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

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Customer-Centric Transformation: What Good Looks Like – Acquisition – Identifying New Prospects – Part 13b 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 – Identifying New Prospects

  • The nature of target customers is defined and best potential sources (locations, current suppliers, groupings) of these types of potential customer have been identified.
  • Use is made of all relevant channels of influence and referral both at the individual advocate / trusted advisor level and at the level of influencing bodies and networks. This includes the active exploitation of referrals between business units of the organisation.
  • All pro-active acquisition marketing activity, across all media including social media, is tightly targeted to ensure the highest probability of gaining an attractive mix of new customers efficiently and cost effectively. Marketing activity is effectively terminated where it is resulting in the identification of a poor mix of prospects.
  • Good quality customers who have been lost in the past are targeted for appropriate winback activity, using relevant messages for their reason for leaving, at the right time to ensure the best chance of winning back the most valuable ones.

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 – Agility and Workflow – Part 9 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 Agility & Workflow which is one of the six Enabling capability areas represented. The Enablers explore the components needed to energise your transformation and will invariably involve changes that can be planned for within the current business cycle, for implementation in the next budgetary or operating period. These components support your capability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) already discussed in Part 1 to 4 of this series of blog posts.
Transformation Intent – Agility and Workflow
“The ability to deliver a customer-centric experience is dependent on the speed at which your organisation can mobilise itself so that you can meet the changing needs of your customers and act on new opportunities as soon as they arise. In order to do this you need an agile decision-making infrastructure that is supported by efficient and technology-enabled processes that integrate teams and deliver on the opportunities for real-time responses.”

What Good Looks Like – Agility and Workflow
• The organisation is set up to take customer insight and feedback through to new or amended processes / propositions quickly and is checking that customers perceive this agility.

• Processes are actively managed to ensure the right people receive the right prompts and information at the right time and are able to action it within defined timelines.

• The opportunities and customer need for real-time working are understood and the relevant data is available to enable clear movement towards this in the most important areas.

• Collaboration between customer-impacting colleagues is encouraged and enabled by relevant technology on an overall basis as well as being targeted at specific areas of need.

• Centres of Excellence are used to formerly incubate and develop good practices in one part of the organisation in a way that is specifically designed to support ‘packaged’ transfer of learning across the enterprise.

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 – Insight and Planning – Part 5 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 Insight & Planning which is one of the six Enabling capability areas represented. The Enablers explore the components needed to energise your transformation and will invariably involve changes that can be planned for within the current business cycle, for implementation in the next budgetary or operating period. These components support your capability to implement your chosen customer strategies and rely on the fundamental building blocks (Foundations) already discussed in Part 1 to 4 of this series of blog posts.

Transformation Intent – Insight and Planning

“Whereas data management ensures that the quality and priority of critical customer information enables a customer-centric approach, insight and planning translates that data into meaningful patterns of customer drivers and behaviour. With this understanding you can transform your approach to defining your customers’ needs from an outside-in perspective, thereby segmenting them correctly and, thus becoming capable of delivering a relevant and superior customer experience, while being mindful of your competitors’ manoeuvres.”

What Good Looks Like – Data Management

  • The current and changing nature of customer transactional behaviour is understood in its own right and in terms of how it relates to other behaviours. Non-transactional behaviours (both on-line and off-line) are captured and analysed as well as being researched at the market level.
  • The nature and relative importance of own-customer and overall market needs (as opposed to satisfaction) are understood.
  • A clear and consistently applied segmentation framework is in place at the detailed analytical level and at an operational level that drives differences in the ways that customers are actually managed. The segmentation extends beyond financial value into dimensions such as needs, attitudes etc.
  • There is an explicit customer dimension to business planning activity that considers planned revenue / margin improvements, by customer segment, by the value drivers that will deliver them. The range of competitors likely to impact the organisation’s ability to achieve these plans have been identified and their action / reaction is both predicted and monitored.

 

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

 

What Leaders of 21st Century Customer Centric Organisations do!


Roger Martin, in his Harvard Business Review article (Jan-Feb 2010) entitled ‘The Age of Customer Capitalism introduced a new principle called Customer Driven Capitalism. He introduces this as the third era of modern capitalism and builds an argument that society should rapidly shift towards this principle which is based upon a logic that shareholder value can be best optimised by focussing on the customer. This is radically different from the two previous eras of modern capitalism – the first, Managerial Capitalism, began in 1932, and was defined by the then radical notion that firms ought to have professional management. Business leadership moved from entrepreneurs and founders to an elite group of professional managers. The second era of modern capitalism began in 1976 and, known as Shareholder Value Capitalism – defined and built upon the premise that the purpose of every organisation should be to maximise shareholders wealth.

Roger Martin shares statistics that prove that shareholders weren’t necessarily any better off during era 1 when professional managers came in to look after their interests. Similarly, during the last quarter of the 20th century and through till the end of 2008, when the maximisation of shareholder value was the ‘calling cry’ – shareholders aren’t shown to have benefitted any more as a result of their interests being put first and foremost. In fact, during this period, the focus of many organisations and stock markets became increasingly short-term. This focus on quarterly results led many executives to ‘dilute’ their focus on longer term sustainable earnings, to the detriment of those shareholders who were longer term focussed. We’ve all seen the results and possibly felt some pain resulting from Worldcom, Enron, Madoff and the 2008 financial meltdown. This is largely due to leadership focussed on serving themselves and short-term shareholders rather than leaders who are focussed on building both short and long term sustainability and earnings.

Bill George, in his HBR article entitled ‘The New 21st Century Leaders’ highlights the fact that a new generation of leaders is re-shaping the best led global companies. Authentic, customer focussed leaders are replacing hierarchical leaders who have focussed on serving short term customers.

The late Peter Drucker probably said it best when he stated that the purpose of a business is not to create a product – it is to create a customer.

So what needs to be done to focus new age leadership on delivering sustainable superior business performance and where does leadership focus to deliver against the mandate?

Sadly, measures and bonuses are often structured in such a way that management is incentivised to do the wrong things. Silo mentalities remain embedded, functional areas operate in their own isolated universes oblivious to the customer experience, often a business focuses on optimising a functional area unaware that ‘fixing the part’ often breaks the whole –  (e.g. Optimising operational efficiencies of the call centre by measuring AHT (Average Handling Time), Time to Answer etc without realising that the Call Centre is very often the only channel that a customer will proactively use to make contact with the business and instead of encouraging  customer interaction the focus remains on getting customer off the line as quickly as possible so that operational metrics can be achieved.)  This is often at the expense of brand reputation and customer experience – real drivers of organisational value.

Bonus payouts are very often based upon Revenue, EPS, Market Share and such like. These metrics seldom correlate with building sustained value.

Furthermore, the analyst community very often ‘rate’ companies according to aggregated and generic measures that do not necessarily correlate with building organisational value. For example, ‘Net New Customers’ is often viewed as being representative of an organisations growth capability. The higher the number the better! Well, reality is sometimes different if viewed from a value perspective e.g. Net New Customers may equal 1 Million, made up of 1.27M newly acquired customers and 270K lost customers. What if the bulk of the newly acquired customers were low value customers and the bulk of the lost customers were high value? This may well represent value erosion rather than be reason for celebration.

So…..in the Age of Customer Capitalism leaders need to create organisations that have the capability to Influence Customer Behaviour – they need to demonstrate an ability to Acquire customers more effectively than their competitors through high quality, relevant product and service. Their Value Propositions need to be targeted and appropriate. They also need to create an organisation that has developed capability to Retain customers through the delivery of a service promise that aligns with the value proposition and brand. Corporate social responsibility, socio economic commitments, sponsorships, environmental awareness are all important as part of Retention capability. The organisation also needs to develop the capability to cross-sell and up-sell their customers – to develop trusting customer relationships that encourage customers to be open to additional, relevant products and services.

The ability to Influence Customer Behaviour is reliant on having a solid base of Committed Customers, not merely satisfied customers. It is this group of customers who, through consistency in terms of product quality, relevance and service, become company ambassadors.

The only way to build real commitment is through the Design and Delivery of a Unique and Distinctive Customer Experience. This is a blend of the rational and the emotional – it is a mix of the traditional product, service, communication offering and the emotions evoked when engaging with the business across various touch-points and/or channels. New age leadership needs to proactively design this experience at each and every moment-of-truth and ensure that employees are empowered to deliver according to the agreed upon standards

Lastly – to deliver the defined experience requires Engaged Employees – employees who are fully aligned around the organisations values and its purpose. These employees need to be committed to deliver upon the promises they will have made to ensure that the intended experience is brought alive

Organisations developed around these principles will indicate that the ‘Age of Customer Capitalism’ has come of Age.

Why Organisations are Failing to Build Customer Centricity


For an organisation to be deemed  ‘customer centric’ it will have developed the capability to design and to deliver a unique customer experience – a principle that is the blend between the product, communication and/or service and very importantly, the emotions evoked across all moments of contact – an experience that profitably and positively impacts the customer acquisition initiatives, the customer retention initiatives and  the cross-sell and up-sell initiatives. However, in order to profitably and positively impact these three extremely important value drivers, the business needs the insight to optimally allocate resources to profitable customers. Importantly, ‘profitable customers’ doesn’t only mean those whom are profitable today. It includes those whom will be profitable in the future through normal commercial engagement and through equally important and sometimes intangible value contributions such as positive ‘word of mouth marketing’ and referral  value.

So……….when we read those lofty mission statements that paint the picture of a ‘customer 1st’ business, gawk with wonder at those ‘organisational values’ that promise the world, stare with amazement at press articles and web-entries that freely use self proclaimed descriptors such as ‘customer centric’ and ‘world class service’ we have the right to be cynical. Not many organisations get it right.

Our global customer management capability benchmark (CMAT™) indicates that customer management capability, in general, remains fairly static year on year. This indicates that although many organisations have recognised the need to become customer centric (and in fact have done something about it by having their capabilities professionally assessed through a methodology such as CMAT™) they are failing to execute in a meaningful and  sustainable way. They are failing to re-orient the organisation around a true customer centric mindset. In so many cases there is confusion about what customer centricity means and a distinct lack of enlightened leadership that recognises that economic and market changes are calling for a different way of doing things. Increasing competition, more insightful and educated customers, evolving customer needs, diminishing levels of loyalty and trust are all ‘alarm bells’ that are being ignored.

Not only are the ‘organisation’ systems broken but so too are the ‘market’ systems. The obsession with shareholder value has boosted market capitalisation but has led to financial meltdown.  Increasing pressures from investors require short term results. Corporate boards are challenged by the analyst community to report against aggregated metrics that are deemed to be indicators of business success and sustainability. These are often so aggregated and short term driven that they have little bearing on sustained longer term results. These realities force executives to focus on raising expectations about future performance and then to drive hard to meet those expectations in whatever way possible. In too many cases the decisions made are not in long term interest and are more focussed on ‘puffing up’ short term income statements than building sustainability.

With this as a backdrop it’s no wonder that organisations are failing to live up to their customer centric aspirations. We can confidently predict that the future will look different from the world we inhabit today. How quickly or how slowly that landscape changes remains highly uncertain but we all know how quickly change happens. Amongst other realities the future promises:

  • New technologies that will better enable organisations to both ‘sense and deliver’ what consumers want
  • Interactive dialogue and 2-way conversations that provide free flowing information exchanges in both directions
  • Younger generations who have different buying patterns from those of older generations
  • Multichannel options for buying, interacting, problem solving and communicating
  • Evolving organisational design that is more dynamic and more team based than the traditional hierarchical structures

When we add these few realities  to the mix we recognise that the future is going to consist of increasing  levels of complexity, particularly for those organisations chasing the ‘customer centric’ differentiator. In this rapidly evolving world there is increasingly less tolerance from the consumer for mediocrity and false promises.  We already have significant lower levels of belief and trust in organisations and brands that have, in the past, stood for stability and consistency.

Quite simply, if businesses that believe their own rhetoric about customer centricity being their competitive advantage don’t really start to ‘practice what they preach,’ they need to move away from their perceived point of differentiation and channel their energies elsewhere. They need to find some point of differentiation that is meaningful and relevant to their customer base. At least then they may be perceived as more authentic, even if less customer centric

Customer Experience – still an empty promise!


If you google Customer Experience you have the option of reviewing 158M results. Scary isn’t it?

It’s scary because in spite of all the talk about organizations building their ‘sustainable and competitive advantage’ through the design and delivery of a unique and distinctive customer experience the majority still screw it up.

I’m not sure about you but I’m really sick and tired of being on the receiving side of RANDOM experiences. In our many client engagements I almost always hear of the intention to ‘delight’ the customer. Why I ask? Can’t you simply deliver a consistent experience everytime ? I’d be happy with that!

The reality is that the 21st Century organization requires interoperation and integration. It needs to be ‘joined-up’ with a clear understanding of the intentional customer experience it’s trying to deliver as well as the capabilities of executing against that intention. It needs to have clear definitions and a common vocabulary so that EVERYONE is talking the same language with consistent meaning.

Customer Experience has got to be ‘connected’ with the overarching business strategy. It cannot exist as a ‘bolt-on.’ It’s way too important for that. It must be fully embedded into the very core of what the business stands for. People today expect a customer experience. No organization can differentiate merely by having an experience – the differentiation comes through the ‘kind’ of experience delivered.