Manufacture Customer Insight: Industrial Revolution Principles for Today’s Information Age

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The industrial revolution happened over a period of about 200 years starting in the mid-1700’s and lasting to the mid-1900’s. The core pattern of this period was the application of mechanical methods to meet the needs of the many in a more scalable, cost-effective way. For example, the first industry to kick off the industrial revolution was textiles. In the early 1700’s all garments were made by hand. The wealthy could afford extremely high quality, comfortable, tailored, and expensive handmade garments. However, most people could not afford these clothes and had to make their own. The idea was to apply machines and water (later steam) power to produce many garments at much higher quality than home-made ones with an extremely high degree of consistency, but less quality than those created by the high-end, skilled tailors of the time. The result was a complete transformation of business and society.

Today’s Problem – Providing Your Customers with Valuable Information and Insight

Today’s problem is that supply exceeds demand for many products, driving prices so low that companies are under massive margin pressure. As a society, we have migrated out the industrial revolution, past the age of mass communication, and are in the early stages of the information age. Yet, the methods most companies have to develop, create, distribute, and manage valuable information is very much in the same state the textile industry was back in the 18th century.

Truly valuable information that will help targeted buyers solve problems is mostly “home spun” by sales people in the field. They are supplied with some basic ingredients (product information, positioning, corporate branding, etc), but how these materials are woven into something meaningful for customers is extremely inconsistent. In most organizations, 80% of their new revenue comes from 20% of their sales force (the people who have perfected the craft of tailoring the information provided into valuable insights for customers). The other 80% of the sales force has varying degrees of capability to create customer insights from mountains of information.

How are Companies Combating Commoditization Forces?

Most companies have realized they need to add more value to their clients to create differentiation. They are retooling their sales organizations, investing in tools to sift through data sources to collect intelligence, lowering their costs to provide greater pricing flexibility, and are packaging their portfolio into “solutions”. While these efforts are showing modest improvements, its also creating greater expense and waste in the sales and marketing system – the groups who are ultimately responsible for creating and communicating those insights critical for developing sustainable competitive advantage.

The Current State of Developing Customer Insight is Very Similar to how Clothes Were Made in the 18th Century.

Companies are really struggling with creating differentiation, and in today’s overloaded world, one way to be different is to sort through the variety of information available and turn it into valuable insights to customers. The big opportunity here is to modernize the customer insight development process into something more consistent and scalable.

The concept isn’t new – it’s a value-added process similar to assembly lines. How effective would Henry Ford have been if all of the carburetors were created by hand to one specification and drive shafts were created by another team with similar design principals? The result would have been a car that was too expensive that required heavy tweaking once completed because the different design points between carburetor and drive shaft would have to be ironed out before being shipped. This would defeat the whole purpose.

Today, companies are pursing similar, poorly coordinated approaches to customer service and sales. And very similar to the textile problem that helped launch the industrial revolution; real customer focus is a luxury that can only be afforded for a few key large accounts. It requires a 100% customized approach (just like the high quality garment makers who could satisfy the needs of the very wealthy). Today companies are making investments in strategic account programs but stop short of figuring out what is required to make the whole engine efficient enought to be rolled out to all customers.

Model, Map, and Match – Three Steps to Building a Customer Insight Assembly Line.

There are 3 high level steps to follow to begin building a “customer insight” assembly line in your company.

  • [u]Model[/u] your customers – you don’t need to be an expert in their business, only an expert in how you can help their business. Find common patterns across your customer base from all levels and dimensions. Understand the steps both individuals and groups go thought to solve problems, secure budgets, and initiate buying processes. Package the “know how” that you have (or can get) that will make their problem solving process easier and you’ve got a solid framework to work from.
  • [u]Map[/u] your messages and content to the framework – The mountain of information you have (content, reports, data feeds, you name it) in reality lacks a suitable structure to provide the “fuel” which will power your customer insight assembly line. Use the model of a successful customer outcome to identify cross-function inputs and outputs, process and application integration opportunities, and develop a more dynamic way to present information in the context of customer patterns.
  • [u]Match[/u] customer patterns to mapped content – The key issue here is simple. With a well structured value framework (based on best practice client outcomes), you can develop simple tools to help sales people identify common patterns in your client base and match those patterns to the right information, for the right person, at the right time.

Just as the assembly line created huge competitive advantages for first movers, so too does developing customer insight assembly lines. We’ve tremendous results downstream of this process – with sales performance. Some results include:

  • 100% increase in revenue in one year for a $25M company
  • 400% increase in operating margins from 8% to 30% for $30M Unit
  • 43% improvement in average selling price for a $200M company
  • 50% reduction in sales process time for a $200M company
  • 25% increase in close rates for a $150M company

The bottom line here is that we are rapidly approaching diminish returns by trying to maximize point issues (training sales people, new demand generation techniques, pocket tool investments, etc). The low hanging fruit for higher yields is to begin to look across the silos of your organization, and build a blueprint of your value communication process so you can see how all of the information you are providing to your customers adds or doesnt add value to the people you are trying to influence.

From there, spend the time to create an authentic, actionable framework to add value and then focus on producing, distributing, and maintaining the information required that will genuinely help your customers. If you take a customer first view point, and find simple areas to pilot the approach, your can get going quickly and begin to “fix the plane while it’s flying.”

7 COMMENTS

  1. Scott

    Your post brings up a lot of conflicting issues: Information Sharing vs information assymettry. Packaged information vs information tools. Information sharing vs hands-on doing. And so forth.

    I think the information sharing theme is just another inside-out sales play. Customers generally don’t want information (the manual), they want help making stuff happen (helping hands). And they want it in sporadic doses when they have particular problems to solve, like selecting a solution, in configuring it, in implementing it and particularly, in running it day-to-day. That implies less modelling, mapping and matching, and more sensing, responding and hands-on supporting.

    This corresponds to how much of manufacturing operates today. Gone are the unstoppable production lines as developed by Alfred Sloan at GM, with their ‘moving the metal’ volume mentality. In their places are much smaller manufacturing cells as developed by Toyota, with their high quality sense and respond mentality.

    This goes hand-in hand with a move from seeing the sale as the fulfillment of a value-creating transaction, towards seeing the sale as the start of a much longer value-delivering relationship. What Vargo & Lusch call the Service Dominant Logic of Marketing and Sales.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  2. I realize there are a lot of conclusions I’ve reached based on different points of view.

    So, let’s start with the first premise… do you accept that providing valuable information is a differentiator? From my point of view, UPS provides me the visibility into my shipping status as value-added information.

    I will comment further later, but I think the core issue is weather or not valuable information makes a difference or not. We should discuss what valuable information IS and what it cost to create later.

    Scott Santucci

  3. Scott

    The answer to your question is of course Yes, and No!

    In your UPS example, Yes, information is useful if the package is late. But at the same time, No, it isn’t useful if you just trust UPS to get on with their job of delivering the package. In other words information is context-dependant. Knowing the context makes all the difference between helpful insight and information spam.

    I still think that information is a useful thing, but nowhere near as useful as a pair of informed helping hands.

    Sadly, my everyday experiences as a consultant (gatekeeper) and an interim manager (buyer) suggest that salesmen neither understand this contextual difference, nor are they particularly interested in it. Just in making the sale. Their pitches are getting better; they are now more like VC pitches for funding than 1980s hardware sales by IBM. But they are still all about them and not about supporting me over the longer-term. They are still about value for them at the point of sale and not about value for me over a lifetime of usage.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  4. Ok, we are really getting somewhere now. I think there are two different issues here.

    1) What is valuable information? I actually agree with you there is difference between “information spam” and “insight”. Insight is valuable information that is TIMELY, RELEVANT, and IN CONTEXT.

    2) The difficultly of providing that insight is different from business system to business system. A person buying desktop outsourcing services for 5 geographical regions throughout the world requires different insight (to be valuable) than the shipping clerk who manages deliveries.

    3) Each business system is really an ecology… it has a set of common buyers involved, it has a common set of drivers, there are typically technology patterns associated, etc.

    4) Because these business cycles are ecologies, the “insight” is really a view for how the whole thing works – not how an individual cogs works.

    5) You are completely right that the current state of the typical sales presentation is no where near close to this “insight exchange”. I really like your analogy to the VC pitch v. the hardware pitch – I’m going to steal that one from you!

    6) “Insights” are not really a requirement to sell everything. The role of a sales person is being disintermediated in many different industries as more and more people can “self service” their knowledge acquisition for certain products. In many markets, where the business problems are complex, there is a need to exchange information – the buyer wants to communicate needs and the vendor needs to articulate how they address those needs. However, in a lot of cases, the buyer’s don’t fully understand the whole problem and they need guidance to create a plan before they can even begin to buy something.

    To put is simply, I think we have need to look at sales people differently. Right now, they are treated as a role – go and do what ever you need to do to meet quota. However, my basic premise is that we should look at sales people as a communication medium, not as a role. The only form of communication that exists to give you the relevant, contextual information you are seeing is a CONVERSATION. However, that conversation MUST be with someone who is informed and can add value.

    If not, they are just an “information spammer”.

    The medical profession has figured this out to some degree. Every doctor has access to an online database of symptoms they can access if they come across an anomoly. The human body is a lot more complex than a business system, so – you can build a “model” of that system to help people locate the right information, for the right person, at the right to to turn information into insight.

    Perhaps I should have started with this premise first – sales people = advertisments, radio spots, or billboards. They are a communication medium and it is the company’s responsibility to figure out how to optimize it.

    Scott Santucci

  5. Scott

    At the end of the day, I don’t want information, I don’t want insights, I don’t want a conversation, I want ACTION. I want hands-on help deciding what is best for me. I want hands-on help configuring it. Then I will buy. But that’s not all. I want hands-on help getting it working. And I want on call hands when something goes awry.

    All the information & insight is just like the script for a blockbuster film. Nobody wants to pay for the script. They want to pay to watch the action. There you have it. Lights, camera, ACTION!

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  6. How is a vendor going to provide that common experience unless they have a process which rationalizes the goals and objectives of their internal groups?

    On the front line it’s simple – but in reality you have so many different players inside a company with their own biased points of view – product managers, delivery people, sales engineers, executives, demand generation people, pre-sales support, sales people, etc all will engage with you differently.

    The point is that for a company to behave like YOU want then to behave -they need a system to do so, and need a galvanizing call to action to coordinate their activities.

    The experience you desire today is achieved about 20% of the time and generally related to a sales person who has a lot of empathy for you who works very hard behind the scenes to give you the hands on action YOU want.

    My argument is how to make that whole process more scalable. It’s not about your contact management system, how you use social networks, what strategies to deploy business intelligence, or how to use Web 2.0. It’s about working backwards from a value chain to facilitate the delivery of what you want.

    Scott Santucci

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