As usual, the The Yale Customer Insights Conference 2016 was great. Leading practitioners and academics came together to tackle some of the most challenging customer insights problems of our time. This as technology moves at warp speed and entire business models get wiped out in a couple of years. And customer behavior changes more rapidly than ever before.
The big message (paraphrasing by us) on Saturday was:
“What is your brand mission?”
If you are clear about what your brand mission is, then you can easily:
Create continuous fresh content on the web
Improve your social media presence
Integrate technology to your business model
Rework your business model including supply chain,production,advertising, distribution and revenue
Have the same message across global markets
Here are some great nuggets from the conference:
1. Alison Lewis, CMO, Johnson and Johnson urged marketers to have one bold idea for each brand. You need to be super clear about the behavior change you are trying to activate in the market place. The baby bathing experience (video pictured below) was all about “Happy healthy baby development.” J&J clarified the idea by talking with scientists about the science behind baby skincare and with mothers worldwide. All mothers, everywhere , are interested in “Happy healthy baby development.” Once the idea was clarified then different global markets and local advertising agencies could execute on the concept as appropriate whether on TV,Billboard, point of sale, social media etc.
2. Pete Fader, Marketing Professor, Wharton School spoke about “customer centricity”. This is the idea of trying to identify your best customers and then treat them “special.” Small businesses are able to do this very well and bend over backwards to satisfy those special customers. Today both big and small businesses have the data, and yet are generally afraid to differentiate among customers in their processes. Focusing resources on your most profitable customers of the future can mean better growth and profits. There is a great podcast online where Pete Fader explains his idea.
3. Kristen Lynch, CMO, Vail Resorts explained about how big data is helping them constantly refine the customer experience at Vail Resorts. Their brand mission is “Experience of a lifetime.” Amazingly, there were at least five people in the audience who were regular customers and said great things about the Vail Resorts experience. Look at Trip Advisor reviews.
More about great ideas from the conference in later posts.
The drone industry is booming. And the number of companies authorized to use drones for commercial drones is up from 499 to over 5000 in just one year according to the NBC Today show. The number of personal drones registered has risen to over a million in the USA. Currently the Xponential 2016 Conference and Trade Show is underway. This is an event of the Association for Unmanned Vehicle Systems International. Xponential 2016 is one among many trade shows of the drone industry.
The NBC report suggest that commercial drone companies are ready to deliver your coffee in a few minutes from order to your work place lawn. And there has been talk about pizza delivery and a video “Dominos DomiCopter”is pictured above.
Commercial drones are examples of the growing Internet of things. Once pizza delivery by drone is commercialized- the pizza delivery experience could play out as follows:
The pizza store takes your pizza order online and conveys by screen to the human cooks – a bit like McDonald conveys your counter order to the kitchen.
Human cooks (for the time being at least- till automation takes over) will put together your order and keep the pizza ready for delivery
The pizza delivery drone will pick up and deliver your pizza
And you will not be obligated to tip the pizza delivery guy
Your pizza payment will be charged to your credit card and might include a delivery charge till drone costs come down
Unlike Uber and Airbnb where you are dealing with an entrepreneur ( i.e. the Uber driver or the Airbnb owner) one is unsure if the pizza shop owner will increase deliveries or business, because of drone delivery of pizzas- except on the busiest days.
The pizza delivery guy who takes the payment and tips will be the loser here. This is one more example of a relatively low-skill part-time job that is outsourced to technology. It also marks a huge shift in removing human contact at the delivery point of a perishable product. So far you had refrigeration of milk that allowed the marketer to remove “time” in the marketing equation. If you can cool the milk and keep it cold – you have time to sell it at supermarkets.
For warm cooked food the last mile to the customer’s home had to be done by a human being. Commercial drones that deliver restaurant food brings a new angle to distribution with the Internet of things.
You have a great product and you have some great customers – and you want to expand your market ( don’t we all want that ?). You try various things including print and digital ads, cold calling, trade shows, sales pitches etc. but seem to be stuck in a rut.
Talking to many businesses particularly hi-tech ones, we feel that businesses are not able to zero in on a precise answer to the questions:
Who is our customer?… and what does she value most?
Why are these questions so hard to answer? Because businesses are unwilling to give up on large segments of customers who seem to be promising prospects and yet orders never seem to come through. We are all unwilling to focus on a narrow band of customers because of our
Fear of losing out
We feel that neglecting large segments of “possible” customers will mean losing out on large chunks of business. A nagging fear of losing out seems to dog even the savviest marketers. And if you do not focus on a particular segment of customers – you cannot define what she values most. The two segments of potential customers pictured above as “A” and “B” are different because they value different things.
This inability of businesses to focus on their core customer results in several back-end problems like:
Product offering continues to try and mean different things to different people. Product developers have a moving target for innovation that seems to move horizontally. You think that one segment of customers requires a feature “A” but then another good segment of customers really want feature “B”. Where does the product team focus?
Customer service suffers because the service team never really figures out how to make both segments “A” and “B” happy. In fact, customer service reps are bewildered when a solution loved by segment “A” seems to totally annoy a customer from segment “B”.
Marketing communication is devised for one segment but sent to both: Amazingly cable TV companies do this all the time. They will have a great promo for new customers (Segment A) but will mail the offer to existing customers (Segment B) and when you call them the hapless service rep says “sorry – this is for new customers.” If you persist in asking for the deal the rep will actually tell you to leave the company and come back as a new customer after a year’s gap!
Here are some things to consider in trying to solve this evergreen marketing problem:
Focus on one set of customers, at a time, with similar needs : These customers might be geographically dispersed, might have very different demographics but the share one thing among them.
They value the same things or features and benefits of your offering.
Once you map the features and benefits that matter to your core target customers back-end things become much easier to manage:
Production becomes easier and better quality because you are trying to deliver some key features and benefits to a precise segment of customers.
Customer service causes more customer satisfaction. This happens because customer service reps get a deeper understanding of customer problems and their quick solutions.
Marketing communication becomes easier because (a) you know what the particular segment of customers care about (b) you can tailor messages accordingly.
As Google AdWords users already know the link between
keywords—>ad text—-> landing page
needs to be really tight and focused on giving value to your customer who is searching. Thus someone looking for “mother’s day roses” should be ideally seeing an ad that says “mother’s day roses ” and lands the visitor on the roses page and not on the tulips page. (A good example of this is pictured above).The value of such advertising is the most till mother’s day (May 8) and if you searched online in the US you’ll find that the online florists have again started advertising vigorously. After disappearing since Valentine’s day (February 14).
Similarly, in Email Marketing- there must be a “value” signal on the email subject line and the content should be relevant to the subject line. If you have a “call to action” i.e. a link to a buy page, then the link should land you to the relevant page. So if you have “mother’s day roses” on the subject line – the buy link in the content of the email should take the email recipient to the ” mother’s day roses” page instead of the “tulips” page. Sounds obvious- but its amazing when you look at campaigns and see the missing pieces.
While in AdWords the quality score and AdRank nudges you towards more value and relevance for your customer email programs don’t help in this regard because they are not set up to “not deliver” your email unless you are spamming. Repeated tests in email marketing programs is a good idea to ensure that you are sending out stuff exactly as you would want your target audience to see it. You do want to ensure that your email message is of value and relevance to your email list.
So why is value and relevance so important in Google AdWords and Email Marketing? Here are some thoughts:
It turns out that data in Google AdWords provides clear metrics as to what people searched (search terms), what keywords you bought, what Ad was shown and what was clicked. You pretty much know if your value communication efforts were working.
Similarly, email marketing platforms report how many people opened the email, who clicked on a link in the message and if you have tagged your emails you know exactly which email resulted in an online purchase.
The ability to instantly measure the effectiveness of your digital advertising is amazing. And if you are committed to change and improve your message – it is possible to do so with very short cycle times.
What a huge improvement from the days of trying to measure audience response through surveys.
The Marketing vs. Sales difference is a crucial one for all businesses to understand. To simplify:
Sales is trying to sell what you have.
Sales followed from the production era where in the early part of the 20th century, entrepreneurs like Henry Ford famously produced only one color of car (black) and could bring down the price to $260 for the Ford Runabout in 1925. Pictured above is the 1915 model priced at $390.
Marketing on the other hand is much more recent (1950’s and 1990’s) and has a simple idea:
Marketing involves coming up with something that customers need and/or value.
So why is it that sooner or later even the most innovative organizations become more about sales and less about marketing? Here are some thoughts:
What is of value today, will change tomorrow: Not to be confused with ethical values like honesty,integrity etc. here we are thinking of “value” in marketing terms. Are there products and services that we value today that we did not value yesterday and vice versa? For example, would you pay $4000 for a laptop computer today that you paid 15 years ago? It’s hard for the computer industry to re-invent itself and provide a high perceived value. With the exception of Apple computers, though that has only 7.8% of the market. All other computer makers seem to be focusing more on selling.
Locked into technology platform: Once you start finding customers, you keep improving your product to meet your customer’s value perceptions. The more your production process improves you lock in people,machines and processes to do your stuff flawlessly. Very much like Henry Ford and his black car that became less than one-third of the introductory price in fifteen years.There is simply too much invested in the platform including low-cost overseas manufacturing today. You end up selling what you have.
People resist change: Employees resist change even when they see that they can do better with customers by changing their offering. Explaining a change and innovation process upfront can help. It’s hard to get your people to change – so just try to sell what you have.
Segmentation of customers and employees by innovativeness: Some customers tend to be OK with the old. For example, we know people who are still using Windows XP and don’t see a reason to change. Better segmenting customers by innovativeness might be a good approach. The innovative customers are demanding something new, and there are employee intrapreneurs willing to try something new. Matching innovative employees with innovative customers might be a way to stay ahead of the marketing curve.
Disappearing information asymmetry with the Internet: Information asymmetry where the seller knows more than the buyer is disappearing fast with the Internet. You can check prices on almost anything online from your cellphone. Thus, it’s hard to sell anything unless you have (a) a competitive price and (b) enhanced value. Value could be a great return policy, training, free trial or what matters to your client. Sales must assume that the prospect has Googled your offering while Marketing needs to figure out what exactly is the unique value being offered.
Think of your first home buying experience and your own customer journey-StratoServe
Marketers of complex high value products and services have a hard time in grasping the learning process of the buyer. Here are some quotes we have heard from businesses about their prospects and customers over the years:
They are not ready to buy
They don’t know what they want
They are not clear about the problem they are trying to solve
They want too much customization
They don’t have a budget
They are not sure of their budget
Just think back of your first home purchase and replace the “They” with “We” being your family. Here is how the above quotes would have looked like, at the time you started to look to buy your first home:
They We are not ready to buy
They We don’t know what they we want
They We are not clear about the problem they are trying to solve house we want
They We want too much customization many changes in the house we like
They We don’t have a budget
They We are not sure of their our budget
You get the picture. So how did you solve your first house buying problem? You started by going to open houses and getting an idea of what was available. As you saw more and more houses you got a better idea of things you needed to have (eg. must have a fireplace, near to good schools) and what you really didn’t care about (eg. a walk out basement). Meanwhile you tried to get your budget and loan limits clarified and tried to work with what you could afford.
When it comes to complex purchases – buyers’ minds get clearer (on what they want and how much they are willing to pay) as they go through the search and buying process.
If you are always wondering about the confusion that you sense in the buyer’s mind – think of your first home purchase. An easy way of putting yourself in your customer’s shoes.
Talking to businesses who sell complex expensive technological systems, we find an amazing expectation:
That the customer will search online – see your ad, click, land on your contact page and “voila” you get a phone call or email. Resulting in a $250,000 order off course.
This is like saying that every first date from digital dating sites (eg. eHarmony) results in marriage. And the marriage analogy is huge in marketing theory. Our favorite is by Dwyer,Schurr and Oh (1987). They debunk the marketing myth of the”one night stand” in favor of the paradigm of”long term marriage.” Just as a marriage takes place after much due diligence on both sides, so does complex B2B and B2C purchases. Lisa Gevelber of Google explains how one customer searches 900 times, at different websites,before deciding to lease a particular car.Read: The Car-Buying Process: One Consumer’s 900+ Digital Interactions.
Before the Internet one could possibly visit 7-10 dealers and now 900 checks even before getting to the dealer!
If you think about it – how much would 900 clicks cost you if you are a car brand and relied on paid advertising alone? At least $2000 is our rough guess, and going by the lease deals that the car brands are putting out ( eg. zero down and $200/month) – there is no way for the car industry to make any money at all if they paid for all those 900 clicks that Sara made before signing a car lease.
So what should businesses do?
A good approach is to have helpful content on websites that helps the awareness-interest-evaluation stages of sales funnel. For in the digital age the first thing that people do with any question is to search online. Unlike your teachers,colleagues,friends or family:
Google does not judge you – when you search.
So if you want to know about “integrating robotic manufacturing processes” you will search online first.The moment you search online you are interested so awareness and interest are kind of working together. Even if you are a high school kid taking a robotics class. The manufacturer who specializes in “integrating robotic manufacturing processes” must not have you clicking on their ads (there are methods to do that) and yet provide you details of what this involves in their “awareness” pages. In fact, an engineering intern might be Googling the same thing as they have studied about robots but need to understand the process for stringing together a bunch of robotic machines through a conveyor line. And guess what? That intern might inform the Manufacturing manager about your service and voila you might actually have the $250,000 inquiry coming through.
The point is, web content cannot be just contact numbers, a web form and a few lines of explanation. You really are into educating anyone (school students will become decision making engineers one day) interested in your product or service. Some key basics for any visitor to your website is:
What you do : Explain what you do in simple terms so that anyone interested to learn is able to understand.
Why you do it: Explain why you do it. An experienced manufacturing manager might know the value of “integrating robotic manufacturing processes” but when that page link is shared with the CFO or CEO things can become clear to the buying center immediately
How you do it: Demonstrate that you know what you are talking about. A brief video of past projects can go a long way when you are trying to demonstrate your expertise in “integrating robotic manufacturing processes.”
If your website and content is always geared to help people understand your offering and how it helps, Google AdWords become cheaper. Your SEO ranking becomes better and even your current customers feel more comfortable. Besides you set forth a bunch of social media referrals and web citations that only help your cause.
You may decide to advertise but even there you pay for only a fraction of the 900 clicks that lead your customer to your car dealership, if you are the car dealer.
On a lighter note on April Fool’s day – do not be fooled with “love at first sight” that will lead to marriage. You can be sure that your partner has checked you at least 900 times before proposing or accepting your proposal. And many of these 900 checks are well….online…
Introducing innovation in organizations is hard: your employees seem so suspicious of the innovation.
CEO’s know that their organizations must innovate to stay relevant and succeed. Other functional heads (CxO’s) also understand the innovation imperative. And this applies to the Chief Marketing Officer (CMO) ,Chief Supply Officer (CSO) or the Chief Financial Officer (CFO) etc. These organizational leaders cannot understand why getting a new thing started is so difficult. And why they do not see the benefits flowing in- simply because of employee reluctance in implementation and “buy-in.”
Innovative B2B marketers also despair when they face suspicion and skepticism after all the proposals,presentations and training that is done. And yet the organization continues in its old ways.
There is lots of research on this inherent reluctance to try something new and potentially better. For example, your organizational climate must encourage innovation and if you have a product champion who goes after everybody then people start “buying in”.
To break it down, here are two questions for CEO’s and B2B Marketers to ask as they try to overcome this “suspicion” of innovation:
How does the innovation fit into perceptions of their “real work” : As CEO or CIO (Chief Information Officer) you might buy a great software system and then be appalled at the rate of use one year later. Why are 80% people hardly using the system? The trouble is that they don’t see using the new system as part of their”real work”. Perhaps sufficient training and explaining was not done to start with and there was no regular monthly follow-up, at least till everybody got on board.
So what is this perceived “real work “? Whenever you ask someone to do something new and different – you are taking them off their routine because you believe that the “new” routine will be more innovative and productive. However, a person on a routine in an organization got there because of different signals she/he received over years! Doing that routine has given the employee job security, good performance evaluations and very importantly work relationships and friends.
If you are say a manufacturing materials user, you do one part of an existing process data entry in manufacturing. Your counterpart in accounting knows exactly what you mean. Because you have discussed and clarified questions over lunch at the company cafeteria in the past. The new process is either not clear to your friend in accounting or they have a different system. Now you need to shuttle excel spreadsheets in the new manufacturing system. The “new” pieces have not been worked out and instead of giving all the energy in trying to do the integration – you simply go slow with the new system. This is simply “not your job” is what you (rightly) think.
So where does this leave organizational leaders and marketers who want the innovation to succeed in organizations? Here is our take:
Understand the perception of “real work” of the main players who will make the innovation succeed.
Explain why and how the innovation will fit into their “real work”. A real concern is that they new way will eliminate the job by outsourcing to “technology.” If this is the case, you must have a career plan after adoption (involve HR) and that must be a step up for the employee. This linkage is the weakest in most organizations. Taking honest time with this can go along way.
Make it easy for the employee to adopt by ensuring that what you are asking is easy and not overwhelming.Think Facebook and not a complex ERP system in one go.
Have adequate resources to do the integration and linkages with other organizational activities.
Review progress of implementation say monthly.
Give feedback against expectations that are outlined as you started the project.
Celebrate success with rewards – consider a small gift card and a letter of appreciation as milestones are achieved.
These steps don’t seem to happen in many organizations. If implemented, employees will feel more “buy-in” and less suspicious of innovation initiatives.
If you have satisfied customers – you would feel that word of mouth including social media should help get more market share. “It’s all about happy customers” …..Well that is not true.
Based on data for 200 companies between 1994- 2006 for 800,000 customers from the American Customer Satisfaction Index (ASCI) there are some interesting results. Rego,Morgan and Fornell (2013) compute the market share corresponding to customer satisfaction and prove pretty convincingly that increased market share leads to lower customer satisfaction and vice versa.
If you are looking for market share, be ready to sacrifice some customer satisfaction.
If you are looking for increasing customer satisfaction, be ready to sacrifice market share.
Caveat: Unless you are ready to expand your product offerings – and ready to deal with the management challenges of a multitude of product lines…
So why does this strange stuff happen?
The root cause is that as you have more customers their needs become fragmented. The catch all “one shampoo” does’nt work too well for market segments that are looking for “anti-dandruff” shampoo , shampoo for “dry hair” etc. The solution to keeping up with customer satisfaction as market share grows is to segment customers according to similar needs. Then you can put customer service teams around these segments and address their needs. This is easier to do with smaller customer numbers in B2B markets and can be harder in mass consumer markets. Besides customer service teams, think of the massive challenges in management. Having a 100 or 1000 ice cream flavors that have low volumes mean a lot to do in supply chain and manufacturing. Also each new product needs advertising support and expenses.
Now consider the opposite i.e. your customer satisfaction is rising. Why would your market share decrease if you don’t increase your product range? Because if you become really good at satisfying some customers then your product has a great appeal among the customers in that market segment which has the best product-market fit.
To feel better about lower customer satisfaction, track your customer satisfaction with respect to your nearest competitor, the authors suggest. If it’s easy for a customer to switch from your product to your competitors products, so long as your customer satisfaction rates are better than your competitors – you are fine. In most low cost consumer products, eg. shampoos its easy to switch from one brand to another if you are unhappy with your current brand. In complex and expensive durable goods you don’t tend to change your washer-dryer unless you have good reasons to do so. Similarly, in B2B markets a clunky software system is hard to change. There are too many things tied to that system and too much training has gone into getting the staff to finally use that system. That is why new system makers focus so much on user experience, training and support.
We get frequent questions from innovative solution sellers about how to deal with the power and politics of B2B Buying Centers. This is after you have started talking with people at a prospective customer organization. And yet a deal doesn’t seem to be coming through.Here is our take and we hope this makes our dear readers feel better:
Power and politics is the nature of B2B Buying Centers
Dealing with the power and politics of buying centers involves following steps:
Identify the user whose job and life will be significantly improved if your innovative solution was adopted by the organization. Try to get a meeting with that person and check whether your assumption is indeed true. The existing vendor or process may be so embedded that anything new will mean a whole lot of disruption. If it does, then figure out a way to ensure success after adoption of your product or service. If the user is convinced that your organization will not fail her in her job – your marketing battle is half won.
Who are the bosses involved? Marketers assume that the CEO or VP can help their case. But organizations are not fiefdoms because they have to get the work done. The CEO or VP cannot push people to accept something on which they have reservations or at least unasked questions. However, its really important to keep communication with other members of the buying center whether it is the CEO, VP, CIO or VP of Supply Chain. Consider sending out informational mail (yes snail mail) and emails. Even though the Chief officer may not see your mail piece the assistant is likely to forward the mail piece to the relevant manager.
Who is the relevant manager? This one can be hard to determine as different people have different ideas of who the most relevant manager is for the decision. A good way to identify the relevant manager is to ask : “Will this manager look great when the results start coming in from our solution?” Meanwhile putting all potential managers on your mailing list is a good idea.
Ultimately, B2B marketers need to recognize that B2B buying is not about buying something for fun. Your product must speak to an organizational objective that is important. Your sales task is to persuade the buying center members that it is urgent as well.
