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I recently celebrated a birthday….not an important one but a Birthday nonetheless.

As a Precision Marketing strategist, practitioner and consultant, I am registered with and keep a close watch on over 40 major brand CRM programs across a wide range of categories and industries.

And do you know how many ‘Happy Birthday’ messages I received from said brands on my birthday…..? One…..just a single Birthday wish landed in my inbox ! Truly, I would argue, a staggering miss by the other 39+ brands.

Staggering because a triggered Birthday communication is proven to be one of the most effective, and most simple to implement, tactics in the direct marketers toolkit.

I am always amazed at how consumers are still seemingly surprised to see that a brand knows it’s their birthday but chuffed and happy to receive a message or even a gift, reward or incentive. Recent insights from journalist and consultant Jeanne Jennings, writing on ClickZ in 2011, provides evidence from client case studies that birthday emails can lift conversion rates by over 60% over non-birthday email messages with the same offer. Given such a significant potential uplift, it is surprising to read research from Silverpop who found in a recent study that seven in 10 email marketers don’t send birthday emails and that, on top of that, 75% of email marketers who don’t send birthday emails say they don’t ever intend to.

From my experience at Diageo, where I was Global Head of Digital Marketing, we continually found that Birthday emails (and direct mail packs) were the best performing communications of the year and the simplest to personalise and provide value-adding content and relevant rewards or messages. It seemed a no-brainer to us to recognise such an important event in our journey to build emotional and personal relationships with our higher value consumers.

Indeed, back in 2007 the Guinness ‘Pub Landlord’ birthday campaign ended up taking the Grand Prix at the Precision Marketing Awards, delivering results including 60%+ open rates, 95% interacting fully with the mechanic and 96% unprompted recall in post campaign research !  

So, I must offer my hearty congratulations to Coca-Cola (disclosure: a client of TCF’s) for still believing in the basics and sending me a compelling birthday from the My Coke Rewards loyalty program with a message encouraging me to interact with the website, view a special video and earn and burn my points.

Why are other brands not getting with the program on this basic tactic ? Why do so many brands seem to skip over such basics ?

I fear it comes down to poor basic data understanding, a lack of good planning and a lack of managed contact strategies. I also fear what with the increasing focus on ‘big data’, the focus on ‘simple data’ is being overlooked.

My fellow TCF Director, Andy Green, recently wrote on this topic arguing that “big data is often an expensive distraction” and that “organisations should focus first on closing the capability gaps to better use the customer data they already have”.

I couldn’t agree more. As Andy eloquently highlights, and as reported in Marketing Week in April, brands need to be very wary of the  impending global shortage of data skilled professionals at a time when there is ever-increasing pressure to prove the worth of Marketing activities and get maximum value from customer data.

Marketing Week report on a study from IT consultancy EMC who found that there is little confidence that firms have the skills to use the data they have to make sound business decisions and only a third of companies are very confident about making decisions based on new data, according to the research.

As Virgin Media Director of Customer Insight, Michael Payne, says “If marketing is to be seen as an investment, rather than a cost, it must be positioned as a quantifiable discipline. It needs to be seen as much more data-driven. The UK has a shortage of data-driven marketers”.

I agree with Mr Payne, and if as much attention is paid to Precision Marketing training and Data training as is paid to Digital Marketing training, then perhaps brands would understand the need to crack some of the basics of good customer management, such as sending highly effective and impactful – and simple – Birthday communications !

Perhaps, given my birthday was 11/4, and bearing in mind this gap in basic data skills, I should actually expect more Birthday wishes on November 4^th than I received on April 11^th !

We’d love to hear your thoughts and views. 

Author details:

Nick Broomfield - Director. Nick specialises in helping brands engage and build profitable relationships with customers across multiple channels, with a focus on the effective integration of Digital and Precision Marketing strategies. Previously Nick spent 8 years at drinks giant Diageo where he headed the Global Digital Marketing Team, credited with delivering a step-change in the marketing of brands such as Johnnie Walker, Guinness and Smirnoff. Nick has also worked agency side and started his career at BT, where he helped launch broadband in the UK.  nick.broomfield@thecustomerframework.com

I have just finished reading an article (no names, no pack drill) claiming that banks need to get serious about social media. This includes determining their strategy, creating tough guidelines, training staff, developing and implementing escalation processes, determining customer expectations, creating consistency etc. etc. etc.

If only it were so easy. The social approach to business is at its earliest stages, and almost pre-natal when it comes to banks (with a few star exceptions). For two main reasons (regulatory complexity and problems with trust), the social approach to business is particularly difficult to implement in financial services. Regulators stamp heavily on information which is provided without a long list of disclaimers. Most customers hate reading the small print, and they’re not really sure whether they even want to engage with banks more than they absolutely have to.

In such circumstances, putting a group of marketing planners together in a (metaphorically these days) smoke-filled room and asking them to “determine” social strategy is daft. It’s almost a guarantee of failure. The very essence of a social approach is that it much be (at least partly) customer driven.

So how about taking this idea to its logical conclusion. Why not ask customers what sort of bank they’d like you to be? Why not encourage them to discuss you? Why not ask them to suggest your social strategy? Why not ask them about their ideas on how you could test what works, for them and you.

You might even consider asking your best customers, perhaps comparing their views with what your difficult customers say.

Surely, the one thing we have learnt about the social approach is that it must be truly social, at a meta-level too. You can’t plan social as if it were a hammer to hit customers over the head with. That’s 1980s marketing thinking. Do you remember Segment, Concentrate, Add Value, Develop (or SCAD as it was known), the mantra of a generation of marketing planning academics (and the myriad consultants who followed in their steps)? It meant, ‘let’s put customers into boxes, make sure they don’t escape, and pour whatever mixture of fertiliser and liquid on them that will keep them “ours” and no-one else’s, and grow them into our ideal fat customer, paying us lots of money!’.

This is one of a series of blogs from Paul Weston, the architect of The Customer Framework’s SCHEMA® toolset. In each blog he reveals the thinking behind the individual capabilities and practices that make up one part of the SCHEMA® Capability Assessment, which is becoming the World’s leading customer management benchmarking tool.  There are 110 capabilities in the assessment, containing almost 400 individual practices that together provide a comprehensive definition of what ‘Good’ looks like in today’s “Customer World”. It is this definition against which organisations can be assessed and benchmarked.

In the “EXPERIENCE MANAGEMENT” area of the assessment we have a specific capability called “Researching the Customer Experience” and this is what we look for:

Event and sample-based customer satisfaction research

Research is carried out with customers who have been through a broad range of interaction types (e.g. complaint, purchase, enquiry, web session) to understand their experience of having done so. This is carried out regularly enough to identify changes in the quality of experience being delivered. A complimentary but not identical set of research is carried out periodically with a sample of customers who have not been through any specific interactions to understand the attitude and perceptions of customers at a 'background' level. The nature of both types of research is carefully controlled to prevent individual customers being researched too often and the sets of questions becoming too long. A small set of questions form the consistent core of all the research in order to enable comparison across customer types and over time. These core questions are reviewed at least annually in the light of findings from qualitative research and behaviour analysis. A robust process approves the non-core questions for each type of research that considers the customer experience of going through the research itself.

Qualitative customer research used to ensure focus of other research

Professionally executed qualitative research methods such as depth interviews, focus groups or projective techniques are used at regular intervals to enable both prompted and unprompted input to be captured from a range of customers. The research allows unstructured views, thoughts and feelings to be captured that would often be missed in quantitative research. It always probes and challenges received wisdom about what makes customers and potential customers 'satisfied' or otherwise with their experience. It seeks to identify new factors that impact customer perceptions, potentially due to new market entrants or product evolution, and factors that were previously trivial in terms of impact but are starting to become more important. A clear process ensures that the interpretation and analysis of the findings can either result in changes to wider research to assess the scale and impact of new factors or are explored further using techniques such as on-line listening or observational techniques.

Design of research to enable comparison to customer behaviour

Customer research is designed and carried out in a way that enables the organisation to compare the way that customers actually behave to the way that they say they intend to behave in research activity. Where the research is not carried out with a promise of anonymity then this simply involves ensuring that the relevant reference numbers are included in results reporting to ensure that responses can be matched back to systems storing behaviour data such as transaction systems, data warehouses, self-service systems etc. Where respondents are promised or would expect anonymity then a specialist, third-party supplier is used to merge behavioural data provided by the organisation with research data provided by the research company. They are briefed on the analysis required, carry this out and provide not-individualised results regarding the correlation between attitudes / claimed intentions and observed / recorded behaviours.

Inclusion of predictive (of loyalty or engagement) questions in research

Customer 'satisfaction' research carried out by the organisation is designed to assess and predict levels of customer commitment / loyalty (repeat purchase) rather than just understand whether or not they are satisfied. This has involved the creation of a scale of loyalty which runs from those customers who are known or suspected to be in an almost constant process of looking at other providers through to those who are extremely forgiving of any mistakes that the organisation makes and are very unlikely to take their business elsewhere. Customers are placed on the scale by the use of both direct questions about their intentions and by the analysis of answers to other questions that have been shown analytically to correlate with certain levels of loyalty and commitment. Loyalty and 'Satisfaction' levels for customers of different types of customer are compared to understand the relationship between them with particular attention being paid to understanding of customers where satisfaction and loyalty cannot be seen to correlate.

Disaggregation of customer expectation impact on satisfaction

Research questionnaires and analysis of satisfaction research results are designed to identify where specific customer expectations and experiences have an impact on what they say is important to them. This includes trying to understand factors that appear to have a big impact on overall satisfaction but which competitors do not even include in their research. This can often be because they perform so much better and their customers simply don't consider it as a potential failure point. Industry or syndicated research (which includes competitors) is analysed to identify areas that are important enough to include in the organisation's research. The results of this understanding are fed into the interpretation of satisfaction research to prevent highs and lows being considered as competitive strengths and weaknesses where they are overly driven by expectations and experiences that are peculiar to this organisation.

Use of mystery shopper activity to give a feel to satisfaction research

Mystery shopping is carried out to provide a degree of feedback on what the experience of dealing with the organisation 'feels' like to another person. This often adds a different perspective to the relatively 'dry' information provided by quantitative customer research and can also provide powerful illustrations of what quantitative research is saying. Verbatim feedback from the shoppers can often be as powerful as the analysis of their structured input and is particularly powerful where it is combined with video or audio recording. Some of the research is carried out by professional providers but this is supplemented by formal, internally resourced mystery shopping using staff from one part of the organisation to test the experience of dealing with another part of the organisation and to report back on the experience. Care is taken in all the research to prevent using examples of particularly good or bad experiences that are out of alignment with the general findings of other research unless they are being used for a specific purpose or have been further tested to ensure that the organisation is not over-reacting to a single isolated experience. 

Author details:

Paul Weston - Director. Paul has been consulting for more than 20 years after a marketing and product management career in the telecoms and motor industries. He has worked all over the world with multinational clients in banking, insurance, telecoms, motor and hospitality. Paul is a Customer Information strategist who believes that this area offers as much opportunity for creativity and innovation as any other area of Customer Management. He has developed many tools to help clients address challenges as diverse as Contact Centre resourcing, business case construction and risk assessment. This has made Paul the obvious person to lead the development and management of The Customer Framework’s core SCHEMA® Toolset, a role he relishes and which represents a substantial proportion of his time. paul.weston@thecustomerframework.com

There seems to be a new announcement every day about the impact of mobile technology on payment systems, about a new development in that technology, or about the strategies of the major players. These include financial organisations (banks, new generation payment organisations, credit and charge card operators, acquiring organisations, money transfer operators), mobile players (mobile network operators - MNOs, handset manufacturers, suppliers of their components or software) and systems providers.

There is global chaos, with few standards, regulators unsure of their positions and consumers confused over different approaches.  Potential providers are concerned about being left out but uncertain how much to invest in entering or staying in. On each continent, companies are looking at other continents and wondering what can be learnt from them. The world is looking to Africa to see what lessons can be learned from the success of simple text-based mobile money transfer operations in one country (Kenya – it’s a slower start in other African countries), from the reactions of financial and telecommunications regulators and from the developing relationships between MNOs and financial organisations, particularly banks. It is looking to Asia, to where early hopes about rapid take off of NFC - Near Field Communication-based retail payments were not fulfilled, but where some smaller countries have been successful, both in taking NFC-mobile payment forward and in achieving the critical mass of contactless card readers required for the NFC approach to succeed. It is looking to the US, where take up of innovations in merchant acceptance and the success of new generation payment organisations (PayPal and Square) have not been matched by take-up of NFC-based approaches, despite Google’s efforts, and where the relatively slow take-up of approaches to card security (chip and pin) indicates a fundamental conservatism in approach to payments innovation on the part of financial organisations and retailers. And it is looking towards Europe, where the drive to contactless payment systems and the rapid increase in diffusion of NFC enabled smartphones are now understood to be the two critical enablers for growth in NFC-mobile payments, and where African-style person-to-person payment systems are beginning to appear.

For NFC mobile payments, the most important factors are the commitment by retailers of all kinds to accept NFC contactless payments, not necessarily by mobile phone, but just by contactless card. There still remains the critical issue of consistent standards but, after a long period of fencing, MNOs and banks are now committing to move forward. However, from agreeing on standards and ways of working together to delivering a secure, cost-effective and user friendly proposition to consumers and retailers takes some time. The slowness of the move towards contactless payments has not helped, but here there is a gentle acceleration.

During 2011, those involved in mobile banking and payments were distracted by analyst reports indicating a massive global swing to NFC payments by 2013. This ignored the evidence that this would take a lot more than the widespread availability of NFC handsets, which in any case was not happening. By early 2012, realism was dawning, and those involved in the industry were sceptical of such rapid progress, with 2014-17 being a more realistic timing for such a swing in behaviour. Security and the need for co-ordination among key mobile commerce stakeholders and for mobile payment standards are now seen as the main barriers.

In the US, Square and Paypal are challenging both MNOs and banks, but in different ways. Google’s challenge is primarily evolutionary, using an approach broadly based on existing ideas – mobile phones and contactless technology.  The challenge may be successful, not just because of Google’s power, but also because it may fund development in a situation where NFC by itself provides questionable value for consumers or merchants in mature payment markets. Google has payments ambitions like PayPal, and this is why it wants consumers to use its payment services. Google’s involvement will increase legitimacy for this market for all other players, as well as for consumers. However, MNOs and banks have identified this as a serious challenge. Early problems with Google wallet in 2011 and 2012 included not just lack of availability of handsets and contactless payment points but a wait and see attitude of most merchants, who in order to fully exploit the capabilities of Google Wallet need to make adjustments to their Point of Sale environment to allow One Tap payment.  In addition, a weak and imperfect proposition focused on a few credit cards, lack of true partnering with credit card providers and limited coupon and loyalty points redemption functionality. These can be expected eventually to fade away, provided that Google does not determine that the game is not worth the possible eventual rewards and that it has other more serious challenges to its core business on hand, as other players have done in different parts of the mobile payments market (e.g. Nokia’s exit in India).

The approaches of Square and PayPal are both revolutionary and game-changing. Their main focus is on micro, small and medium businesses, bundling a merchant acquiring agreement and card acceptance app with a handset and contract. In the US, where there are about eight million "traditional" merchants, Square has signed up over a million of them. PayPal’s activity is distinguished partly by the immediacy of the availability of funds. This contrasts with the failure of the US to develop a mechanism for immediate funds transfer, like the UK's Faster Payments scheme. This means that not only is the US behind on card developments, but also on money transfer between individuals and businesses. However, three of the largest payment processors - Bank of America, Chase and Wells Fargo - have joined up to create their own back-end system for processing the money, clearXchange. For younger people and the unbanked, it might be more logical to use a socially based (in-app) payments mechanism e.g. Facebook.

Behind all this chaos lies a clear lack of consensus by all the players, including governments and regulators, about what the future world should look like, and what the benefits for consumers and business will be. I am reminded of the early scepticism about the use of personal computers in the early 1980s, or even of computers themselves in the 1940s and 1950s. However, the difference in this case is that there are many existing, acceptable, trusted and efficient methods of achieving the different kinds of payments. Early 2012 has seen a tipping point, not in terms of take-up of the different technologies and approaches, but of the public voicing of scepticism about the speed of their take up by some major suppliers, and a realistic view dawning of how to progress.

This emerging realism is good, because decision-making based on probably exaggerated views about the speed of change rarely leads to the right outcomes! My advice is, if your company is thinking of getting involved, take a long hard look at the business case, and consider whether you can afford the distraction.

Author details:

Merlin Stone, Research Director. Merlin is a leading expert in customer management.  His work focuses on improving customer experience, satisfaction, loyalty and trust, and also the customer research, data analysis, systems decisions and supplier selection and management needed to support improved management of customers. He is also well known for his work on thought leadership and public relations – improving clients’ communications to the media and customers, including explaining complex propositions and conducting media interviews. This includes conference speaking (especially for client events) and thought leadership research, which focuses on clients’ customers and prospects, the issues they face, how they handle them, and where they need help. merlin.stone@thecustomerframework.com

[1] Big data is a term applied to data sets whose size is beyond the ability of commonly used databases and software tools to capture, manage, and process the data within a tolerable elapsed time. Big data sizes are a constantly moving target currently ranging from a few dozen terabytes to many petabytes of data in a single data set.
 

Author details:

Introduction

Much has been written about the reasons why the locus of control in relationships between organisations and customers is moving firmly, but not completely, towards the customer.  In increasingly global and commoditised markets, where there is increased competition and little difference in price and product specification and quality, the main competitive difference will be in the way companies deal with customers and the experience they deliver.  In response to the above, organisations should be, in theory, more customer-focussed or customer centric and our SCHEMA® benchmarking shows that they are– but only just!  But how can you tell a customer centric company?  Below, we explore what it means to be a customer centric company – what it feels like to be a customer of one and what it looks likes from the inside. 

1.    What is customer centricity…?

Customer centricity is not necessarily about offering world class ‘mandarin hotel style’ customer service or providing the most luxury products possible.  It might be about this, or it might be about offering fantastic value and product availability with an acceptable customer service (e.g. IKEA).  It might equally be about being lower priced (e.g. Lidl), more convenient (e.g. Amazon) or more innovative in product design (e.g. Apple).  So what does a customer centric company look like? 

…from an internal perspective

The table below is a checklist of what it means to be a customer centric versus a sales centric organisation.  Note that both columns may imply a profit focus, but companies who relate better to the statements in the left hand column are more customer focussed, and are conscious about balancing short term revenue with a longer term customer value objectives, whereas companies relating better to the right hand column are mostly about winning sales. 

If you ticked each of the statements in the left hand column then you are a customer centric organisation.  Companies must structure themselves to deliver the most appropriate experience within the proposition they have defined and they must do this as cost effectively as they can because price is a key component in almost all markets.  Although propositions will vary, what is consistent is what customers say it feels like to be a customer of a customer-centric company? 

…from a customer’s perspective

Over the years, we have studied £mms of research from customers of large organisations.  Research across markets, across business to business or business to consumer organisations, is reassuringly consistent in its core findings about how customers describe companies they prefer to buy from.  

“The company provides me with the products or services I want, when I want them, in full, on spec and at a price that I think represents good value.  They get it right nearly every time.  If I have a question, I can find the answer and talk to someone whenever I need to.  If I have a problem, they sort it out for me quickly with little fuss.  They seem to care about me - I feel connected with them.  Occasionally they really surprise me – in a good way!"

What all customers of customer centric companies say is..

“I like dealing with them, will buy again and I’ll speak highly of them.” 

Just to repeat, these statements are core to most markets and will hold across sectors, whether you are customer flying on Easyjet or Singapore Airlines, buying from Lidl’s or Waitrose or whether you are a business buying office products or earth moving machinery.  Whatever sector you are in, you’ll have some additional specific and important statements about what customers want.  For instance, “Association with the brand makes me look and feel special”;  “they know who I am”; “they tailor their solutions to help me achieve my objectives”; “they make me look smarter”  and so on.

A customer of a customer-centric company will buy again from them, and maybe recommend them, because they are engaged with the brand.

Author details:

Neil Woodcock - CEO & Chairman.  Neil is one of Europe's leading experts and authors in Customer Management.   His background in Mobil, Unilever, Accenture and McKinsey has provided him with the knowledge and experience to advise companies, practically, about how to improve bottom line profit through more effective and efficient Customer Management. Neil has co-authored 5 books, various reports and numerous articles on Customer Management. He is on the editorial board of leading journals and is an honorary fellow of the IDM. He is a regular speaker at conferences, at home and overseas.  
neil.woodcock@thecustomerframework.com

I think it is fair to say that never before has the job of a Marketing Manager been more difficult. We now operate in a world where the social consumer is firmly in control, media is fragmented almost beyond recognition offering us a huge proliferation of channel and connection choices and budgets are certainly not growing in line with the challenges. And all at a time when trust in the Marketing industry is reported to be at an all-time low!

And so surely this means the skill-sets required of modern-day Marketers have also changed beyond recognition?  Well, yes but in our experience we are seeing many focus perhaps too single-mindedly on the ‘Digital only’ up-skilling and often overlooking the need for the integration of Digital tools and channels within the overall Marketing strategy.  Indeed within the Digital arena itself, many businesses seem incredibly focused on Marketing innovation and chasing the latest ‘Marketing handbag’ (to quote Daryl Fielding, VP Europe Marketing, at Cadbury Kraft) or shiny-penny often to the detriment of proven business and marketing practice.  

Don’t get me wrong….I am all for the need to innovate, test and learn and actively support clients in this capacity, however in our view it seems many are taking their eyes off some of the fundamental Marketing principles from the past and losing the need for balance.  

The best CMO’s, in our view, are the ones focused on building an internal team that understands and builds strategies to meet its business goals, based on rich consumer understanding and using Marketing tactics and channels that are most suitable to meet their objectives; invariably a mix of online and offline, digital and physical experiences….but always focused on driving improved business performance and a balance of the most relevant Marketing channels. In the results oriented world in which we live, brand and business growth surely has to be our number one objective, no matter what the channel used.

It seems many large brands agree with us and there have recently been a slew of interesting comments. Let’s look at just a few.

Brewer AB InBev (ABI) is a case in point. Although they operate what they call a ‘fans first’ strategy, they include their owned database alongside their social media ‘fans’ when it comes to direct marketing. ABI proclaim not to have a ‘social media strategy’ per se – maintaining that social networks are just a means to an end – with their ‘fans first’ approach simply meaning that the ‘first, second and third dollars it invests in a brand are dedicated to consumers who have actively chosen to connect with the company’. This to us is solid relationship marketing thinking, applied to the social space and makes perfect and good sense.  Indeed, with regards to the role of Marketers, Chris Burggraeve, CMO at brewer AB InBev, says that ‘nothing has really changed over time in the Marketer’s core areas of responsibility and the marketer’s job is still to move forward whatever behavioural and attitudinal measures lie at the heart of brand health for the company’.

Diageo, a TCF client, have also been vocal in this space recently.  Philip Gladman, Western Europe white spirits Director, argues that brand managers of the future are going to have to be like “Swiss army knives” and come with a whole new set of skills, to complement basic skills such as ‘creativity, strategic thinking and being good with numbers’. Speaking at the annual ISBA conference in March he said that the brand managers of today were ‘a fundamentally different animal than the traditional brand manager’ and had to have a balanced range of skills to handle the digital challenge and opportunity.

Kraft Foods (also a TCF client), have recently talked about ‘digital fitness’ and the vital need for businesses to drive digital to the core of the business in order to survive in the new business landscape.  Bonin Bough, VP of Global Digital and Consumer Engagement, recently speaking at a Social Business Summit, called on businesses to build up ‘STEM capabilities’ by which he meant ‘science, technology, engineering and maths’. At TCF, we equally advocate for businesses to understand the science and maths of their business, knowing where the value and profit lies and how they can best develop strategies to maximise business performance by being smart and delivering the right message to the right consumer at the right time.

Indeed, never has Relationship Marketing and Customer Management seemed more relevant and important….especially when it can be so well enabled by digital tools and channels.

Procter & Gamble have also talked about the fundamental need to shift and change how it operates, with Marc Pritchard, Global Marketing and Brand Building Officer, stating that ‘digital marketing is no longer a trendy use of technology for technology’s sake, but instead the way that P&G aims to engage with people in real-time and build brands’.

Crucially, P&G are ensuring that rather than digital being a strategy in its own right, digital is purely the enabler for their over-arching strategy which in the words of Pritchard is to ‘build lifelong, one-on-one relationships in real-time with every person in the world’.

In summary, it is clear that the modern Marketer needs to build and hone their digital skills and understanding and we will continue to see the re-shaping of Marketing departments to reflect the optimal way to engage consumers. However, avoiding the worst of the hype, the best marketers will strike the right balance and continue to rely and lean on traditional skills and sharp business and value focus whilst adopting a managed and selective approach to testing and innovation. 

To take Philip Gladman’s analogy of the Swiss army knife, just as the knife balances the core blade with the flashy gadgetry so must businesses effectively balance a focus on the proven fundamentals with innovation and digital integration.

We’d love to hear your thoughts….

Author details:

Nick Broomfield - Director. Nick specialises in helping brands engage and build profitable relationships with customers across multiple channels, with a focus on the effective integration of Digital and Precision Marketing strategies. Previously Nick spent 8 years at drinks giant Diageo where he headed the Global Digital Marketing Team, credited with delivering a step-change in the marketing of brands such as Johnnie Walker, Guinness and Smirnoff. Nick has also worked agency side and started his career at BT, where he helped launch broadband in the UK.  nick.broomfield@thecustomerframework.com

This is an extract from a longer article - please contact Vicky for the full article

 The conflicting perspectives of ‘measuring business performance’

We all think we know what “business performance” means, but we often disagree about its exact definition. This is because any business, including those in the public and voluntary sectors, involves many groups of stakeholders, including customers, employees, directors, shareholders, creditors, suppliers, government, regulators, state agencies, voters, local communities, taxpayers and patients. Performance means different things to each of these groups. Although positive performance for one group may be correlated in the long run with positive performance for others, in practice their interests often conflict, especially in the short run. For instance, a drive for efficiency may mean fewer employees and longer queuing times for customers; satisfying creditors may mean disappointing shareholders. A company can make excellent profits this year if it; cuts customer service standards to increase productivity, fires 30% of its staff, cuts its marketing budget by half, fails to invest in product development and cuts all of its IT development budgets. Yet, although customer service excellence is key to differentiating any business which has regular contact with customers, CMOs say they worried that the drive to reduce costs may undermine customer trust. The focus on short-term profit compromises long-term sustainability.

Each stakeholder group may rate performance measures differently. For shareholders, profits are important, but even this has several dimensions e.g. short versus long-term. Not all stakeholder groups are equally “important”. There is of course a legal hierarchy. In a public company, secured creditors come first, shareholders last, though poor governance may allow shareholders to “jump the queue”. Business performance should to be judged by the hierarchy of measures set by the board. However, at the top of this hierarchy for most private sector companies is PROFIT. Sometimes this is so important that other measures are not taken seriously, particularly systemic drivers of profit such as customer engagement. Our view is that by focusing on a SYSTEM of measures which include profit, rather than on profit alone, companies will balance optimally short and long term performance, and that a critical component of the system is customers.

A measurement hierarchy or line of sight between business performance and customer management activity

Extensive SCHEMA® benchmarking across the world shows that although customer management models are evolving, measurement approaches are not keeping up. They need to incorporate customer engagement and recognise the unique role of digital, social and mobile in engaging and selling to high value customers and influencers. Business leaders need a systematic approach to determining how business performance is improved by managing customers well.  Here’s a suggested approach used by some leading companies.  This ‘line of sight measurement approach is underpinned by a fundamental belief that sustainable business performance comes from winning, keeping and developing customers: who are, or can become, heavy spenders in a category and by building their trust and engagement over time.

Engagement comes from delivering a distinct and appropriate customer experience which appeals to customers (the right blend of functional, rational, sensory and emotional elements). These experiences result in customers preferring the brand.

Customer experience is also achieved most effectively through engaged, motivated and capable colleagues (even for online businesses) who can design and deliver the experience in a way that customers value.

Colleagues work within the context that the company sets which supports the overall customer management approach (e.g. proposition, insight & planning, channel mix, measurement, workflow and agility, IT and data). This business infrastructure or “system” must work in harmony so that the organisation is aligned to deliver sustainable business performance.

Would love to know what you think. 

Author details:

Neil Woodcock - CEO & Chairman.  Neil is one of Europe's leading experts and authors in Customer Management.   His background in Mobil, Unilever, Accenture and McKinsey has provided him with the knowledge and experience to advise companies, practically, about how to improve bottom line profit through more effective and efficient Customer Management. Neil has co-authored 5 books, various reports and numerous articles on Customer Management. He is on the editorial board of leading journals and is an honorary fellow of the IDM. He is a regular speaker at conferences, at home and overseas.  neil.woodcock@thecustomerframework.com

This is one of a series of blogs from Paul Weston, the architect of The Customer Framework’s SCHEMA® toolset. In each blog he reveals the thinking behind the individual capabilities and practices that make up one part of the SCHEMA® Capability Assessment, which is becoming the World’s leading customer management benchmarking tool.  There are 110 capabilities in the assessment, containing almost 400 individual practices that together provide a comprehensive definition of what ‘Good’ looks like in today’s “Customer World”. It is this definition against which organisations can be assessed and benchmarked.

In the “BRAND & PROPOSITION” area of the assessment we have a specific capability called “Understanding Customer and Market Needs” and this is what we look for:

Regular qualitative research of customer needs

Deep, qualitative needs research is carried out, typically by professional researchers who are able to probe interviewees or groups for inputs that may otherwise not emerge. It explores customer ‘wants’ as well as ‘real’ needs without making judgements about which is which at this early stage. The research uses approaches that do not prompt for wants and needs that the organisation wants to emerge and does not even provide stimulus to possible needs until all unprompted inputs have been explored. The research is done regularly enough to quickly identify changes in patterns of needs or response to new products or providers in the market.

Quantitative research to scale the relative importance of needs

Quantitative research is used to scale and prioritise the wants and needs identified in qualitative investigations. This is done separately from the organisation’s customer satisfaction research using different but comparable samples to avoid respondents getting into mind sets that influence their inputs. The focus is completely on what the respondents want from providers in the market and how (relatively) important each factor is to them, rather than on their view of what the organisation currently provides. The research is carried out on a large enough scale, with appropriate sampling, to ensure that understanding of the relative importance of needs between different segments / values / types of customer is robust.

Extension of needs research to non-customers

Needs research in both its qualitative and quantitative forms is extended beyond the current base of customers to ensure that a ‘market’ view is achieved. It covers currently active prospects, previous ‘failed sales’, ex-customers and other parts of the potential customer universe, focussing particularly on target areas of the market. The research to non-customers is designed to be substantially the same as for customers but with a degree of further exploration of areas that will be covered in other ‘early experience’ research for customers such as purchase decision processes and criteria.

Comparison of depth of needs to market enablers and barriers

Both the qualitative and quantitative research is designed to test the depth of feeling that respondents have for their wants and needs relative to market factors that actively enable or prevent their purchases. This is aimed at judging which factors impact which needs, to what extent, possibly to the extent of even preventing sales. Key factors explored in the research include Price Comparison, Location, Local presence of Competition. In addition, analysis is carried out of the relationship between local market characteristics and purchase behaviours of customers from the research with differing natures of stated needs. This extended the factors considered to include: local economic conditions; competitor’s advertising spend; traffic congestion statistics.

Differentiation of hygiene factors, preference and loyalty

The quantitative research is designed to test the impact that each need area has on the depth of the respondents’ commitment to the organisation. It does this by asking respondents about the degree to which they could ‘forgive’ failures against each need and the degree to which excellent delivery against each need would guarantee their future business and potentially even warrant a price premium. This is supplemented by analysis of the purchase, service and complaint behaviour of customers known to have expressed differing core needs.

For a great video that gets across the basic messages from above have a look at the link below and don’t be put off by the suggestion that the target audience is small businesses. We at TCF have seen a number of major corporations who are convinced that their customers are mainly interested in their muffins!!

Author details:

Paul Weston - Director. Paul has been consulting for more than 20 years after a marketing and product management career in the telecoms and motor industries. He has worked all over the world with multinational clients in banking, insurance, telecoms, motor and hospitality. Paul is a Customer Information strategist who believes that this area offers as much opportunity for creativity and innovation as any other area of Customer Management. He has developed many tools to help clients address challenges as diverse as Contact Centre resourcing, business case construction and risk assessment. This has made Paul the obvious person to lead the development and management of The Customer Framework’s core SCHEMA® Toolset, a role he relishes and which represents a substantial proportion of his time. paul.weston@thecustomerframework.com

In the private sector, good individuals are broadly defined as a mixture of the characteristics below. These aren’t all necessarily business traits either, personal traits can also be indicative of how reliable and profitable a company might be.

1. Good net value

They yield value to the supplier which is more than it costs the supplier to service them, taking into account all costs.

Consider the bank customer who keeps a reasonable current account balance, never going into overdraft without permission, and rarely going to the branch, preferring instead to use cash machines.

This customer is of higher net value than a customer with the same average balance who constantly moves into a small overdraft and uses branch services. Even though this customer would pay higher bank charges, these are unlikely to compensate for the extra administrative costs triggered by staff constantly checking to see whether the overdraft will be paid off. Although the bank might try to optimise charges to the latter to make the account profitable, it will not always succeed.

2. Moral (i.e. unfraudulent)

They stay on the right side of the law in all their dealings with the company.

This might seem common sense, but there are grey areas where you need to exercise your discretion. For instance, some companies do quite well out of meeting the needs of customers who in other respects are immoral, but stick to the law while interacting with the company e.g. casinos or betting shops used for money laundering.

3. Prudent

They live their lives within the resources available to them.

This is always a good indicator of how a customer will be to work with, however some companies make a very good living out of imprudent customers, even if it does necessitate charging usurious interest rates!

4. Punctual

They are (nearly) always on time.

This includes, for example, paying off bills on time and arriving at transport locations on time.

5. Responsive in a relevant way to communication

They respond to marketing communications that are relevant to them, but don’t respond to ones that are not.

When receiving relevant communication, a good customer is likely to lead these customers to evaluate seriously the possibility of buying the product or service. Responding to communications that aren’t relevant is known as the “schoolboy brochure” phenomenon at the Motor Show, but is experienced by many companies with strong brands; however the World-wide Web has proved to be a very cost-effective way of handling these.

One of the major problems faced by companies is to manage communications cost-effectively (whether or not they are solicited in the first place) when they have a low probability of leading to retention or development of revenue. Of course, if the communication is solicited, this does not necessarily imply poor targeting, as the customer may respond in other ways than anticipated by the company.

6. Responsive to other initiatives

They are willing to try new products.

7. Accurate and Honest

They are happy to give relevant and truthful information to the organisation and to update information previously given.

This means you can determine appropriate ‘treatment’ for the individual, while avoiding wasting resources offering inappropriate treatment. This also applies to complaints (see below).

8. “Justified” Complaints

They only complain when they truly have a grievance.

Not all complaints are unwelcome, and companies who complain shouldn’t be written off as a bad job. Constructive complaints can help you improve your company’s service, and actually in the long term reduce the number and likelihood of future complaints.

9. Brand Ambassador

They are prepared to recommend a product or service to other individuals if it is good.

It really goes without saying that having a customer who sings your praises to others is invaluable, whether that be online or in person. If you have come across examples of your customer writing testimonials complimenting other companies, this will of course be promising sign for you.

10. Stable or predictable

Their actions are unsurprising, timely and fit to type.

It might be less exciting this way, but it makes for a far less time consuming relationship between you and that customer because you don’t need to chase around trying to find what they need all of the time.

Author details:

Merlin Stone, Research Director. Merlin is a leading expert in customer management.  His work focuses on improving customer experience, satisfaction, loyalty and trust, and also the customer research, data analysis, systems decisions and supplier selection and management needed to support improved management of customers. He is also well known for his work on thought leadership and public relations – improving clients’ communications to the media and customers, including explaining complex propositions and conducting media interviews. This includes conference speaking (especially for client events) and thought leadership research, which focuses on clients’ customers and prospects, the issues they face, how they handle them, and where they need help. merlin.stone@thecustomerframework.com