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
Do New Markets, New Customers, New Products Present a Challenge for Your Organization?
Thursday, June 21, 2007
I was recently in Singapore and met with a colleague who works for a large government agency there—one that just received a few billion (yes, billion!) dollars from Singapore’s government to roll out new programs. As we walked and talked, I asked about utilization and if their current programs were being adopted. After a long pause, I realized that tracking usage and adoption wasn’t something their team focused on. Instead, they tie success to new programs and attracting new people into them versus getting folks to maximize their use of what’s already there.
Like a lot of companies and organizations, teams tend to be intoxicated by the newest frontier. A client’s customer told me a few years ago, “Solution providers live with an eye toward the future, but we’re just trying to survive in the present.” Yes, every company needs to be forward-looking; but it’s also true that adapting to new, new, new is a challenge for most customers and their organizations.
Study re-confirms the importance of retention
A small, recent study put out by an organization called DemandGen highlighted, as we’ve said for years, that retention as a corporate strategy is essential to profitable growth—not only because retention gives you the ability to get more from existing customers, but also because it gives you and your customers a better ability to absorb change. The study, which took into account the responses of 200 sales and marketing executives, focused on the sales and marketing aspect of being “new-market focused.” Two key takeaways for you:
- The majority of sales and marketing executives said that their companies’ top two growth strategies for the coming year are “new product/extensions” and “change focus on customer/segments,” at 76% and 62% respectively. This is shocking because “deepening customer relationships” and “growing existing accounts,” two of the other answers, are known to be key to rapid growth and yields but were not noted by respondents as top priorities.
- Constant “innovation” is becoming hard to digest. Sales organizations, marketers and customers often are not ready to receive new products and services, new models for engagement, new… new… new…. DemandGen’s study pointed out that 58% of respondents said their greatest challenge was “implementing strategy,” while 34% said they were only somewhat prepared to deliver on their customers’ biggest demands.
Is retention in your plan for the next fiscal year?
What are you doing in your plans for the upcoming fiscal year to connect with and segment your customer base and put into place a retention strategy for your value segments? As part of your new fiscal year plan, do a simple exercise of valuing the new versus the existing base: what is the potential value of your current customers versus the value of the new market (taking into account the cost required to enter that new market or attract those new customers)? If you consistently do this exercise and implement a retention strategy as par-for-the-course, you’ll be able to better put your current versus new market opportunities into better context and capitalize on the breakthrough growth that retention as a strategy provides.
Promise Phelon, CSO and Founder
What Las Vegas Can Teach You About Managing Customer Referability
Thursday, June 14, 2007
If you’ve ever walked down the strip in Las Vegas, taking in that flaunting of excess, you’ll appreciate what a feat it would be to achieve any kind of conservation goals there. Making do with less? In Vegas? That’s a tough sell. But it’s also just what Pat Mulroy, the water chief for the city, has accomplished (here’s a great story about her that aired the other day on NPR’s Morning Edition). She got big results that crossed state lines, changed the way the Colorado River is managed, and made new artificial lakes illegal in Las Vegas, to name just a few specifics.
Here’s how she did it, according to Alan Feldman, vice president of the Mirage Resort: "She framed it as a business issue: 'This is a resource, this is how much we have, this is its correlation to the economy. How do we manage it to its best impact?'"
A lot of forward-thinking people find themselves frustrated by their inability to get everyone to agree on how to manage customer referability – that is, willingness to recommend your company to a colleague – “to its best impact.” You may be convinced that listening differently or better or more often to your customers is critical. You may think you listen plenty, but don’t respond well enough. But mobilizing others to action around these ideas is arguably harder than getting Vegas to conserve.
But think what you’d be able to do if you could get everyone to see customer referability as a resource, and then trace its impact. Referability may be a slightly more complex resource than water, because so many moving pieces go into creating it, but it’s a resource nonetheless. And it certainly has a powerful impact on your bottom line – the challenge is to make that connection visible. If you did, maybe you could change the way your company manages its equivalent of the Colorado River.
Whitney Wood, Senior Consultant
Blogging at the bottom …the MOST EFFECTIVE MARKETING ACTIVITIES in IT are still high touch
Wednesday, June 06, 2007
Last Thursday I attended SVAMA’s event on MARKETING THOUGHT – Ideas That Drive Results. Overall there were some good points and learnings to take away. While Guy Kawasaki is always great to listen to and learn from, it was the Gartner Group presentation by Robert Goodwin that resonated with me. Of course that was because his topic speaks to what the Phelon Group lives and breathes every day, Customer Buying Trends and Influence - the TOP 10 Most Effective Marketing Activities in IT. Gartner is in the process of releasing one of their studies, and Robert shared some of the insights gained from the study. So in the spirit of “Pay it Forward” (and by the way if you haven’t seen the movie, you should rent it), I share with you some of the IT buying trends that emerged:
1) The Sales channel is becoming more important in technology as buyers look to this group to help them determine the value they will receive from their purchases.
2) High touch selling is still the most effective way and preferred way that executives buy. These decision makers put Digital Media at the bottom of their list as ways they make decisions or are influenced. So much for all this blogging and webcast stuff! Gartner recommends investing in all the classic high-touch methods: sales presentation and interaction, contact management, events, the website.
3) There is a growing trend that technology solutions are now being purchased from the line of business and not purely the IT departments.4) And on the subject of delivering technology to the marketplace, leading edge technology buyers are acquiring technology “as a service” rather than as "owners" as they have in the past.
So for those of you in the technology sector who are reading this, it may be time to check in with your customers on “How they WANT to buy” and time to get in touch with your sales people on what they need to more effectively sell.
Debra Colombana, Vice President of Client and Market Development Debra.Colombana@phelongroup.com