Freddie Daniells

Changing customer behaviour?

I am in bed with some sort of flu at the mo. so catching up on a little reading (in between sleeping!).

In the Spring issue of the Marketing Society’s Market Leader magazine, David Cowan of Forensics, a strategic growth consultancy writes:

Marketing’s proximate mission must be to change customer behaviour – it is customer behaviour change that leads to top line growth. Changing customer behaviour is the link that connects the CEO and finance directors requirements with marketing.

and later…

Changing customer behaviour should be formally set as the header objective because it gives direction to the whole marketing enterprise.

Sorry David, I just can’t get with this at all.

Imagine you knew one of your suppliers had its objective to change your behaviour – what would your reaction be? I certainly know what mine would be and it is not suited to a family blog like this! As a customer, I have no interest in changing to suit a company’s needs – only to suit my own.

Indeed, I’ll go further. A responsive supplier would change it’s behaviour to meet my needs and aspirations not the other way round.

Of course, the best relationships are the result of conversation or co-creation. Change often takes place as part of this discussion – sometimes on one side only, but most successfully on both. Customer success (and the supplier’s long term aspirations) are won through dialog, understanding, education and common ground.

IMO they are never won through suppliers coaxing customers to do things that they neither want to do nor are in their longer term interests.

PS. I have mailed David about this post to give him the chance to respond in the comments.

Setting the right priorities

Just doing my daily trawl of the Wall Street Journal and came across an article about Motorola who reported earnings yesterday, handily beating expectations.

The money quote is:

“There’s no magic here” said Ed Zander, Motorola’s chairman and chief executive officer, in an interview. “When you focus on customers and developing compelling new products that they want, this is what you get,” he said.

Enough said.

Your front line staff are your brand

At the CIMTech conference recently, one of the speakers said:

If you wanted to learn which was the best TV or Hi-fi to buy, where would you go? My bet is that you wouldn't’t go to Dixons or Currys*. You just won’t get the information you need from the staff there.

He was explaining how much front line staff have been de-skilled of over the past 10 years.

Staff in call centres follow prescribed speeches and look for options on a screen for what to say next. Sales staff in shops are not educated in the products that they sell. Indeed, as a consumer, there are few places where front line staff are more knowledgeable than they were a decade ago.

Yet these are the people who are the public embodiment of the brand.

To me this is a no-brainer – it is near impossible to create a great customer experience without investing in front line staff.

There are 4 things that I think companies should do:

1. Hire people who are interested in the products and services they are being asked to sell
2. Give them the time and information they need to stay on top on the products you offer and of general developments in the market
3. Empower them rather than make them follow pre-determined scripts
4. Make ‘making customers successful’ their mantra

I often hear how difficult it is to differentiate your business. This is a really simple way.

* For those on the other side of the pond, Dixons and Currys are the UK’s largest high street electrical retailers.

Getting your priorities right

This just arrived in my inbox. I have no idea whether it is real or not, but it certainly made me laugh.

Subject: B&Q Yacht Record

Dear Sir/Madam,

My congratulations to you on getting a yacht to leave the UK on 28th November 2004, sail 27,354  miles around the world and arrive back 72 days later.

Could you please let me know when the kitchen I ordered 96 days ago will be arriving from your warehouse 13 miles away?

Yours Sincerely,

John Roberts

For those unaware of Ellen MacArthurs exploits, background for this is at Team Ellen.

Customer Satisfaction is an outdated measure

From Dictionary.com

sat·is·fac·tion – The fulfilment or gratification of a desire, a need, or an appetite.

Customer satisfaction is an oft mentioned measure for marketers to watch. Yet, is increasingly becoming a nonsensical measure.

You can see the questions on the Satisfaction survey:

• How did you rate our product?
• What did you think of the service you received?
• Did your delivery arrive on time?
• Did you experience any billing issues?
• How were our staff to deal with?

In today’s markets, if the answer to these questions is anything less than excellent, you have problems. Satisfaction has become only the entry level to play in the market. You can’t differentiate your business around customer satisfaction.

Great companies are no longer built on satisfied customers, they need to go so much further. With satisfaction, there is no sense of stretching the customer, educating them what the possibilities are, building dialog with the customer – nothing.

And yet this is what great relationships are about – conversation and education. In these times the questions become:

• Have I understood you properly?
• What have you learnt from our relationship?
• What have I learnt from our relationship?
• Have I been able to exceed your expectations?
• How can I continue to do this into the future?

In ReImagine, Tom Peters talks about Customer Success. I talk about Customer Leadership. These encapsulate so much better what is needed to be successful today.

A quick plug - CIMTech's annual conference

I have been asked to speak at CIMTech's annual conference. The conference runs from 22-24 February and is being hosted at Earls Court in London.

Over three days, the conference will tackle many of the key issues facing marketing:

• Managing Total Marketing - all the collateral, data, IP and processes that come together to help the organisation make money and achieve its objectives
• Customer Centric Enterprise - redoubling the efforts to help marketing focus on the customer
• Proving and improving Marketing's ROI - measures that can be taken to measure and improve marketing's effectiveness.

I am speaking on the first day about Managing Total Marketing. I am really looking forward to this. Since I talked about Marketing Capability here, I haven't really followed up since. This will be a great excuse to talk about this area more fully.

If you are interested in coming along and hearing me warble, then details of the conference are here.

Customer Leadership: Innovation and competitive advantage

Been a little while since I posted. Been a bit frantic I am afraid. Have plenty to talk about so hopefully over the next week or so I can catch up.

Anyhow one of the tasks I had was another article for the guys at CIMTech. I was asked to tackle the issue of building and sustaining competitive advantage. I have to say this was a nightmare to get out - took several re-writes. But hopefully it gives you some food for thought:

Innovation will be the single most important factor in determining America’s success through the 21st Century.
The Council of Competitiveness

Things have changed dramatically over the past 30 years. In the 1970’s the industrial landscape of Britain (and many other Western nations) was characterised by inefficiency and poor quality.

The Japanese, Germans and others were able to take ready advantage of the situation. By using cost and quality, it was easy for them to keep a competitive advantage. This was a sufficient differentiator in the market.

Western companies reacted in the 80's by adopting Quality Assurance programs such as Six Sigma. Many organisations also began applying the process lessons of manufacturing to other business functions – HR, Accounts, Sales and so on.

The last 10-15 years have seen some of the biggest improvements in productivity ever. Not only have process improvements been honed, but technology now automates many tasks. Companies routinely rely on ERP systems to tell them how things are going daily. Yet, so far, these programs have been about one thing – doing the same things better. This thinking is no longer enough.

Most of the efficiencies have been made. Indeed, in contrast to the 1970’s, today most companies are in good shape. Quality is now a given and any cost advantage gained by efficiencies brings only short-lived advantage.

Deciding where to build your advantage

Today, business needs to look further afield to build sustainable Competitive Advantage.

The starting point is to focus on being great at one thing consistently at the expense, if need be, of others. Dell Computer, Apple Computer, IBM, Amazon, Wal-Mart, Tesco are examples of great companies who have built advantage and, if needed, ignored short term profitable choices along the way. HP, Barnes and Noble, K-Mart and Sainsbury’s all pay testimony to that.

It is not easy to stay this focused. It is too easy to chase every opportunity. Discipline is paramount. Many become distracted by their competition.

• “How are we faring relative to our competition?” “How do our products compare relative to our competition?”
• “Before we decide how much to spend on R&D, how much is the rest of the industry spending?”

These are valid questions, but they must never become the main guiding posts for decision making. Great companies are built from the absolute that is ‘how can we be our best at our one thing’.

Michael Porter, the Harvard professor, is the father of competitive strategy thinking– it is worth revisiting his thoughts.

He believes that Competitive Advantage can only come from three sources.

1. The first type is a cost advantage – tools for achieving this might include economies of scale, a proprietary technology advantage or materials supply advantage.
2. Competitive Advantage can result from differentiation. Differentiation often comes from the product you sell. However it could also come from the way you sell your product or, as in the case of some luxury brands, how you market it. Reliability is a great differentiator for industries like logistics.
3. Finally, Competitive Advantage can come from focus. This sits across the other two. It suggests that competitors are failing to deliver on either a cost or differentiation basis because of their more general approach. You provide that benefit through your focus. Many small businesses choose this route.

Taking these lessons together, to build Competitive Advantage you need to:

1. Understand your industry.
2. Decide on a single source for your Competitive Advantage – cost, differentiation or focus.
3. Decide what the characteristics of your product or business model are that give you that single Advantage. Is it design as in the case of Apple Computer, supply chain as in the case of Dell Computer and Tesco, or marketing as in the case of L’Oreal.
4. Sustain and build on these characteristics.
5. Ignore the short term temptations

The role of innovation

The discussion so far has covered all these points except how to sustain and build your Competitive Advantage. This is where innovation comes in.

I have already said that the efficiency and quality game is over. Any small advantages you can gain are quickly eaten away.

Within your strategy, you now have to ask what you are going to do that's different. The response to this question needs a more innovative mindset and culture.

The nature of Innovation

I like this definition of innovation – the act of creating a new idea, method or device.

Innovation in this sense becomes the lifeblood that supports and builds your area of competitive advantage. As such, you need to build an organisation to support sustained innovative thinking.

Formal innovation processes need to be developed across the organisation – how are ideas encouraged, captured, built on, tested, either accepted or rejected and what happens to them then. An innovation culture needs to spread – that silly idea may not be so silly after all once we have played with it! People need to feel free to bring ideas to the table and not feel the fear of rejection.

Innovation for its own sake helps no-one. It needs to be directed. You will need to align your innovation efforts and processes towards your single chosen strategy. Does your investment in time and money help you move closer in your journey to being the best at your chosen one thing? How are you going to measure the success of your innovation efforts?

Example – Dell Computer as a master innovator

Dell is a great example of a business that has been on the leading edge of thinking for some time. Michael Dell realised at an early stage that the PC business was going to be commoditised. He decided that he would take a cost leadership position. Having done this he realised his primary job was to drive value out of the PC business.

His first great innovation was to sell PCs direct to the consumer. He reckoned that the money he could save in middleman’s fees could be passed on to the consumer. He was right and this helped grow the business rapidly. Dell was also the first major manufacturer to embrace the internet as a channel for sales and support.

But he didn't stop there. He then oversaw a rework of the entire supply chain. Like Wal-Mart, Dell’s model is to cut the number of companies in the supply chain, squeeze the margins of each in favour of price to the consumer and continue this loop relentlessly.

In Tom Peter’s new book Re-Imagine, I recently read:

“One hundred square feet. That’s roughly the total amount of space needed for spare-parts storage at Dell Computer’s new Optiplex facility, a manufacturing operation that turns out 80,000 custom-engineered computers…per day.”

Makes you think, doesn’t it!

Innovate: make cows purple?

Seth Godin in his book Purple Cow asks the question – What makes your business remarkable? It’s a great question. In today’s market being remarkable means an even greater focus on the single value you bring. It means avoiding short term temptations.

It also means developing the innovative culture that brings you the flow of new ideas, methods and devices. These will help you sustain and build your competitive advantage.

According to Porter, failure to do this results in being ‘stuck in the middle’ – typically broken brand promises and weakened profitability. Companies of this type are at the mercy of their more focused competitors.

So the incentive is large enough! Now, go make it happen.

Brand Honesty: Your employees are central to your marketing effort

Following on from my last post, I have just finished reading a great article by Opinion Leader Research (part of Chime Communications - the UK's leading PR agency). Entitled "Friends or Foes? : Are your employees ambassadors or detractors", it talks about how we need to:

...stop viewing employees as a passive mass...and need instead to start conducting real conversations with people that are about developing strategy, not merely implementing it.

It makes the point that employees are viewed outside the organisation as a far more authentic and open source of information about the company than its marketing or management. This fits with my thinking too. Many times I have been on the phone to a utility supplier, for example, who ends up giving me the warts and all reality of their own company.

Successful organisations of the future will put employees at the heart of their business planning and communications. They will recognise that it is their employees who connect with every other stakeholder, shaping and forming and informing their beliefs and behaviours. They will feel comfortable with employees being the voice of authenticity.

Couldn't agree more.

Couple of small points. They state

Employees can be an organisations most influential and powerful communicators.

This might be nitpicking, but what the hell. Employees are an organisations most influential and powerful communicators. They are having the conversations down the pub, with their friends, families and with your customers whether you like it or not. The only issue for you is whether you wish to be a part of the conversation as well.

Also, they spend some time talking about identifying influencers within the workforce and working with them to get other employees on board. My sense is that he who shouts loudest is not always the right person to be engaging with. Often the quiet types respond to different types of conversation. That doesn't mean their views should be overlooked.

Anyhow, this is a great article that is well worth a download. Hat tip to the Marketing Society for alerting me to the piece.

As an aside, I walked past Chime's offices the other day and commented to a friend "You know, that is a business that is going the way of the dodo. PR is really going to struggle in this new world". Seems there might be more going on inside those 4 walls than I ever imagined!

Brand Honesty: Are values a marketing exercise?

I always enjoy the stuff that Steve Yastrow says over at tompeters.com. He noted an article in the Wall Street Journal talking about how companies are focusing more of their marketing efforts on internal audiences. The WSJ article focuses on how advertising agencies are driving this change.

He comments:

Getting employees to "Be the Brand" is critical for success, because every employee in a company has an effect on the customer's brand experience, even if it is an indirect effect.

And asks:

Are ad agencies the ones leading this change? Should companies turn to their ad agencies for help with internal marketing? How will ad agencies address this challenge? Will it be the right way?

I  have sat in those meetings where top management 'communicates' the new position, values statement etc. It was such a load of old tosh. Not one person walked out excited, enthused, or to be honest all that interested. It had no relevance to what they believed in or felt.

Where do the only workable brand values come from?

Not from what focus groups think they should be. Not from the outside at all.

Not from what the top management feels they should be. Brand values cannot be imposed.

They come from the inside. They come from the people who work for the company or brand. They know what they stand for and what their brand stands for. This is the place to start looking for brand values.

It isn't about big pitches, slick advertising, large roll-outs etc. If this is the first time your employees are aware of your 'new' values, you have likely failed already.

If you haven't read it, take a look at the interview with Sam Palmisano of IBM in Decembers Harvard Business Review - that is the way to create values that work. He set up a 'ValuesJam' site to discuss with employees what IBM meant to them. He got 50,000 comments in 3 days. Many critical, many positive. Through consultation these were distilled down. He then acted like the leader he is. He took action to make sure that the organisation came into line with these values. Yes, people's jobs were on the line! Including his own.

Finding values that work is not about hiring agencies, focus groups or any other such nonsense - it comes from the inside. And follow through comes from strong leadership.

PS. I would rather see an HR consultant hired than any ad agency - someone who could advise how best to integrate these values into the hiring process.

Customer Leadership: No.1 priority is great product - period.

It is such a joy that just once in a while you meet someone who gets it.

For a client, I am currently looking at how process and technology is being used to drive efficiency and effectiveness within the management of events.

My travels today took me to see Brendan Barns, who runs London Business Forum, to understand how they do it.

We have all, I am sure, sat through those interminable industry and business conferences. Falling asleep, catching up on email etc. Indeed anything except listen to what is going on.

So had Brendan, and decided he could do better.

Brendan focuses on being best at one thing – his product.

His conferences must connect with the audience on three levels:

1. Information – The information that is right for the audience, not for some sponsor or other organisation.
2. Inspiration – People want to believe that what they are doing is making a difference. He targets putting the spring back in the audience member’s step.
3. Fun – Too often forgotten but key. People want to be entertained.

How many conferences deliver on these effectively? Brendan does. Serially.

And he doesn’t rest on his laurels.

Brendan lives by the acronym CAN I – Constantly And Never-ending Innovation. Focus groups and market research are not the tools to drive this. Innovation comes from his gut and head. Risky but that is what innovation is about. And he uses every tool to drive that innovation – his first event was held in a disused railway arch, with attendees dodging the cesspool to get in!

LBF is a Purple Cow if ever I saw one.

He knows that great product sells itself.

LBF’s marketing is by his own admission simple and low key. As he says, you don’t need glossy exhibition banners and stands. How many people comment on great content and how many on great banners?

This is not to say that he eschews design. All LBF comms and materials are presented in a way that oozes style and modernity. But he gets the balance right – focus on event quality, inform your audience and stand back.

If you haven’t been to one of their events, treat yourself. Go along to his annual conference with Tom Peters and Richard Scase in March. Or see Peter Fisk, ex Chair of the Chartered Institute of Marketing in February. I’ll see you there.

What did I learn from Brendan?

1. In case I forget, it’s the product stupid. Without it, you are nothing.
2. Use all the tools available to make your customer experience inspiring and fun – this needs thought more than budget.
3. With great product, marketing suddenly becomes easier. So where should you invest next years marketing budget?
4. Process and technology may well save money and speed time to market. But a cheaper, quicker crap product is still just that – a crap product.

PS. I am in the process of dreaming up an article on competitive advantage. This will tackle some thoughts I have on the scope of innovation more thoroughly.