who’s on the frontline when a customer de-positions your company or detracts from its brand with negative word of mouth? You already know that sales to existing customers are faster and more profitable. Retained customers not only contribute to growth; they co-invent and co-innovate. Your very reputation and ability to enter accounts, let alone new markets, is contingent upon the building a foundation of credible customer advocates.
To drive the correct investment and organizational behavior, retool your budget so that there is a master line item coupled with centralized ownership for capturing voice of the customer. Make voice of the customer a corporate versus a departmentally driven mandate. The net is that if voice of the customer is to make a difference in retention, repurchase and referrability –the three essential, revenue-driving customer metrics, it needs a formal line item in the budget with executive ownership and accountability across the management chain.
David Ambler, Vice President of Client Services David.Ambler@phelongroup.com
What the Tuk-tuk Business Can Teach Us About Customers
Wednesday, July 11, 2007
Imagine this… You’re in Cambodia. It’s hot. It’s also the slow season, kind of like your end of quarter. The tourism folks are desperate; they mob you at every turn. Did I mention it’s 90 degrees and 100% humidity?
It was our second day in Pnom Penh. Leaving the Royal Palace, we’re swarmed by tuk-tuk drivers, all wearing slippers, all exhausted, all yelling some variation of “I give you cheap price!” I notice a driver who’s standing away from the pack. He’s sporting a clean vest, a tucked shirt and a huge smile. He’s also holding up two icy bottles of water.
My tall, American-looking husband is bargaining with five drivers at once. But I look at Ali. He looks at me. Then he walks over, hands me the water, smiles and bows with arms outstretched toward his wagon.
I think—assumptive close and differentiation. Very nice.
My husband follows me; we hop into the tuk-tuk and speed away. Ali says, in pretty good English, “I felt sorry for you and wanted to get you out of there.” We are glad. When we arrive at our next stop, Ali goes for the big close: “I’d like to be your driver while you are in Pnom Penh,” he says. And then he asks us for all the details about our upcoming week—where we’re going, how we’re getting to and fro, and what we’d most like to see.
He assembles a perfect itinerary, weaving in hidden spots to watch the best sunrise and sunset, and the best place to try traditional food without “cramplications,” if you know what I mean. He’s at our hotel early to pick us up EVERY day before we can even be distracted by other drivers. And when we leave, he gives us his card and thanks us for helping him get through a rough week with few tourists.
Ali won more than a sale that day—he won a loyal, committed customer who will proactively refer him to others. He also established such value throughout the trip there that we paid a premium and tipped big at the end. Although he doesn’t have a quarterly customer satisfaction survey or a CRM system to log and manage these issues, he knows how to differentiate himself and deliver value throughout our stay. And in doing so, he unknowingly implemented a set of tactics to result in retention, repurchase and referability.
The evening we left Pnom Penh for our next destination, I gave Ali’s contact information to at least 20 people who were heading in his direction. I don’t know how it went, but I’m sure at least 50% of them used Ali. And we will arrange in advance to use his services when we return again.
What one action did your company take today to ensure retention, repurchase and referability? What will you do tomorrow? If you’re not treating those three revenue-driving Rs as strategy, you’re still just one of the pack fighting the commoditization of your product or service. What Ali the Tuk-tuk driver can teach us is that winning customers is essential but keeping them with an ever-evolving value proposition—keeping them by engineering value—will keep you well poised and on the road to long lasting success.
Promise Phelon, CSO and Founder