Your customers don’t care

Your customers don’t care….

…that your e-commerce operation and physical stores division are run separately…

…or that your systems don’t “talk” to each other…

…or that you say “your call is very important to us” over and over again.

Your customers care that every aspect of the shopping experience–and that includes returns–is as close to frictionless as possible.

They care that they don’t have to re-start at the beginning every time they interact with someone from your organization–and that they don’t get a different answer based upon who they happen to speak with.

They care that if say “your call is very important to us” that you hire enough people to answer the phone quickly and that the person on the other line can actually resolve their problem the first time, every time.

Customer-centricity is rooted in an outside-in perspective and starts where the customer is, not where your brand happens to be.

Customer-centricity means a commitment to really knowing what customers want, showing that you know them and showing them that you truly value them. Through actions, not words.

When your customers stop caring about what you say, or they see a disconnect between what you say and what you do, it won’t be long before they stop caring to spend any time or money with you.

So what do you care to do now?

 

 

 

 

 

Big picture before big data

So-called big data analytics has, without question, enormous potential. More and more, if you aren’t competing on analytics you aren’t competing. If you aren’t working to make your customer experience more personalized and relevant, you are on your way to becoming irrelevant.

Yet many, if not most, companies are not making good use of small data. If you haven’t figured out how to glean useful insight from what you already have, piling on more data is not only unlikely to help, it’s bound to smother and confuse your efforts.

So what to do?

For most brands the place to start is with a few big picture questions:

  • What are our most important customer segments and how are we doing against our desired outcomes?
  • What are the key drivers of performance for each segment? How are these drivers changing?
  • How to we stack up against our current and emerging competition? Where are we most vulnerable?
  • Where are the greatest opportunities right now to improve on the highest leverage drivers of customer profitability, loyalty and remarkability?

This relatively quick and easy exercise should yield a roadmap for where you need to go next in your customer insight journey. Generate a manageable set of hypotheses or options to guide your action plan. If a lot more data will help, fantastic. Get on it.

Many times you have plenty of data. What you need is more insight and more action. And if you don’t know where you are going, any road will get you there.

 

Living la vida local

Until the end of the 19th century virtually all retail was local.

There was no such thing as a chain store or a catalog merchant. Most raw materials were locally or regionally sourced. The local shopkeeper predominated.

For centuries, the typical merchant specialized in a particular area of expertise–butcher, baker, cobbler and so on. He knew most customers by name and understood what they liked. With the ability to get instant feedback on his offering he could readily curate his offering to local tastes. He didn’t have to learn 1-to-1 marketing. It was his lifeblood.

In the 1880′s, Richard Sears and Aaron Montgomery Ward launched their catalog businesses, and in the decades that followed, consumers began to have greatly expanded choices. As the 20th century unfolded, the transportation infra-structure improved dramatically, creating greater opportunities for sourcing product from around the globe. Multi-unit retailers proliferated and eventually the bulk of retail shifted to regional malls, mass discount stores and dozens of national “big box” retailers and specialty chains.

In the last 15 years, the advent of e-commerce, along with incredibly efficient direct to consumer supply chains, have made it possible for the individual consumer to have virtually infinite choices available to them. The local shopkeeper model has become largely extinct.

Now it’s come full circle. Retail, like politics, has always been local. The winners have always been those that bring the most remarkable and relevant solutions to individual consumers. But over time what was possible shifted. Those that failed to keep pace lost out.

Today the retail world is becoming increasingly bifurcated. A few players are winning by riding the long tail and by offering low prices and efficient shopping. For everyone else, the world is a lot more complicated. Right now the challenge is to differentiate your brand in a sea of sameness. Right now the goal is to curate your offering–or make it incredibly easy for the customer to do it for herself–to a specific set of consumer needs and wants. Right now your mission is to know your customer better than the competition and to leverage that insight to craft more unique and personalized solutions.

Sounds familiar right?

Advances in technology make it possible for your brand to provide value in much the way the shopkeepers of yesterday did. To know me, to understand my individual preferences and to use that information to tailor your offering to my specific requirements is the formula for winning.

You can keep chasing price and remain wed to mass approaches to marketing, customer service and operations. And you can hope to beat Amazon and Walmart at their own game. Let me know how that works out. Or…

Or you can commit to treating different customers differently and invest in a strategy steeped in localization and personalization.

The choices are increasingly clear. The commitment to one path or the other is becoming more urgent. You need to choose.

Ultimately it’s death in the middle.

 

 

 

 

Dead brand walking

The business graveyard is filled with brands that have gone from the lofty heights of recognition, stature and profitability to flagging relevance and, ultimately, complete extinction. For every long-standing, legacy brand that continues to thrive (think Kraft or Coca-Cola) there is a former high flier that is now gone (think Borders or Oldsmobile).

Sometimes companies are hit by a largely unexpected exogenous force that sends them reeling. More often than not, the company’s ultimate demise surprises no one.

For some of us–investors or potential employees, for example–the key is to separate out the walking dead from the exciting turnaround story or the metaphorical Phoenix.

For business leaders, the obvious implication is to become aware of the early warning signs of decreasing brand relevance, accept the need to change and take the requisite actions. The obvious question, of course, is why are there so very many strategy meltdowns?

In my experience, brands go from healthy to critical in one or more of three ways.

First, you can’t fix a problem you aren’t aware you have. Many dead or dying brands lacked a fundamental level of customer insight. So not only did they not appreciate their vulnerability early enough, they didn’t focus on the important things quickly enough.

Second, just because you know something, doesn’t mean you accept it as the new reality. When I was a senior executive at Sears–the poster child for dead brands walking–we had tons of evidence that clearly showed our weakening relevance and declining profitability in our core home improvement and appliance businesses. Did those that could have changed Sears’ destiny truly accept that without aggressively attacking these issues it would eventually be game over? Sadly, then, as it is now, the answer is “no.”

More recently, when I ran strategy and multi-channel marketing at Neiman Marcus, we had plenty of customer research and analytics that our strategy of narrowing our assortments and pushing prices ever higher was losing us valuable customers to Nordstrom (among others). Did we accept that it constrained our growth and made us increasingly vulnerable in an economic downturn? Fortunately the harsh lesson of the recent recession–and a new CEO–”forced” Neiman’s to address these problems before they became crippling.

Lastly, even with keen awareness and complete acceptance of new realities, we regularly fail to take the (often radical) action needed. This is mostly about fear. Fear of being wrong. Fear of looking stupid. Fear of getting fired. Fear of risking one’s legacy or resume value.

In fact, history teaches us that it’s far more common to see executives holding on to a mediocre status quo rather than risk competing with one’s self or making a big bet on that new technology or innovative business model that is ultimately used against them by an upstart competitor.

Frankly, if your inability or unwillingness to act on saving your brand is rooted in fear, don’t hire McKinsey or Bain (or me for that matter) to help you with your strategy. My advice would be to get yourself a new management team and/or go see a therapist. It’s far cheaper and more likely to work. And do this before your Board figures it out.

Dead brands almost never die by accident. They die by leaders failing to see the signs of terminal illness while there’s still time to save them. And they die by management teams’ inability or unwillingness to take the necessary and decisive action before it’s too late.

Hopefully dead brands walking can be a lesson to us all.

 

 

Easy or good?

It’s far easier to run your business with a paint-by-numbers operating model.  Why risk the vagaries of human interaction?

It’s far easier to craft a one-size fits all marketing plan. Why invest in complicated customer analytics and the complexities of managing vast numbers of different campaigns?

It’s far easier to focus on efficiency rather than effectiveness. Doesn’t Wall Street reward brands that run a tight ship?

It’s far easier to remain product or channel focused. Organizing your business around customers–and the realities of the omni-channel blur–means blowing up many existing processes, metrics, incentives systems and management structures.

It’s far easier to focus on the certain short-term fix, rather than commit to a long-term program of testing and learning and building foundational capabilities. After all, how can we be sure we will ultimately generate sufficient ROI?

The problem is that easy is not the same as good.

And good enough is rarely good enough anymore.

Remarkable. Relevant. And built for me, rather than built for everyone, is what it will take for just about any business that cannot win by price alone.

And like it or not, easy is not going to cut it.

 

Most growable customers

I didn’t come up with the term “Most Growable Customers”–Don Peppers and Martha Rogers did–but I’ve used it as a cornerstone of crafting customer growth strategies for nearly 15 years.

In concept, any good customer growth strategy has three basic components:

  • Plans to retain your Most Valuable Customers (“MVC’s”)
  • Actions to attract and engage your Most Valuable Prospects (“MVP’s”)
  • Strategies to increase share of wallet with your Most Growable Customers (“MGC’s).

Most often, struggling brands fail to clearly define and track these segments, understand their unique needs and put into place differentiated, workable programs to move the dial with each.

But even if companies don’t use this exact framework they typically are pretty good at focusing on the big spenders, while simultaneously obsessing over winning new customers.

Unfortunately this often means they aren’t spending enough time on their MGC’s. And that’s usually a big miss.

Typically MGC’s represent great leverage. You already have a relationship with them, so your acquisition costs are behind you. With any luck you have a way to cost effectively reach them. Minimally you should have some basic data about their behavior–products they buy, channel of engagement, full-price or markdown customer–which provides clues as to possible tactics to try next.

Sure you must work hard to keep your Most Valuable Customers–so long as you don’t confuse sales volume with value–and clearly few businesses can thrive over the long-term without adding meaningful numbers of new customers.

But I’d be willing to bet that if you invested more resources against understanding low share of wallet customers and made it a priority to identify and implement opportunities to drive more frequency, cross-shop and/or up-sell, you’ll be happy you did.

 

Mr. CEO, tear down this wall!

It’s not hard to find literally hundreds of articles imploring brands to adopt a multi-channel–or as is fast becoming de rigueur, “omni-channel”–strategy.  I’ve written my fair share of them.

Typically these articles provide helpful hints or highlight core capabilities one must embrace to achieve this recommended state of retail nirvana. In fact, at last week’s CRMC conference in Chicago, speaker after speaker delineated the usual suspects.

We must have a 360-degree view of the customer. We need to become channel-agnostic. We must leverage actionable customer insight to drive personalized interactions. Our customer experience should be seamless across touch-points. And so on.

All good stuff to be sure. Yet the cold hard truth is that while these components are all quite necessary, they are simply not sufficient.

The unfortunate reality is that all the Vice Presidents of Customer Insight and all the Directors of CRM and, for that matter, all the whatever you want to call your new leader of cross-channel initiatives, can do an exemplary job and it won’t get you there as long as a few other conditions exist.

If your brand is still fundamentally organized by channel rather than customer, you will only get so far.

If your company’s senior leadership is rewarded by channel performance, more than brand and customer-driven metrics, you face an insurmountable challenge.

Without the walls between channels being torn down–without the Board and Mr. or Ms. CEO making customer-centricity THE driving force of your customer growth strategy–all the well-intentioned efforts of an enlightened few will fail to gain essential traction.

So Ms. CEO tear down those walls!  What are you waiting for?

 

 

 

My Top Ten Blog Posts of 2012

Happy New Year.

And now, as has become my custom, here are my top ten posts of the past year. Enjoy. Comment. Debate. Share.

1.   The world’s best loyalty program.

2.  The end of e-commerce.

3.  JCPenney’s Road to Recovery (Part 2): The intervention.

4.  JCPenney swings for the fences (Part 1).

5.  JCPenney’s Road to Recovery (Part 1): The reality distortion field.

6.  JCPenney’s Road to Recovery (Part 3): The 10 point action plan.

7.  In gut we trust.

8.  Now you’re just somebody that I used to know.

9.  Honey, I shrunk the store.

10. 8 things that are wrong with your omni-channel strategy.

And one of my personal favorites that, in my humble opinion, was mostly overlooked: Knowing what ‘yes’ looks like.

But it did get excerpted in Seth Godin’s new book The Icarus Deception.  So I got that going for me. Which is nice.

Big data, little action

You’re probably hearing a lot about so-called “Big Data” and “Big Data Analytics.”

Here’s one definition I like: “Big data analytics is the process of examining large amounts of data of a variety of types to uncover hidden patterns, unknown correlations and other useful information.”

More and more, companies will start to discover that–unless they can win on price–their only hope for carving out a sustainable advantage is to become more intensely customer relevant than the competition. Making sense of the ever-growing pile of consumer data–transactional, web browsing, social media activity and the like–can be incredibly powerful. There is no question that innovative technology and new techniques are emerging that will transform brands’ abilities to glean powerful insight.

But…

But the reality is that for many companies the problem is not a paucity of data or an inability to extract nuggets of potentially interesting findings. Data is not insight. Insight is not action.

Many of the companies I have worked for have a ton of data, but not an ounce of capability nor willingness to act upon it.

If you don’t have a well articulated customer growth strategy, if you don’t have people who know how to turn data into actionable tactics, if you don’t have leadership committed to customer-centricity and being channel agnostic, more data is not going to help.

First things first.

 

 

Data whisperers

This is the era of “Big Data.” Or so a lot of pundits and conference speakers tell us relentlessly.

Of course it’s true that with better technology–and myriad new track-able customer interactions–we are now faced with a huge, expanding and sometimes overwhelming amount of customer data. Big data indeed.

For many, the focus has been on what data to collect, how to collect it and which technology to deploy. That’s a mistake.

More data without a customer insight strategy is irrelevant. New technology without humans who know how apply it is a waste of money.

Truly customer-centric companies invest first in 3 core things: a clearly articulated customer growth strategy, a robust customer insight plan and people who can apply useful intuition to a growing mountain of data.

I call this last group the “data whisperers.”

Data whisperers blend a highly technical skill set with pragmatic knowledge of how to usefully segment, attract, engage and retain your most valuable customers.

Data whisperers see the forest AND the trees. They are the secret sauce that make big, complex and expensive technology solutions actually generate actionable customer insight. They help your organization treat different customers differently.

So read the blogs, review the literature and enjoy the conferences.

Just don’t lose sight of what makes the difference between big data and big insight.

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