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How to make your customer strategy work: the ten essentials

customer strategy

You may have great products with competitive prices and know who to target, but without an effective customer strategy you can still miss out on sales.

Writing in Strategy+Business, Thomas Ripsam and Louis Bouquet present ten principles to help you succeed by adding distinctive value and experience to your offering.

1) Master the art of the possible. Customers appreciate technological changes that make their lives better, but they can’t predict what those innovations will be or what effect they will have. Often they are unaware of what they want until they see it.

Who would have known, for instance, that a ride-sharing app would be possible before Uber brought it to the market? Going back further, who would have predicted that mobile apps would be invented and would become so indispensable?

Your business needs to develop the informed judgement to decide what will appeal to your customers, when to introduce it, and how. That’s largely a matter of experimenting, on a relatively small scale, and learning from each innovation’s launch. Digital and mobile technology is an area on which you should particularly focus.

The success of smart home device manufacturer Nest Labs illustrates these points. By developing an intuitive, self-learning thermostat which customers could control with a smartphone, Nest persuaded its target audience to pay considerably more than a thermostat’s established top price. Huge success with other web-connected appliances followed.

2) Know your customers at a granular level. Instead of just targeting a traditional segment, identify your market precisely. Find out exactly who your target customers are, and how they think and behave. To sharpen your insight, use the range of modern data-gathering and analysis methods now available.

Useful sources of granular-level data include activity tracking by the Internet of Things, interactions with your website and e-commerce sites, social media activities and discussions within online customer communities.

3) Link your company’s customer strategy to its overall identity. Do you know what your company stands for? Many businesses don’t. Your identity should coherently combine your value proposition, capabilities and offerings in a way that distinguishes your customer experience from that of your rivals. Base your value proposition on what you do distinctively well, rather than calibrating it against rivals’ offerings.

Importantly, your customer strategy, including its emotional elements, should be reflected at every customer touch point and by every part of your organisation.

Apple does this particularly well, presenting a consistent value proposition which has almost turned its fan base into a cult. Its customer experience, with distinctively spacious and sophisticated stores, a sleek website and knowledgeable support staff, gives Apple buyers a sense of superiority. What’s more, its premium prices actually add to that status.

4) Target customers whom you have the right to win. Use the strength of your identity to compete in selected marketplaces where you can be confident of winning, profitably, against your rivals.

Don’t risk wasting your time and resources on trying to appeal to markets whose customers are likely to be indifferent to your appeal. Branching out to new markets and customers should only be undertaken if they can be reached using the same capabilities that give you a competitive edge in your core area.

The right-to-win approach is exemplified by grocery chain Trader Joe’s. Rather than appealing to the mass market, Trader Joe’s offers a carefully selected range of products aimed at those with refined tastes.

Catering especially to those seeking healthy, diet-friendly and unusual foods, at a reasonable price, its sales per square foot are double those of its nearest rival. With its devoted following, Trader Joe’s also consistently comes out on top for customer satisfaction.

5) Treat your customers as assets that will grow in value. Your long-term relationship with customers should be cultivated in a way that meets their evolving needs and continues to give new reasons for buying from you.

Some businesses do quantify a customer relationship’s lifetime cost, but you can develop your insight further through analysis of customers’ paths to purchase. Improved knowledge and good data will help you strengthen and adapt your relationships, with many positive effects – including price consistency and reinforcement of your brand’s emotional attributes.

You should see your customers as partners, and not simply the targets of transactional selling. Develop an organisational culture in which problems are solved jointly with the customer, and where everyone understands their responsibility toward addressing and resolving customers’ issues.

Software provider Salesforce.com is particularly good at getting the most out of customer relationships. Its success owes much to a platform it developed, now commonly known as Software-as-a-Service (SaaS), in which customers subscribe to products instead of buying them.

Customers remain in contact with the company, which regularly adds new features to the software as a result of their feedback. Customers are also, in effect, brought into the company’s branding and sales force through its training and certification programmes.

6) Leverage your ecosystem. Look at the broader picture of interconnections and interactions between customers and, for example, supply, distribution and retail companies, trade bodies, business partners and government-related organisations.

Within the communication generated there are opportunities to find out more about your customers and their interests. Members of the ecosystem can also help you by sparking ideas, increasing routes to market and endorsing your offering.

Try to gain ambassadors for your brand within all sections of the ecosystem. Think of how customers of Lego, Harley Davidson and BMW enthusiastically communicate with each other, and how that helps those companies.

7) Ensure a seamless omni-channel experience. Whether their contact with a seller is via a physical store, a face-to-face interaction, a phone call, a website or a mobile app, customers expect the experience to look and feel much the same. It should consistently deliver your identity and value proposition.

To achieve this, each channel must be developed with customer expectations and value, brand position and cost-to-serve in mind. Everyone in the business, from the product developers to the supply-chain managers, must play a full part.

An interesting example of omni-channel development comes from men’s clothing company Bonobos. Originally set up as a webstore aiming to help men find well-fitting trousers, Bonobos discovered it could extend its customer reach by providing shops in which people could see, feel and try on clothes.

To meet its particular market’s needs, Bonobos invented the idea of a ‘guideshop’, where customers would make an appointment to try on items with the guidance of a stylist. They would then place an order and the clothes would be shipped from a warehouse to their home.

8) Excel at delivery. Today it is essential that you use digital technology to optimise customer experience in terms of fast and efficient delivery. Daunting as it may seem, your performance is always going to be compared to that of Amazon. Have a close look at what Amazon does and try to copy it in some ways.

Adopting the latest delivery technologies will help you adapt your options according to margins, brand positioning and customer expectations. To meet customers’ demands, while maintaining profits, you should use data and analytics based on metrics such as customer experience, cost and productivity.

9) Reorganise around the customer. If you find, by following the principles in this article, that your business is not a good fit for your customer, you need to redesign it. For some companies this might require fundamental rebuilding of structures, processes and interactions. It is certainly likely to involve changes in roles, responsibilities and team composition.

There is a warning from the authors not to try to apply the agile development strategies of technology businesses to your customer strategy, as this may result in unprofitable distractions. Instead, consider carefully whether any method you adopt will actually strengthen your customer strategy.

You should recruit and retain employees with an understanding of customer experience, and the expertise to apply it. This may include setting up a chief customer officer (CCO) post. Be careful, however, to ensure that your structure allows this person to influence all elements of your organisation which affect the customer’s experience of it.

10) Match your culture with your customer strategy. Your existing culture can be a major block to developing and successfully implementing a customer strategy. Don’t expect to change your culture overnight, but start by identifying behaviours which are already working well in terms of customer satisfaction.

For example, you might find cross-functional teams working to solve customers’ problems swiftly, or sales staff recognising when to turn down deals which don’t fit with your strengths, or meetings being opened with a discussion of their topic’s relevance to customer strategy.

Highlight those examples to the rest of your organisation, explaining how they benefit the business, and encourage their spread. As a leader, set a good example by exhibiting those customer-orientated behaviours yourself.

What to do now

In their conclusion, Ripsam and Bouquet suggest a number of immediate actions:

  • Check on how far your existing customer strategy is addressing the ten principles.
  • Establish a scorecard covering several measures, such as annual and incremental sales, market share and ROI.
  • Assess – qualitatively – what your company does badly and well.
  • Focus on a clear identity as your practices are adjusted.

Once everything you do in these respects is making coherent sense, you will be well on the way to building the effective customer relationships on which your business will thrive.

Source Article: Ten Principles Of Customer Strategy
Author(s): Thomas Ripsam and Louis Bouquet
Publisher: Strategy+Business