This creates ever-rising complexity in customer interaction / expectation management channels. The complexity further results in loss / lack of customer knowledge as companies maintain traditional methods of managing customer data and lack consistent structure, making it tricky to run campaigns.
This article aims at emphasizing the importance of converting customer voice to data in usable format which helps companies in monetizing and augmenting lifetime customer revenue.
The three statements above depict three unique customer personas with three key areas of improvement that most companies encounter. Catering the right solution to relevant statement is an art. It is not so easy to identify the type of response / solution to +10,000 such statements per quarter. It is indeed a Himalayan task to manually analyze, compose a response and devise the right action plan.
While the well-known phrase suggests, “You cannot improve if you cannot measure”, one can logically extend that further to, “You cannot measure if you do not gather right and relevant data.” There is no silver bullet to how you gather / measure it or improve it. It is going to be unique for every organization depending on the type and size of their business. This article covers an actionable Customer Value Management (CVM) strategy to a company which has managed to build a decent customer base but is seeking to raise standards to improve life-time value of the existing customer base.
The article illustrates the strategy using “Minto Pyramid approach” developed by Barbara Minto which identifies the situation that most companies face in retaining existing customer base, illustrates the complication involved in not being able to converge process, technology and people, raises one’s eyebrows with challenging questions and presents a realistic and achievable jaw-dropping solution to moving customers to loyalty zone.
The gaps reflected in the image above is just illustrative and not exhaustive. The real challenge is to primarily identify these gaps for ultimate bridging of gaps during the customer life-time journey. So, this involves capturing, assembling, and transforming the gaps into area of opportunities. Many companies find it difficult to primarily gather useful data and then comes assembling and creating useful footprints to target different customer persona.
While 10% of the customer revenue comes from the initial sale, 80% of the revenue comes post sale. Therefore, it is no longer the job of sales executive to capitalize on customer lifetime value. Customer success and retention team should work hand-in-hand with sales and marketing team for further expansion. So, this point of convergence is a bow-tie function.
Activities performed by CVM therefore, are purely aimed at augmenting revenue by analyzing and identifying cross-selling opportunities and retaining existing customer base by identifying customer retention and engagement measures. Data and synergies between departments to focus could pose challenges. The first challenge is to gather relevant and usable data that drives decision making.
The second challenge is to gain consensus among various stakeholders because CVM is a ‘larger than life’ function that celebrates the point of convergence of product / process / customer / technology/ finance / sales and marketing experts. Even if consensus is gained, it may tend to be difficult when there is no centralized CVM team who would liaise with experts and manage the “Bow-Tie” Funnel between ‘path to purchase’ and ‘path to loyalty’.
Unlike many issues connected to system / technical / process changes, issues connected to customer intimacy is a white box where the components that demands change / shift / expansion is clearly visible but could be difficult to accomplish if the value is not understood well.
IF 20/80, THEN 20/100 (If 20% of your customers attribute to 80% of your revenue / satisfaction of service, then build an engagement model for same set of customers that will assure 100% revenue / satisfaction levels )
According to Marketing Metrics, the probability of converting an existing customer is 60 percent to 70 percent. On the other hand, the probability of evolving a new prospect, is only 5 percent to 20 percent.
While it may seem challenging to collect data and store in a scalable format, fortunately there are number of ways to improve data collection. For example, Salesforce offers smart options to manage CRM/Sales/Marketing data by introducing dynamic picklists and template configuration to fill various types of data, supports codification of data validation rules to ensure data is stored in an extractable / auditable format.
Once we identify preferential customer and gather right data, the follow-up action involves four simple steps as below :
Sales Support: Studying cusotmer specific data would help uncover buying patterns / persona. Leveraging market basket analysis would help sales team predict buying behaviour specific to a region / group. The data of existing customer together with their business potentiality could help determining cross-selling opportunities. Besides, it will enable increase margins and drive towards loyalty.
Periodical review of KPI s: The Key Account Managers play an important role in communicating how the company delivers expected value; strategies therefor are many and varied. Process and Service value review templates is a tool that will help track customer success metrics. This is an engagement tool that most Key Account Managers utilize to communicate expected and delivered value. Automation of these metrics in the form of real-time dashboards is key to bringing efficiency in data generation within the company.
Improvement projects: As an example, quarterly reporting of KPI is done by initiating conversation with a customer related to a particular metric / area of concern. If in this process, the key account managers could explore ways to effectively encounter such areas of concern and acquire additional data points vis-a-vis customer needs, this strategy has to be further stepped up in greater frequency.
This is a standardized tool where we could track customer loyalty over a period of time. The index takes into account multiple questions such as
1. How likely are you to recommend our service to Industry?
2. Would you be willing to try out our other services?.
3. How likely are you to switch to competing organization?
While we gather answers for these questions, it is important to build a customer penetration index as it serves a useful data point on the list of customers to prioritize.
While there are different definitions to customer penetration, the definition that is quite relatable to our mission is to do a quick temperature check on the customers who are willing to discuss issues with you, the ones who periodically contact you and whether your company has been able to engage and win over the confidence of C-Suite / influencer of the customer company.
Theoretically to analyze, there are two important stakeholders within your customer company.
1. Middle-level management / users who are influential in your customer company
2. C-suite / investors who make decisions on purchases.
So, it is recommended to engage both stakeholders in different styles. For middle-level management who solicit your service on day-to-day basis, it is prudent to capture their sentiments and conduct user sentiment analysis, understand their needs, fix the gap and report promptly to get the best net promoter score (NPS).
As regards the engagement of C-Suite / Top Brass in your customer company, it is a sophisticated one where companies normally strategize the engagement by offering one page newsletters / executive summary detailing the competitive positioning of the company versus other suppliers, how the customer benefits by using your service and how they could benefit by utilizing additional services which other customers within the same segment benefit from. These are usually campaigned for successful sustainment of the customers. Thus, achieving repeat purchases over time.
The definition of satisfaction index is purely to measure the perceived quality of the service, quality of managing relations with customers and effective communication / query solving capabilities within customer service or operations department.
A combination of loyalty index and satisfaction index is depicted in the chart below and it gives a clear indication of whether the customer is in the loyalty zone, indifference zone or rejection zone.
This apostle model made an early appearance in the July-August 2008 issue of the Harvard Business Review in “Putting the Service Profit Chain to Work” by James L. Heskett, Thomas O. Jones, Gary W. Loveman, W. Earl Sasser, Jr., and Leonard A. Schlesinger. The model demonstrated the relationship between customer satisfaction and customer loyalty.
Indifference zone is the most dangerous one as customers are unsure of their choice of suppliers and could easily switch over to your competitor. A quick strategy would be to hire customer champions / experts within your company to handle key clients tied to both rejection / indifference zone. From data support perspective, customer risk index / score (heat maps) will be a tool to identify and manage perception of the customers in these zones.
It could be critical to understand this zone of indifference, understand where the company sits in comparison to your competitors and what will help achieve a better scope to shift to loyalty zone.
Capitalizing data gained is achieved through two important levers. Monetizing value through right pricing and digitizing customer journey through right platforms.
…pays an important role in assessing suppliers. Identifying the right price could sometimes be difficult for a new product / service, especially when the service is new in the market where there is a clear differentiation in the service offered. To start capturing and retaining value of an existing customer, it is highly recommended to conduct price sensitivity analysis. There are various techniques again to assess price sensitivity.
One such technique that we could adopt is Van Westendorp analysis which is a meter that asks four important questions to assess an optimum price point that the customer is willing to pay. This is critical to ensure that there is a buying interest amongst your customer base and that there is no price war when we speak of the value we deliver with inherent assertion. During the customer journey, it is key to tag customers who expressed concern on price and devise a bespoke strategy to consistently communicate on the benefits / value they are reaping.
So, once there is fair understanding of what data to gather, how to assemble, how the stakeholders should be fed with data, it is highly critical to choose a single platform to manage database covering 360-degree overview of your key contacts and customer base. There are various platforms such as Salesforce for instance which offers a complete suite of modules and offers integration to company specific systems. This helps you manage data, assign task, responsibilities across sales / marketing / finance / CRM / operations who equally contribute to adding value to customers at different stages.
Overall, it is quite evident that CVM is a marketing science that unabatedly enhances the commitment of the customer and improves customer’s lifetime value. This function is all about linking value to recommendation and improving our customer’s share of wallet.
While this article has briefly discussed techniques, tools, and strategies to improving customer intimacy and value, the vision could be far from reality if there is no consensus amongst various stakeholders. In the same vein, there must be pro-active mindset and customer-centric culture as that are too precious to emulate as well to get lost in turbulent ocean.
Even as countries all over the world led by WHO are sincerely endeavoring to flatten the trajectory curve vis-à-vis COVID-19, it is no gainsaying that this article could and would motivate companies ‘aspiring to inspire’ to transform customer journey curve from the current obnoxious rejection zone to the much-solicited loyalty zone.
As a passionate business/customer analytics professional, I always felt so empowered having a “datalogue” (A portmanteau coined by me) than a normal dialogue with my customer. When I say “datalogue”, it does not necessarily mean talking data but converting the cognizance gained through studying customer touchpoints to empathizing customers in a more natural setting, which is considered authentic.
“Data is the new oil” being a well-known saying, but “analytics is the new engine” that helps convert your cognitive datalogue and acumen needed to make your customer a host, a strategic partner, than just a temporary guest.
Have a datalogue, become a host to your customer!
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