Customer
Growth
Growth can only be achieved by improving
value delivery through the overall customer experience - and
may be one of the only remaining sustainable differentiation
strategies available to the modern firm.
The siren call of growth is common
to almost every business in the world. Whether driven by investors
or in response to global competitive threats, this business
objective leads us to focus on the domain of the customer.
We cannot cost cut our way to sustainable growth. Growth through
acquisition or merger must also confront the brutal facts
at some point - who are the customers, and what will they
continue to pay for? Couple this ever increasing growth pressure
with the gradual decline in the effectiveness of existing
customer facing marketing techniques and models. New media
options have entered the equation in the last decade. New
competitive offerings flow from places in the world that were
unanticipated just five years ago. How should a business respond?
If the growth imperative is dependent on business activities
in the customer domain, no strategic growth initiative can
succeed without leveraging customer insight to improve the
value delivered across the entire customer experience.
It may sound simple, but listening
is the common thread. Listening to the voice of the customer,
and then responding appropriately helps uncover what customers
want us to know and do - deliver value. To accomplish this
we need new tools to hear the voice of the customer and refined
methodologies to apply this knowledge. Fueling this learning
engine to drive growth also requires empirical evidence and
measurements to know when to refine the approach. Take the
long standing belief that satisfaction will lead to loyalty.
While satisfaction is often a pre-condition of loyalty, highly
satisfied customers routinely defect. Why? The following sections
take on strategic questions and present useful concepts as
tools to discover what can be done to improve the overall
customer experience, and fuel business growth.
Customer Loyalty
Does most of what we spend on marketing,
selling and servicing our customers, impact customer loyalty?
Look at how the word loyalty is used in marketing plans, project
initiatives, etc. How common is it to read "and the project
will improve product X sales and customer loyalty."?
Stop. How do we know this? Have we simply been programmed
by formal marketing education to take it on faith? Have we
been deluded into spending based only on what we think the
customer truly values vs. seeking and listening to the voice
of the customer? What can be done to make sure we are investing
in building loyal customers and not spending foolishly? Let's
take a quick test of reasonability to
see if your company has the current capability to impact customer
loyalty. Ask yourself the following questions:
- What's your definition of customer loyalty
- can you write it down?
- What is your measure of customer loyalty?
- Is the measure linked with profitable
customer behavior?
- Is the loyalty measure captured on each
customer?
- Is the measure actionable?
If you answered no to two or more of
these questions, you are almost guaranteed to be mis-allocating
your strategic investments. Mis-allocating does not just mean
sub-optimal performance. Most companies survive in this state.
Mis-allocating usually means you are making wrong decisions
that are restricting the value your company delivers to your
customers. Worse, it means you are making mistakes that can
be deadly when your competition understands the difference
between loyalty drivers and table stakes.
There are only three requirements that need to be met in order
to impact customer loyalty and improve the economic payoff
by generating more loyal customers:
- Validate true drivers of customer loyalty
with your customers,
- Invest strategically and tactically in
programs that leverage this knowledge, and
- Measure and monitor the impact of these
programs on your customer loyalty measurement index.
Example 1: Download a PDF article on this subject
Example
2: Download a PDF article on this subject
Account Penetration
Customer growth through account penetration
involves identifying and connecting with a growing number
of individual buyers within a customer account. In this framework,
think of the account as a network of multiple sites, composed
of multiple buying groups, composed of individuals with responsibility
for specific applications – applications for which your
products or services meet the customer needs.
Marketing to the various individuals who
make or influence purchasing decisions is mandatory. But businesses
tend to assign differing sets of responsibilities to people
with roles that look identical from a functional title perspective
alone. As a result, reaching individuals inside accounts is
difficult, complex and expensive. Leveraging relationships
within buyer groups is necessary to identify other buyer groups
and generate referrals. This complex set of relationships
can be visualized as a cube, and account plans driven from
decoding and mapping the relationship network.
Example 1: Download a PDF article on this subject
Example 2:
Download a PDF article on this subject
Product Penetration
If account penetration is about achieving
customer growth by selling your products to more buyers within
an account, product penetration achieves growth by selling
more products to each of those buying groups. Product penetration
is about more than short-term revenue enhancement. It is about
creating a sustainable, inter-dependent relationship with
your customers which is based upon a broader exchange and
delivery of value.
Achieving this inter-dependent relationship
requires proactive communications with customers in an interactive
environment, and development of a deeper understanding of
customer needs. It is this understanding which will allow
the B2B company to successfully identify customer needs and
match those needs with additional product or service offerings
valued by the customer. Download a PDF article on this subject
New Product Launch
Most companies measure velocity from
the completion of product development to the time the product
is introduced to the commercial market. After that date is
met, most launches either collapse into chaos or slide into
obscurity. Organizations should really focus on the time it
takes to fill the sales funnel and realize sales. The speed
and methods used to fill the sales funnel will have the greatest
impact on your new product’s lifecycle - market penetration,
product penetration and repurchase - because this is when
you build your presence in the marketplace, often with little
interference from the competition. By building a sales funnel
and estimating your response and conversion ratios, you can
tell early on if you will meet your revenue objectives. If
you are not generating enough inquiries, qualified leads,
demos, closes, and re-orders, you are not on track to meet
your revenue projections and you can adjust your launch activities
accordingly. Download a PDF article on this subject
Integrated Account Management
Business-to-business marketing and sales
executives are urgently searching for new and better ways
to find and keep customers. Faced with the triple impact of
rising costs, fierce competition, and fickle clients, many
organizations are finding a unified solution in Integrated
Account Management (IAM) - a form of marketing that takes
a proactive and personal approach to managing mutually beneficial
customer relationships. IAM allows companies to effectively
manage their relationships with customers. It is the customer
relationship that drives both growth and profitability. It
is why customers buy, what differentiates companies from competitors,
and, most importantly, why customers remain loyal. IAM is
an integral component of a company’s overall relationship
marketing strategy.
How does Integrated Account Management work
for customer growth? Fundamentally, Integrated Account Management
extends the B2B organization’s reach and ability to
build relationships with customers – relationships that
result in increased loyalty and revenue growth. It does this
by leveraging the face-to-face sales and relationship management
with supporting contacts via phone, mail, email, etc. As a
result, the total cost to serve decreases, while customer
loyalty increases! Download a PDF article on this subject
Service Profit Chain
The most direct driver of revenue growth
and profitability is customer loyalty. In almost any organization,
a small percentage of loyal customers account for the majority
of the company’s profit and growth. All of which begs
the question: how do I increase customer loyalty? The answer
is not simple – but the Service Profit Chain (Service
Management Interest Group, Harvard Business School) provides
an excellent framework for diagnosing components and building
the infrastructure to increase loyalty, revenue growth and
profitability. Loyalty is measured by actual buying behavior.
By knowing who your best customers are and what they value,
you can target and acquire similar customers with greater
potential of becoming loyal and driving business growth.
This understanding must then be translated
internally into the skills, behaviors and attitudes of the
organization. Employee loyalty is directly linked to customer
perception of value and customer loyalty. Your more loyal
employees will drive growth – both directly through
the higher productivity and lower cost of retention vs. turnover
as well as through the impact those employees have on customer
satisfaction and customer loyalty. Download a PDF article on this subject
Value Based Contact
It is important to integrate and coordinate
communications to provide the maximum value to the customer.
Customers today want to be more in control of specifying the
content and quality of the communications that are valuable
to them. No longer is a model of guessing, spamming and blasting
appropriate - it is even destructive and illegal. Customers
are pleased to provide information on how communications should
be delivered, as well as the content, frequency and medium
and may indicate that face-to-face contact is not a preferred
medium when asked how they want to receive communications.
This can come as a shock to Business-to-Business selling forces,
or a realization that there are ways to optimize the delivery
of value to customers. This realization is the first step
to bringing expense-to-sales ratios down, and to delivering
more value to your customers. Download a PDF article on this subject
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