Being customer focused and acting on what customers say is a challenge in many companies. I recommend learning from an industry that does it much better than most – Retail.
Here is a strategy that several retailers adopted.
1. The CEO spends a lot of time going into stores talking to customers, especially on Fridays and weekends. At his Monday morning meeting he tells his senior team what he has heard and seen and asks them what they are doing about issues that he has uncovered. This can be quite painful for unprepared members of the senior team.
2. The senior team not wanting to be caught out by the boss go out to stores and listen to lots of customers on Thursdays, before the CEO visits on the Friday. This gives them the opportunity to fix problems before the CEO finds out about them.
3. This creates pressure for the direct reports of the senior team. They soon catch on that they better go round the stores on Wednesdays before their bosses visit on a Thursday.
4. As this thinking cascades down and across the company management staff are in stores every day talking to customers, finding issues and acting upon them. They also enjoy contact with staff and customers and the experience helps them make better decisions.
You don’t have to be in Retail to use the same concept
In BtoB companies senior management frequently go out on Sales calls to hear what customers are saying or sit in on calls in the call centre. Some go out on deliveries or do service calls with their engineers. The secret is for all senior managers to become simply another member of staff rather than an “important person.” Done well it’s very effective at getting everyone in the company to act in a more customer focused way.
A great supplier is one who retains a larger than average percentage of existing customers and finds it easier than competitors to attract new customers. But what is it that makes them successful? It’s not just price.
To find out how suppliers get rated as great we asked 67 companies to tell us “What do your suppliers do for you?” We wanted to discover why particular suppliers were selected and what they had to do to remain as a supplier.
The bottom line is that the three top factors were: Quality, Expertise and Price, in that order. It was very clear that having the “best” product or service was rarely a deciding factor because frequently the company had no basis on which to determine which offering was actually “best”. This makes other factors such as quality customer service not just good to have but critical to retaining customers and attracting new ones. The other top factor were: Flexibility, suppliers processes and timeliness.
Many suppliers of products or services are over optimistic in thinking that their customers love them. Perhaps this is because they don’t asked customers what they really think about their relationship.
We carried out a survey of 66 companies and asked them to rate their relationship with suppliers. We also asked suppliers how they thought customers would rate them. There was a significant difference between the two sets of results which could be summarized as misplaced optimism. For example the number of customers who would strongly agreed with the statement that their supplier is customer focused was 35% lower that the suppliers thought that it would be.
There are many examples of companies that have lost existing customers because they took their business for granted while focusing on getting more new customers. How can you avoid this happening in your company?
The first step is not to listen to consultants like me. We may have opinions and experience but we don’t have a magic bullet. A good strategy is to understanding why companies became your customers in the first place. This gives you a base of things to keep doing. You also need to understand more about how customers regard their relationship with you now.
The obvious function to gather this type of customer feedback are Sales but, they are also the worst people to do it. They are too close to the action and have too much to lose from negative comments. You could use Marketing or even employees in HR if they have the skills. If you don’t have the expertise in-house to both create the right questions and know what to do with answers you might just have to hire a consultant like me.
Whatever your approach my advice is to ask your own staff how they think customers will rate their relationship with your company before talking to customers. When you have the results then go out and ask customers what they think. Comparing the answers that staff thought customer would give to what customers actually said can prove very salutary. Perhaps more importantly it reinforces to your staff what customers really care about and they buy-in much more easily to any changes that have to be made because they have been part of the process.
These changes could both encourage existing customers to stay and buy more but in many cases they also presents opportunities to reduce cost by stopping doing things that customers do not value. Get it right and your company will not only retain more customers but also find it easier to get new ones.
How much time and effort should be put into researching and tracking the activities of your competitors?
It’s easy to become a bit paranoid about competitors, especially when it seems like they are winning more business than you are. The temptation is to spend a lot of time trying to second guess competitors plans which can become very frustrating due to a lack of data. One of the reasons for this lack of solid data is that surprisingly often your competitors don’t know enough about why they are successful either.
Most suppliers think that they win or lose business based on product capabilities and/or price. My own experience of carrying out win/lose reviews with my clients customers is that suppliers assumptions are usually wrong. It’s more often factors other than price and product capabilities that swing the final decision. In short companies don’t always understand what their customers really care about.
The only way to find out what customers really care about when making supplier decisions is to ask them. You will almost certainly learn that customers care about a range of things that you have not considered. To you they may not necessarily be logical or even sensible but they are factors that influence buying decisions which no amount of competitor analysis will uncover.
Success doesn’t come from exploiting the detailed differences between your products and those of your competitors that customers don’t understand or care about. The secret of success is knowing the questions to ask customers and acting on that information.
It’s a very good idea to keep your existing BtoB customers happy, particularly in today’s business environment. But, what’s the best way to do it?
You could reduce your prices. In most cases that’ll have no long term impact on the relationship with your customers but will hit your own profitability. If you gave away products or services it would have the same negative impact on your bottom line and your customer would soon forget it. Even worse, they could expect reduced prices and free products as the new norm.
The challenge is to find something that your customers would value more than free stuff and price reductions but which costs you nothing. The answer is to help your customers get more business for their own company. Nothing is more important to your BtoB customers than their own bottom line. Imagine the impact of passing your customers leads and contacts that they can convert into revenue and profit for their company. When a customer successfully closes a lead that you gave them your relationship moves to a different level. You will have a very happy customer who is most unlikely to attempt to replace you as a supplier and will want to work more closely with you.
The way to implement this strategy is for your Sales team to always be on the look out for sales opportunities for your customers as well as your own company. (There are ways to incentivize them and help them to do this). It’s very unlikely that your competitors will be using this strategy or that your customers would ever expect a supplier to get them more business. Done well you will get some very happy and loyal customers.
Treating a Marketing plan as a stand alone document is a sure way to reduce it’s impact and make it to hard to get budget approval.
I’ve carried out Marketing reviews for lots of companies over the last ten years and discovered that the root cause of most issues is that the Marketing plan has not being tightly coupled to the overall business plan. As a result justifying Marketing investments and measuring the value of Marketing is often challenging to say the least.
Before starting on a Marketing review it’s vital to see the Business plan, company objectives and strategy for achieving those objectives. Sometimes this information needs to be organised to make it easier to communicate so I often produce a one page graphic version of the Business Plan.
Now I can review the existing Marketing activities based on how well they support the one page plan, particularly the top level objectives. This often cuts out some Marketing activities completely as well as re focusing others. The final step is examining how well the Marketing activities have been implemented and what can be done to improve their impact on the overall Business plan and objectives.
Acquiring new customers is at or near the top of most businesses priorities. The key question is HOW? We asked over 60 BtoB companies which marketing activities worked best for them.
The survey came up with some very interesting results. The biggest surprise is that some of the most heavily used marketing activities are not proving to be effective in winning new business. Bottom of the list was cold calling. Perhaps not such a shock because it’s often done so badly but it raises the question of why so many organisations continue to use it. Just above cold calling is price cuts. For some this may be unexpected but it shows that marketing actions which work in a Business to Consumer (BtoC) environment often have a different impact in Business to Business (BtoB) marketing. The big difference is that few BtoB buying decisions are solely made on price. The buying decision is much more dependant on what I call the RET factor. Relationship, Expertise and Trust.
What worked best?
In the No1 slot was Face to face networking. As more than one respondent observed “the traditional ways still work best although maybe not quite as well as they used to”. Networking examples given were events for their specific industry sector, expertise linked events such as technology, or common membership in organisations such as the IoD or golf/sports clubs.
In the No2 slot for acquiring new customers is Content and Publishing. Blogs, articles, media coverage and answering questions on LinkedIn, were common examples but there were many others. Predominantly the aim was to add value to potential new customers while at the same time demonstrating their own Expertise.
A final observation from the survey. Not one respondent cited having the best products as an effective way to acquire new customers. Could it be that the RET factor is even more important than the product?
Many companies talk about customer service being their top priority and “delighting” customers but often its just marketing blah blah. In fact customers don’t actually want to be “delighted” they just want their expectations to be met and companies to deliver as promised.
Successful companies that really do care about their customers have one thing in common – they all listen to their customers rather than making assumptions about what is most important to them. One company that I’ve worked with gets their senior staff to spend at least 5 days a year in Customer Service listening to calls and speaking to customers. Several supermarkets get their Managers/Directors working for two weeks in stores helping customers and staffing the tills. Other companies use techniques such as senior managers shadowing customer facing staff. The closer that senior staff, including Directors, can get to customers the more they will understand about what customers really care about which will lead them to make better decisions in the business.
In addition to hands-on experience the smart use of customer surveys can also identify factors that your customers like and don’t like about your company. Some skill is needed to ask the correct questions and interpret the results but the effort to do it well, rather than as a box ticking exercise, can be very worthwhile. Combining hands-on experience and customer survey feedback often has the major benefit of identifying issues that would never have come to light in any other way. It’s not issues either because things that customers really like are often identified too and they are often different from what the company assumed they were.
So lets stop talking about delighting customers and focus on ensuring that we understand customers expectations and that we deliver as promised.
How do you keep Sales motivated in a tough marketplace? Step one, don’t beat them up and tell them how badly they are doing. Step two, create a project to engage other parts of the business to work out as a team what can be done to increase sales.
Talk to Customer Services, Marketing and yes even Finance. Don’t forget the less obvious functions such as Logistics, Manufacturing and product development too. Get a different take on customers that can be used to change how things are done. Functions that have never been asked for input before can come up with some great thoughts. Here are just a few real examples from my own clients:
From a Field service engineer: Customer XX told me that he doesn’t give us more business because we ask him to press too many buttons on his phone to get through to a human being who can take an order.
From Manufacturing: We know that product XXX has a high failure rate and customers get angry with it but no one has ever listened to us before.
From Finance: We’ve been told by several very large customers that we provide far too many low value invoices which cost them a lot of money to process. Those large customer said they just want one invoice.
From Product Development: My cousin works for XXXX who Sales want as a customer – I’m sure he can help.
This current harsh environment is a great opportunity to pull together the whole organisation to help and support Sales. With the extra knowledge gained processes and products will be improved. Marketing may also discover some new ways to stand out from the competition too. Most importantly Sales staff will be able to build better relationships with customers and therefore improve results.
Perhaps equally important top Sales staff will be more encouraged to stay with a company that helps them rather than just beats them up.
Dogs are loyal, customers are not. Customers buy from you for a range of different reasons based on their perceptions and the relative value that they place on: price, relationship, product/service, expertise and trust. There are usually a few emotional factors in there too!
The mix and importance of all these factors varies by product, circumstance, time and immediate economic environment. Of course it can also vary by individual customer too. This means that there are a lot of variables and illustrates that there are no easy answers. Success is usually based around really understanding your customers and providing an appropriate mix of the variables under your control for your target market. If a strong competitor enters your market the worse thing to do is nothing. Hoping that “customer loyalty” will see you through is very dangerous. You have to understand the competitor, their offering and the likely impact that it will have on your current and target customers. Only then can you decide the most effective actions to take.
I advise my clients not to think about customers being “loyal” to them. Customers are simply preferring to buy from them until they do something wrong or a competitor becomes a more attractive option. Only dogs are loyal, customers are not.
Yes lots of management teams are unsettled by the current business environment. Some react by doing nothing and hoping things will change. Rarely a good idea! Others simply work harder but in the same ways. However, I’m seeing an increasing number who are recognising that to thrive, or perhaps even just to survive, they need to do something different.
Over the last year more companies than ever are seeking external advice about what to do. For some the start point is to find out how to make their marketing more effective. For others it’s the recognition that they don’t have a strategy and they realise that they need one in order to move forward in a joined up way.
Companies are not looking for heavy complicated planning processes, nor are they looking for quick fixes that are not sustainable. They are looking for something that fits their needs and their business environment. This means that us marketing and strategy experts also have to adjust what we offer and how we add value to our clients on an individual basis. I’m finding a lot of interest in very simple tools like my One Page Plan to get a rapid overview of business and to identify issues. Often it’s tied to a review of what’s working and what’s not working in Marketing.
Whichever methods and tools you use the key thing is to keep it simple and easy to communicate and that the Marketing plan supports the overall business strategy.
Often the most interesting and useful customer feedback doesn’t come from Sales or Marketing. It comes from functions that deal directly with the customer such as Customer Services, Logistics and Finance. I always ask people in these functions what customers are saying and often get some amazing information that by its very nature Sales and Marketing would have no way of capturing. For example the customer whose main reason for using one supplier was the way that they invoiced. (It fitted in well with their own internal systems.) This knowledge stopped the supplier changing their invoicing system.
Then there was the customer who didn’t like the way that boxes were opened by the supplier before they sent them to the customer. The customer thought that because the box had been opened they contained faulty products. The supplier thought they were providing a valuable service by opening and testing every product before they shipped it, but they had never told the customers what they were doing or why. In both of these two real examples the customers had told people in their suppliers company about these things before but the staff in Logistics and Finance didn’t know who to tell or, that this type of information was important.
So my recommendation is to ask staff at all the main customer touch points what they are hearing. I’m sure that you will be surprised by what you discover.
Some of the most brilliant plans and strategies never get implemented. The problem is often communicating the strategy in a simple and easy to understand manner to a lot of people with different opinions, knowledge levels and responsibilities. As plan creators we need to think about our internal audience in the same way as we think about customers. They have to get and like our message and see benefit in implementing it.
My approach to this challenge is to boil down the plan document to a single page that can be shared and understood by the whole organisation. I then put a lot of effort into marketing it internally. As one of my more memorable bosses frequently said, “If my granny can’t understand your plan you ain’t got a plan”.
2013 will be the year of the customer for all smart companies, not just retailers.
When times get tough consumers and B2B customers think more about what they buy and who they buy it from. Price will always be a consideration but making a good decision is even more important. To help them make a good buying decision companies assess potential suppliers against three criteria: Relationship, Expertise and Trust. It’s what I call the RET Factor.
From a suppliers perspective anything they do which could negatively impact any of these three factors could result in fewer customers buying from them. Of course the opposite is also true and anything that could positively impact a RET factor could led to increased sales and better customer loyalty. That’s why companies are striving much harder to understand what their customers really want and why 2013 will be the year of the customer.
The first step is to understand how your customers rate you today. I do a lot of RET surveys and almost without exception companies think that their customers will rate them higher than they actually do. With evidence from surveys its much easier to decide what actions to take and what things to leave along. Without this evidence Corporations will continue doing what they think is best which is often not what customers want. Have a look at the survey results on our main website which will explain this in more detail.
Companies who understand and act on what their customers really want at every touch point will be the ones who are successful in 2013.
It seems to have become an automatic reaction for us marketing people to say don’t cut the Marketing budget in difficult times. To me this is rather naive. The vast majority of companies will cut their Marketing budgets whatever we say. If you are a CMO or Marketing Manager my suggestion is to be pro active. Tell your staff that YOU are going to cut the marketing by 50% and ask for their suggestions about how to get the best results with that much reduced budget.Set a meeting within a few days to brainstorm ideas and build some recommendations and justifications. Cuts of this scale will demand that people think differently because business as usual will not be an option.
At the end of the meeting you will have enough information to build a plan and justify actions. Write it within a few days and keep it short and customer based. Obviously it does not have to stick to exactly 50% but it does need to be a significant reduction. Then take it to the CEO or board for discussion. This will be your suggestion about how best to respond. This is Marketing being proactive and ahead of the game while other functions haven’t even started to think about how to respond. You will stand far more chance of getting your revised budget and the actions that you wish to implement agreed than anyone else. You have done your planning and will have some logic to back up your plan. This will lead to you being able to focus Marketing on delivering while other functions get bogged down in ain’t it awful discussions.
The worst thing to do is to ignore financial conditions and try to do the same old marketing in the same old way. Highly frustrating and potentially a very career limiting option.
I look after events for IoD Berkshire and we spend a lot of time asking members what works for them. The best category is events that draw repeat attendees. A good example are certain types of breakfast clubs. The benefit comes from being able to build the relationship over time and staying in peoples mind by repeat contact. There is no specific format such as informal networking, speakers or topics that always works the best. However, the event has to provide the opportunity for attendees to easily get engaged in conversations with several different people. Of course the event has to be interesting to get people to attend in the first place.
My advice is to find an event that repeats several times a year that you feel comfortable at and keep going to it. Personally I think that weekly meetings only work for certain types of businesses. Going to the odd event and hoping to get lucky in finding a lead or good contact is increasingly unlikely.
I start from the premise that customers expectations are never unrealistic.We may think they are but with the odd exceptions customer are reasonable and believe that their expectations are realistic.The challenge for companies is to understand the specific expectations of their customers and ensure that where it makes business sense those needs are met.
One of the myths is that meeting customer expectations or proving a better customer experience means spending lots of money.In a lot of situations it costs very little or even nothing. It’s not untypical for me to make at least three or four recommendations to a client that have a high positive impact on customers at zero cost them.(I have specific examples for anyone who is interested to know more).
The second major point that many companies miss is that improved customer experience leads to better customer retention. We’ve seen many different surveys that claim that 50% – 70% of customers leave due to how they have been treated by their supplier or their by staff.I use this information to do a very simple ROI for clients to demonstrate the value of investing in improving customer experience.In several cases the ROI based on improved customer retention was in excess of 50%.
There are a few articles on my web site that give a bit more background to my thinking and some example of what customers really care about rather than what we think they care about.http://www.simpleplans.co.uk/7.HTML
It’s not about where they report but what they actually do that matters.
Marketing are the servants of Sales and the masters of business strategy.Successfully pulling this off is often quite a challenge. I encourage clients to think that Sales own responsibility for selling and servicing all customers individually and Marketing are responsible for all customers collectively.
The issue is not the internal wrangling about metrics or organisational structures.They are just red herrings and take our mind off the core issue. The real focus is Customers and how both Marketing and Sales work together to get and keep profitable customers.
In a really Customer focused organisation all decisions are tested against the impact on customers before being implemented. Having this common touchstone significantly reduces internal “discussions” about organisation structures.