Every day I read that some company has started a new program for Customer Loyalty, or for Customer Journey or for Customer Experience or for Customer Response or for Customer Success. How can one program work for one company and not for another? Is there a diagnostic the company use that calls for these programs? Or are business results falling, causing an immediate knee jerk response to do ‘something’?
Do you need programs for Loyalty, CX, CS, CJ, and CR?
I do not know whether you do. Do you? Or is some consultant selling you on motherhood statements? Yes loyalty, CX, CJ, CS, CR are all important. They should be inherent in your company’s DNA. Why aren’t they?
Was there a problem?
I suspect there was one of two problems. One was that you felt you should improve some aspect of your Customer program such as experience. Someone says these are nice (or proper things) to do. Hence let’s start a program on (you name it).
The other is that some business result or performance was wanting. Market share, lower prices, retention etc. The boss asks his people to work on these. The solution is one of the types of programs described above.
What was the base problem?
The base problem could have been loss of market share, falling of Customer retention/loyalty, or price pressure or profit reduction, or that you are not creating enough value versus your competition.
What is the solution to the base problem?
First, all of us will agree that Customers have a choice between competing products or offers. Why do they buy from one or the other? What makes them buy?
The answer is the Customer will buy from that competitor he perceives he is getting better value from. This means he balances what it costs him and what benefits he perceives he will get from the competitors, or what the offer is worth to him.
- What is his perception of cost?The amount of time and energy to buy, to understand, and use the product, and the price and payment terms
- What is his perception of benefits? The benefits would depend on his perception of the product, the company’s people, the company’s image, the retailer, the service, the loyalty programs if any, etc.
- If the Customer can perceive benefits and cost, can your company measure these? First the juxtaposition of benefits and cost is called Customer Value and can be measured. Certainly you want to know the value your Customer perceives you are creating. Is that enough? Not really. Because the Customer is looking at competitive offers. And so, too your Company has to look at competitors. What is the value your competitors are creating?
- Can you compare your company to competitors by measuring Customer’s perceptions? We compare the perception of the value we create and divide this by the value your competitors create. We call this Customer Value Added
- Customer Value Added= The Value we add to our Customers The Value your competitors add to their Customers
This Customer Value survey also throws up the relative importance of cost and benefits. How important are the costs, and how important are the benefits (if value is 100, is cost 30 and benefits 70? This depends on the product or service, and whether they are more of a commodity or a niche).
In addition, for each item of benefit or cost, we get a relative importance, and whether we are better or worse than competition.
What should we work on?
There are two criteria to select what we should work on. One is the relative importance of that attribute in benefit or cost (we get this from the survey); and whether we are better or worse than competition (from the survey). So, we should select those items important to the Customer in his purchase decision; and if we are worse, we have to improve on these. If we are better, we have to communicate these to the world.
We have to customise our improvement programs to the Customer’s needs. As we run those programs that increase the value to the Customer, we will find that the Customer gets a better experience, a better response from us, a comfortable and shorter journey, and better service. It has been proven that loyalty and market share will increase, and so will profitability (see data from PIMS (Profit Improvement through Marketing Strategies) based on1000 American companies in my book: Total Customer Value Management, Transforming Business Thinking.)
Unrelated or isolated programs do very little good:
Thus selecting a loyalty program when the Customer Value study shows it has very little influence on buying, then it is a waste of time instituting such a program. On the other hand, if the study shows it is important, and then we need to work on it. Or if the study shows the service is important and we are poor in service, we must start a program to improve service. Or if in cost, the relative importance of the time and energy required to buy is high, we must have a Customer Journey program to reduce the time and energy the Customer spends (only if the survey shows we are poor at it) or tell the world buying from us requires less time and energy (only if we are better). In short customise your program based on Customer feedback.
What programs to run?
Based on the Customer Value survey of your Customers and potential Customers, we will know what programs to run (or what aspects of programs to run). We may need to improve Customer experience only in service and not in buying; we may need to improve the Customer Journey program in buying if the Customer is unhappy with the time and energy it takes to buy. We may wish to improve a Customer response program if the Customer cannot get information or answers readily, and if this is important to the Customer; and so on.
One size fits all does not work. Customised programs based on Customer Value studies are the ones that will work.
Don’t waste your time by running programs because they sound good or others are doing them. Base them on the Customer Value you will create, and help the Customer buy from you because of superior value of your offer.
Would love your comments and help. We are happy to help others in education and executive education on courses in Value Creation.
This reflects the core, fundamental issues of enterprise customer focus and customer-centricity. Far too many organizations suffer from this. Directional choices are a challenge because necessary analyses and determinations haven’t been done. Companies fire without aiming. To paraphrase Henry Kissinger: “If you don’t know where you’re going, any road will get you there.”
WHOA! As a devotee of Lewis Carroll, I must demur, Michael, when you attribute this line to Henry Kissinger. It is a paraphrase from the Cheshire Cat from Alice in Wonderland. Hoping that my smile wistfully evaporates as you watch . . . 🙂
I misspoke. What Henry Kissinger actually said was:”If you don’t know where you’re going, any road will get you nowhere.” Either the Cheshire Cat’s or Kissinger’s quote would apply to ill-conceived customer programs. Recall that the Cheshire Cat also famously said: “Only a few find the way, some don’t recognize it when they do – some… don’t ever want to”