The importance of the 3V’s to customer-based strategy

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.

Vision

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.

Values

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.

Value Proposition

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.

Conclusion

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?

 


How to excel at Customer Experience and customer-centricity: 3 tips

Shift your perspective, embrace being wrong and practice radical empathy

Businesses can cut costs, keep more customers and win new customers (through word of mouth/mouse) if they focus on the customer experience.  That means designing customer experiences that fit customer needs and expectations and which make their lives easier and richer (not just in the money sense).  To do that all the people in the organisation (Tops, Middles, Bottoms) have to shift their perspective, embrace bring wrong and practice radical empathy.  What am I talking about?  All is explained/demonstrated beautifully in the following three TED talks: the first is about shifting your perspective; the second on embracing being wrong; and third on radical empathy.  I hope you enjoy and learn from them.

RavKK:  Shake up your story

Kathryn Schulz: On being wrong

Sam Richards: A radical experiment in empathy

You may be wondering why these practices are necessary and if I am correct in asserting that customer experience design can cut operating costs and protect revenues by keeping customers coming back.  Allow me to share two recent experience with you and give life to what I am saying.

Software4Students.co.uk – they made me work and created work for themselves

On the 10th of Sept I finally gave in and decided to update the software on my children’s computers so that it was the same as what they are using in school.  I placed the order with SoftwareForStudents.co.uk and was happy to do so because the price is reasonable and they promise to despatch it within 24 hours.  I received a package this Wednesday and on opening it I found only Office 2010 discs. That was a both a concern and a disappointment because I had placed an order for Windows 7 and Office 2010: one order, two items.

I emailed the company straight away – pointing out that the issue.  Immediately I got an automated email that told me that the issue would be looked into.  Four days later I received the following email:

“Hi,

Thank you for contacting Software4Students!   Please note the products you have ordered have been dispatched separately.

The status dispatched applies to orders that have been validated and approved as per software manufacturers requirements. Orders are dispatched the following working day. Most customers receive their orders within 3 to 5 working days. However, due to varying factors out of our control, there may be occasions when deliveries are delayed. We are confident that delivery will be made shortly and appreciate your patience.

Should your software not arrive after 21 days from the order date please notify us by email.

If you require any further assistance please do not hesitate to contact us.

Kind regards,

Customer Support Team “

Lets just take a look at what has happened here and the consequences:

  • I place one order for two items and they despatch them separately – the company has doubled its postage costs.
  • Because I was not informed that they were sent separately I became worried.  And  hunted around for the contact number (on their website) and then emailed the support team.  There is just work and concern that I can do without – it is simply a ‘cost’ that the company has put on to me.
  • Software4Students.co.uk incurred costs in dealing with failure demand (demand the company brings upon itself by failing to do right by the customer) because someone in the Customer Support Team had to read my email and then write a response back.

Now look at the email response itself because it is a window into the mind/culture of the company:

  • They have my name and they do not use it to address me even though research shows that your names are dear to us.
  • The email provides only one piece of useful information – that the products have been despatched separately;
  • There are absolutely no commitments on when I will get my order – just vague words around what might happen – and what I can count on them for;
  • It ends with the line that says if your order does not arrive after 21 days then contact us by email.

It is all about the company – about Software4Students.  They simply do not care about me – the customer – and my situation, my needs, my perspective.  Will I continue buying from them?  That depends on what alternatives are open to me and the cost of those alternatives.

Memorybits.co.uk – they make me put in extra work and increase their costs

I placed an order for 4 memory cards (for cameras) and 4 USB flash drives handed over my credit card details including putting in my pin (‘Verified by Visa’) and received a confirmation of my order on Sunday 11th Sept.  So all they had to do was to deliver the goods right?  I thought the same.  The next day I received the following email:

“Dear Customer

We have received your order, unfortunately due to our security procedures we require confirmation of your details before we can dispatch your order.

Please email our verification help desk on sales@memorybits.co.uk to verify your details.

Department opening hours are 09.00 to 17.30 Monday to Friday

Kind Regards

The MemoryBits Customer Service Team”

This email did not create value for me so I sent the following email: “I have received an email from you stating that you need me to confirm my details for security reasons.  Here is the order I placed – please fulfil it or cancel it and refund my money.  Thank you.”  Almost immediately I got an email response back: “Thank you for your email we can confirm that you order is being processed”.  Which left me wondering: “Why did they write the email in the first email?  If there was a genuine security issue then how was it cleared by me writing and telling the company to fulfil the order or refund my money?” Why did they waste my time?  And why did they create work for themselves.

And the next day (Wednesday) I got two emails (received at the same time) confirming that my order had been despatched and was on its way to me via first class post.  The following day, I got the same two emails again which left me wondering what is happening here?  It did not inspire confidence in MemoryBits.

When the order arrived I was expecting to issues a flash drive to each of my children for their schoolwork.  Yet, the tiny package contained only one USB flash drive.  Which left me wondering: “Where is the rest of my order?  And why did they just send me this one flash drive?  Have they made a mistake / misread my order?”  As I had been through the Software4Students experience I decided to check my email confirmation and this is what I found: “Please note that for our own processing reasons, your order may be split into more than one package. If this happens you will not have to pay any additional shipping charges, and you will receive a dispatch email for each package.”

What can we learn here:

  • MemoryBits has a process in place that can and does result in multiple deliveries for a single order – thus increasing picking and postage costs.
  • I suspect it then invites emails and telephone calls from customers wanting to know where the rest of the order is.
  • It fails customer expectations because when we order multiple items – especially small ones – on one order many of us expect to get them in one delivery.
  • Furthermore, multiple deliveries set up multiple failures – what if no-one had been at home?  Then I would have had to make multiple trips to the local post office depot to collect my stuff.
  • You can lose customers by creating work / hassle for your customers – I will not be buying from MemoryBits again.

And finally

One practice I have failed to mention is that of Gratitude – not taking people (and circumstances) for granted.  Let me practice gratitude right now.  I thank you for reading what I write.  I thank you for writing to me and encouraging me to continue writing.  I thank you for educating me.  And I thank you for letting me into your world by commenting on what I write and thus entering into a conversation with me.  I wish you well and look forward to our next conversation.

Why companies are wasting time and money on the Voice of the Customer

I have an issue with the VoC thing

Many large companies are busy tapping into the VoC.  In principle this is a great thing to do because the majority of companies do not have a good enough understanding of their customers.  In practice, I am left feeling that we will see a repeat of the technology centred CRM love fest:  these companies will collectively spend billions, the software companies will get fat and customer satisfaction will stay pretty much the same.   So what is my issue with the VoC thing?

A simplified look at the VoC process and issues

First, let’s take a look at the VoC process:

  • Determine listening posts;
  • Set up listening posts (platforms, tools, people);
  • Collect and consolidate the data;
  • Interpret (make sense of) the data;
  • Sell the interpretation of the data to the various Barons inside the enterprise;
  • Get the Barons to take action in their respective areas; and
  • Monitor/assess the impact on customers (and the business).

If you take a deep look into this you will notice an array of issues:  First, when it comes to surveys how do you know that you are asking the right questions and not ‘leading the witness’?  Second, how do you get access to all the customers that don’t want to complete surveys and make complaints?  Third, how can you be sure that the data you have collected is information and not noise?   Fourth, how do you know that your customer insight team is interpreting the data correctly?  And so on…..

The real issue: VoC can act as a barrier to connecting and empathising with the customers

These issues hide a much more important issue that VoC is a rational solution to an emotional issue.  What do I mean?  The challenge is to get the Baron’s out of their offices and shoes and experience the world  by walking in their customer’s shoes.

Put differently, the challenge is to get the Baron’s to emotionally connect with their customers by experiencing what these customer experience.  And if you accept this  then you will get that VoC programme gives these Baron’s the illusion that they can and do understand customers by reading the reports produced by the customer insight teams.

The problem with this intellectual understanding is that it is purely intellectual.   Intellectual understanding is dangerous because it leaves us thinking we have got it when we have not got it.  What do I mean?

I mean that we have not get it emotionally. That we are not touched, moved, inspired to take action because of having experienced our customer’s lives.  There is a whole body of neuroscience research that shows that the seat of all human action is the emotions and that we can feel/experience what other human beings feel/experience through mirror neurons.  To empathise with our fellow human beings we simply have to connect with them in the context of their day-to-day lives and then let the mirror neurons do the work.

What happens when an industry has no empathy for its customers

Why is that important? Frankly, if the Baron’s cannot or do not empathise with their customers then you end up treating your customers the way that the UK banks treat their customers.  Upon reading this article two paragraphs caught my attention:

“The fine reflects BOS’s serious failure to treat vulnerable customers fairly,” said Tracey McDermott, the acting director of enforcement at the FSA. “The firm’s failure to ensure it had a robust complaint-handling process in place led to a significant number of complaints being rejected when they should have been upheld.”

“We have fallen short of the high standards of service our customers should be able to expect of us and we apologize,” said Ray Milne, the risk director at Bank of Scotland. “We are in the process of contacting affected customers and will pay compensation where it is due.”

It is not hard to treat customers fairly.  The failure to do so by the banks and hide behind platitudes is simply a reflection of the gulf between the Baron’s who make policy and the customers who are impacted by the policy.

How do you cultivate empathy?

Empathy is the route to the human soul and any person who strives to get a meaningful insight into customers lives has to excel at empathy.  So how do you cultivate empathy?  I urge you to watch and listen attentively to the following TED video:   http://www.ted.com/talks/lang/eng/sam_richards_a_radical_experiment_in_empathy.html

Just in case you do not have the time here is a key extract from this presentation:

“Step outside of your tiny little world.

Step inside of the tiny little world of somebody else.

And then do it again, and do it again, and do it again.

And suddenly all of these tiny little worlds they come together in this complex web.

And they build a big complex world.

And suddenly without realizing it

you’re seeing the world differently.

Everything has changed.”

To sum it al up

To exaggerate I would say that an ounce of empathy is worth a mountain of VoC data.  Yet, I do not have fame to my name so I will let one of the worlds renowned business strategists (Kenichi Ohmae) say the final words:

“Personally, I would much rather talk with three homemakers for two hours each on their feelings about, say, washing machines than conduct a 1,000 person survey on the same topic.  I get much better insight and perspective on what customers are really looking for.”

Why organisations will continue to struggle to get close to their customers

I am not well, I think it is the flu.  So today I am going to keep my writing short – please excuse me if it is a little light.

I love learning especially stuff that challenges the dominant ways of thinking about stuff.   As a result I regularly visit TED and in my last visit I came across this video:

It got me thinking and I asked myself the question: is it that simple?

If you read the articles on CRM, on Customer Experience, on Social Business then time and again the writers mention the need to get commitment from the Tops, the need for leadership from the Tops, the need for cultural change – which, no surprise, needs agreement and leadership from the Tops!

Who are the Tops?  Almost always men.  The language that men speak is the language of warfare; the language of the impersonal; the language where the end often justifies the means.  And men love technology – we love our toys.  We love command and control. And in the process we make toys of human beings.  That applies to employees, it applies to suppliers and I argue that it also applies to customers.  We seek to manipulate customers adeptly as they are the more important pieces on the chessboard – yet they are just another piece on the chess board.   Can I dare assert that the men that are most adept at playing this game of chess end up at the Top?

Yet the social, relational and experience paradigms are predominantly feminine.  It is soft stuff. the stuff that has been neglected for a long time and often handed over to the HR folks.   If you are struggling with this then I have a question for you?  How is that in business we refer to getting customers as ‘conquesting’, as hunting; keeping customers is referred to as ‘farming’; and hunters are the hero’s that get the lion share of the rewards  whereas the farmers are looked down upon and get meagre rewards.

Is it that simple?  That organisations are struggling to become customer centric because this is  relationship centred paradigm which is natural for many women and unnatural for many men and especially the Top.  That the Tops prefer to play generalship (the art & science of warfare) then to play midwife to the relationship centred organisation and economy?

If it is not that simple then why is it that whilst the Tops profess customer focus and customer centricity their lieutenants claim that these very same Tops are the main obstacles to bringing customer centred initiatives to fruition?

I do not claim sole access to  ‘truth’ so do let me know what you think.