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If customers buy benefits why do we spend so long measuring transactions?

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13th Mar 2009
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Organisations move in the direction of their measures - but many firms target busy, transactional measures which may steer them in the wrong direction. So could focusing on benefits rather than transactions help?

Alison Bond, The Halo Works

Benefits are the things which are derived from an organisation. For example, a pensions provider's main benefit to those buying its service is a confidence for the customer that their financial future is secure. It has nothing to do with how quickly they answer the phone - although this might help the feeling of security. It is to do with the maturity values and a confidence in the integrity of the company.

Transactions are the things which people and organisations do. So the transactions associated with the pension provider might be ensuring a quick answer to problems and queries, and regular and easy to understand updates on the fund. But transactions use up resources, be they time, energy or materials. This means that they are therefore finite - there is a limit to how many transactions can be done. Consequently, transactions ensure an organisation and its people are busy, whereas benefits ensure that an organisation is delivering its promises.

"Who said that a busy organisation is a good organisation? Who says that it is delivering its promise to the staff who work there as well to as its shareholders, stakeholders and, importantly, its customers?"

Alison Bond

Now let's think about how things are measured. An organisation goes in the direction of its measures, or at least it tries to, because that is why it has measures. For example, if an organisation has a target to make a profit, the people in that part of the organisation will shape themselves around the need to make that profit. If everyone in the company is focused on that profit target, that will be the primary concern.

Great, you say, everyone here is trying to make a profit so it is bound to be successful. However, it often doesn’t work like that. The extreme cases like Enron are classic examples of a target driving behaviour in a negative way, but there are plenty more.

We uncover lots of these transactional, busy targets in our work as researchers and they always make me frustrated. Who said that a busy organisation is a good organisation? Who says that it is delivering its promise to the staff who work there as well as to its shareholders, stakeholders and, importantly, its customers?

Say you are a creative business and hire a bunch of creative people to service your creative-hungry clients and you then focus your creative people on profit; what effect does that have on their creativity? Does it make them more creative or does it divert their attention away from the creative process and end up giving them creative block? And what about the customer who bought the promise of a creative and outward looking service? How do they feel when the service they get is from someone with one eye on the bank balance and the other eye on the clock because the best part of the day is going home?

The benefit of benefits

So how would focusing on benefits rather than transactions help? If an organisation measures the benefits the organisation delivers it will attract and keep the best staff. And the same will happen with customers. Why? Because people buy benefits. There are not too many customers, or staff for that matter, who are committed to making your company rich, but people do like to feel that they have made a difference and (if they are a customer) are keen to realise the benefit of buying your company's service in a tangible way.

Now think about which company is going to be the most successful? Is it the one which has everyone focused on profit, or the one where they are focused on the benefits the business provides - be they tangible or intangible? All our work has shown that the profitable businesses are the ones who align themselves behind the benefits they sell. Yes, they measure profits, but the main focus is an alignment behind the core business they operate. The staff stay and the customers are loyal.

"The profitable businesses are the ones who align themselves behind the benefits they sell. Yes, they measure profits, but the main focus is an alignment behind the core business they operate."

I call these benefits measures 'halo measures' because they go beyond the logical, transactional 'head' measures traditionally used in organisations, which we all know are important but find it difficult to articulate. They are the 'think and feel' elements, including levels of integrity, the enthusiasm and passion for what is being delivered and the openness of communication. These are directly related to the benefits that people buy or use an organisation for, and are things which keep people loyal.

Halo measures are way more fun to use than transactional measures because they are all about people. We are all members of that club so using them makes sense. They are also much cheaper to use than transactional measures because they have a universal nature, which means that levels of bespoking can be done by the user rather than external consultants.

As a consultant, I am committed to organisations delivering what they say they are going to and for staff to enjoy their work life more. Halo measures assist with this and the sooner we see them in widespread use the better.

Alison Bond is a director of The Halo Works and has more than 20 years market research experience. She is the author of Direct Hit, the textbook on direct marketing, and the Definitive Handbook of Direct and Interactive Marketing. Her latest book is on consumer insight, commissioned by the Market Research Society.

www.thehaloworks.com

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Dr. Graham Hill
By Dr. Graham Hill
23rd Mar 2009 20:39

Hi Stephen

Thanks for your comments and the ad hominem.

The first point of my comment was that 'benefits' is another word that has been hijacked by marketers and has had its meaning clouded as a result. Like needs, wants and expectations before it, benefits now has many different meaings for many different people. In reality, it has ceased to have any real meaning.

The second point was that the word has no real resonance with customers either. Customers do not go out looking for benefits from the products they buy, they go out looking for products to help them get jobs done. Ted Levitt first described this problem in the 1970s in his book 'The Marketing Imagination'. He illustrates it with the job of drilling a hole in a wall to hang up a picture. Marketers will talk about the benefits of one drill over another. Our drill drils faster, ours drill deeper, etc. But customers just want a hole in the wall to hang up a picture. A manufacturer who comes along with a cheap, safe, home laser for making precise holes quickly with no mess will disrupt (in a Christensonian fashion) the drill marketers and win the day, because the laser helps the customer get the job done more effectively. Customers don't look for benefits, they look for products to help them get jobs done.

The final point was that managers actually need a balanced scorecard of customer data to sense and respond to changing customers' needs effectively. They need historical transactional data to understand how successful they were in the past. But the past is often a poor guide to the present and a worse one to the future. So they need purchase context information and purchase influencer information too to understand what customers are currently purchasing and how. And they need information about customers' needs in the form of the jobs customers are trying to do and the outcomes they desire from doing them (think about Levitt's drill example) to understand what they should be developing for customers in the future. We need to look beyond simple transactions to a balanced scorecard of customer data.

Transaction measures are a start. At least they are easy to define. But they are not enough. Benefits are too nebulous to be useful. We had better start looking at purchase context, purchase influencer and customer needs too, if we really want to get to the heart of customers, their behaviour and how we can influence it.

This long comment is exactly what I had hoped to avoid by referencing my blog post at CustomerThink. Interested readers could have found my CustomerThink blog post, (using Google), once they had finished reading Alison's article and my comment. The blog post describes the balanced scorecard of customer data and why it is necessary in much more detail. But then you would have known that if you had read the blog post, wouldn't you?

Graham Hill
Still a Customer-driven Innovator, I Hope

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Dr. Graham Hill
By Dr. Graham Hill
20th Mar 2009 08:12

Hi Alison

People don't buy benefits. They never have. This is just marketing-speak. It's not how people think nor how they behave. In reality, customers hire companies and the products, services and experiences they offer to help them get jobs done.

As I wrote in a recent blog post on 'It's Time for a Balanced Scorecard for Customer Data' at CustomerThink, we should be looking at a variety of customer data, including historical transactions, purchasing behaviour, social influences and customer needs (in terms of jobs and desired outcomes).

It is time we looked beyond transactions, but trying to master benefits will only lead us down a dead-end alley. We need a balanced scorecard for customer data.

Graham Hill
Customer-driven Innovator

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