Customer Growth how to increase sales by building strong customer relationships.
Customer Growth how to increase sales by building strong customer relationships.
Sales or revenue is the foundation upon which every business is built. All sales come from your customers. Customers are thus the only source of value for your company. In order to grow revenues you must focus on your customers. All companies face challenges of growing and retaining customers in a very competitive and fast moving market. The only way to differentiate and create value for your customers is by delivering a better customer experience than the competition. To do this, you must listen to customers and interact with them as individuals. This requires many changes within the company: new ways of organizing, better data management, new flexible technologies and new metrics. The journey towards becoming customer centric will take time. But the payoff will be increased loyalty, greater share of wallet, increased efficiency and ultimately growth in revenue and profitability.
1
2
CUSTOMER GROWTH – WHAT IS IT?
A BUSINESS MODEL BASED ON CUSTOMER EXPERIENCE
HOW TO BUILD A STRONG CUSTOMER EXPERIENCE
5
10 Increased sales through stronger customer experiences
16 The core product and service is important - but it is not enough
Why is it important?
8 A framework for creating Customer Growth
13 Measuring Customer Growth
4
3
18 Step 1 - Indentifying customers
5 CREATING A ROADMAP FOR CUSTOMER GROWTH
TOWARDS A CUSTOMER CENTRIC ORGANIZATION 30 Capability 1 - Customer centric leadership 31 Capability 2 – Data and information management
48 Strategy and handson execution in parallel
50 Developing the vision and customer strategy
52 Validate strategy 20 Step 2 - Deepen customer through piloting insight 33 Capability 3 - Customer experience design 54 Roll-out and change 22 Step 3 - Customize your management offering and 36 Capability 4 – Customer communication acquisition, cross-selling 56 Optimizing the and retention customer 24 Step 4 - Interact with each experience customer as an individual 40 Capability 5 – Customer centric organization and processes 42
Capability 6 - Technology platform
45
Capability 7 - Customer centric culture
1. Customer Growth - What is it?
4
Cus to mer Growth [kuhs-tuh-mer grohth]
noun A business model where increased revenue and profitability is derived from listening to customers and interacting with them as individuals over the customer lifecycle in order to strengthen the customer experience and increase customer loyalty.
5
The only value your company creates comes from your customers. But that value is changing. Customers do not want the same things as before. Still most companies continue offering the same old stuff and treating customers in the same way as in the past. In order to be relevant to all your customers you need to say different things to different customers. Only by serving each customer as an individual can you really create customer value and a strong customer experience. A strong customer experience leads to loyal customers, who buy more and recommend your company and the products or services you sell. Customer experience becomes your platform for both revenue growth and customer acquisition.
Why is it important? Despite talk of customer centricity most businesses today are product centric. In a digital world, where customers have more information than sellers, a product centric approach will no longer differentiate companies. You will be caught in fierce price competition, which leads to a vicious round of cost cutting. A new customer centric approach is needed to differentiate from the competition and to create room for product pricing based on the value delivered to customers. •
Digital drives customer centricity. Why is customer centricity so important now? Digital technologies are transforming almost every market. Customers have more information and alternatives from which to choose. At the same time digital channels provide efficient tools for customizing offerings and communication based on the needs of individual customers.
6
Figure 1 A framework for Customer Growth
1 BUSINESS MODEL Grow sales and profitability per customer
Customer experience
Loyalty
Sales
RELEVANCE
2 RELEVANT CUSTOMER ENGAGEMENT
Identify
Listen
Customize
Interact
Treat each customer as an individual
3 ORGANIZATIONAL CAPABILITIES Move from product centric to customer centric organization
Data & Information Experience design Organization & processes Technology Source: Avaus
“Only by serving each customer as an individual can you really create customer value and a strong customer experience.�
8
Companies that learn how to leverage digital opportunities will provide a better customer experience and increase internal efficiency. They will outgrow their competition. •
Customer centricity drives revenue and profitability. By understanding the customer better you can offer and communicate relevancy. This will increase conversion rates and drive sales. In the end, customer centricity is about growing your bottom line.
A framework for creating Customer Growth To put it simply, Customer Growth is about 3 things: 1. Building a business model based on customer experience. Customer experience drives loyalty, which in turn drives revenue. Section 2 of this book describes the customer centric business model.
2.
Engaging customers in a relevant way. Relevance drives the customer experience. Relevant customer engagement requires that each customer is served based on individual needs. The elements of relevant customer engagement are explained in Section 3 of this book.
3.
Developing a customer centric organization. To create relevant customer interactions the organization must change and create new capabilities. These are described in Section 4. Execution will determine success. How to build a roadmap for Customer Growth is explained in Section 5.
2. A Business Model Based on Customer Experience
10
Customers pay you money, products do not.
•
Loyalty as a sales driver. Loyal customers create value in three ways. First, they buy more today. Second, they will stay longer and purchase more in the future. Finally, they will recommend your company to others. Customer loyalty will determine how your sales drivers evolve. For instance, if your customers are willing to recommend your company to friends, then your customer base will probably grow as a result.
•
Customer experience. A good customer experience is a strong driver of customer loyalty. There are three components of a strong customer experience: perceived value, effortlessness and enjoyment. Each customer wants different things and they will experience your company in different ways.
Therefore, your business model should be built around your customers instead of your products.
Increased sales through stronger customer experiences Sales growth is driven by customer loyalty, which in turn is derived from customer experience. A stronger customer experience will lead to higher customer loyalty, that in turn leads to increased sales. •
Sales growth. Sales or revenue is the foundation upon which every business is built. Your revenue is defined by a simple formula. It is based on how many customers you have, what the average revenue per customer is and how long customers stay with you. Increasing any one of these sales drivers leads to increased revenue.
“In order to make informed decisions and formulate plans we need to continuously measure all customerfacing activities.�
12
Figure 2 A business model based on customer experience
Customer experience
Customer loyalty
Customer value
Useful Easy Enjoyable
Purchasing intention Recommendation Retention
Customer base Revenue per customer Retention
Strong customer experience ...
... creates loyal customers ...
... which increases revenue.
Source: Avaus
13
Measuring Customer Growth Traditional mass marketing is about hoping your marketing investments pay off. Customer Growth is about knowing whether they do or not. Decisions should be based on facts. How many new customers did we attract? How much did current customers buy? How long did they stay with us? What is the ROI of our last campaign? •
•
Measure to learn. In order to make informed decisions and formulate plans we need to continuously measure all customer-facing activities. But even more importantly - we must measure in order to learn what works and what doesn’t. Both strategic and tactical. Setting up good reporting is a good starting point for becoming more customer-focused. It helps you understand customers and ROI both on a strategic and tactical level. Strategic reporting helps you understand how your customer base is evolving. Tactical reporting is concerned with how well your campaigns are working.
•
Use control groups. Control groups should always be used to evaluate results against a baseline with no actions. Designing a good framework for control groups can be complex, but it is worth the effort.
•
Set up a customer dashboard. One of the best investments early on is to set up a customer dashboard that displays customer KPIs internally. It promotes a new externally focused view to the business and creates a collaborative tool for discussing customer-facing activities.
•
Challenges for measurement. In some organizations setting up proper measurement may take time. Data issues, organizational silos and cultural issues often slow down the adoption of customer KPIs and dashboards.
14
Figure 3 Management dashboard for measuring Customer Growth
Customers All
Purchases Store
Internet
Loyalty
...
Telesales
CUSTOMER BASE - FEBRUARY 2012 Total number of customers: Marketing permissions: New customers this month: Average purchases per customer:
852030 754044 (88%) 5713 2,3
12 MONTH TREND Existing customers
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 11 11 11 11 11 11 11 11 11 11 11 11
Products per customer
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 11 11 11 11 11 11 11 11 11 11 11 11
New customers
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 11 11 11 11 11 11 11 11 11 11 11 11
Share-of-wallet
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 11 11 11 11 11 11 11 11 11 11 11 11
Revenue per customer
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 11 11 11 11 11 11 11 11 11 11 11 11
Customer life time value
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 11 11 11 11 11 11 11 11 11 11 11 11
Source: Avaus
3. How to Build a Strong Customer Experience
16
The key to building stronger customer relationships is being relevant. Relevance is about listening to your customers and giving them what they need at the right time. The core product is just a hygiene factor for producing a good customer experience. In order to really stand out you need to become relevant to each individual customer. This requires four things: 1) Identifying customers, 2) Listening to and understanding individual customers, 3) Customizing offerings and communication and 4) Interacting with customers one-to-one.
The core product and service is important - but not enough To compete, companies must differentiate. The product is rarely enough to do this anymore. Other factors increasing ease-of-use, value and enjoyment may be more important.
•
Good products a hygiene factor. Competition has long focused on who can develop a better product. Most companies today produce good products that are quite similar. Take digital cameras for example – they have similar designs and functionalities and they cost about the same. The product itself may no longer determine which camera the customer buys.
•
Relationship as differentiator. How companies treat their customers differs greatly. A relationship is where companies can stand out and create a competitive advantage. Do companies treat their customers in a way that makes the customer feel good and thus creates additional value for the product?
•
Relevance drives the relationship. A good customer experience is based on relevance – a feeling that “this is right for me”. Relevance is about listening to individual customers and customizing the relationship to their needs.
Figure 4 Relevance drives differentiation
17
Relevance
This is where companies can differentiate.
“I love them, although I’ve seen better products!”
“Wow, what an experience!”
“I couldn’t care less!”
“It’s a good product but they don’t care about me!”
Many companies try to compete here, but good products have become a hygiene factor.
Core product Source: Avaus
18
Step 1 - Identifying customers
•
Gather data. Data is the ears of the digital world. Without data companies are deaf – they will have no clue about what their customers are doing and what they want. Once customers are identified you can start to collect data on individual customers. Data may involve demographics, purchase history, customer service history, marketing history and even web browsing history and data from social media. Collecting data may in itself be a challenge, but often even more work goes into integrating data in a way that makes it useful.
•
Integrate web data with customer data. Customers use both digital and traditional channels when they interact with you. In order to fully understand customer needs and behaviour you should integrate web-based data with traditional customer and transaction data. On the web many customers start out as unidentified. This often poses a challenge for integrating web data with customer databases. Using cookies and advanced data integration tools these challenges can be overcome.
Data is the ears of any business whereas analytics are the brains. You can compare the importance of data with the hearing of a traditional salesman. A deaf salesman will never understand the needs of his customers and consequently will usually offer the wrong solutions. The best sales person always listens more and talks less. •
Identify customers. The starting point for customer insight is the ability to identify individual customers and collect data of their behaviour and preferences. Customers must be identified each time they interact with us at any touchpoint. Trust is a basic building block for identifying customers. Without trust, customers will not be willing to identify themselves and disclose private information. Therefore a good privacy policy is an important requirement for identifying customers. Often customers must also be incentivised to identify themselves – there has to be more value in doing business as an identified customer than as an anonymous one.
“Data is the ears of the digital world. Without data companies are deaf – they will have no clue about what their customers are doing and what they want.”
20
This requires automating analytical processes. The most advanced form of automated analytics is self-learning systems that continuously refine business rules based on live data about customer behavior.
Step 2 – Deepen customer insight Once you have data on individual customers you can start drilling down in order to understand who they are and how they differ from each other. There are many good analytical tools to do this. •
•
Analyze data for insights. Analytics helps you learn more about your customers, but it also helps you identify the needs of individual customers and thus drive personalized interactions. Who are they? What do they like? How do they behave? Which customers are the most profitable ones? You can start by doing simple customer profiling and perhaps segment customers in groups based on their motives or behavior. More advanced methods include customer value analysis for identifying profitable customers or churn analysis for finding out what drives customer retention. Predictive models can be used to identify upsell opportunities or customers that may defect. Automate analytical processes. Analytics helps to enrich data about individual customers. That enriched data is only useful if it is up-to-date. Therefore, analytical processes should be executed regularly.
•
Execute interactions based on data. Data is only useful if it drives action. Therefore data should be structured and stored in a way that enables personalized interactions in inbound and outbound channels. This may require building an operative database – often called a marketing database – with relevant customer data.
•
Evaluate response. Response data on customer interactions should be fed back into the operative database. Actions can then be evaluated. But even more importantly we can use those responses to further continue a relevant customer dialogue.
•
Data is important, but don’t sink into it. No matter how much well organized customer data you have it is never the whole truth. Therefore, balance data utilization with intuition. Sometimes it is good to take a risk and try something that feels good or right even though there is not the data available to support the decision.
Figure 5 Using customer segmentation as a tool for understanding individual customers
Attitudes and demographics
Behavior
Needs and preferences Awareness and perceptions Demographics
Profitability
Usage Products Frequency Value of purchase
Motivations
How: Study behaviors first. Then use attitude research and profiling to explain these behaviors. Why: To understand how best to motivate the right customers to demonstrate this right behavior.
Process How purchased Where purchased Switching Retention
21
Acquisition and retention cost Segment size and growth
How: Leverage behavior analysis to build richer understanding of the drivers of customer economics Why: To create a better view of the relative attractiveness of customer and segments.
Current and future profitability Lifetime value
22
Systematic processes for different phases of the customer lifecycle will ensure that as many customers as possible will end up being loyal profitable customers.
Step 3 - Customize your offering and communication Once customers and their needs are identified, the next step is to customize your offering and communication based on what they need and how valuable they are. The more customers differ in terms of value or needs, the more compelling it will be to customize the approach for each customer. •
•
Differentiate customers. Not all customers are the same – far from it. They differ in value, commitment and needs. Your most valuable customers should be treated differently from less valuable ones. The same goes for customers that are very committed to you. They will be interested in getting lots of information whereas customers with low commitment will ignore much of what you say to them. Understanding the customer lifecycle. Depending on where customers are in their lifecycle their needs and values will be different. Loyal customers should be retained whereas new customers need to be onboarded.
•
Making life easy for customers. From your customers’ standpoint customization is about making things easier for customers. Customers are strapped on time and often want to find suitable solutions as quickly as possible. Customization narrows the choices customers have to make down to the few most relevant options. Customization may also adapt the product or service offering so that it fits with the needs of individual customers.
•
Personalized communication. There are three things that determine how relevant communication is for each customer at any given moment. Is the content right? Is the timing right? Is the channel right? Getting all of them right will make the customers feel as though you know them and serve them better based on that knowledge.
Figure 6 Managing the customer lifecycle
Customer insight
1
Experience & Proposition design
2
Customer fundamentals
23
Customer acquisition
Customer experience
Share-ofwallet
Loyalty
3
4
5
6
Customer lifecycle
Source: Avaus
24
•
•
Using triggers to get timing right. Often the most important element of customization is timing. Are you communicating with the customer at a moment when he or she is willing to consider what you have to say? Trigger marketing is often an efficient tool for ensuring the timeliness of communication. Obviously what you say – the content – will also be important. Personalizing content based on customer needs and the stage of the customer lifecycle will ensure that you say relevant things to your customers. Customizing products and services. Not only communication should be customized. To be really relevant you need to differentiate what you offer customers as well. Offering premium service to valuable customers is a typical way to start customizing the offering. The offering can be customized in many ways: prices or discounts, service levels, features and so on. The important thing is to ensure that customization makes the offering more relevant to customers and drives customer value or profitability at the same time.
Step 4 - Interact with each customer as an individual Customer value is delivered through interaction with the customer. Each customer has different preferences. Interactions should be based on what the customer wants, how the customer wants it and when the customer wants it. •
Multiple channels. Customers interact in many channels depending on their need and situation. The experience should obviously be consistent no matter which channel the customer interacts in. It is also important that customer data is available for use in all channels and that additional data on interactions is collected from each interaction.
•
Design the experience. The customer experience is as much about feelings as it is about actual substance. Therefore, it is not only about what you say or offer. It is very much about how you present it. Service and experience design should be used to dictate how customers will be treated to ensure a positive experience that creates loyalty.
“One of the biggest opportunities that is often overlooked is all inbound contacts that occur when customers visit your website or call your contact centre.�
26
Figure 7 Designing the customer experience
BEHAVIOR
SEGMENT 1: FAMILY TRAVELER
PRETRAVEL RESEARCH Look for inspiration and plan the trip
BOOK Efficiently book and pay for the trip
TRAVEL LEAVE
STAY
RETURN
REMEMBER
SHARE
Look forward to the trip
Travel to destination
Enjoy the destination
Travel back home
Enjoy memories of the experience
Share experience with friends
Collates the package (pricing etc.)
Reads about the destination
Receives communication
Makes reservation
Researches and compares destinations online
Wants to include personal requests in own order
Tells friends about own plans
Unsure about where to travel Excited about attractive price offer Chooses destination and plans own holiday
POSTTRAVEL
PREPARE
Hears about experiences from friends
Pays the reservation
The scenario illustrates high , low and neutral emotional points. These all represent a potential customer experience design opportunity.
Plans activities at destination Receives communication
Receives confirmation
Asks questions
Unsure about travel details
Prepares for travelling by packing etc. Receives information about changed travel details
Checks in at the airport
Relaxes at the hotel
Excited about flight to destination
Packs and checks out of hotel
Enjoys local attractions
Leaves for the airport and checks in
Solves unexpected problems during transit Finds bus and travels to hotel Meets guide Checks in at hotel Enters own hotel room Solves problems with hotel/room
Eats out at hotel or local restaurants Excited about shopping opportunities Goes on trips to nearby attractions Taking photos of family and sights Solves unexpected problem with guide
Discusses experience and memories with family Looks at photos from trip
Sad about flying home
Enjoys stuff bought on trip
Solves unexpected problems during transit
Order print photos or album
Arrive at airport and travel home
Thinks about the experience by him/ herself
Tells friends about the experience Shares photos via emailor uploading to photo sharing site Gives feedback via tour operator’s online questionaire Positively surprised by offer for new trip
Unpack
ENJOYMENT
CUSTOMER SCENARIO DESCRIPTION
The classic family traveler goes on holiday with the family and children. They want certain services that make traveling with children easier and that create unforgettable experiences for the whole family.
Source: Avaus
27
•
Digital and mobile is taking centre stage. Customers are increasingly using digital channels and mobile devices as their main tool for interacting with companies. It is also the most efficient channel for providing personalized context sensitive interactions with customers. But it takes a lot of learning before getting it right.
•
Leveraging inbound channels. Marketing has traditionally focused on outbound activities trying to get messages out to the customer. One of the biggest opportunities that is often overlooked is all inbound contacts that occur when customers visit your website or call your contact centre. Customizing those interactions by offering relevant information and services delivers an opportunity to not only create a personalized experience, but also to sell additional products and services. This requires the capability to decide what to offer the customer on the fly and is therefore often called real-time marketing.
•
Execute orchestrated customer dialogues. Predefined customer dialogue models are good tools for creating a consistent experience in different customer situations. The dialogue models define communication flows that take into account customer profiles, customer actions and reactions, as well as business drivers. Predefined content and business rules, combined with marketing automation technology, make executing complex dialogue flows feasible.
28
Figure 8 Automated customer dialogue models
1 Joins the program
@
Welcome! Please confirm your membership
Confirms Membership
NO
@ Member benefits (latest newsletter)
Reminders 7d, 11d, 30d, 45d
@ 25 days
Product offer
@ 40 days
@ 120 days
Fill in your profile and win
Remember to use your benefits
Gives areas of interest YES
YES 7 days
W
Thank you, here is your card. Product offering
1 day
@
Our top selling products. Product offering
Source: Avaus
4. Towards a Customer Centric Organization
30
Seven key capabilities need to be developed to increase customer relevance and accelerate Customer Growth: 1. 2. 3. 4. 5. 6. 7.
Customer centric leadership Data quality Customer experience design Customer acquisition, cross-selling and retention Customer centric organization and processes Technology platform Customer centric culture
1.
Managing the customer experience. All interactions across different touchpoints need to be managed. Managing the customer experience must be based on a deep understanding of customer needs. Clear standards and procedures for how customers are engaged are needed. But creativity and design are also very important elements of creating and maintaining a good customer experience. In channels with human interactions there should also be room for adding a personal touch.
2.
Managing customer insight. There need to be continuous processes for analytics and reporting. But more importantly there should be procedures for how customer insight is integrated into business decisions and daily optimizing of interactions.
3.
Managing customer value. From a business perspective Customer Growth is about maximizing revenues and profitability of the customer base.
Capability 1 - Customer centric leadership As for any business strategy, Customer Growth requires active leadership. There are four aspects of Customer Growth that need to be managed.
31
Therefore, a clear understanding of the value of different customers is crucial. This knowledge is required to create and execute viable strategies for different value segments. Valuable customers must be retained. Unprofitable customers need to be served more efficiently. And suitable products or services must be sold to customers with growth potential. 4. Managing customer focused culture. A good customer strategy is only a starting point. Success will depend on execution. Execution of a Customer Growth strategy will require the commitment of the whole organization. Getting everybody in the organization to think in terms of customer relationships instead of products will determine how successful you will be. Culture changes slowly. But in order to get on the path to a more customer centric culture a systematic change management program needs to be put in place.
Capability 2 - Data and information management Data is the most important building block for Customer Growth. Data enables insights and it drives interactions. Therefore, a solid data strategy is at the core of a Customer Growth strategy. •
Collect and integrate data. All needed data should be collected and integrated in order to form a 360-degree view of each customer. Data is often decentralized in different databases and silos. All relevant data should be integrated into a marketing database so that it can be used for analytics and interactions.
•
Start small if data is a problem. In many cases data integration will pose a big challenge. It may require extensive investments to extract and integrate data from all relevant legacy systems. If this is the case, it is often wise to start with a partial data set so that the program will not be postponed for years.
32
Figure 9 Four pillars of customer management
1. Managing Customer Experience
Are you actively developing and delivering consistent positive customer experiences in all channels?
2. Managing Customer Insight
Do you have an accurate view of customer needs and behaviour that is based on data and facts?
3. Managing Customer Lifetime Value
Do you know the value that individual customers bring and are there systematic programs in place to increase that value?
4. Managing Customer Centric Culture
Are all employees committed and motivated to create value for customers and serve them based on their individual needs?
Source: Avaus
33
•
Good data is mostly about the right processes. The starting point for usable high quality data is creating a proper data strategy. Data structure and standards need to be defined. Based on that, processes for collecting, cleansing, enriching and using data are needed. A rigid process for protecting data and ensuring data security is also needed.
Capability 3 - Customer experience design
•
Start from customer need. Customers only pay attention to stuff they need. This obviously applies to communication but also to all products and services that companies offer. Therefore, all design activity should start by a deep understanding of who the customers are and what they need. Both qualitative and quantitative methods bring important insights to the design process.
•
Desirable, easy, useful. There are three elements of a customer experience that should be fulfilled by any offering. Is it desirable? Is it easy to use? Is it useful? This applies both to designing services and designing communication activities. All design processes - whether it is a new self-service website, a complete new offering or a triggered email newsletter - should start by comparing the offering against these three experience elements.
The customer experience is both rational and emotional. Good experiences do not happen by chance – they are designed. •
Design is important because it differentiates. The functional features of a product or service rarely differentiate it. But the experiences that various products or services deliver are almost always different. Therefore, design drives differentiation of the customer experience. Design is thus an important element for increasing customer loyalty and revenues.
34
Figure 10 Designing the customer experience – using customer experience maps Service Blueprint for Seeing Tomorrow’s Services Panel Find out more: http://upcoming.yahoo.com/event/1768041
Physical evidence
Attendee actions
Blog posts Facebook Upcoming.com
Event registration confirmation
Register for event
Welcome signage
Welcome email
Go to the event
Arrive at the event
Welcome pack
Sign in
Twitter monitor
Displays
Participate with displays, discussions, and drinks
Listen and interact with panels
Takeaway
Depart
LINE OF INTERACTION
Front-of-stage interactions
Blog, tweet and announce event
Greet attendees
Sign-in attendees
Seat attendees
Conduct panel
Facilitate Q&A with panel
Conclude panel
LINE OF VISIBILITY
Back-of-stage interactions
Blogging and twittering event
Post signage and position greeter
Setup sign-in desk with volunteers, welcome packs, and attendee list
Setup room: chairs, displays, drinks and A/V
Mic panelists
Order chairs and drinks
Coordinate panelists
LINE OF INTERNAL ACTION
Support processes
Create a marketing plan
Manage CMU event registration system
Recruit and coordinate volunteers
Source: http://fritillaria.blogspot.com/2010/04/service-design-and-customers-journey.html
“Customers only pay attention to stuff they need. This obviously applies to communication but also to all products and services that companies offer.�
36
•
•
Creativity AND measurability. Design is often regarded as a purely creative process. Creativity is obviously very important to good design. Everybody has opinions of good design. Good design should create feelings. But equally important is that design be guided by facts. Therefore, design is at its best when it is an iterative learning process, where creative ideas are fused with testing and evaluating responses. The customer experience map. Design is not only about a beautiful surface. Good design has to deliver. It has to meet the expectations that customers have. Therefore, design goes deep into the organization and it’s processes. For example if you promise good customer service, you must ensure that response times in customer service are fast. The customer experience map is a good tool for mapping the complete customer journey against front-desk activities and internal processes.
Capability 4 - Customer acquisition, cross-selling and retention Systematic processes and treatment models for key phases in the customer lifecycle are important. •
Profile good customers to identify similar prospects for acquisition. Understanding your current good customers is a valuable starting point for finding new customers. By profiling your customer base you can gain insight into who your acquisition program should target and how. Efficient acquisition programs use a variety of tools including digital marketing, social media, word-ofmouth and in-store registrations. The important thing is to collect data of prospects and new customers in order establish a customer dialogue early on.
•
Lead management makes B2B acquisition efficient. In a B2B setting lead management processes combined with a digital content strategy will ensure that your sales force focuses on customers that are ready to buy. The key is to collect data on what individual prospects are doing, whether they visit a website, download a product
37
brochure or attend a seminar. These interactions are used for giving a score to each customer describing how likely they are to purchase in the near future. Customers with high scores are automatically passed on to sales reps. •
•
An onboarding program is critical to ensure a customer starts getting value quickly. New customers are an important target group. Especially for complex or low-involvement products or services that customers may not easily understand. This may cause frustration early on and even cause defections. An onboarding program needs to be in place to ensure that customers learn to use products and services as quickly and easily as possible. Programs for cross-selling optimize customer value. Revenue per customer is an important driver of the business case for customer growth. In order to increase customer value more products or services should be sold to current customers. But if you do this right then these customers will also be more satisfied and loyal as they are getting a more complete solution.
Predictive modelling and triggers will allow you to identify needs of individual customers. The right actions at the right points of time may then be executed. It is important not to push too hard on customers. This will have an adverse effect on the customer experience and even on retention. •
Reduce churn with a customer retention program. The starting point for improving retention is analyzing why customers leave. Also try to understand what would encourage customers to stay. Based on this you can build rules or models for identifying individual customers at risk of leaving. Develop programs that will encourage customers to stay. They usually fall into two four categories: 1) activities that improve loyalty for good customers, 2) activities targeted at customers predicted to leave, 3) rescue activities for customers in the process of leaving and 4) winback activities for customers that have recently left.
Data Sources
Data Repository
Data Management
38
Figure 11 Collecting and using data for Customer Growth
Data collection
Data cleansing
360 degree view of customer
Demographics
Data enrichment
Marketing database
Purchase history
Inbound contacts
Data security
Data usage
Using data to drive insight and interactions
Campaigns and responses
Web history
External data sources
Source: Avaus
“Understanding your current good customers is a valuable starting point for finding new customers.�
40
Google sees its managers as leaders who facilitate inspiration and empower employees. These open policies translate into a distinctive corporate structure that inspires guidance, good nature and supports Google’s moral code, “Don’t be evil”, while attracting top talents.
Capability 5 - Customer centric organization and processes In the end, it is your organization that will develop and execute all actions related to your Customer Growth program. Ensuring that everyone is on board and motivated will make or break the success of your strategy. •
•
Give the organization big exciting things to do. A shared vision gives purpose to people and motivates them. Where do we want to go? What do we want to achieve? How will the customer see us? Answering these questions will provide a shared direction to the organization. Flat innovative organization. Magic doesn’t happen in silos and companies like Google have understood this. Flat organizational structures encourage open communication and idea-sharing regardless of official position in the organization.
•
Objectives, reporting and rewards. You get what you measure and reward. Be sure to align objectives of different units and individuals with the vision. If you want to create a great customer experience and increase revenue per customer you must set objectives, KPIs and rewards that support it.
•
Meet the customer. Ensure that everyone in the organization has a feel for your customers. What do they look like? What do they talk about? What makes them happy? The voice of the customer should be heard throughout the organization. A Voice of the Customer program (VOC) may be one way to achieve this.
Figure 12 Basic technical architecture for customer growth
41
SERVICE CHANNELS Instore
Internal / external databases
ERP / Cash register
Contact center
1. Demographics, interests and web history 3. Purchases
Marketing database
Web and mobile
Analytics
2. Data enrichment Segmentation Predictive models
4. Communication Marketing automation
Multichannel campaign
360 degree view of customer Targeting & execution Automation Reporting
Source: Avaus
42
But it can also simply mean that everyone in the organization spends one week each year at the front line serving customers. •
•
Break down silos. Often sales, marketing and customer service are separate organzations with differing cultures and objectives. They may not even be working closely together as they should. Integrating sales, marketing and service is important to ensure a consistent and personalized customer experience. Use technology to automate processes. Many tasks needed to personalize the customer experience can be automated. This will allow people in the organization to focus on innovation and adding a personal touch to the customer relationship.
Capability 6 - Technology platform Customer Growth is based on technology. A solid technology strategy is a crucial element of a Customer Growth program. Technology is needed to capture and store data, automate processes, register purchases and payments as well as deliver services and communication. The right technology can provide a competitive advantage as it helps to differentiate the experience and increases operational flexibility. •
Develop your solution step-by-step. Technology can be complex. A large portion of all technology projects fail. Successful technology rollout is based on learning. People, and the organization as a whole, have to learn a new technology. But developers are also on a learning curve when implementing new solutions. The best way to learn is through a step-by-step approach. Instead of doing one monumental three-year project that is doomed to fail you should do ten three-month projects.
“Successful technology roll-out is based on learning. People, and the organization as a whole, have to learn a new technology.�
44
•
The marketing database is the core. A complete 360-degree view of the customer is a requirement for intelligent customer interactions. To enable this a good solution is to aggregate all needed customer data in a marketing database. The marketing database should be integrated with key operative systems and web interfaces. There should also be interfaces to an analytics solution and external data sources. A flexible data model ensures that new data points may be integrated as needed.
•
Make customer data available at all touchpoints. Customer data is needed at the front-desk, on the website, in personalized emails and in the contact centre. Flexible interfaces ensure that customer data can be integrated into all needed external systems.
•
Use marketing automation technology to coordinate and automate interactions. From a technical perspective, the value proposition you design will translate into business rules that drive interactions. In order to deliver a strong customer experience, different customers need to be treated according to their individual needs and situation. A technical layer for managing the business rules is crucial. Marketing automation technology enables the creation and execution of automated business rules that take into account each individual customer.
•
Integrate analytics to enrich data. Intelligent interactions require rich customer data. Analytics should be used to profile and segment customers as well as to create models for predicting customer needs and behaviour. The technical platform should include a solution for analyzing and enriching customer data.
45
Some have direct contact with the customer and others make daily decisions that affect how your customers are treated. Therefore, how good your staff is will affect what kind of an experience you deliver. In a customer centric culture employees are put first. Career paths, training, and working conditions are all important to create the right motivation and competence. And ultimately to drive the right kind of culture.
Capability 7 - Customer centric culture Customer Growth often starts out as isolated projects but it should end up being integrated into company culture. Customer centric culture cannot be decreed from the top as cultures get their power from all of the people within them. But there are certain elements that drive cultures. You can influence and shift cultures by paying attention to these key areas. •
Focus on customer experience. Customer-centric organizations believe strongly that sales and profits are the by-product of great customer experiences. This is reflected in objectives, KPIs and in what people at all levels talk about. Internal focus should shift from sales and process efficiency to customer experience.
•
Employees first. In the end, the employees of a company deliver the customer experience. All employees play a part in delivering the customer experience.
•
Map out the change process. Changing culture is a process that takes time. It requires a systematic long-term step-by-step approach. In the first phases Customer Growth is mostly about developing basic tools and doing isolated projects. This may involve integrating customer data and trying out triggered marketing. Going further will require changes to processes in order to ensure the delivery of a stronger customer experience. When the organization has accumulated experience the focus turns to integrating customer centric thinking into the activities of everyone in the organization. It is about getting the commitment from all employees.
46
Figure 13 Building a customer centric culture is a long process
Level of customer centricity Level 5
Part of culture Level 4
Committed Level 3
Investing Level 2
Experimenting Level 1
Interested
Focus of the organisation Maintaining customer centric culture Getting commitment from personnel Adapting business processes Tactical development projects Exploration through pilots
Source: Avaus
5. Creating a Roadmap for Customer Growth
48
An idea on its own has little value. Execution will almost always determine success. Therefore, your success will depend on how well you can implement your Customer Growth program.
•
Three phases: Vision, rollout, optimization. A Customer Growth program involves three key phases. First a vision needs to be created and validated. This requires analysis and strategy work, but it also requires piloting to get experience of what Customer Growth could mean. Second, the vision needs to be rolled out. This involves preparing the organisation, setting up technology, designing services and implementing a data strategy. Third, services and processes need to be continuously optimized to provide a strong customer experience and revenue growth.
•
Build multidisciplinary team. Customer Growth requires collaboration of several key competencies. Strategy, analytics and design should be fused with data and technology. Efficient business processes also need to be built. This calls for a cross-disciplinary team taking an active part in the process.
Strategy and hands-on execution in parallel The days are gone when upper management developed a strategy and the organization then implemented it. Things are changing way too quickly for this to be viable. A new kind of iterative approach is needed, where the organisation is constantly and deeply involved. •
Both strategy and hands-on execution. The typical waterfall approach where an isolated strategy is first developed and then executed is too slow and inflexible. Strategy needs to be anchored in real-world processes. Therefore, the best approach for going forward is gradually rolling-out the new approach through pilots that produce input for the strategy process.
Figure 14 Avaus services for Customer Growth
Strategic design
INSIGHT
49
DATA STRATEGY
CUSTOMER STRATEGY
Vision Hands-on execution
CHANGE MANAGEMENT
CONCEPT DESIGN
AUDIT
PLAN PILOT
Roll-out
REPORTING & ANALYSIS
Optimize DATA MANAGEMENTY
CONTENT PRODUCTION
IT ARCHITECTURE EXECUTE AND EVALUATE PILOT
CUSTOMER MANAGEMENT
CREATIVE DESIGN
EMPLOYEE ENGAGEMENT TRAINING
TECHNICAL DEPLOYMENT
CAMPAIGN MANAGEMENT
SAAS SERVICES
CROSS COMPENTENCE TEAMS STRATEGY
DESIGN
TECHNOLOGY
ANALYSIS
EXECUTION
Source: Avaus
50
•
•
Incremental change instead of revolution. Customer Growth requires changes to core processes and technologies. And ultimately it requires developing a new customer centric culture. Change management is a key success factor for delivering a successful Customer Growth program. The change management approach should be based on incremental change during which the organization has time to adapt to the new approach. Slow down. It takes time and money to develop big concepts. And it takes time to get results. If results are not good within a few months after the launch, it doesn’t necessary mean that the concept is bad. The concept may just need more development, some marketing or better targeting. For Facebook, Twitter and Foursquare it took two to three years before the visitor amounts really started to grow. Many companies would have been capable of developing FaceBook, but few would have ever waited for it really to succeed. In most cases the project would have been killed after the first year as a failure. What would have happened to the “FaceBook” project in your company?
Developing the vision and customer strategy The customer strategy creates a framework for a Customer Growth program. It is important because it forces the organization to define who we want to serve, what we will offer, how we will differentiate and what needs to be done to make it happen. •
Start with insight. A customer strategy should be grounded in insight about customers, their needs and their profitability. All available data should be used to form a complete view of your customers. Some qualitative and quantitative research may be needed to complement existing data.
•
Define a good customer. Who are our best customers, and why? Understand and segment the customer base in order to get an understanding of who your customers are. Define which customers you want to serve and which are not in focus.
Figure 15 The Customer Strategy is a map that helps the organization to focus on the right things
Why? Customer insight
Vision and objectives, KPIs
51
Who? Customer definitions and selections, Customer lifestyle
What?
How?
Moments of truth, Offering, Service channels
Culture, Business processes, Development areas and roadmap
Piloting and implementation
Source: Avaus
52
Validate strategy through piloting
•
Is it desirable? Piloting in the customer interface will show how interested customers are in the offering or communication. Customer response can be measured and feedback gathered. This will help to evaluate how the final service and communication activities need to be designed in order to make it desirable to customers.
•
Does it drive revenue? A solid business case is required to rollout a Customer Growth program. Piloting is a good way to validate key assumption of the business case. It will provide valuable insight both on revenue driving factors but also on costs and needed investments.
Piloting is a great way to learn and assess the attractiveness of a customer centric approach. Piloting is also a key tool for change management as it involves the organization. Piloting can be used to assess feasibility, desirability and profitability of a new customer strategy. •
Is it feasible? By building a working pilot some of the challenges to rolling-out customer centric services and communication will arise. These may involve challenges related to data, technology or processes. Through piloting it is easier to assess how easy or difficult it will be to overcome these challenges.
“Strategy needs to be anchored in real-world processes. Therefore, the best way forward is to gradually roll out the new approach through pilots that produce input for the strategy process.�
54
Rollout and change management
•
Implement data strategy and technical solutions. Integrating data and implementing a new data governance system will take time, but it is at the core of a customer centric business. It will determine how well you will be able to serve customers. Customer technology, including marketing automation systems, web technology and new databases, need to be rolled out.
•
Ramp up processes. Customer Growth will require new processes and render some old ones obsolete. Process efficiency is crucial to the customer experience and how agile you will be when reacting to customer response. Outsourcing may sometimes be an efficient alternative to changing legacy processes.
Rolling out a Customer Growth program will change how the organization works and thinks. Therefore, careful change management is a key success factor. •
•
Involve people. Success will depend on people. Will they embrace a new customer centric way of working or will they stick to the comfort zone of old silos? People from all levels of the organisation should be involved in order to get buy in and refine the approach Develop customer dialogue and services. A new kind of customer experience will require changes to services and to the way you communicate with customers. New services should be implemented. Digital services will almost always be a key component.
Figure 16 A roadmap for rolling out a Customer Growth program
55
EXAMPLE: Three year roadmap for Customer Growth 2012 1. Data and technology
4. Service innovation 5. Organization and culture
2014
Key data management
New website
2. Customer dialog 3. Customer processes
2013
Online sales development Mobile services
As is analysis
Online customer service Process automisation
Production of digital contents
Resource and channel optimisation
Development of new digital services Direct customer dialog Knowledge management
New working methods
New job descriptions and organization
Source: Avaus
56
Figure 17 Optimization cycle based on agility
Analysis and action points
Agile decisions
Actions and testing
Optimizing the customer experience
•
Make agile decisions. Decentralized decision-making is key to Customer Growth. Customer Growth operations should be organized in a way in which decisions can be made close to customer activities. Optimizing the customer experience and sales results will require a continuous flow of smaller and larger decisions.
•
Implement and test. Flexible resources for implementation and execution should be reserved. Optimization will require continuous tweaking of services, communication design, technical solutions and databases. These changes need to be implemented on a daily basis.
Good results are based on learning. Continuous improvement will determine your bottom line. There should be processes and resources for continuous optimization. •
Monitor and analyze results. All actions should be continuously analysed and compared to objectives. This requires that all actions can be measured both from how well communication works but also how well it drives sales. Only by connecting sales data to campaign reporting will you actually know what customers value and which activities drive ROI.
Source: Avaus
Tom Nickels
About Avaus
Tom Nickels is a widely recognized specialist in developing and growing customer relationships. He has helped companies in retail, telecommunications, banking, insurance, media and travel to plan and execute successful customer growth strategies. Tom is a co-founder of Avaus.
Avaus is a consultancy focusing on Digital Transformation. We help our clients develop profitable customer relationships, increase digital sales, manage information and transform their business by leveraging digital opportunities. Avaus offers strategy, technology, analytics and design services as well as intelligent outsourcing solutions under the same roof. Avaus employs 80 specialists, of which half are technology consultants. Avaus is growing rapidly and turnover for 2011 was 9 million euro.
Contact:
Contact us
Tom Nickels Senior Advisor, Customer growth
Avaus Consulting Oy www.avaus.fi
Tel. +358 40 5443348 email tom.nickels@avaus.fi
Merimiehenkatu 36 D, 00150 HELSINKI info@avaus.fi