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Seven Ways to Improve Customer Value

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1st Jun 2004
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Jennifer KirkbyAcres of words are written about managing customers; much less is said about what customers actually want. We all talk endlessly about providing customer value but what exactly is that? Consumer research, satisfaction indices and discussion at any social gathering all point at the same trend. En masse we are doing a poor job at meeting customer needs and they are getting very annoyed at our shortcomings.

So, lets pause from the frantic 'do it yesterday' rush of solving our internal problems of brand alignment, channel management, and sales targets and look at value from the point of view of our customers instead. For our customers are the only profit centre we have*.

The world may be global but building customer relationships differs between the Americas, Europe, Africa and Asia, because of culture. (see CRM Global Adoption – Jennifer Kirkby – free slide). The social trends below are primarily, but not exclusively, those of the western industrialised consumers.

1. Improving Returns
What customers really value is help in improving the quality of their lives, their wealth, health, competence and happiness. Increasingly, this means providing skills and experiences rather than just material goods – of which they have enough. A present of a massage will bring more delight than a 'soap on a rope'. Companies should understand goals and help customers achieve them (see Co-Managing Consumer Accounts in CRM – Scott MacStravic – free).

2. Outsourcing Non Core Competencies
Consumers are seeking more support and service. They don’t have enough time, knowledge, energy, and space and hate companies who waste these resources. They want solutions to problems not products. A wonderful example is the lingerie company Figleaf, who have a ‘blame it on us’ service for men who have forgotten an important anniversary. They send out the belated gift together with a full apology. Find out what is going on in people’s lives, not just product usage. (see The Support Economy – chargeable)

3. Reducing Complexity
Choice has turned into a double edged sword. As supplier switching costs have decreased, e.g. gas and electricity, the complexity of life has increased. Technology causes anxiety and annoyance; media messages create a cacophony that even invades public toilets; and the choice of 20 styles of jeans, 24 flavours of jam, and 22 models of mobile phone is dispiriting. Consumers seek trusted sources of personal advice and information – friends, family, networks or advisors. The lesson for companies is to innovate not copy and swap PR and mixed media for advertising. (see Move Towards A Redefinition of Critical Marketing – John Billett – free)

4. Channel Management
Consumers value convenience and channel proliferation brings great advantages if they can use what suits them. Sometimes they need high touch interaction and sometimes high tech – depending on the point of the purchase lifecycle. 51 per cent though, still want personal contact at all points even if that is the telephone.

Self service is seen as either customer liberation or corporate imposition depending on perceived intent. If it even smells of an agenda for transferring cost from company to consumer it will be rejected. The more confidence people have in a company the more self-service will be consider. (see Self-Service Society – Future Foundation –chargeable)

5. Company Trust Management
Consumers don’t talk about relationships, they talk about trusting companies. The hallmarks of trust are security, value for money and authencity. Increasingly consumers also want to see demonstrable humility and a sense of humanity (see The Next Hot Topic in CRM). Customers most likely to be attitudinally 'loyal' want this far more than the habitual price hoppers – who never will be loyal.

Consumers are discontent with companies and independent, non-government organizations (NGO’s) are gaining power to support them. The 'compensation culture' is spreading into company territory, court small claims in the UK have risen by 40 per cent in the last few years. Company risk management is needed, in the form of quality control standards, up to date terms, instructions, warnings and product recalls

6. Inspiring Communities
The times of attributing need by lifestage and affluence are going. Values and attitudes dominate behaviour and networking with kindred spirits is getting easier. Propositions need to inspire and reinforce community values groups (see Adversting to the herd – Mark Earls free). Real differentiation can be found here. Luxury travel for 'empty nesters' can mean marble bathrooms or, increasingly, local staff and natural materials. Eastern Europeans hang on to local communist style cafes and shoes rather than global brands. Nokia knows that 'the mobile community' is more about community than mobile.

7. Collaboration
People value involvement and respect. They want to engage with companies. They want dialogue not communication. They want to be known, listened to and co-create the brand (see Branding as an organic procsss – Johnnie Moore – free). An example is Elle magazine who recently carried a Future Elle supplement written by a team of readers. Trust is created when a company is familiar and open. Harness the value in technology innovatively – involve customers in incubation units

For many consumers the best companies provide value when they are sympathetic and trustworthy, dynamic and innovative. Hardly earth-shattering but true.

*Peter Drucker

Jennifer Kirkby
Strategy & Business Analyst CMC
Director, Mutual Marketing
[email protected]

 

Replies (10)

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avatar
By Jennifer Kirkby
07th Jun 2004 18:01

Don't know that one, but have got "Eating the Big Fish" on my shelves. An excellent 'how to' on challenging complacent brand leaders - especially those who have lost touch.

Is this starting to turn into a 'fishy tail'? ;-))

Thanks (0)
avatar
By Jennifer Kirkby
07th Jun 2004 18:01

Don't know that one, but have got "Eating the Big Fish" on my shelves. An excellent 'how to' on challenging complacent brand leaders - especially those who have lost touch.

Is this starting to turn into a 'fishy tail'? ;-))

Thanks (0)
avatar
By AnonymousUser
07th Jun 2004 16:46

Jennifer

A sign of the times...and potentially a big loss of management experience and network contacts in the middle of the organisation, the melting pot where unworkable ideas from above so often get put into action down below.

Now what was the title of that famous book? Ah yes, "A Fish Rots From its Head".

Sadly, all too often, never was a truer word spoken.

Graham Hill
Independent Management Consultant

Thanks (0)
avatar
By Jennifer Kirkby
07th Jun 2004 12:00

A very useful placed to start. Even more useful maybe just looking at what we ourselves want as customers and our own experiences. Have you noticed how the further up an organization people rise the further from customers they get and the more they actually put up barriers between themselves and customers.

Interestingly Barclays Bank have announced today (7 June)that they are putting more staff back in branches and taking out middle management - I wonder if its senior management they ought to look at more closely?

Thanks (0)
avatar
By AnonymousUser
07th Jun 2004 11:09

Jennifer

I think that we all tend to forget that most customers still want the much same things they always wanted; the right things, of the right quality, at a fair price and with a minimum of unnecessary hassle.

To deliver these things, companies basically need to do what Michael Lanning of 'Building a Market Focussed Organisation' fame described years ago in his book 'Delivering Profitable Value': 1. Find out what customers want. 2. Give it to them. 3. Tell them about it. Obviously there is a wee bit more to it than that - profits for example - but that just about sums up the business basics.

Sadly, as you have pointed out in the past, companies tend to get caught up in the production game, whereby they try and sell to reluctant customers what they have produced. Rather than trying to produce what they can sell to keen customers. That is much harder. You need to know all about customers, their needs, wants and expectations!

So before we get too carried away with the complexities of segment proliferation, the needs of cash-rich-time-poor customers and non-core competency outsourcing, just ask yourself one simple question...

How many customers have YOU talked to today?

Starting to feel uncomfortable already. You only have yourselves to blame.

Graham Hill
Independent Management Consultant

Thanks (0)
avatar
By admin
05th Jun 2004 04:06

consumers are unpredictable species whose choices always keep on changing. Now here we can't say that they are loyal to us as they use to be a decade back.Values,trust,security are the age old words but the consumers want something new.What they want and how can we identify their new wants?
we the companies and the consumers can sit together to decide what will be the values and by this way only the consumers can develop a trust.

Thanks (0)
avatar
By AnonymousUser
07th Jun 2004 16:46

Jennifer

A sign of the times...and potentially a big loss of management experience and network contacts in the middle of the organisation, the melting pot where unworkable ideas from above so often get put into action down below.

Now what was the title of that famous book? Ah yes, "A Fish Rots From its Head".

Sadly, all too often, never was a truer word spoken.

Graham Hill
Independent Management Consultant

Thanks (0)
avatar
By admin
05th Jun 2004 04:06

consumers are unpredictable species whose choices always keep on changing. Now here we can't say that they are loyal to us as they use to be a decade back.Values,trust,security are the age old words but the consumers want something new.What they want and how can we identify their new wants?
we the companies and the consumers can sit together to decide what will be the values and by this way only the consumers can develop a trust.

Thanks (0)
avatar
By AnonymousUser
07th Jun 2004 11:09

Jennifer

I think that we all tend to forget that most customers still want the much same things they always wanted; the right things, of the right quality, at a fair price and with a minimum of unnecessary hassle.

To deliver these things, companies basically need to do what Michael Lanning of 'Building a Market Focussed Organisation' fame described years ago in his book 'Delivering Profitable Value': 1. Find out what customers want. 2. Give it to them. 3. Tell them about it. Obviously there is a wee bit more to it than that - profits for example - but that just about sums up the business basics.

Sadly, as you have pointed out in the past, companies tend to get caught up in the production game, whereby they try and sell to reluctant customers what they have produced. Rather than trying to produce what they can sell to keen customers. That is much harder. You need to know all about customers, their needs, wants and expectations!

So before we get too carried away with the complexities of segment proliferation, the needs of cash-rich-time-poor customers and non-core competency outsourcing, just ask yourself one simple question...

How many customers have YOU talked to today?

Starting to feel uncomfortable already. You only have yourselves to blame.

Graham Hill
Independent Management Consultant

Thanks (0)
avatar
By Jennifer Kirkby
07th Jun 2004 12:00

A very useful placed to start. Even more useful maybe just looking at what we ourselves want as customers and our own experiences. Have you noticed how the further up an organization people rise the further from customers they get and the more they actually put up barriers between themselves and customers.

Interestingly Barclays Bank have announced today (7 June)that they are putting more staff back in branches and taking out middle management - I wonder if its senior management they ought to look at more closely?

Thanks (0)