Transcript
Page 1: Inside The Customers Mind

Inside the customer’s mind: A framework for building profitable customer relationships

NCDM Summer 2003Intensive Session – July 28, 2003

Dave HarkinsVP, Strategic Services

The Jackson Group

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About today Some “lecture” Mostly interactive! Hands-on session Apply your knowledge of your company, using a

defined, repeatable framework to build better customer relationships

• There much more to what’s presented today—in the interest of time we’ll be focusing on just a few key points

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Today’s Goals Stimulate your thinking about your company and its

customer relationships Provide tools to help you plot a course of action for

overcoming relationship-building challenges Help you create relevant, hands-on examples to

assist you in thinking through issues Others? You tell me…

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Introduction What we need to get on the table up front

• Cultural Issues– We think about the customer, but generally treat customers

as numbers in the spreadsheet.– Customer-centered thinking is at the core of all we do

• Okay, but…– What about channel conflicts?– What about technology challenges?– What about the data?– What about the “brand”?

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Everything you do is to get or keep customers.

-Jack Welch, paraphrased

News Flash!

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Strong customer relationships begin by looking at your organization from the outside-in.

-Dave Harkins

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What does the customer think? Listening for the silent screams of customers

• Do you hate your customers?– Do you make it hard for your customers to buy?– Do you have absurd return policies?– Do you have sales procedures (commissions, perks, etc.) that

push products on customers, regardless of their needs? • Are your business operations or structure transparent to the

customer?– Do your customers get lost in “voice-mail hell” when they call?– Do your customer have to talk to more than 2 people because

your structure doesn’t allow front-line employees to solve customer problems?

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What customers really want from you1. Value for price paid2. Solve my problems and/or make my life easier3. Stop making it hard for me to be your customer4. Get rid of “things” that don’t matter to me or make my life more

complicated5. Keep me informed6. Listen to what I say (and make me say it only once)7. Show me how sharing my personal information will be of benefit to

me8. Show me you care9. Be sincere and trustworthy10. Quit asking me if I like you11. Remember that I pay your bills

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Putting the customer first How you can contribute to a customer-first culture

• Ensure that everything you do is done by first looking from the outside-in

– How will the customer view what you’re doing?– Will it satisfy the “holy grail” of customer “wants”?

Create a sustainable relationship using a methodical, easy-to-understand framework

• Understanding the customer• Developing a relationship• Selling through the relationship• Fulfilling your obligations in the relationship

Keep the promises you make

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Building a framework to deliver Profitable Customer Relationships

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It starts with a Promise The customer has expectations of their interactions based on

some external factors Think of this like dating…

• Get to know and understand the other person• Develop the relationship by sharing and interacting• “Sell” yourself and your value as someone with which to spend

time• Fulfill your obligations to make the relationship work

It’s work It’s a never ending cycle You win some, you loose some, but you never really fail if

you learn something each time you go through the process

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The Customer Relationship ProcessDefinition:

What the customer experiences or believes he/she will experience when interacting with a company.

We call the value delivered or implied: “The Customer Promise”

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Types of Promises Institutional

• Broader, “brand-oriented” promises• Generally “implied” promises• Difficult to measure• Often deployed through taglines • Can be presented as part of the corporate mission or in customer service

statements Interactive

• Directly stated• Tangible, tactical• Actionable by employees• Often “made up on the spot” • Can be any promise made by an employee, regardless of fit with the

institutional promise

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Customer Promise Examples A few implied, institutional promises presented through

taglines • “You’re in good hands…”• “Yeah, we’ve got that.”• “Like a good neighbor…”• “Have it your way…”• “You can do it, we can help”

How can these promises be consistently delivered?

The Promise is delivered using a repeatable process we call:

The Customer Promise Framework

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Framework Objectives Provide the understanding of the customers (and

prospective customers) Needs, Values and Expectations (NVEs) to put the human element back into the process

Provide the foundation for relationship-building with customer and prospective customers

Provide a process for how best engage the total organization in the customer’s experience

Determine how to leverage NVEs to build sustainable customer relationships

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Framework Importance Allows for a better understanding customer (and

prospective customer) • Needs, Values, and Expectations (NVEs) allow an

organization to deliver higher value products and services, and build stronger relationships

Stronger relationships allow an organization to leverage additional sales opportunities

Additional opportunities result in revenue growth

REMEMBER: Everything you do is to get or keep customers (in other words, it’s about SALES)

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Develop the relationship by providing relevant value in:•Product/service offerings•Pricing strategies•Distribution•Promotion/Advertising

Understand the customer with analysis of:•NVEs•Transaction activity

Sell using the relationship with:•Targeted acquisition efforts•Direct, F2F sales•Loyalty and continuity programs

Fulfill your obligations to the relationship through:•Customer service•Frontline support•Product/Service Delivery

Information Technology

Organizational Development

Human Resources

Finance

The Customer Promise FrameworkThe Customer Promise Framework

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Step 1: Understanding the Customer

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Understanding the Customer All data and information play a part, but we tend to

look too much at the numbers• Promotion History• Response History• Purchase Transactions• Predictive models• Demographics, lifestyle, overlays, etc.

We need to also look at the human element Evaluating Customer Needs, Values and Expectations

or NVEs help to put the human element into the equation

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It begins with customer NVEs What are customer NVEs?

• Needs: Basic human needs (like food, clothing, shelter) or core needs, as well as variable needs to solve a specific problem at hand

• Values: Combines the customer’s values (integrity, honesty, etc.) with what he or she deems to be important in the relationship with your organization (comfort, security, stability, friendliness, etc.)

• Expectations: What the customer expects from his or her interactions with your company based either on past experiences or on the Customer Promise that you’ve presented—your brand identity.

How well do customer’s NVEs align to a company’s perspective of itself? Let’s look at a retail example…

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Aligning NVEs to Corporate Perspective

Customer Customer View Company View VarianceProduct/Service Value 5 5 0Solved problems 2 4 2Easy to do business 2 5 3No "noise" in the process 2 4 2Information that's relevant 3 3 0Exceptional service 3 4 1Benefits for personal information 1 5 4Value as a customer/person 4 4 0Sincerity 3 4 1Lack of inferiority complex 2 5 3Control 2 4 2

5 = Excellent 1 = Poor

Alignment Variance:0 = Excellent1-2 = Good (Caution Areas)3+ = Poor (Problem Areas)

Retail Operation

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Aligning NVEs to Corporate Perspective

1

2

3

4

5Product/Service Value

Solved problems

Easy to do business

No "noise" in the process

Information that's relevant

Exceptional serviceBenefits for personal information

Value as a customer/person

Sincerity

Lack of inferiority complex

Control

Customer View Company View

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How does your company measure up? Do you know…

• Your customer’s NVEs?• How do well do you think your company aligns to your

customer’s NVEs?– Looking from the outside-in, would your customer agree?

• In reality, how does who you are (and what you look like) align with customer NVEs?

– Where the area of convergence between what you say and how you act?

– Do you meet expectations every time?• How do NVEs impact your customer interactions?

Page 24: Inside The Customers Mind

Understanding the customer Exercises (20 Minutes)

• Pick two customer segments, define NVEs• Identify your organization’s key strengths from a customer

perspective, relative to the NVEs (use a scale of 1-5 with 5 being “Excellent” and 1 being “Poor”

• Variance in alignment of 0 = Excellent; 1-2 = Good; 3+= Poor

• Map and evaluate alignment– What are you going to do to gain greater alignment in weaker

areas?– How will you prioritize the order of work to be done?

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Step 2: Developing the Relationship

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Developing the relationship The key to developing a relationship is anticipating

and providing for customer needs and expectations• When, how and why a purchase is made (or planned) is

critical for developing product, market, and customer strategy

• What’s provided (product or services) must be relevant and timely to the customer

Understanding how the customer’s purchase decision process is almost as important as NVEs in building the relationship

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Developing the relationship Understand how the customer buys

• Provides key knowledge to map with NVEs to develop product, price, distribution and promotion for customer segments

Purchase Decision Cycle provides a guide• All customers have a decision process for buying• For the most part, everyone follows the same pattern• It’s driven by a combination of needs, that are often

identifiable by internal and sometimes external triggers– Triggers are the key to understanding where a customer is in

the buying cycle so you can determine how to best meet his/her NVEs in the process

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Defining the Purchase Decision Cycle

Need Learn Buy Value

Customer has a need created by internal or external forces

Change brings discontent

Need becomes firmly established

Customers seek to understand options

Compare alternatives

Identify preference

Value and expectations are set

Customer determines which products, services and companies best meet his/her needs, values and expectations

Makes purchase

Customer forms opinion of product, service, company relative to NVE’s

Develops relationship (or not) based on that value

Repeats the process

Concept Source: Getting Into Your Customers Head, by Kevin Davis

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Visible internal trigger examples

Need Learn Buy Value

Automobile ages

Increase in repair visits

Visits a website to look at models

Visit dealerships to test drive

Asks about specific available features

Requests literature

Asks about financing options

Begins negotiations to buy/trade

Purchases a new automobile

Expresses intent to buy if NVEs are met

Returns to dealer for service

Refers friends/family to dealer

Purchases ancillary services/warranty

Automobile Dealership

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Leveraging the triggers If you know the customer NVEs and know the triggers

in the purchase decision cycle, you could…• Tailor communication to facilitate faster decision making

– Anticipate and answer questions before asked• Sell against competitive products/services• Provide more relevant information

– Better demonstrate your knowledge of the customer You don’t have to begin at the beginning to take

advantage of the process

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Developing the Relationship Exercises (20 Minutes)

• Define and map The Purchase Decision Cycle for your two segments

• Identify key internal trigger points• Determine what actions you could take with this new

information

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Step 3: “Selling” the Relationship

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“Selling” through the Relationship Selling through the Relationship is a process that builds

company value through sustained, relevant interactions with the customer

• Both the customer and the company have invested time to understand each other’s NVEs and believe that mutual benefit is gained through sustaining the relationship

• Specifically:– The company has consistently met customer needs and expectations– The company delivers on what’s important to the customer– The customer sees a “relationship” rather than a business

transaction– The customer believes that the company is deserving of ongoing

support

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“Selling” through the Relationship NVEs and the Purchase Decision Cycle allow you to

better position your products or services to “the right customer, at the right time”, reduce operational costs, and create sustained value.

• Can reduce overall marketing and sales costs because your efforts are more targeted

• Will increase sales because your offerings are more relevant• Solidifies your relationship as a company that understands

and acts on its customer’s NVEs The relationship becomes established with a purchase

(or re-purchase) and your company gains a “valued provider” status

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Relationship “Selling” Program Strategies Continuity of Contact Rewards Rebate Appreciation Partnership Affinity Community/Philanthropy

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Relationship “Selling” Program Strategies Continuity of Contact

• Can be used to drive acquisition offers• Encourages new customer to create a new relationship or

deepen an existing relationship by creating incentives for repeat business

• Not generally used as a loyalty program• Low risk• Relatively low cost• Highly flexible

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Relationship “Selling” Program Strategies Continuity of Contact

• Definition: – Special offers, value-added benefits to customers

• Use it when:– Your primary goal is both to acquire and retain customers

• Will require different programs for each– You want to motivate new incremental purchases– You want to increase specific channel traffic

• Example:– Lenscrafters

• Event driven continuity program offering reminders to schedule visits, expiration of contact prescription, birthday discounts

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Relationship “Selling” Program Strategies Rewards

• Leverages a customer’s interest in an idea or conceptthat has nothing to do with the brand

– Rewarding a customer's behaviorwith merchandise unrelated to the brand

– Customers become emotionally involved inthe program

– Can serve double-duty as an acquisition program• If prospective customer sees no differentiation between your

brand and another, then merchandise rewards may sway purchase decision

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Relationship “Selling” Program Strategies Rewards

• Definition: – Awards points for purchases. Points can be exchanged for rewards

unrelated to the brand• Use it when:

– You offer limited options for rewarding customers with additional products or services

– You want your program to serve double-duty as a new customer acquisition device.

– You need to differentiate your brand from your competitors' brands• Example:

– AT&T• Offers reward program for using X dollars per quarter. Rewards are

generally $10 purchase card chosen from a variety of merchants

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Relationship “Selling” Program Strategies Rebate

• Simplest form of value exchange, most prevalently used by retailers

– Supports the brand and the buying habits of the highest value customers by giving them more of what they like

– A tool to increase traffic and incremental sales without reducing perceived brand image

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Relationship “Selling” Program Strategies Rebate

• Definition: – Awards a gift certificate, redeemable against new purchases,

when a customer reaches a spending threshold• Use it when:

– Product or service lines represents a wide selection– Desire to motivate new incremental purchases– Want to increase channel traffic

• Example:– Borders

• Children’s “book club” that provides a $5 rebate for every 10 children’s books purchased

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Relationship “Selling” Program Strategies Appreciation

• Similar to the rewards program, with rewards based on the brand rather than on unrelated offerings

• Increase lifetime value among current customers• If customers are asked whether they prefer rewards or

cash, they'll always take the cash– But in giving your customers cash, you could diminish

the value of your brand

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Relationship “Selling” Program Strategies Appreciation

• Definition:– Offers a reward selection of your company’s merchandise in

exchange for accumulated points• Use it when:

– Your goal is solely to increase customer lifetime value, not acquire new customers

– You want your customers to sample other products or services• Example:

– Blockbuster• Gold Rewards program provided to members renting over X number

of movies per year. Free rental for every 5 rented per month; free Blockbuster Favorites (non-new releases) Monday-Thursday.

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Relationship “Selling” Program Strategies Partnership

• Designed primarily to acquire new customers and then to reward them for additional purchases

– Actively seek new customers with a specific interest in a partner's product, and rewards those customers with more of the product

– Only the partner's customers are aware of the offer

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Relationship “Selling” Program Strategies Partnership

• Definition: – Rewards a customers accumulated purchases or points with a

partner company's products or services (discounts or free)• Use it When:

– Your primary goal is to acquire new customers – You have the opportunity to prospect a partner company's database– The partner company’s customers are likely prospects for your

loyalty program• Example:

– FTD• Partners with airlines to offer discounts on flowers for frequent flyer

programs.

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Relationship “Selling” Program Strategies Affinity

• Increase the lifetime value of customers by building strong relationships with them, without the use of rewards

• Value is added to customer relationships through information-intensive communications, value-added benefits and recognition

• Applicable only where the brand represents a strong lifestyle

• Success may be more difficult to measure

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Relationship “Selling” Program Strategies Affinity

• Definition:– Offers special communications, value-added benefits and recognition to

valued customers• Use it when:

– Your brand strongly represents a specific customer lifestyle – Your customers are generally interested in learning more about your

products or services – Rewards are not needed to cultivate long-lasting interactive

relationships• Example:

– State Farm• Agents provide ongoing newsletters, return mailing labels, birthday

cards, etc.

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Relationship “Selling” Program Strategies Community/Philanthropy

• Use rewards to enhance value proposition, as well as brand core philosophy

• Value is added to the customer relationships through the good feeling associated with contribution to a cause

• Ideally applied to companies with long-established, well-known community/philanthropic platforms

• Can sway a prospect to purchase

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Relationship “Selling” Program Strategies Community/Philanthropy

• Definition: – Reward a customer’s purchases with a

donation to community or philanthropic cause• Use it when:

– Your brand strongly represents a known philosophy – Your customers support the brand philosophy– Smaller reward for high perceived value is necessary– Rewards are not needed to cultivate long-lasting relationships

• Example:– Third-party phone company who’s name I can’t remember

• Donates a portion of your monthly bill to a cause of your specification (chosen from a provided list)

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Choose Currency… Carefully

• Points– Liability and exposure– Spoilage– Restrictions and rules for redemption

• Discount / Rebate– Brand devaluation– Effect on margin– Effectively paying current customers

• Added value– Deliver on promises

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Best Practices in Relationship “Selling”

What Doesn’t Work

Channel specific/single channel Cookie-cutter messaging Talking to the customer Designed for company Company-valued rewards Automated customer contact Customer service rhetoric

from the top

What Works

Channel-neutral, but multiple Customized messaging Communicating with the customer Designed for customer Customer-valued rewards Face time Customer service from

the ground up

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“Selling” through the Relationship Exercises (20 Minutes)

• Using the NVEs and purchase decision cycle as a guide, determine which program strategy would work best for each of your segments.

• Explain why you choose the program strategy• Determine the currency you would use and why • Define the benefits you would offer your customers

– Does it measure up to the best practices?

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Step 4: Fulfilling the Relationship

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Fulfilling the relationship Keeping the relationship going is the hard part

• How do you fulfill customer expectations and promises after the sale?

• Are all parts of the company focused on the same goal for meeting customer expectations?

• Do you have ongoing education and training programs to ensure that customer value is?

Continuous improvement is paramount• What do you learn at each interaction that you can use the next

time through the framework?• How can you apply what you learn to improve your value to

customers? Managing interaction points are key

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Customer Interaction Map

Interaction reasons Reta

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ore

Web

site

Tele

-Cus

tom

er S

ervi

ceTe

ch S

uppo

rtCr

edit

Learning about products X X ?Purchase X ? ?Setup ? ? XQuestions about operation ? ? ? XProblems related to operation ? XQuestions about a bill ? XReturns ? ? X ?

Computer Store (computer purchase)

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Customer Interaction Points How many points of interaction does the customer

have with your company?• What are these points?• When do they occur?• What messages are being put forth (from the customer’s

perspective)?• Are the messages consistent with your Customer Promise?

– Who’s ensuring this consistency?

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Fulfilling the relationship Exercises (20 minutes)

• Determine the interactions your two customer segments will have, based on their NVEs

• Create a Customer Interaction Map for each– How will you determine the consistency in meeting customer

expectations at each point of contact?

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Key points to remember Think from the outside-in (look at everything from the

customer’s viewpoint) Customers have needs, values and expectations of their

interactions with your company—know them and understand how they impact the relationship

“Selling” through relationships requires both and understanding of the customer and knowledge of how he/she buys

Relationships aren’t built with a single purchase—they’re developed over time when both parties see mutual benefits

Long-term customer relationships are a result of continuous fulfillment of the customer’s Needs, Value and Expectations (keep the human factor)

Page 59: Inside The Customers Mind

Key points to remember

Develop the Relationship

Sell through theRelationshipFulfill the

Relationship

Understand the Customer

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Questions?Dave Harkins

VP, Strategic ServicesThe Jackson Group

1.800.JACKSON x3374803.548.4172 (direct line)

[email protected] | www.jacksongroup.com

This presentation will be available for download from our website at: www.jacksongroup.com/presentations


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