Consider for a moment the task of trying to hammer a nail deep into a block of wood. Obviously, the sharper the point on the nail, the easier it will penetrate and the deeper it will go with a minimum of effort. And once it’s in, it’s there to stay.
“The essence of marketing is narrowing the focus. You become stronger when you reduce the scope of your operations. You can’t stand for something if you chase after everything.”
– Al Ries & Jack Trout The 22 Immutable Laws of Marketing
If you're in business today, you need to be creative more than ever before. You need to invent solutions to your business issues, and to find new and compelling ways to engage your Customers. But being creative can be hard to do!
A “need” is the result of either (a) a physical depravation (not getting enough water to function or survive) or (b) a mandate or requirement from some authority (citizens “must” pay taxes; students “must” turn in homework assignments…).
Example: I might ‘need’ transportation (I have to get to work); I ‘want’ this particular car. I ‘need’ food to sustain my body; I ‘want’ to go to Outback for a steak (or Taco Bell… you pick it…)
Why this matters: For most Consumer products and services, and for many ‘discretionary’ Business to Business products and services, WANTS drive the wallet. In other words, people will pay for more than the minimum available solution to get what satisfies or fulfills them emotionally. I ‘need’ transportation — I could take a bus, ride a bicycle, etc. — but I will pay extra to get the car I “want” (plus insurance, maintenance, gas, etc.).
a. Who are our best Customers (Pareto Principle: 80/20 rule)
b. Segmentation: Demographic, Geographic, Psychographic
c. “RFM”: “Recency, Frequency, and Monetary value.” RFM analysis is a technique for segmenting Customers into groups based on their behavioral responses
d. Personas: a vivid description of a single archetypical Customer
What’s the difference between Segmentation and Personas? Here are a few highlights of the differences thanks to Frank Capek in his post "Customer Innovations: Driving Profitable Growth":
What is the Difference Between Personae and Segmentation?
• Personas are used for designing experiences that get the Customers’ attention, fit with the way they think about what they’re trying to accomplish, and map easily onto their natural set of behaviors;
Segments are used for making strategic focus and prospect targeting decisions based on the attractiveness and accessibility of different types of Customers.
• A persona is a vivid description of a single archetypical Customer;
A segment is an abstract group of Customers that share certain characteristics.
• A persona includes a rich description of how that specific Customer thinks, acts, and experiences the world;
a segment typically includes descriptive or situational information about the group of Customers.
• A small set of personas can be used to illustrate the fundamentally different types of Customers that exist in the marketplace; segmentation is used to create a comprehensive mutually exclusive, collectively exhaustive (MECE) representation of an entire marketplace.
• Personas are qualitatively derived based on observation and in-depth elicitation interviews;
Segments are quantitatively derived from large samples including demographics, situations, behaviors, and attitudes.
2. How much are they worth to us?
Customer Lifetime Value See:
• Harvard Business School Publishing “Customer Lifetime Value Calculator”
• Integrated Management Resources Inc. “Lifetime Value of a Customer Calculator”
3. How do they feel about us?
Net Promoter Score: See “The Ultimate Question”
(1) “How likely is it that you would recommend our company to a friend or colleague?”
(2) Follow-on question: “Why did you give us the score you did?”
//Richard Randolph
Scott McKain has redefined “Customer Service” in his excellent book What Customers Really Want. He identifies three levels of Customer interaction.
This level is about expediting the transaction. The computer screen or preprinted menu tell the clerk what to do and say — they never have to even look at you or use your name. Just follow the procedure, finish the transaction, and on to the next in line. You see this level any time there’s a line: in the grocery store, in the fast-food restaurant, at the toll booth… The emphasis is on turnaround time, not on hearing or satisfying the Customer. Example: I enjoy a good Subway sandwich. In fact, I think they have single-handedly redefined the fast-food industry. They want to know what kind of bread, meat, cheese, and toppings I want. And it’s all Processing. Sure, it’s customized a little bit – but not much. They’re all the same, and after minimal training, just about anyone can do it. Strategic implications: Customers appreciate improving the speed and efficiency of a transaction — but it’s easy for competitors to duplicate.
At this level, the emphasis changes to understanding the emotional dimension of the exchange. The focus changes to listening to what the Customer wants and actually needs — there’s some effort to understanding “the job” the Customer is trying to do, and what it will take to accomplish the goal. It’s more “human being to human being.” True Customer Service invokes a relationship, even if it’s a short one, where the Customer and the Provider are both involved and actively engaged in achieving the desired outcome. Example: I went to the Apple Store so I could get a good microphone to record Podcasts and PowerPoint narratives. The representative listened to and understood my needs, then presented three options along with the “plusses and minuses” of each one as it pertained to my purposes. “By the way,” he said, “Have you ever tried Keynote?” (it’s Apple’s alternative to PowerPoint.) “Never heard of it,” I replied. “Watch this!” he exclaimed, and walked me through a brief demo and showed me some of the innovative features. Wow! Guess what I bought…??? Strategic implications: True “service” is people-dependent, and technology enabled. To achieve this level, you have to hire smart then train and invest in excellent people, and empower them to do what they know how to do so well. It’s very hard to replicate this level of delivery — you can probably name just a few firms who truly deliver on the Customer Service potential.
At the top of the pyramid is the total Customer Experience — the sum total of everything that happens from the time the Customer first learns of the company’s offerings (advertising, word of mouth, referrals, etc.) through contact with the company (on line, on the phone, or at a store), through the purchase experience, on through support, billings, upgrades, renewals, service failure recovery, Customer Satisfaction surveys, and so on. It includes all the sensory and emotional dimensions in addition to the physical and financial portions of the transaction. Remarkable Customer Experiences often leave long-lasting memories. They also build Customer loyalty, along with the positive word of mouth, referrals, and increased patronage (spending) that go along with a totally happy Customer. Example: I guess the Disney organization is most frequently mentioned in this category, but they’re not the only leaders to consider. You can think of one true industry leader in most fields who exemplify the remarkable Customer Experience (retail? On-line shopping? Automobiles? Even groceries!) Strategic Implications: A Remarkable Customer Experience is a powerful differentiator. It tends to remove Price as an issue, and it builds long-term brand loyalty.
Look at your own business to see where your Customer interaction falls. Do you Process numbers in a line? Or do you deliver personal Customer Service? What would you need to do to deliver a consistently remarkable Customer experience? That’s where the long-term gold is!
//Richard
