How does digital impact strategy, marketing, and the customer experience?

I say digital fundamentally disrupts everything: value propositions, communications, the customer experience

“What do you think of digital?” That was the question that the interviewer at the Technology for Marketing & Advertising conference asked me. The bulk of my customer experience work for the last two years has centred on/around digital. So here is the answer I gave:

Digital is disruptive. It disrupts the value proposition, communications with and between customers, the customer experience, and the business model  I say every business has to get to grips with digital and the transformation it engenders in these four areas. Failing to do so is a one way ride to oblivion especially for retail businesses.

I went on to say:

The days of putting a warehouse with a glass front and minimum wage employees, who are generally clueless, on a high street, are fast running out.  Why?  Because if it can be bought digitally then it will be bought digitally. You cannot beat digital for research, for price comparisons, for ease, for convenience and even for instant access to the product/service – for some categories of goods and services. And if you get your logistics right then many customers can wait a day or two to get what they ordered online.

Which means that If your value proposition and the associated customer experience is not good enough to charge an entrance fee then you should close up shop. Why? Because you will simply end up being a showroom for a digital master like Amazon.

Michael Schrage says “Invest in your customers more than you brand”

It isn’t often that I come across a piece that speaks to me the way that Michael Schrage’s piece speaks to me.  I say that if you are in the game of business, the game of customer-centricity, or the game of customer experience then read and memorise that which he says.  For my part, I want to pull out his wisdom as it relates to the impact of digital on business strategy, marketing, sales, service and the customer experience.

Digital technologies push firms to recognize, rethink and reorganise how they should make their customers smarter and more confident…How are you using digital media to help your best customers and prospects to better educate themselves?  How are you making them smarter and more capable? Companies like Amazon, Google, Apple, IKEA and IBM have answers to that question. What’s yours?

The distinctions that make a difference will be value-added aducation and advice.  After decades of complaints about the poor quality of its instructions and documentation, for example, Ikea set up a YouTube channel…showing people how to easily put together its most complex furniture.

The advice/aducation marketing challenge comes from redefining advertising as an investment that makes your customers more valuable to you, not just an investment that makes your brand more valuable to your customers…

The digital and digitizing future belongs to the best aducators and advisors who make clients, customers, prospects measurably smarter and authentically more confident.  That a challenge a David Ogilvy, Jay Chiat and Rosser Reeves would appreciate.

Credibility comes from commitment to facilitate decision, not calculate persuasion. “We [Amazon] make money when we help customers make purchase decisions.”

Bezos’ bet is that relevant recommendations and reviews – good advice – are better brand investments than digital sales pitchesClose the deal by being openly helpful and helpfully open, not by “selling better.” Amazon transformed customer behaviours and expectations by consistently favouring innovative “advice” over sales-oriented “advertising” and promotion.

Sales don’t drive the UX; they’re it’s happy byproducts. That digital design sensibility has yet to seep into marketing’s mainstream…..

And finally

If you are busy firmly planted in the call-centre working on improving the ‘customer experience’ then I say get that you are at best improving customer service. Not the customer experience. You are mired in operations and as such you may just be missing out on the bigger picture – the opportunity and the challenge.

If like me, you are fundamentally a strategist and you passion lies in value propositions and customer experience innovation,  I say get passionate about digital. Learn digital. Use digital. Why?  Because digital enables transformations in the value proposition, communications with and between customers, the customer experience, and the business model.

What is the biggest barrier to coming up with a customer-based marketing strategy?

Most of my work over the latter years has been around helping organisations to generate profitable revenues by doing a better job of addressing customer needs.  In the course of my work I spend a lot of time with the folks responsible for marketing and sales.

One of the exercises that I do is to get the right people from customer touching functions such as marketing, sales and customer services in a workshop.  And then I guide the folks through a structured SWOT type process for each significant customer segment.

The process starts of by asking the people in the room to identify what matters to the people in that customer segment.  What are the jobs that these people are hiring the company’s ‘products’ to do for them?  And what are the key outcomes that matter to the customers.  This is terminology that is not typically familiar to the people in the room so there is some tension in the room. At some point someone in the marketing function will say “Aha, you are talking about customer needs!” and everyone relaxes.

Then the answers come. Almost always the top five tend to be: brand, product, quality, price, and service.   Not particularly useful and I have learnt not to challenge people at this stage. So, I ask the people around the room to allocate 100 points between these five needs.  This is where the fun starts .  First, people really struggle to allocate weights to these five needs. And second, there tends to a lot of predictable disagreement.  Marketers rate brand and quality highly.  The Sales folks rate product and price highly.  The folks from Customer Services tend to rate quality and service highly. And if there is senior, dominant, person in the room then slowly the people in the room come around to his/her way of thinking and weighting these top five needs.  Notice something?  How confident would you be that the people in the room are providing you with an accurate picture of what matters to customers?

Next, I ask the folks sitting around the large conference table to identify their key competitors. And once they have done so I create a grid.  The columns are the company and its key competitors.  The rows are the top five needs usually brand, product, quality, price and service.  Now I ask the people in the room to evaluate how each of the competitors is doing in terms of meeting these five customer needs by giving marks out of 10. Once again the fun starts.  People really struggle to come up with weighted answers.  And there is considerable disagreement between people.

By the time we get to this stage the people around the room sigh a collective relief as if to say “Wow, that was hard work.  We are so relieved that this is over and done with.”

At this stage I am hoping for someone to say “Going through that exercise has made me realise that I/we know so little about what matters to our customers.  And how we compare to our competitors on what matters to our customers, as seen through the eyes of our customers.  So we should go and get better answers by conducting research, talking with customers, talking with the people on the front line who actually are in touch with customers on a daily basis.”  This rarely happens.

Instead, the people around the room have an air of assurance.  They are visibly convinced that they know what matters to their customers. And how they compare to their competitors. It is as if the hard work of the exercise that I have taken them through hypnotises them into believing that the answers they have conjured up have to be true, are true.

So the biggest barrier to coming up with a powerful customer based strategy is simply this: ignorance and prejudice masquerading as knowledge/understanding of customers.  The failure of people to say “We don’t know what really matters – jobs, outcomes, needs – to our customers.  We don’t know how customers prioritise these jobs-outcomes-needs.  We don’t know how our customers see us in comparison with our competitors.  Let’s go and find out.”

B2B: can you help me figure out why B2B sales folks do what they do?

A little about me

I have spent most of my working life working in the B2B space: auditing/accountancy, corporate recovery, management consulting, IT professional service and marketing services.  And there is something that I have noticed during the latter years that was not present in the earlier years.

How the B2B sales and B2B buyer dance tends to work out 

Here is what has happened more often in the latter years.  The B2B sales guy is courting the B2B buyer and the buyer makes sure that the sales guy knows that he is only one of a number of people courting the buyer.  What does just about every B2B sales guy (that I have worked with / come across) do? The one that expends (and wastes) the least effort just drops his price to the absolute minimum he can get away with.  The most wasteful one has his organisation put in a ton of effort educating the buyer, coming up with shiny objects, detours/side shows, and in the end drops his price to the absolute minimum.

When he wins he is delighted, it is something to show the folks (that matter) back at home.  The people back at home are rather simple and confuse revenue with profitability.  They don’t even think of cash-flow.  When he does not win he tends to say that the other guy won because he offered the lowest price: “we are just not price competitive enough!”

Once the delight of the win fades, reality hits home – at least to the team that has to deliver on the promise.  It soon becomes clear that it is not possible to deliver what has been promised and make enough of a profit on the work.  Here it goes one of two ways.  Either the least investment is made – people, time, effort – to get the job done so that it is done just good enough.  Or the pressure is placed on the delivery team to work long hours (not bill them) and deliver a great job.

What is the thinking about doing a great job?  This usually happens when the piece of work is being done is the first piece of work for a new customer.  And there is the carrot of a lot more work to come.  The organisations management (including the sales guy) is convinced that doing a great job will secure a promising future.  A future where the B2B sales guy has the upper hand: he can charge higher (more realistic prices) and win a steady flow of big piece/s of work usually termed “implementation”.

Welcome to the ‘dark side’ of the human condition

What actually happens?  Before I spell that out let me just remind you of the darker side of human beings. In particular what I call the ‘four prime directives of the dark side’:

  1. Look good, avoid looking bad;
  2. Be right, avoid being wrong;
  3. Strive for control and dominate, avoid losing control and being dominated;
  4. Justify self, invalidate others.

Back to the B2B sales/buyer dance and how it plays out

Back to my question, what happens?  The buyer wants to continue looking good and is at pains to avoid looking bad in the eyes of his boss, his organisation.  So he insists on getting a discount on the existing price he is paying in order for him to reward further and usually larger pieces of work to the B2B sales guy.

The buyer insists he is right, he is being reasonable.  Loyal customers (like him) should get a volume discount isn’t that what loyalty merits?.  The B2B sales guy explains that he dropped his prices to ‘cost’, even made a loss, on the expectation of higher prices for the follow on work when value had been demonstrated.  What happens?  The B2B buyer justifies himself, his stance! And proceeds to invalidate the B2B sales guy’s perspective.

During the whole encounter “negotiation” (which can be from days to months) the B2B buyer is determined to be in control and dominate the B2B sales guy and avoid being controlled/dominated (taken for a ride) by the B2B sales guy.  After all, he got to do it the first time and the B2B sales guy was ok with it.  Why change now?

Now what happens?  The B2B sales guy caves in and gives the buyer pretty much what he is asking for.  What drives his action?  Fear, the fear of looking bad in his organisation and the desire to look good.  The folks back home are not that sharp: they will rejoice in the revenue and not look too hard on the margin on the piece of work that has been won. And of course, the long hours (with no pay for the extra work) will be worked by the guys who deliver stuff.

And the same cycle repeats itself in the next sales encounter especially if it is a ‘brand name’ that is well known and thus highly valued by the organisation: a brand name that gives bragging rights.

Somewhere in the organisation is a finance guy (like me – I qualified as a chartered accountant many years ago) is wondering why the folks in the organisation are doing what they are doing.  Why are you guys selling valuable people/skills/expertise so cheaply and thus giving up revenues that are needed to invest in and grow the business – the people, the methodologies, the thought leadership, the tools..?

What I have to say about the B2B sales/buyer dance

I am not an expert in sales and yet I have done selling and account management.  Arguably, you might say that I know a thing or two about people and negotiations.  And I say to the B2B sales guy, your leverage is right at the start.  You have to position yourself and your organisation correctly right at the start by genuinely creating value for the buyer right at the start.

When I say creating I mean creating value – not talking about creating value.  I mean being/living/embodying the value.  How?  Here are some ways I have gone about it and that have worked for me:

1. Take and demonstrate a deep interest in the company, the industry and the markets that the company operates in.  That often means showcasing a good grasp of the history of the company and where it has got to be.  This is not easy, it takes time and requires real dedication.

2. Use the work that you have done to generate insight into the situation that the company is facing and the options that are available to the company.  Explore those options with the buyer (and his colleagues) by facilitating a workshop (or two) to explore the options and their implications.

3. Take the buyer (and his colleagues) through concrete examples of how exactly you/your organisation have addressed that kind of situation/issue/problem, the hurdles that came up along the journey, where they came up, why they came up, how they were addressed or not, the outcome and lessons learned.

4. Take the buyer (and his colleagues) as concretely as possible through the journey he/his organisation is going to go through.  Help him to visualise the assets he/his organisation has.  Help him visualise the obstacles that are there already and the ones that are likely to show up given his organisation/his unique situation.  Work with him to develop ways that you/your organisation and he/his organisation can work together to handle/overcome them.

I hear you say that this is a lot of work.  I agree, it is a lot of work.  I hear you say that this is simply not possible because you situation is such that you are not allowed to meet the buyer (and his colleagues) to do what I propose as the whole process has to be done at arms length.  I say that when that has been the case I have made it clear that the price of my participation in the game is access (one or two workshops) to the buyer  and the key people who are party to the issue at hand and addressing it.  And where this has not been granted I have walked away.

As a result of the time/effort that I have taken and the value that I have created, I have had the confidence and desire to charge the right price. The price that goes with the value that I have created (already) and am committed to bringing to the customer when I take him on as a customer.  Put differently, when I have done it right, like I know it can/needs to be done, I have not had to discount my price to win the work.

It might just be that I do what I do because first and foremost I have the being of an educator, a coach, an advisor. .  And I have never been put through ‘sales school’ and come out as a sales person.  What do you say?  What is your experience?

And can you please help me understand why B2B sales guys do what they do – again and again?  Why do they continue doing what they do and yet expect a different result each time?

Generating revenue: are these the 14 questions to ask your customers?

I say that the customer experience movement is, or should be, about  creating superior value for customers and making customers feel valued.  Why?  So that they stick around longer, buy more and get people in their networks to do business with your organisation.  Put differently, the focus on customer experience must at some point show up in revenues and profits.  Else, it is not sustainable.

How does one go about generating more revenue and improving profits? How about asking the following questions of your customers:

I wish to give credit where credit is due: I have taken the work of Kristin Zhivago as shared in Roadmap to Revenue and added/modified it so that it fits with my experience and my style.   If Kristin’s book interests you (in my view it should) then you can read my review here.