How do you go about developing a customer-based strategy?
If you are a strategist you will have come across all kinds of frameworks including: 5 Forces(Porter); Core Competencies (Hamel & Prahalad); Ansoff’s Matrix; BCG’s Growth-Share Matrix; 7S McKinsey Model; GE-McKinsey Matrix; 3Cs (Kenichi Ohmae); PEST(LE) model; SWOT analysis; IDIC (Peppers & Rogers)….. Each was developed in a particular era, for a particular problem and represents a particular point of view about what matters in shaping success.
In addition to these frameworks, I’d like to suggest the 3V’s – Vision, Values and the Value Proposition.
Valeria Maltoni at the Conversation Agent has spelled out the value of having a Vision Statement. I am going to take her lead and explore the Virgin Group especially as I had the good fortune to provide digital marketing services to the Virgin brand some years ago and walked away impressed at the culture, the customer orientation and how we (the supplier) were treated. If you take a look at the Virgin website you find the following statements:
- “We have always succeeded in business by offering consumers another way, a better way and being willing to fight their corner.”
- “Our lifestyle is the way that we choose to live our lives – the things we buy, the things we believe – it is who we are. As global citizens we want to provide people with products and services that will help them to embrace a more sustainable lifestyle.”
- “Our vision is to contribute to creating happy and fulfilling lives which are also sustainable – surely a vision worth aspiring to?”
- “We believe that we have a part to play in making this a reality and so our vision for sustainability within the Virgin Group is: “to make a credible contribution towards sustainable lifestyles whilst meeting or exceeding the expectations of our staff, customers and other stakeholders”.”
- “We want our Virgin companies to provide responsibly produced, sustainable, low carbon services and products that are desirable, easy to use and good value above all else so that our customers can enjoy their lifestyles safe in the knowledge that Virgin is acting responsibly on their behalf.”
What is the point of putting forth a Vision Statement? Let me say that is no point in a Vision Statement if it is just a PR exercise or a desperate attempt to revive flagging fortunes. The power of a Vision Statement lies in its ability to enroll a diversity of actors (Tops, Middles, Bottoms, Customers, Suppliers…) in an inspiring point of view on the future such that they co-operate in moving towards and creating that future. This means that first and foremost the Vision Statement has to be authentic for the leader who crafts, speaks and lives it. Notice the last point: the Vision Statement lives to the extent that it is lived. The more people that live it the more likely it is that the vision will become reality.
You and I might craft the same Vision Statement and yet go about it very differently. Why? Because our values (and beliefs) are very different. For example, in the ‘struggle’ for independence from British rule in India several leading figures wanted the same thing – to bring an end to British rule and rule themselves as a people – yet some leaders valued taking up arms, others valued pleasing the British and Gandhi valued non-violent resistance.
Here is what Virgin says about values:
“The Virgin brand values have remained unchanged for 40 years. They aren’t just an image but a reflection of our very essence and the way we do business. Virgin has always stood for value for money, quality, innovation, fun and a sense of competitive challenge. But now our brand values have gone three dimensional; we no longer have a list of brand values but a brand cube to which we have added the Wellbeing & Happiness of People and Sustainability of the Planet. “
Made up values are cooked up to brainwash the intended audience and in that sense are simply the lipstick that hides the pig. They are an either an attempt to hoodwink the gullible, a good sounding slogan or simply a desperate attempt to turn an also ran into a contender (think back to the highly successful Avis campaign “We try harder”). Which makes me ponder about British Airways suddenly finding its core values: “To fly, to serve”. Is it authentic? I don’t know. Will it lift its fortunes? Possibly.
Real – authentic – values act both as guides and as constraints on what you will and will not do and how you will conduct yourself. One of the essential aspects of strategy is choosing what courses of action you will take and what courses of action you will not take. Real values also have another advantage they allow you find / attract value chain partners - it is simply easier to do business with those that hold the same values as yourself and arguably it is more fun as well.
In my way of thinking the Value Proposition is where you spell out your promise to your target customers. It is where you take all of your insights about yourself, your target customers, your competitors and the world at large and spell out what your customers can count on you for. If you get the Value Proposition right then you will attract hordes of customers. If you actually deliver on the Value Proposition – the customer experience delivers the value proposition – then you will keep customers and they will get more customers for you through word of mouth.
Let’s take a look at the Value Propositions for Richer Sounds (award-winning high street electronics retailer); TED (one of my favourite sites); and John Lewis (renowned for customer service):
Richer Sounds: “Biggest Brands, Best Prices, Expert Advice…and take it home today!“;
TED: “Riveting talks by remarkable people, free to the world”; and
John Lewis: “Free Standard UK Delivery on Orders Over £30″; “Click and Collect From Our Shops”; “International Delivery”; and “Never Knowingly Undersold.
It is worth thinking about what you stand for in the world (Vision, Values) and clearly articulating the promise that you are making / the bargain that you are striking with your target customers (Value Proposition). Why? Because these are fundamental strands of a customer-based strategy. What do you think?
There is value in marketing, advertising and brand values
Unlike many, I totally get the value of great marketing and advertising: it activates the Elephant (emotions) bypasses/speaks to the Rider (reason) and shapes behaviour.
I can see the value of brand values. They can be used to guide and, where necessary, constrain the actions of the people developing products and conducting marketing activities. They also help to give put clothes on ordinary products and services and thus give them personality and appeal. I can also see the value of going further and having all the front line people live those values so that they are not simply marketing slogans.
Yet most organisations struggle to live the brand values
Anyone who has an interest in organisational behaviour will understand the distinction between espoused values and lived values. If you look into the mirror you will probably see that our company and most companies struggle to live their brand values in their day to day behaviour. It does not help if the brand values have been cooked up in the marketing dept. My experience is that many in the organisation listen to marketers in a certain way; I have heard the marketing folks described as “the department of coloured pencils” or “the spend spend spend folks” or “the folks that lie for a living” or the “party people” and so forth. So is it a surprise that few people in the organisation actually live brand values cooked up the marketing folks?
So the first challenge is coming up with values that speak to the hearts and minds of the people that work in your organisation. The second challenge is translating those brand values into specific behaviours that everyone in the organisation is expected to embody. The third challenge? Getting the Tops to model these behaviours on a daily basis so that the Middles model these behaviours and onwards to the Bottoms. Fourth, to implement the values within the organisation whilst honouring those values! If one of your values is “innovation” then living your values means coming up with an innovative way of infecting hearts and minds with that value. If one of your values is collaboration then taking a ‘command and control’ approach and telling people they have to collaborate is probably not the right way to foster collaboration.
If you want to use brand values in designing the customer experience then you have to translate them
I, the customer don’t care about your brand values – honestly I don’t. I do care about what others (the journalists, influential bodies, my social circle) say about you. I care about how you treat me, my family, my friends, my social network. And I have a strong interest on what to expect from you? Put differently, what can I count on from you?
So if you accept the line that goes something like “design the customer experience” around your brand values then you have some work to do. You have to take values (that are general) and translate them into specifics – what can your customer expect and count on from you when she is interacting with you and using your products and services? And you have a potential problem – your brand values may not reflect the totality of customer needs. Lets make this real by briefly looking at Virgin’s brand values: Fun, Value for Money, Quality, Innovation, Competitive Challenge, Brilliant Customer Service.
- As a Virgin customer what can I expect from your online presence? What does fun, value for money, quality, innovation, competitive challenge and brilliant customer service mean to me?
- Brilliant customer service – does that mean I can quickly, easily contact you at any time, any day, through any channel and get an instant, insightful, relevant and quick response? Does that mean that you assure me of 100% satisfaction?
- How about your ‘product’ – what can I count on here? By the way, I like products that are simple to understand and easy to use. Oops it looks like your brand values don’t cater for all my needs and expectations – there is no mention of simplicity in your stated brand values. What are you going to do about that? Are you going to change your brand values or simply factor in my need/expectation and design the customer experience to take that into account?
I hope you get the point that I am making: a lot of work has to go into designing the customer experience and you cannot automatically assume that you can use your brand values as a shortcut. Brand values have to be translated into specifics: specific customers, specific customer scenarios, specific customer touchpoints…….
How about converting brand values into specific promises to customers?
Too much of business is littered with buzzwords and abstract concepts and this is a problem as the devil is in the detail. One way I have found of translating brand values into customer terms is to start with promises. Lets imagine that you are creating a customer charter. What will you put in this customer charter? What are the truths that should be self-evident to you, your organisation and your customers? What are the promises that you are making to your customers? And what specifically do you expect from your customers? This is hard work primarily because buzzwords and brand values lose their appeal when they have to be translated into publicly visible commitments to customers. Yet there are organisations that go beyond the fear and make meaningful promises to customers.
Take John Lewis as an example. John Lewis has made a commitment to customers – the John Lewis Price Pledge - and recently that has hurt profits. This is what the chief executive says “Absolutely it’s costing us money, but it is really important we stick to it.” Is it any surprise that John Lewis regularly comes towards the top for customer satisfaction and loyalty?
A high end retailer and a discount retailer offer the same value for money
I was reading Marketing Week and the following piece caught my attention:
“Consumers perceive that John Lewis and Primark offer the same value for money, despite their widely different brand positionings, according to a new retail study.
The “Re-imagining the retail store” report, by Arc Worldwide – part of the Leo Burnett Group, found that both John Lewis and Primark scored 112 on its quantitative scale for value for money, as rated by consumers.
The scores demonstrate that both deliver good value for money, but in different ways. Consumers’ perceptions of Primark’s value stems from its low price, while John Lewis’ value perception comes from its range of choice and quality.”
How do you make sense of Customer Experience?
How do you decide when you have got the customer experience right? How does the customer experience fit / contrast with customer service? How does customer experience fit into the bigger picture? Put differently if customer experience is the foreground then what it the background (the context) into which it fits? I have been grappling with these questions and want to share my thoughts with you and get your feedback.
Here is how I make sense of Customer Experience:
In my way of thinking the focus of enterprise effort should be to create (and communicate) superior value to the customer segments that the Tops have decided to focus upon – to serve. So that is why “Superior value” sits at the centre of my thinking and this diagram.
Which begs the question: how do you create superior value? My answer is made up of two parts. First, you have to come up with (and communicate) value propositions that meet customer needs/wants – whether these needs and wants are expressed or not by the customers themselves. Second, you need to deliver a customer experience that matches the promises implied within the proposition. And the brand plays a role because there are a set of promised associated with the brand by customers and these are inherent in any value proposition. For example, you will expect different stuff when you think of Mercedes and say GM.
The key point I want to stress is that in this framework we can think of the value proposition as the promise – the bargain that is being struck between the customer and the enterprise. And the customer experience is the delivery of that bargain as experienced (lived) by the customer.
If you think about value, value proposition and customer experience then the fact that a high end retailer and a discount retailer as perceived as being par on value makes perfect sense. They both excel because they have crafted value propositions that speak to their chosen customer segments and deliver the customer experience that goes with the value proposition.
How do you craft the right value proposition and associated customer experience? This is where insight comes into play. In my model I distinguish four different types of insight: customer insight – your customers needs, wants, behaviours; competitive intelligence – what your competitors are up to; technology insight – what technology enables and how it disrupts what is taken for granted today; and other insight for example regulation around how you treat customers, privacy etc.
The final point I want to make is that I strive to think like a ‘systems thinker’ and I see all of these pieces as being interdependent. Each affects everything else. So customer insight informs the value proposition and the customer experience. Yet the customer experience will inform/feed customer insight and the value proposition cannot be developed solely based on customer insight: competitive intelligence has to be factored in because we, humans, make sense of things through comparison and contrast. You may have a great value proposition and customer experience yet if your customer comes up with a better value proposition then you are likely to find yourself in trouble: think Nokia, think RIM.
Customer Experience Management – a tentative definition
I take the view that all knowledge is provisional and as such I offer you my ‘faulty’ yet ‘rigorous’ definition of Customer Experience Management:
Customer Experience Management is the practice of designing, orchestrating and overseeing the efficacy of customer interaction (direct and indirect) such that the phenomena (experience) and outcomes of these interactions as a whole deliver on the promises implied by the value proposition and meet-exceed the expectations (implicit and explicit) of the customer, the customer facing agent and the management of the enterprise.
If you want a much simpler definition then here it is:
all the stuff that you need to do to create happy customers, have them stick with you, incentivise them to ‘recruit’ new customers for you (free of charge) AND to do this in a way which delivers a fair reward for the investment/sacrifice that you make in time, money, effort and risk.
What do you think?
I’d love to get your feedback on what I have written here. So what do you think?
One of the biggest issues that I have with the customer experience movement is that the process, technology, efficiency and standardisation mindset that is appropriate in the manufacturing environment is being applied to the services industries and the service environment. And in the process the very best of what people have to offer (the human touch, flexibility, improvisation, creativity…..) is being taken out of the picture: the opportunity to create that emotional bond is sacrified for efficiency.
At the same time, today, I have not been able to do much today (back is playing up) and so I spent some time re-reading an old book (published in 1999) and called “Market Leadership Strategies for Service Companies”. As I have spent the bulk of my life working in, delivering and advising companies with a heavy service orientation the following passages speak to me and I want to share them with you:
Employees are not the problem, management is the problem
” Over-engineered employees desperately need to once again pursue the most personally satisfying work goal: doing things that make a difference in the eyes of customers. Employees intuitively know that their core mission should be to provide the kind of help to customers that is truly needed …..Their company’s seeming indifference to being perceived by customers as unique frustrates them……..The net effect is that millions of employees feel robotic in their daily execution of quality, cycle time reduction, re-engineering and a host of other operational activities that perpetuate rather than improve the company….”
Employees are incredibly important and yet misunderstood, under-utilized and over-structured
“Employees are often the most misunderstood, underutilized, and over-structured assets of a service companies. But next to customers they are the second most valuable asset that companies have. The problem lies in the perception of the role that employees play in the customer experience. Many service companies view their employees simply as part of a process that produces an end output – a physical product to be delivered to a customer. If a customer’s primary focus is on functional performance of the physical product, the employees generally do not need to be involved with the customer experience. But with services the situation is different. In fact, in service companies the employees are very involved in the customer’s experience.”
Big mistake: dehumanizing people all in the mistaken (manufacturing) view of quality
” The mistake made by well meaning and well schooled managers is to dehumanize their people – all in the name of quality control. Service managers attempt to make employees interchangeable. Although industrialising the service may be important and even necessary, taking the “performers” out of the equation leads to a neutered, indistinguishable experience for customers. “
Product and quality through people – not by replacing them with self-service technology, standard processes and scripts
“Productivity and quality improvement come from having people involved with customers – people who want the responsibility, can manage themselves, respond well to pressure from customers, and who are highly motivated through skills, job opportunities and pay advancements.”
My conclusion, my interpretation
People – customers, employees, contractors, suppliers, partners matter. In fact they are critical to business success in service intensive operations and industries. If you are worthy and you have the know how you can tap into the very best of what they can offer: energy, enthusiasm, passion, creativity, flexibility, discipline, intelligence, wisdom. And that in itself is ultimately the source of competitive advantage, ongoing renewal, new product development, great customer experience, growth and profitability.
Yet as a very wise French teacher told me when I was about 10 years old: “you can lead a horse to water but you cannot make him drink”. I believe that is the case with many companies, many CEOs and many management teams. If they do not value their employees, you cannot make them value them. Which means the door is wide open to those that get the message and are willing to blaze the trail. For example, John Lewis – who recently delivered a great set or financial results when many other retailers are struggling and blaming the weather.