Customer Strategy Infographic


It goes without saying that if your organisation pledges to become more customer-centric, you need to innovate your business model through a customer-centric lens. Customer-Centricity is all about the organisations ‘way of work’ or the ‘business system’ that enables the business to design and to deliver a unique, distinctive and consistent customer experience in order to Acquire, Retain and Develop targeted customer Efficiently. An organisation seeking to develop customer-centric capabilities must be willing and able to change its organisation structure, its measures and its employee and distribution incentives to focus on long term business success.

The design of a customer-centric strategy requires an organisation to deeply understand its current customer-centric capability (its departure point on the transformational journey), the nature of customer-centricity to which it aspires, the action and implementation priorities to bridge the gap between the current and the ‘to be’ state as well as the business benefit (financial uplift) derived from this improved level of customer centric capability.

This infographic helps explain the core components of the transformational journey and the customer-strategy, and is based upon the SCHEMA Customer Management Framework which is the methodology we use to drive customer-centric transformation

Exampleco customer management strategy - REAP

Customer-Centricity! Oh, I’m Doing that Already!


Yeah right! I had a really interesting discussion with a prospective client recently. He is the MD of a multi franchise vehicle business. Successful? – no doubt. Customer-Centric? – I don’t think so. Yet he was adamant he had ‘customer-centricity’ under control. They were busy hiring someone who was going to drive this initiative. This is a classic example of a refusal to admit to the current reality. A refusal to fully understand what’s wrong with the current way they’re running the operations. A refusal to really understand what customer-centricity is all about.
Will these refusals lead to business failure? I certainly don’t believe so. But I do know that they will lead to lost opportunity. And what really agitates me is a verbal commitment made to developing themselves as an internationally recognised exemplar of customer experience. How, I ask with tears in my eyes? How are they going to enable disruptive change by doing more of what they’ve always been doing? Time will tell. I only wish that people would stop making bold statements that they’re never going to deliver upon, unless they develop a REAL understanding of their current reality, a REAL understanding of the reality to which they aspire, and REAL capacity for change.

Customer Centricity = Sustainability = Customer Centricity = Superior Business Performance


In a recently published article (MIT Sloan Management Review – How to Become a Sustainable Company)the authors point to a study that supports the view that ‘high sustainability’ companies significantly outperformed their counterparts over an 18 year period in terms of both stock market and accounting criteria, such as return on assets and return on equity. Also, stock market performance was higher and there was lower performance volatility. We can therefore conclude that sustainability makes good business sense.
The term ‘sustainable company’ is spoken about and referred to fairly frequently these days. At the core of this trend is the fact that consumers and the general public are not satisfied with businesses that focus solely on short-term profit maximisation. People want businesses to be far more considerate of broad based human needs.
In this context ‘sustainability’ refers to a business philosophy based on balancing financial, social and environmental considerations.
I am a firm believer and supporter of ‘sustainable enterprise’ – I also have this expectation that if a business can balance financial, social and environmental issues then surely they should add ‘customer experience’ to the list? After all, why waste the energy and effort to address social and environmental considerations (which ‘speak’ to us and can therefore be used to create greater levels of loyalty and advocacy) if they don’t design and deliver a differentiated customer experience.
Sadly, I’m a customer of a couple of ‘sustainable’ companies that deliver a customer experience that is mediocre at best and downright unacceptable at worst. This got me thinking from two perspectives – firstly, building organisational capability for sustainability is similar to building organisational capability to deliver differentiated experiences. Secondly, if an organisation is committed to ‘sustainability’ yet doesn’t focus on customer experience, should we be more accepting of mediocrity in delivery of those customer experiences? I say NO! NO! NO! In fact, Customer Experience and Sustainability should go hand in hand – one without the other is indicative of opposing forces.
Your thoughts?

Customer-Centric Transformation a no-brainer: Check out why!


I’m guilty! I admit that I’m a customer-centric evangelist because quite frankly, how else can you build meaningful competitive advantage? Customer-centricity is all about differentiation and it’s almost impossible to sustain differentiation around product, price and distribution footprint. But you can sustain differentiation around your customer knowledge, insights and understanding.

Here are 3 questions designed to get you thinking a little differently about the criticality of developing customer-centric capability within your organisation. These ideas are attributed to Don Peppers & Martha Rogers of Peppers & Rogers Group, whom I worked with very briefly around 11 years ago.

1)      Who is the one stakeholder, whom if you maximised the return thereof, would benefit ALL stakeholders?  So think about this – there are generally 5 major stakeholders in businesses today – society, partners, investors, customers and employees. Maximising the return for the investor is not necessarily good for the customer! Maximising the return for the employees doesn’t mean ALL other stakeholders will benefit. Maximising the return for the Customer, on the other hand, certainly does benefit all other stakeholders. This is why the principles of customer-centricity are so important. If an organisation is unable to propagate a supply-demand chain then they are unable to supports investors and all other stakeholders.

2)      Would you agree that customers create 100% of business value in almost all cases? Customers create value for businesses every quarter by purchasing products and services. They also create value in another way which is referred to as lifetime value (LTV). LTV is based upon their intention to continue doing business with, and paying money to the organisation. That LTV goes up and down in value, as does a stock/share portfolio. Any reduction, or potential reduction, in that value (brought about possibly through a poor engagement or experience) is bad news for the organisation. This level of understanding and insight of that value change is generally not available within organisations so this reduction in value is not reported to shareholders , albeit that it is akin to the company reporting lower earnings which in almost all cases results in company stock/shares losing value. My friends at Peppers & Rogers have a metric for this which they refer to as ‘Return on Customer’ and this metric is designed to capture both types of value created (actual and LTV) to balance the short term/long term impact of customer value. ROC = (Profit made on customer today + change in LTV)/Initial/beginning LTV.

3)      What do shareholders & investors really want? Most shareholders and investors want confidence that leadership is able to grow a company organically. That means that the organisation will have developed capabilities to Acquire customers, to Retain them and keep them buying from the business, to grow them and to get them to buy more from the business. They’d also want confidence that leadership is able to guide investment and understand the cost-to-serve different customer cohorts/segments to best manage financial return. If the business can demonstrate these capabilities then they are providing REAL value to customers which means they’re providing real value to shareholders/investors at the same time

Customers are a scarce asset. They are valuable and unique. They are measurable. They are the biggest limitation to growth and to understand this will impact the decisions we make.

So…………within your organisations, if customers are the most important asset in your business, who is managing them as such. What operational framework/ architecture/ business model are you using to optimise that asset? Who is tracking the value of the customer today and the value of the customer tomorrow? What does your customer dashboard look like?

Comments?

Customer-Centric Transformation: What Good Looks Like – Penetration – Managing High Value Customers – Part 14c of 14c


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

This week  we are dealing with Penetration which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and includes Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Penetration dimension relates to the ability to develop more value from existing customers through cross-sell and up-sell activities to improve return on customer investment. Formal management of high value customers and key accounts is a critical part of this. It also requires clarity as to how you deal with low value customers from a development perspective, if at all. The 3 sub-components of the Penetration dimension are ‘Understanding Customer Value,’  ‘Increasing Customer Value,’ and ‘Managing High Value Customers.’ Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Penetration

“Delivering sustainable and superior business performance requires the on-going development and growth in the value of your customer base. To do this you need to have an in-depth understanding of your customer value so that you can identify opportunities to increase this value. This potential uplift is then supported through relevant propositions, cross-selling, up-selling, indirect value creation and expansion of existing product usage. In treating different customers differently, high value customers should also be given special attention so that the right team equipped with the necessary budget can deliver on their specific needs.”

What Good Looks Like – Managing High Value Customers

  • Current and potentially high value customers are identified and managed as a specific category with additional resources and budget, even if there is no formal concept of key accounts, or they do not fall into the definition of key accounts.
  • Planning for customers that do classify as formal key accounts is a meaningful exercise that drives resource allocation, customer activity and relationship development rather than just setting targets and budgets. It involves a wider range of internal stakeholders for each account and is at least transparent to the customer if it does not actively involve them.
  • Key accounts are managed at a deeper and more pro-active level than other customers with regular reviews of the relationship as well as progress against the plan. Opportunities for meaningful collaboration on a shared-risk basis are actively sought.

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y

Customer-Centric Transformation: What Good Looks Like – Penetration – Understanding Customer Value – Part 14a of 14c


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

 

 

 

This week we are dealing with Penetration which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and includes Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Penetration dimension relates to the ability to develop more value from existing customers through cross-sell and up-sell activities to improve return on customer investment. Formal management of high value customers and key accounts is a critical part of this. It also requires clarity as to how you deal with low value customers from a development perspective, if at all. The 3 sub-components of the Penetration dimension are ‘Understanding Customer Value,’  ‘Increasing Customer Value,’ and ‘Managing High Value Customers.’ Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Penetration

“Delivering sustainable and superior business performance requires the on-going development and growth in the value of your customer base. To do this you need to have an in-depth understanding of your customer value so that you can identify opportunities to increase this value. This potential uplift is then supported through relevant propositions, cross-selling, up-selling, indirect value creation and expansion of existing product usage. In treating different customers differently, high value customers should also be given special attention so that the right team equipped with the necessary budget can deliver on their specific needs.”

What Good Looks Like – Understanding Customer Value

  • Definitions of how customer value is calculated have been agreed and implemented for the current, to-date & future/lifetime value levels. Proxies have been developed where real data is not available.
  • Analysis has been carried out of value distribution across the customer base and there is clarity about what each of the main value drivers are (e.g. acquisition rate, attrition rate, product holding, market cost etc.).
  • The development of value (upwards and downwards) over time at the absolute level and at the share-of-spend level is understood for different types of customers.
  • Opportunities to develop customer value are identified based on analysis of current purchase patterns, predictive modelling and any other identifiable indicators.
  • Staff are clear on how much value varies between customers and the critical importance of taking special care of the most valuable.

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y

Customer-Centric Transformation: What Good Looks Like – Acquisition – Setting Up & Activating – Part 13e of 14


Designing and executing a customer-centric business model requires end to end organisational alignment. Customer-centric capability development cannot take place in isolation to the rest of the business. The customer-centric journey requires a clear quantified understanding of current organisational capability across all 14 capability areas of the SCHEMA® Customer Management framework in the centre of the REAP Customer-Centric Blueprint below. As important as an understanding of current customer management capability is, so too is an understanding of the capability to which the organisation aspires.

Each week I’ll address another single capability area, sharing with you the Transformation Intent to which your organisation should commit to, as well as ‘What Good Looks Like’ for those organisations that have achieved a fairly high level of maturity in the respective capability area.

The REAP Customer-Centric Organisation Blueprint®

REAP CCOB for Blog

 

 

 

 

This week we are dealing with Acquisition which is one of the four Execution capability areas represented. The Execution layer relates to the capabilities and control levers needed to optimise customer value and includes Retention, Efficiency (understanding cost to serve), Acquisition and Penetration (customer development, cross-sell and up-sell) – collectively referred to as REAP. These are capabilities and initiatives that can be optimised in the short term.

These capabilities support your ability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) as well as the Enabling capabilities already discussed in Part 1 to 10 of this series of blog posts.

Each of the four Execution capability areas is made up of sub-components. The Acquisition dimension focuses on the specific, practical activities that will support you to increase both the quality and volume of new customers. Acquisition explores ways in which you can increase the size of your customer universe and your share of it. The 5 sub-components of the Acquisition dimension are ‘Understanding Acquisition,’  ‘Identifying New Prospects,’ ‘Managing Interest,’ ‘Converting Sales,’ and ‘Setting up & Activating.’  Each of these areas is addressed in separate, individual blog posts.

Transformation Intent – Acquisition

“A customer-centric Acquisition approach begins with a clear and intimate understanding of your customer universe and the factors that impact your ability to sell to them. Acquiring your share of this customer universe is achieved through appropriate targeted marketing activity across a broad range of relevant channels and media, and interest generated is managed effectively so that prospects are kept warm until the sale is closed. While the sales process itself should focus on closing the sale, it should also take into account effective lead management, specific sales targets and rewards and careful controls over pricing. Customer-centricity also recognises that new clients have not been secured until you have taken them through an experience-based initiation process, where they are made to feel welcome and are well informed.”

What Good Looks Like – Setting Up & Activating

  • The new customer set-up process is specifically engineered to be a great first experience with organisation. The welcoming activity that follows happens quickly and in a way that is appropriate to the new customer’s potential value and any history with the organisation.
  • Clear definitions are in place to define when customers have settled into an active relationship with the organisation. Very regular reporting identifies those who have not done so and pre-planned activity is undertaken to address these customers.
  • The duration and nature of new customers’ “early experience phase” is understood and for appropriate customers is addressed with an appropriate ‘nursery’ programme to care-take them through. A specific new customer segment (or set of segments) ensures they are treated correctly and at sensible cost until they can be allocated to a more meaningful in-life segment.

For more insight into customer-centric business model innovation as well as more insight into this particular area of the REAP Customer-Centric Blueprint, please see my book “The Customer-Centric Blueprint’ – http://amzn.to/ZILg4y