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Relationship Management By Jeff Marr Jeff Marr, Vice President of Consulting Services, shares his thoughts on the importance of building, managing, and growing relationships with customers. |
Many companies struggle when it comes to actually enhancing the customer experience. Even after customer initiatives are planned, time may pass and leaders wonder why customer scores aren't improving. Good intentions and plans are often not sustained, getting overtaken by the running of the business. I believe that teams planning action or customer-focused change would benefit from knowing they are being innovators and by adopting principles of lean innovation.
After all, taking customer-focused action is innovation. Adjusting a solution or service to fit what customers want is an upgrade, whether we call it "version 2.0" or not. People working on such projects become energized when they are recognized for creatively producing something new and important for the business.
The emerging practice called Lean Innovation offers a fitting tool for customer action planning because these principles begin and end with customer insights. For example, the first rule is knowing the customer's large "monetizable pain point", which of course would be a key driver of customer loyalty/retention -- which is what action teams typically work on today. Armed with customer relationship insights, teams start out a step ahead in the game of Lean Innovation.
However, the next Lean Innovation rule reveals where some action planning teams get off track. Customers can't tell you exactly how to fix the problem, just where the pain is. After you plan a change, customers will say whether the new approach helps or not. But action teams should be quickly creating the new concept/change to test on some customers, rather than spinning wheels seeking more data up front, hoping that customers will play the designer role. As the authors of the new book,Nail it Then Scale it say, "Entrepreneurs innovate, customers validate."
Action teams can become more entrepreneurial and effective by following principles of Lean Innovation. In the five stages posed in Nail it Then Scale it below which I adapted slightly to fit customer action planning, note how customers are kept engaged through the design process in the early stages:
1. Nail the pain -- fix on a key driver of customer loyalty needing improvement (based on feedback); craft a revised solution/service/process concept.
2. Nail the solution -- obtain customer reactions to the new concept, then to a simple prototype, then to quick iterations of same. Ensure your design reaches the point where the customers see real value, will pay more, etc.
3. Nail the go-to-market strategy -- learning exactly how the customer will effectively use and/or buy the new approach; who's on the "committee" using it and deciding where the value is. Do real testing with real prices, if applicable.
4. Nail the business model -- use customer insights from above to work out predicted usage, revenue streams and costs; as needed probe customers on how they will use, what they will buy, etc. Keep initial applications limited until business side proves out.
5. Scale it -- once the business model is set and functional, the change can be rolled and grown.
Another term from design engineers that fits this approach to customer focused change is incremental innovation -- taking a worst-performing aspect of something key to customers and fixing it, then moving to other aspects. I hope more of those responding to customer priorities will see themselves as the innovators they truly are.
After all, taking customer-focused action is innovation. Adjusting a solution or service to fit what customers want is an upgrade, whether we call it "version 2.0" or not. People working on such projects become energized when they are recognized for creatively producing something new and important for the business.
The emerging practice called Lean Innovation offers a fitting tool for customer action planning because these principles begin and end with customer insights. For example, the first rule is knowing the customer's large "monetizable pain point", which of course would be a key driver of customer loyalty/retention -- which is what action teams typically work on today. Armed with customer relationship insights, teams start out a step ahead in the game of Lean Innovation.
However, the next Lean Innovation rule reveals where some action planning teams get off track. Customers can't tell you exactly how to fix the problem, just where the pain is. After you plan a change, customers will say whether the new approach helps or not. But action teams should be quickly creating the new concept/change to test on some customers, rather than spinning wheels seeking more data up front, hoping that customers will play the designer role. As the authors of the new book,Nail it Then Scale it say, "Entrepreneurs innovate, customers validate."
Action teams can become more entrepreneurial and effective by following principles of Lean Innovation. In the five stages posed in Nail it Then Scale it below which I adapted slightly to fit customer action planning, note how customers are kept engaged through the design process in the early stages:
1. Nail the pain -- fix on a key driver of customer loyalty needing improvement (based on feedback); craft a revised solution/service/process concept.
2. Nail the solution -- obtain customer reactions to the new concept, then to a simple prototype, then to quick iterations of same. Ensure your design reaches the point where the customers see real value, will pay more, etc.
3. Nail the go-to-market strategy -- learning exactly how the customer will effectively use and/or buy the new approach; who's on the "committee" using it and deciding where the value is. Do real testing with real prices, if applicable.
4. Nail the business model -- use customer insights from above to work out predicted usage, revenue streams and costs; as needed probe customers on how they will use, what they will buy, etc. Keep initial applications limited until business side proves out.
5. Scale it -- once the business model is set and functional, the change can be rolled and grown.
Another term from design engineers that fits this approach to customer focused change is incremental innovation -- taking a worst-performing aspect of something key to customers and fixing it, then moving to other aspects. I hope more of those responding to customer priorities will see themselves as the innovators they truly are.
You don't have to be an economist (which I'm not) to recognize that extreme boom and bust cycles harm the economy. A market bubble such as the housing mortgage debacle has at its core some unhealthy relationships between the economic partners involved. I think those poor business relationships reflect on a larger scale what can happen to market relationships in specific industries. Unfortunately, I believe another economic bubble may be on the way.
Business/channel partner relationships that are healthy produce a "win/win/win" -- across the supply chain for original sellers, partners and end-customers. Delivering and receiving value at each chain link should be the metric for healthy partnering. Inadequate value will break the chain. Without good enough incentives or training offered by the original seller, for example, partners can't perform as well for the seller or the end customer. Or if a channel partner fails to support customers post sale, then the lousy experience for customers pings back to hurt the reputation and share for partner and original seller alike. Nobody wins.
On a larger scale, I think the housing mortgage bubble had unhealthy partnership relationships, between banks and mortgage brokers, realtors, regulators and home buyers. Housing prices became inflated because borrowing too much was made too available to too many. Fingers are still being pointed for blame. Suffice it to say that in the end, all those groups and more -- arguably all of us affected by the bad economy -- suffered as a result.
While less documented, another economic bubble disaster may be brewing, related to college lending and borrowing. I agree with analysts who say that higher education prices are inflated because too many are borrowing too much, in terms of lacking ability to pay back and/or lacking quality jobs. The enablers? Here include the usual suspects -- banks/financial aid brokers and regulators. But include as well the colleges and trade schools encouraging over-borrowing, and students and their parents who borrow more than they can pay back, and those studying for careers that can't pay enough earnings to warrant the cost.
Parenting four, college-educated children gave me a birds-eye view of seeing some of these dynamics first hand. But the broader evidence has come from analysis such as here and here (scroll down to chart comparing housing and college inflation rates with the CPI).
Unholy partnering, or a lack of true value for throughout the chain, never ends well. And as we've seen, large bubbles make big messes. I hope some behavior changes and we don't see this next one burst as some fear.
Business/channel partner relationships that are healthy produce a "win/win/win" -- across the supply chain for original sellers, partners and end-customers. Delivering and receiving value at each chain link should be the metric for healthy partnering. Inadequate value will break the chain. Without good enough incentives or training offered by the original seller, for example, partners can't perform as well for the seller or the end customer. Or if a channel partner fails to support customers post sale, then the lousy experience for customers pings back to hurt the reputation and share for partner and original seller alike. Nobody wins.
On a larger scale, I think the housing mortgage bubble had unhealthy partnership relationships, between banks and mortgage brokers, realtors, regulators and home buyers. Housing prices became inflated because borrowing too much was made too available to too many. Fingers are still being pointed for blame. Suffice it to say that in the end, all those groups and more -- arguably all of us affected by the bad economy -- suffered as a result.
While less documented, another economic bubble disaster may be brewing, related to college lending and borrowing. I agree with analysts who say that higher education prices are inflated because too many are borrowing too much, in terms of lacking ability to pay back and/or lacking quality jobs. The enablers? Here include the usual suspects -- banks/financial aid brokers and regulators. But include as well the colleges and trade schools encouraging over-borrowing, and students and their parents who borrow more than they can pay back, and those studying for careers that can't pay enough earnings to warrant the cost.
Parenting four, college-educated children gave me a birds-eye view of seeing some of these dynamics first hand. But the broader evidence has come from analysis such as here and here (scroll down to chart comparing housing and college inflation rates with the CPI).
Unholy partnering, or a lack of true value for throughout the chain, never ends well. And as we've seen, large bubbles make big messes. I hope some behavior changes and we don't see this next one burst as some fear.
In a recent blog, I implied that learning your customer contacts' challenges and needs can be as important as the homework you do on their company. But I think you can assume they will benefit from the success of your product -- its implementation, in doing what you said it would do, and especially in the ROI. Whenever they recommend or choose you as vendor on their project, then your success reflects on them. But it offers an opportunity as well -- to partner up in telling that success story to others in the customer company. Then they win by sharing knowledge with their colleagues, and you win because those are your prospects.It often happens with large accounts that your buying customer is just one among several business units and groups in the corporation -- other product lines, BUs or Geos. Account managers responsible for penetrating the account further can be daunted by reaching out to start conversations with the right people in these groups.
I was struck observing the practices of highly successful Global Account Managers (GAMs) recently that a pattern emerged in how their business with that account accelerated, by:
1. Initially selling a small-to-mid-sized project -- "just got our nose under the tent," as one GAM related, for one area of the customer corporation.
2. Making sure the initial project was executed and paid off for the customer business -- top and/or bottom line
3. And here's the key point -- helping the customer contact assemble a case story about the successful project -- a brief but slick powerpoint with talking points and financial impact as the punchline; deliverable individually or jointly by the contact and the seller. The target audience: other parts of the customer business that would clearly benefit from a similar solution.
These GAMs were motivated to go the extra step of initiating the case story preparation in order to smooth their entry into other parts of the business; the buyer was motivated because telling the successful story accomplished career goals for leadership, knowledge sharing and of course networking elsewhere in their global company.
Top sales account or salespeople are often charged with selling to existing accounts and are told this is "low-hanging fruit" compared to adding new logos. But the low fruit reference may be a stretch -- if it was so easy, then it would show up in the numbers and shorter sales cycles. Developing real partnerships with the contacts you work with can be jump-started by co-promoting a success that you shared.
The old business saying, "Nobody was ever fired for hiring IBM," should have this corollary-- "People got promoted for hiring IBM." Vendor choice and experience helps launch (and destroy) careers. I knew a young manager who became a young executive in a Global 500 bio-medical company, not long after ushering in a successful enterprise implementation. He deserved the promotion, but wouldn't have gotten it without the vendor's splendid performance.
My friend probably made sure this vendor's plan fit their business well. Studies and personal experience show that customers want their vendors to know their business better. By doing homework and aligning their products with the business challenges and goals of customers, vendors improve chances to win and/or grow account and market share. But what about learning the goals and issues of individual contacts at key accounts as well? If they influence choice of vendor, and that decision reflects on them and their careers, then it would serve the vendor to know these individuals better as well as their business.
I suggest that knowing your customer contacts better can parallel the learning of their business. For example, when conducting due diligence on a key account, best practices would identify the challenges faced by the business, strategies undertaken, and most critical business performance measures, so your product can be adapted to fit into that customer reality.
But some answers needed about your contacts are similar -- their career goals and challenges, what they have accomplished to date, how they may be affected by the degree of success in the vendor/partner relationship. The outcomes will guide building in features and assurances that accomplish the personal needs of your contact along with the business objectives. This might include a preferred frequency or mode of communicating project progress, or preparing the ROI story a certain way for the executive audience.
Customer contacts will tell you they want effective solutions from vendors rather than to be wined and dined. But creating some social situations can pay off if that is where we learn about the client as an individual beyond what can be obtained through social media.
My friend probably made sure this vendor's plan fit their business well. Studies and personal experience show that customers want their vendors to know their business better. By doing homework and aligning their products with the business challenges and goals of customers, vendors improve chances to win and/or grow account and market share. But what about learning the goals and issues of individual contacts at key accounts as well? If they influence choice of vendor, and that decision reflects on them and their careers, then it would serve the vendor to know these individuals better as well as their business.
I suggest that knowing your customer contacts better can parallel the learning of their business. For example, when conducting due diligence on a key account, best practices would identify the challenges faced by the business, strategies undertaken, and most critical business performance measures, so your product can be adapted to fit into that customer reality.
But some answers needed about your contacts are similar -- their career goals and challenges, what they have accomplished to date, how they may be affected by the degree of success in the vendor/partner relationship. The outcomes will guide building in features and assurances that accomplish the personal needs of your contact along with the business objectives. This might include a preferred frequency or mode of communicating project progress, or preparing the ROI story a certain way for the executive audience.
Customer contacts will tell you they want effective solutions from vendors rather than to be wined and dined. But creating some social situations can pay off if that is where we learn about the client as an individual beyond what can be obtained through social media.
B2B vendors are selected for reasons that vary by buying sector and company. Vendor size wouldn't always be on a company's short list of decision criteria, but I believe the size of the vendor plays a larger role than some buyers would admit. Implied with the size preferences and other vendor choice criteria is the critical need for vendors to exhibit customer focused leadership.
From personal observation and limited research on the topic, it appears that when considering vendors to hire, companies use some common elements, but vendor size isn't always one of them. For example, at or near the top would be Right Product Capabilities -- knowing that the vendor's product/service fits the goals and needs of the buyer.
In the next tier would come (order will vary based on company and situation):
Let me offer a few hypotheses regarding the impact of vendor size in the consideration and selection of vendors by many B2B companies.
1. There's a rule of thumb or "sweet spot range" on supplier size -- not too big or too small, (as measured by the percent of business the customer represents). If too small, say less than 1% of the supplier's business, and some believe you won't get enough attention. If too large, say over 10% of their business, then they may be over dependent on you and less able to withstand fluctuations in your volume (down or up). Here is one source supporting this notion and advising buyers to stay within the sweet spot range in picking vendors.
2. Bigger customers will look for big-enough vendors -- a minimal threshold to be of adequate size and/or brand/reputation to be considered. Part of the thinking has to do with Capacity/Scalability, but the other part is risk management for the company and the decision-maker. As the saying goes, "Nobody got fired for hiring IBM." Fewer are questioned in the corporate world for hiring a supplier of size and standing.
3. Bigger customers will lean toward smaller vendors as long as they are big enough (meeting other criteria). This is really a corollary of hypothesis #1. Large companies have been accustomed to being treated as major accounts with leverage in their supplier relationships. So they would rather represent closer to 10% than 1% of their vendor's business. This often means working with vendors that are not the largest in the sector.
For vendors, one implication is about marketing strategy -- realizing where the best match-ups might be in targeting customers, given your size. Also running through all the vendor choice criteria is the need to be customer focused. For example, as a market leader, vendors will have to remain nimble in order to compete with the smaller and ofter hungrier vendors in their space. They will also have to sell the buyer that they can "act small" in their customer focus and flexibility.
From personal observation and limited research on the topic, it appears that when considering vendors to hire, companies use some common elements, but vendor size isn't always one of them. For example, at or near the top would be Right Product Capabilities -- knowing that the vendor's product/service fits the goals and needs of the buyer.
In the next tier would come (order will vary based on company and situation):
- Technical Skill (for support and design)
- Capacity/Scalability The buyer company is not only growing and changing, but may also try out a new vendor with a small piece of business before ramping up the purchase.
- Competitive Pricing - the sum of vendor costs help keep the buyers competitive in their own markets
- Reputation/Brand counts, but often more as table stakes in B2B -- such as assuring financial stability, that the vendor stands by its work, etc.
Let me offer a few hypotheses regarding the impact of vendor size in the consideration and selection of vendors by many B2B companies.
1. There's a rule of thumb or "sweet spot range" on supplier size -- not too big or too small, (as measured by the percent of business the customer represents). If too small, say less than 1% of the supplier's business, and some believe you won't get enough attention. If too large, say over 10% of their business, then they may be over dependent on you and less able to withstand fluctuations in your volume (down or up). Here is one source supporting this notion and advising buyers to stay within the sweet spot range in picking vendors.
2. Bigger customers will look for big-enough vendors -- a minimal threshold to be of adequate size and/or brand/reputation to be considered. Part of the thinking has to do with Capacity/Scalability, but the other part is risk management for the company and the decision-maker. As the saying goes, "Nobody got fired for hiring IBM." Fewer are questioned in the corporate world for hiring a supplier of size and standing.
3. Bigger customers will lean toward smaller vendors as long as they are big enough (meeting other criteria). This is really a corollary of hypothesis #1. Large companies have been accustomed to being treated as major accounts with leverage in their supplier relationships. So they would rather represent closer to 10% than 1% of their vendor's business. This often means working with vendors that are not the largest in the sector.
For vendors, one implication is about marketing strategy -- realizing where the best match-ups might be in targeting customers, given your size. Also running through all the vendor choice criteria is the need to be customer focused. For example, as a market leader, vendors will have to remain nimble in order to compete with the smaller and ofter hungrier vendors in their space. They will also have to sell the buyer that they can "act small" in their customer focus and flexibility.
"It's Time to Fire your Customers" -- Based on the number of comments, that HBR Blog headline sure caught readers' attention. However, the author makes a good case for parting ways with unprofitable customers who lack potential to grow or become profitable. My own comment suggested that this thinking could be around Three P's -- Payoff, Potential, and Partnership -- to assess how some customers are more valuable than others.
But then an intriguing
ethical question ensued between commenters, posing challenges such as, "Aren't companies obligated toward even their 'low priority' customers"? "Isn't ... "(any) company that consciously jettisons customers... (treating) the customer as just a statistic?"
My response was simply, no. Business relationships should be win/wins; of mutual value to buyer and seller. Otherwise, the decision maker on either side has to make a call on whether to continue. Sellers have to be more tactful than buyers when disengaging, but they have the right to disengage, and perhaps the obligation to do so for the sake of the business owners.
A counter point was that businesses firing customers using the service/goods provided are treating them as less than "real people (or companies) with real needs." My answer: Sellers are people too, but who ever questions customers when they "fire" their restaurant, retailer or supplier, taking their business elsewhere? In fact, I think we call this, "shopping" and "choice."
Finally the questioner-of-ethics said he "would have difficulty accepting that it’s 'win-win' to summarily turn away a customer who's dependent on the company to meet his or her need." I agreed with him that a company turning away a customer isn't a win/win -- it's a lose-lose. It's a loss to the customer, especially one dependent on the company, but it's a loss for the company, too -- in fact the company had already lost money, which was the point of making the separation.
As always, there are exceptions to rules on letting customers move on. Utility services come to mind, which have grace periods and other policies that protect customers who can't pay in the short run.
But commercial enterprise should be evaluating the relative value of customers, and there's certainly no ethical argument about "targeted marketing", which tends to do just that. One could even say that companies make a profit one customer at a time...(or lose money or just break even.) there is definitely a time to consider firing a customer.
But then an intriguing
ethical question ensued between commenters, posing challenges such as, "Aren't companies obligated toward even their 'low priority' customers"? "Isn't ... "(any) company that consciously jettisons customers... (treating) the customer as just a statistic?" My response was simply, no. Business relationships should be win/wins; of mutual value to buyer and seller. Otherwise, the decision maker on either side has to make a call on whether to continue. Sellers have to be more tactful than buyers when disengaging, but they have the right to disengage, and perhaps the obligation to do so for the sake of the business owners.
A counter point was that businesses firing customers using the service/goods provided are treating them as less than "real people (or companies) with real needs." My answer: Sellers are people too, but who ever questions customers when they "fire" their restaurant, retailer or supplier, taking their business elsewhere? In fact, I think we call this, "shopping" and "choice."
Finally the questioner-of-ethics said he "would have difficulty accepting that it’s 'win-win' to summarily turn away a customer who's dependent on the company to meet his or her need." I agreed with him that a company turning away a customer isn't a win/win -- it's a lose-lose. It's a loss to the customer, especially one dependent on the company, but it's a loss for the company, too -- in fact the company had already lost money, which was the point of making the separation.
As always, there are exceptions to rules on letting customers move on. Utility services come to mind, which have grace periods and other policies that protect customers who can't pay in the short run.
But commercial enterprise should be evaluating the relative value of customers, and there's certainly no ethical argument about "targeted marketing", which tends to do just that. One could even say that companies make a profit one customer at a time...(or lose money or just break even.) there is definitely a time to consider firing a customer.
I wonder if you can't quickly check true customer focused leadership by simply looking for tangible evidence -- the initiatives, projects, metrics, etc., designed to deliver more value to customers. Without such initiatives underway, does a company deserve to call itself customer-focused?
These tangibles might be corporate but should be especially found within customer-facing processes or functions and strategic account teams. In each department it should be asked, "Where are the new projects and goals that will help earn customer commitment?"
I worked with a client some years ago that sold mission-critical equipment to businesses and was a global market leader at the time. They were very business development-oriented in their growth strategy. The feedback from buyers indicated a huge strategic opportunity for this company to enhance customer service, because salespeople didn't do much account management -- users were directed to call customer service with questions. Unfortunately, it wasn't always evident to the customer who to call or how to get their questions answered.
So this client made customer service a priority for improvement. And this was new thinking, because we found that despite having 100+ formal quality improvement projects underway company-wide, they had zero projects active within the customer service function, the number one customer-desired area to improve. This was shocking, but did lend urgency to making changes. They dramatically enhanced staffing and call software in customer service, made changes to the post-sale servicing approach, and have maintained their dominance in their global markets.
One lesson is in knowing the priority of your customers and doing something about it, but there's a bigger picture here. Customer listening should relate to the tangible initiatives underway in different departments and teams. As customer due diligence, the existence of those should be observed along with customer experiences.
The adage should probably be, "Without customer initiatives; we don't have customer focus."
These tangibles might be corporate but should be especially found within customer-facing processes or functions and strategic account teams. In each department it should be asked, "Where are the new projects and goals that will help earn customer commitment?"
I worked with a client some years ago that sold mission-critical equipment to businesses and was a global market leader at the time. They were very business development-oriented in their growth strategy. The feedback from buyers indicated a huge strategic opportunity for this company to enhance customer service, because salespeople didn't do much account management -- users were directed to call customer service with questions. Unfortunately, it wasn't always evident to the customer who to call or how to get their questions answered.
So this client made customer service a priority for improvement. And this was new thinking, because we found that despite having 100+ formal quality improvement projects underway company-wide, they had zero projects active within the customer service function, the number one customer-desired area to improve. This was shocking, but did lend urgency to making changes. They dramatically enhanced staffing and call software in customer service, made changes to the post-sale servicing approach, and have maintained their dominance in their global markets.
One lesson is in knowing the priority of your customers and doing something about it, but there's a bigger picture here. Customer listening should relate to the tangible initiatives underway in different departments and teams. As customer due diligence, the existence of those should be observed along with customer experiences.
The adage should probably be, "Without customer initiatives; we don't have customer focus."
I think the "stickiness" term for good advertising and communication applies to training and development, too. When signing up for a development course, business people all want the same things. They want the content to be interesting. They'd like the instructor to be entertaining. But business learners most of all want takeaways -- learning that "sticks", not only in memory but in their jobs. Participants may be impressed with a course or instructor, but only stickiness gives the desired return-on-learning.
Steep investments are being made in professional development such as sales technique, supervisory skills, professional certifications. Then consider variety of basic training -- on software, new products, computer skills, etc. The workforce is off the job quite a bit for the sake of learning, plus the direct costs. Managers should be demanding evidence of stickiness and return.
One framework lending itself to finding evidence of stickiness of learning comes from Donald Kirkpatrick who has long been a thought leader in professional training. Donald crafted his four levels of learning as follows:
Steep investments are being made in professional development such as sales technique, supervisory skills, professional certifications. Then consider variety of basic training -- on software, new products, computer skills, etc. The workforce is off the job quite a bit for the sake of learning, plus the direct costs. Managers should be demanding evidence of stickiness and return.
One framework lending itself to finding evidence of stickiness of learning comes from Donald Kirkpatrick who has long been a thought leader in professional training. Donald crafted his four levels of learning as follows:
- Reaction of student - what they thought and felt about the training
- Learning - the resulting increase in knowledge or capability
- Behavior or transferred learning - extent of behavior and capability improvement and implementation/application
- Results - the effects on the business or environment resulting from the trainee's performance
Some of us in the B2B customer strategy remember back many years to when 
professional "customer feedback" was for the most part, consumer marketing research -- product testing mainly, but also concept tests, advertising recall, product marketing (awareness/attitude/usage) studies.
You partnered on a project with your client contact, usually a market researcher or product manager (or both) who was seeking market insights to grow or improve his or her brand, or help roll out something new. The stakes were high -- narrowing to the right decision on how to invest in the brand. The work was hard and the study had to be done right. You didn't dare talk about these projects to anyone, even family to secure knowledge that competing brands wanted to know.
Our company's business model evolved to advise B2B vs. B2C customer strategy but the brands my colleagues and I worked with thirty or so years ago are still around. Some of those are in the image to the right. Until speaking to an industry group last week, I had forgotten what tremendous companies these were.
And the main reason why these company brands have stood the test of time? The voice of the customer was sought out scientifically to anchor major product decisions -- on likes/dislikes, what outcomes the buyers were looking for and experiencing. The companies to the right, and many fast-moving consumer goods companies in the 20th century were customer focused... before it was popular.
professional "customer feedback" was for the most part, consumer marketing research -- product testing mainly, but also concept tests, advertising recall, product marketing (awareness/attitude/usage) studies. You partnered on a project with your client contact, usually a market researcher or product manager (or both) who was seeking market insights to grow or improve his or her brand, or help roll out something new. The stakes were high -- narrowing to the right decision on how to invest in the brand. The work was hard and the study had to be done right. You didn't dare talk about these projects to anyone, even family to secure knowledge that competing brands wanted to know.
Our company's business model evolved to advise B2B vs. B2C customer strategy but the brands my colleagues and I worked with thirty or so years ago are still around. Some of those are in the image to the right. Until speaking to an industry group last week, I had forgotten what tremendous companies these were.
And the main reason why these company brands have stood the test of time? The voice of the customer was sought out scientifically to anchor major product decisions -- on likes/dislikes, what outcomes the buyers were looking for and experiencing. The companies to the right, and many fast-moving consumer goods companies in the 20th century were customer focused... before it was popular.
The rise in BI software and scorecards for business reviews makes senior managers more interested than ever in linking customer scores to operational ones. "Since we invest in tracking certain operational KPIs, let's make sure the metrics relate to what customers want," one customer process manager in a global enterprise told me. I couldn't agree more, and will simply share here four precepts for undertaking such alignment or linkage.
Do expect the right customer sentiment data to align with related operating measures. It may take exploring, mixing and matching to find alignment. Managers over customer functions should help identify internal metrics which possibly affect certain customer ratings. Analysis of data must often allow for lag time between the service experience and customer perception scores. The fact is that perceptions stem from customer experiences, which are in turn the outcomes of processes. Execution and measurement naturally precede the impact upon perceptions of customer audiences.
Do expect that some internal metrics will correlate more strongly than others with customer sentiment. The difference in correlation across measures is hopefully less about unveven quality of internal data but points instead to the experiences that customers care most about. When an internal measure is found to be a leading indicator it enables better tracking of improving operating areas in ways that please customers.
Don't expect every internal measure to correlate with customer sentiment. Certain items measure cost or risk managment more than customer value. An example would be the number of calls handled per hour in a call center -- an efficiency that customers may not see or care about, but which helps bottom-line performance. Metrics that help the business hit financial goals are keepers, whether they correlate with customer scores or not.
Do expect the alignment to indicate needing new or different internal metrics. What would you conclude when customers are unhappy about, say, deliveries being late, yet internal on-time delivery scores are very positive? To me, it implies re-checking how the internal metric is measured, since it obviously was not from the customer's point of view. What the customer cares about most can at times be very hard to measure internally, such as installed core product performing at the level the the customer expected. Ideally, you devlop ways over time to measure internally what matters most to your key customers.
I've been reminded lately that having strategic customer focus isn't about all your customer processes and touchpoints. Customer Experience or focus shouldn't mean executing every touchpoint throughout the lifecycle a certain way, but doing certain things so well that customers choose you.
In my household, we find ourselves choosing smaller, more nimble businesses to do business with, such as an electrician hired the other day over the company we normally use. He offered a shorter lead time and an appointment time rather than, "We'll be there between Noon and Five." I expected the other stuff to be done well enough -- like getting the fixture installed right -- but I hired him because he would come on a day's notice and meet at an appointed time, as that made life so much easier for us.
It's the same in B2B. Customers buy from those offering certain unique outcomes, while doing the other stuff well enough. The Corporate Executive Board (CEB) found in a recent study that companies aren't preferred because they perform all or most their customer touchpoints better. Instead, the winners, like my new electrician, were delivering certain unique benefits to the customers -- ones they couldn't easily find elsewhere that made customers' lives easier in some way. More specifically, they found that the preferred companies would:
- Choose a small number of "unclaimed" benefits to provide through their experience.
- Identify and overinvest in the one or two touchpoints where they can best showcase those unique benefits.
- Use other touchpoints to reinforce their unique benefits.
The lifetimes of once-core products, lines or even categories have their limits. But with the global economy changing locally on so many levels, old products can get new lives. We see B2B examples of this but one popular consumer brand story -- the Sony Walkman cassette player -- makes the point.
I didn't realize the extent of the IPod's dominance until seeing this WSJ article describing the demise of Sony's Walkman cassette player (at least no longer manufactured in Japan). The Walkman was itself a classic category-killer. Small radios, a staple in American culture, went by the wayside for the individualized experience of Walkman and other cassette players in the 80's and 90's. But then the coming of CD players (including Walkman's CD player) and especially Apple's IPod and its competitors meant that the days of the cassette Walkman were numbered.
Except for small fact.... the Walkman cassette is not completely dying. The manufacturing has been sold to a Chinese-based operation. Sony says it will continue to sell the product overseas especially in Asia and Middle East where tape Walkman demand is not “totally zero,…” The point is that in today's global economy, when your product cycle wanes in the core markets, there may well be a second life in other markets developing on a different cycle.
In some cases, demand for an old product put on the shelf may actually roar back because of renewed demand from a developing economy. In the automobile industry, demand for manufacturing and parts technology has been renewed due to growth in China and India. For technology providers, this sometimes means dusting off the processes and equipment for older generation parts that are still high quality and meet the immediate needs of the OEMs trying to meet end user demands.
So it seems that more traditional products shouldn't be shelved just because they've lived out their cycle in your core markets. Product managers should make more thorough checks around the globe to find the emerging pockets of demand. Hang onto those specs and blueprints.
I didn't realize the extent of the IPod's dominance until seeing this WSJ article describing the demise of Sony's Walkman cassette player (at least no longer manufactured in Japan). The Walkman was itself a classic category-killer. Small radios, a staple in American culture, went by the wayside for the individualized experience of Walkman and other cassette players in the 80's and 90's. But then the coming of CD players (including Walkman's CD player) and especially Apple's IPod and its competitors meant that the days of the cassette Walkman were numbered.
Except for small fact.... the Walkman cassette is not completely dying. The manufacturing has been sold to a Chinese-based operation. Sony says it will continue to sell the product overseas especially in Asia and Middle East where tape Walkman demand is not “totally zero,…” The point is that in today's global economy, when your product cycle wanes in the core markets, there may well be a second life in other markets developing on a different cycle.
In some cases, demand for an old product put on the shelf may actually roar back because of renewed demand from a developing economy. In the automobile industry, demand for manufacturing and parts technology has been renewed due to growth in China and India. For technology providers, this sometimes means dusting off the processes and equipment for older generation parts that are still high quality and meet the immediate needs of the OEMs trying to meet end user demands.
So it seems that more traditional products shouldn't be shelved just because they've lived out their cycle in your core markets. Product managers should make more thorough checks around the globe to find the emerging pockets of demand. Hang onto those specs and blueprints.
Beginning over a decade ago, the Trusted Advisor concept became a pinnacle for strategic sales and account managers to reach. David Maister's book increased awareness of the term. Trusted Advisor generally means earning your customers' trust and commitment -- seeing you as an ally, with the customer's interests at heart as opposed to strictly your own.
This takes a different angle than customer focus. One can be focused on a customer or prospect without their best interests at heart, much the way the predator snake focuses on its prey. Most people can eventually discern the intent behind the interest someone shows them.
One test for being trustworthy in strategic selling is taking enough time to listen and think about the customer's problem and implications before offering a solution. Unfortunately, the tendency instead is to offer "premature solutions,"according to Neil Rackham, author of the classic, Spin Selling. In this interview with thought leader Charles H. Green, Rackham says we are often too eager solving the customer's problems with our products, services and tools before investing more detailed listening and consideration that their issue warrants.
The 80s comedy, "What about Bob?" is a family favorite for us and depicts a scene that illustrates giving "premature solutions" and worse. Egocentric therapist Dr. Leo Marvin (Richard Dreyfuss) offers new patient Bob Wiley (Bill Murray) a solution for Bob's numerous neuroses, after only a few minutes into his observing and questioning of the patient. Standing at his bookshelf Dr. Marvin says that there's a groundbreaking new book that can help Bob.... that he has it here somewhere..... oh here it is! Dr. Marvin then pulls from an entire shelf-full of identical copies his own brand new book on the therapy he is recommending.
Bob Wiley overlooked Dr. Marvin's duplicity but it's just a movie and his character was quite neurotic. Strategic customers and prospects are more perceptive. It won't help building trust if we prematurely offer customers our favorite or core product as "just happening" to be the right solution for them.
This takes a different angle than customer focus. One can be focused on a customer or prospect without their best interests at heart, much the way the predator snake focuses on its prey. Most people can eventually discern the intent behind the interest someone shows them.
One test for being trustworthy in strategic selling is taking enough time to listen and think about the customer's problem and implications before offering a solution. Unfortunately, the tendency instead is to offer "premature solutions,"according to Neil Rackham, author of the classic, Spin Selling. In this interview with thought leader Charles H. Green, Rackham says we are often too eager solving the customer's problems with our products, services and tools before investing more detailed listening and consideration that their issue warrants.
The 80s comedy, "What about Bob?" is a family favorite for us and depicts a scene that illustrates giving "premature solutions" and worse. Egocentric therapist Dr. Leo Marvin (Richard Dreyfuss) offers new patient Bob Wiley (Bill Murray) a solution for Bob's numerous neuroses, after only a few minutes into his observing and questioning of the patient. Standing at his bookshelf Dr. Marvin says that there's a groundbreaking new book that can help Bob.... that he has it here somewhere..... oh here it is! Dr. Marvin then pulls from an entire shelf-full of identical copies his own brand new book on the therapy he is recommending.
Bob Wiley overlooked Dr. Marvin's duplicity but it's just a movie and his character was quite neurotic. Strategic customers and prospects are more perceptive. It won't help building trust if we prematurely offer customers our favorite or core product as "just happening" to be the right solution for them.
To some it may sound like heresy, but I think you can advocate too strongly for your customer. Years ago at a certain business services company, the scuttlebutt regarding one of the most senior and otherwise respected SAMs (including at high levels) was, "Has Ralph (not real name) forgotten who he works for?" Perhaps that's the point where advocacy has crossed a line -- when colleagues indicate you are asking too much for your customer, or your company is simply not yet ready to give all you are seeking, or both.
That's why I really like the term, "Balanced advocate" in describing successful strategic account managers. The "balanced" description cuts at least a couple of different ways. First, the SAM instigates good practices on both sides of the relationship -- with groups and individuals in his own company as well as with contacts and user groups within the customer account. Secondly, the SAM is balanced in the asking -- able to strongly advocate for the customer and acknowledge the situation and goals of the supplier company.
When the Strategic Account Management Association's annual Standards and Practices Survey recently asked SAMs and strategic account program managers for the traits and behaviors that most contribute to SAM success, the notion of balanced advocacy came out as one type of critical practice. But the three other essential practices implied the importance of working well on both sides of the customer relationship.
Four SAM behaviors most contributing to success
2. Build the team on your side and manage it effectively -- this ideally includes a mix of direct reports for core contacts and responsibilities but a host of supporting contributors from other functions and regions.
3. Guide your company to contribute according to the customer's most important priorities. The SAM knows the customer's business and how they make money from your products and solutions. the SAM knows their top challenges and plans and where your company fits in.
4. Build up trust with the customer -- build relationships, collaborative planning of solutions and initiatives, and prove out the value being delivered in order to seal the trust.
Managers or trainers of strategic account managers (SAMs) all look for certain traits needed by a prospective SAM because the job has unique challenges. SAMs must not only build business relationships within complex, global customer organizations, they must become influential in their own company to marshal cooperation and resources for their customer(s).
In helping the Strategic Account Management Association analyze results from their 2010 Standards and Practices Study, we were surprised that SAMs and managers focused on just four topics when writing in suggestions regarding traits that contribute most toward successful strategic account managers.
1. Strategic thinker with a business mind-set -- Visionary. Have financial acumen. Able to learn the customer business model quickly, not only in terms how they make money, but also how the supplier solution(s) help them do so. Confident working with senior executives on both sides of the business relationship between the customer and supplier.
3. Communicator and relationship builder -- Great listener. SAMs must be willing to be up front and visible to their own colleagues as well as to decision makers in business units of the customer. Many customer relationships are salvaged because the SAM ramps up the visibility of his company solving problems with and for the customers.
4. Honest and sincere -- Ethical. Trustworthy and reliable. SAMs are seasoned business people given enormous latitude by the employer as well as the customer, and wind up responsible for a critical amount of business as the relationship grows. By definition the SAM works fairly independently and have influence over extensive resources. They simply must be worthy of trust.
The vast majority of recommended traits for SAM success from the voice of actual practitioners fit into these four buckets. This implies making these four areas the foundation for recruiting and developing SAMs.
Sales and account professionals simply must learn the customer's business. Knowing the customer's business always emerges as a key driver of B2B customer loyalty for our clients, and stands out consistently as a key factor to sales success in recent studies by Miller Heiman, Chally Group and Profiles International.
One way of ensuring your key account professional has client industry knowledge is to recruit them from the customer industry. During interviews with several top-performing global account managers (GAMs), recently I was struck by how often the GAM or a senior team member had been hired straight from their client or from a competitor.
This insight to the customer business and industry isn't about impressing them so much as getting your value proposition right for them. Customers aren't so much buying a solution, but rather an outcome they desire for their business. In order to trust that what they buy from you is paying off, customers must see that you know their desired outcomes and priorities and have connected their business processes to what you provide.
My simple framework in learning how the customer business (or a functional area/business unit) works in ways that you could support:
1. Learn their primary goals and strategies (means of reaching their goals)
2. Observe and probe how well things work today but especially, the problems, struggles, and issues "keeping the leadership up at night."
3. Probe what they might see as an ideal -- what it might look like if the business/process were proceeding in a best-case fashion. The differences between the ideal and the current situation and problems are the gaps that your solution hopefully addresses.
Learn, observe, probe. You must become intelligently curious... even nosy, in order to gain knowledge enough to help a strategic customer.
One way of ensuring your key account professional has client industry knowledge is to recruit them from the customer industry. During interviews with several top-performing global account managers (GAMs), recently I was struck by how often the GAM or a senior team member had been hired straight from their client or from a competitor.
This insight to the customer business and industry isn't about impressing them so much as getting your value proposition right for them. Customers aren't so much buying a solution, but rather an outcome they desire for their business. In order to trust that what they buy from you is paying off, customers must see that you know their desired outcomes and priorities and have connected their business processes to what you provide.
My simple framework in learning how the customer business (or a functional area/business unit) works in ways that you could support:
1. Learn their primary goals and strategies (means of reaching their goals)
2. Observe and probe how well things work today but especially, the problems, struggles, and issues "keeping the leadership up at night."
3. Probe what they might see as an ideal -- what it might look like if the business/process were proceeding in a best-case fashion. The differences between the ideal and the current situation and problems are the gaps that your solution hopefully addresses.
Learn, observe, probe. You must become intelligently curious... even nosy, in order to gain knowledge enough to help a strategic customer.
It has been said that people buy for two primary reasons -- to solve a problem and/or to feel good about what they are buying. That truth stuck with me after hearing it described many years ago by Michael LeBoeuf, one of the first business authors to focus on customer loyalty.
There's a practical and an emotional side to most purchases -- an outcome desired by the buyer, but also some level of trust or satisfaction sought from the seller or the brand. Learning those desired outcomes and feelings is the challenge for salespeople and marketers. It requires some background research and questions asked to decision makers and product users during the marketing and selling processes.
Once you know what customers are really seeking, you can craft your value proposition. Make sure to address what's really in it for them -- how your solution will pay off and benefit the buyers in a way they don't have a ready substitute for. And get beyond the practical side to the more emotional undercurrents of what the purchase could mean. One of the most classical B2B value propositions was in the day of mainframe computers when people said, "Nobody will ever get fired for buying IBM."
There's a practical and an emotional side to most purchases -- an outcome desired by the buyer, but also some level of trust or satisfaction sought from the seller or the brand. Learning those desired outcomes and feelings is the challenge for salespeople and marketers. It requires some background research and questions asked to decision makers and product users during the marketing and selling processes.
Once you know what customers are really seeking, you can craft your value proposition. Make sure to address what's really in it for them -- how your solution will pay off and benefit the buyers in a way they don't have a ready substitute for. And get beyond the practical side to the more emotional undercurrents of what the purchase could mean. One of the most classical B2B value propositions was in the day of mainframe computers when people said, "Nobody will ever get fired for buying IBM."
You may have seen sales or marketing executives frustrated when customer survey results are obtained and distributed to those responsible for the accounts, yet are not visibly acted upon. .
When feedback is actionable, why aren't more work teams taking action? The knee-jerk answer tends to be that people don't want to change. But action-taking hinges on more than just their will to take action. They must be able to do so, and that means overcoming certain barriers. 
For all the talk of empowerment, more is needed. Most employees need to be better equipped to effectively serve customers. A study published by Strativity said, despite recognizing the growing importance of customer strategies, a third or less of workers feel their company has compensated or equipped them to solve customer problems.
My experience has shown that you enable sales, account and customer support leaders to more effectively use customer feedback by:
- Designed a results format for their team and teach them to use it. Craft reports to hone in on the team's subject matter, be it a specific account or a support process such as customer service. Make reports easy to understand, by highlighting two or three priority areas for action. Teach how to apply root cause analysis, and initiate change.
- Integrate the use of customer feedback into ongoing jobs and routines. Account teams often have created key account plans. Cross-functional teams or departments budget for special initiative and reset metrics periodically. Work with each group to integrate the customer feedback into the way they currently do their jobs.
- Provide incentives for taking action on customer results. People are compensated for meeting objectives in their jobs now; the ideal is to build in incentives for effectively launching and executing ways to improve customer experience.
- Ask each group exactly how they need to be equipped. To have the desired impact on customer loyalty, account teams need help from support functions, and support functions will seek funding to launch their own enhancements. It helps to escalate these needs and requests for equipping sooner than later, as part of the process.
In conclusion, the course of taking action for customers hinges not so much on the willingness of employees to act, but on their ability to do so.
When my grown children started dating people some years ago, I was reminded how becoming "more than a friend" starts an emotional adventure. Peak highs from falling in love may quickly plunge into depths of misunderstanding and hurt. But after a talk, the clouds part, and happiness returns. A line from the classic movie, Cool Hand Luke, summed up a common root cause -- "What we've got here is a failure to communicate."
Strategic sellers and account owners contend with similar problems of not connecting with a customer or prospect. I call it, "the terrible secret" because it puts business at risk and potentially undermines business relationships. The terrible secret means that we aren't "getting" them. We might be misunderstanding their feelings, or not knowing their business situation. It could be misreading their feedback, or their silence. But in any case, it's a terrible thing to not know where you stand with a strategic customer.
As in personal relationships, the solution comes through conversation. To overcome customers holding any "terrible secrets", apply your best listening skills. This means listening more than talking, sprinkled with asking good questions. It's no cooincidence that cutting-edge sales training over the past twenty years has largely focused on asking questions. Andrew Sobel's recent blog offers a good refresher and checklist on effective listening.
Strategic sellers and account owners contend with similar problems of not connecting with a customer or prospect. I call it, "the terrible secret" because it puts business at risk and potentially undermines business relationships. The terrible secret means that we aren't "getting" them. We might be misunderstanding their feelings, or not knowing their business situation. It could be misreading their feedback, or their silence. But in any case, it's a terrible thing to not know where you stand with a strategic customer.
As in personal relationships, the solution comes through conversation. To overcome customers holding any "terrible secrets", apply your best listening skills. This means listening more than talking, sprinkled with asking good questions. It's no cooincidence that cutting-edge sales training over the past twenty years has largely focused on asking questions. Andrew Sobel's recent blog offers a good refresher and checklist on effective listening.
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